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DocuSign: More Than Just E-Signiature

Aug. 05, 2018 11:16 AM ETDocuSign, Inc. (DOCU)1 Comment
Josh Rudnik profile picture
Josh Rudnik


  • DOCU's share price is breaking out higher.
  • Management is committed to growth opportunities.
  • I am buying stock in this name.
  • This idea was first discussed with members of my private investing community, Absolute Returns. To get an exclusive 'first look' at my best ideas, start your free trial today >>

DocuSign (NASDAQ:DOCU) is breaking out higher on strong fundamental performance. Although there has been a board shakeup and strategic acquisitions in the short period of time the company has been public, investor sentiment remains elevated. Core growth is strong, while management tries to stay ahead of competition, adding value for customers through R&D. I am buying stock in this name with a multi-year time horizon.

Fundamental Narrative

DOCU looks attractively valued at current levels as its core-operations continue to grow, while management effectively expands into areas of potential growth, adding value for its current customer base.

The company provides cloud based transaction products and services in the United States. It offers e-signature solution that enables businesses to digitally prepare, execute, and act on agreements. DOCU serves large enterprises, sole proprietorships, small- to medium-sized businesses, professionals, and individuals.

Over the past six years, DOCU has seen its paying customer base grow at an average of almost 50% per year, according to its earnings call, with over 400,000 customers as of the most recent quarter. Its main growth lever thus far has been a successful expansion of its relationship with existing customers. Many companies use DOCU for the initial series of used cases, often one or two critical business processes that e-signature can help accelerate and simplify. Once those are successful, companies often look to bring the benefit to other opportunities and functions in their business.

During Q1, the company posted total revenue of $155.8 million, a 37% year-over-year increase, adding over 30,000 new customers across its enterprise, commercial and web and mobile businesses. The company is targeting a still large and untapped international market. Currently, business from outside the U.S. represents only 17% of its revenue, with a strong pipeline across its target market.

Outside of international growth. DOCU is developing solutions

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This article was written by

Josh Rudnik profile picture
I am currently a portfolio manager at an RIA in Philadelphia with over $1 billion in assets. The portfolio is dedicated towards macro themed positioning with equities, ETFs, fixed income, as well as options and other alternatives. There are opportunities everywhere, both on the long and short side, and I aim to generate absolute returns on an annualized basis for clients. My absolute return portfolio has returned double-digit percentage returns over the last decade regardless of if the market is selling off, or rallying higher with enthusiasm. Relative returns are nice, but at the end of the day, you can't eat relative returns. When the S&P 500 is down 20%, it doesn't necessarily mean you have to be down too. Join my Marketplace service, Absolute Returns, and see how I am positioning my portfolio in real-time, and what trade ideas are coming about daily. I also offer a live chat as part of the service, where questions and ideas can be discussed.

Analyst’s Disclosure: I am/we are long DOCU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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