A few points stood out to me that might deserve more discussion here (editing a bit for brevity)…
"In the case of Shopify I am uncertain about its future growth rates. The most recent rate of growth appears to me to be to some extent an artifact of the lockdown, more precisely the accelerated adoption of e-commerce […] I question whether current rates of growth are sustainable or whether the earlier less robust trend will reassert itself.
When I look at Shopify’s (SHOP) numbers I see a single quarter jump but aside from that almost every QoQ number matches the growth it has shown for years. What is really neat about this to me is that they are a much bigger company each year and yet they find ways to keep growth rates essentially the same, proportionally. I posted the numbers in a recent thread about their report. Note the single jump in QoQ and the next 2 quarters are pretty close to before the pandemic…even my guess is based on this consistency. They didn’t give guidance):
*Guess* Dec-20 Sep-20 Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18 Sep-18
Revenue *920* 977.7 767.4 714.3 470 505.2 390.6 362 320.5 343.9 270.1
YoY *95.7%* 93.5% 96.5% 97.3% 46.6% 46.9% 44.6% 43.8% 49.6% 54.4% 57.5%
QoQ *-5.9%* 27.4% 7.4% 52.0% -7.0% 29.3% 7.9% 12.9% -6.8% 27.3% 7.3%
…Zoom and DOCU you will note seem to have already conquered the world as some here have claimed and I think this is, at least to some degree true. …"
I don’t think this is true, though I agree it is commonly stated as such. I think what we are seeing here is the application of anecdotal life-evidence to investing rather than hard data. When I look around it sure feels like the whole world is using Zoom but in reality MS Teams still has the market share. I wish I could find a quick chart to show this. I am sure I’ve seen one. There is a chart here but I don’t know much about it so take it with a grain of salt: https://www.techradar.com/news/microsoft-teams-zooms-past-zo…
DocuSign has NOT conquered the world. The figure we often talk about is their marketshare; the fact that DOCU, relative to its peers, is dominant. This does not mean they have the majority of the entire world-wide TAM. Here is a cherry-picked article that matches my memory of this (with a little extra data thrown in for fun): https://blog.mywallst.com/docusign-v-adobe-which-is-the-bett…
DocuSign boasts an impressive market share of roughly 70%. It has millions of users worldwide and 749,000 paying customers as of fiscal Q2, 2021 an increase of 88,000 on the prior quarter.
Total revenue increased 45% to $342.2 million year-over-year (YoY) and international revenue grew 65%, making up just under one-fifth of revenue. …
So in nice round numbers that puts the market they currently address at around $500 million YoY (and around 1 million paying customers). I’ve seen TAM estimates between $25-$50 billion, like this Fool.com article from a few days ago: https://www.fool.com/investing/2021/02/25/heres-why-docusign…. There has to be way way more than 1 million potential e-signature users in the world as well.
This site defines TAM as “The Total Addressable Market (TAM), also referred to as total available market, is the overall revenue. In accounting, the terms “sales” and opportunity that is available to a product or service if 100% market share was achieved.” (https://corporatefinanceinstitute.com/resources/knowledge/st…). Now that is a bit confusing because they threw “market share” in there but since we know Docusign isn’t making 70% of the TAM, I feel safe saying this is not the same “marketshare” we are talking about here.
So at $350M in YoY rev (which is 70% marketshare), DOCU has less than 0.5% of the TAM mentioned in the article above…is that right? Even if you cut that by 2/3 and call it unproven hype for the document lifecycle management segment, fluff, etc, that is still a LOT of room to grow. Plus, that 70% marketshare makes it much much easier for DOCU to keep wining over and over again as it expands.
Anyone willing to poke some holes in this? I’m here to learn.