Cloud Stocks: DocuSign Is Building On AI And Self Serve Capabilities

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According to a recent report, the global digital signature market is expected to grow at 35% CAGR to $48.4 billion by 2030. DocuSign (Nasdaq: DOCU) recently announced its fourth-quarter results that surpassed market expectations.

DocuSign’s Financials

Revenues for the fourth quarter grew 14% to $659.6 million, ahead of the market’s estimates by 3.16%. Billings grew 10% to $739 million. On an adjusted basis, net income was $0.65 per share, ahead of the market’s estimates of $0.53.

By segment, Subscription revenues grew 14% to $643.7 million. Professional services and other revenue fell 5% to $15.9 million.

For the fiscal year, DocuSign’s revenues grew 19% to $2.5 billion and EPS was $2.03.

For the first quarter, DocuSign forecast revenues of $639-$643 million, compared with the Street’s forecast of revenue of $641.26 million and an EPS of $0.49. DocuSign expects to end the year with revenues of $2.695-$2.707 billion, ahead of the market’s forecast of revenue of $2.69 billion and an EPS of $2.18.

DocuSign recently announced plans to cut around 10% of its workforce. This is in addition to the layoffs announced last September which impacted 9% of its workforce. The restructuring is being conducted to support its growth, scale, and profitability objectives.

DocuSign’s AI and Self-Serve Strategy

Besides reorganizing itself, DocuSign also redefined its strategy. It is focusing on delivering smarter, easier, and more trusted agreements. It is improving the reach and efficiency of its go-to-market by developing a self-serve experience, strengthening its sales and marketing productivity, and optimizing and modernizing systems and processes. It envisions that its goal is to turn flat agreements into structured data that can be used to make intelligent decisions.

To offer decision-making capabilities, it expanded integrations to drive collaboration in Microsoft Teams, Slack, and Zoom. For its e-signature, it enabled new AI-assisted document highlighting and signing capabilities on mobile and the web. It is working on releasing web forms that will help customers deliver a better and simpler experience by moving from legacy contract forms to a modern web and app experience. It also plans to accelerate its release cycles in fiscal 2024 with differentiated solutions that will simplify the agreement process.

DocuSign’s AI is helping businesses manage contracts through three key benefits. First, the AI engine is able to capture critical elements of a contract like parties, obligations, and payment terms as separate data points. As the contract moves through the negotiation process, these key points are updated and tracked. This not only makes decision-making faster but also helps meet compliance and integrate contract data with other systems of records in the organization. Second, the engine is helping leaders interpret the content and implications of clauses. It not only identifies the existence of a data privacy clause but can also answer questions about the clause, such as data privacy requirements and response plans.

Finally, DocuSign’s AI capabilities include a code embedded in a digital contract that can monitor for a set of conditions and trigger relevant responses. For instance, it can monitor and proactively notify contract renewal timelines and verify some compliance information from third-party services. While currently in its nascent stage, the company is confident that the use cases of embedded code can get more sophisticated as the structured data set grows. These codes can then be designed for specific industries or individual lines of business.

Within its product-led growth and self-serve initiatives, it has also released several new enhancements to modernize its commerce experience to reduce friction and improve ease of use. It expanded seat capacity available via the web and mobile sites and expanded the currency options available to make the buying process easier in international markets.

Its stock is trading at $55.79 with a market capitalization of $11.2 billion. It hit a 52-week low of $39.57 in October last year and a 52-week high of $113.67 in March last year.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research ...

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Mad Money 6 months ago Member's comment

I’m not selling 1 share of $DOCU before it’s back over $150. Huge potential here… 

Andrew Armstrong 6 months ago Member's comment

I’m in this with a decent position, but I don’t see 150 happening any time in the next year or 2 given how it has traded.

Mad Money 6 months ago Member's comment

It’s hard to predict 1 or 2 years in advance, but I can see it reaching 150 in a year or so… Bullish..