DocuSign Inc (DOCU)

[fung_derf]

DocuSign, Inc (DOCU $109.35: 2 Stars)
Valuation Call; Downgraded to 2 Stars
Analyst - Dan Romanoff, CPA
Fair Value: $85.00
We believe DocuSign is a leader in electronic signatures and contract life cycle management software. We think the company has a long runway for growth through viral adoption in greenfield opportunities. However, given its May 2018 IPO, DocuSign has limited operating history. While the company reported positive non-GAAP profitability for the first time in fiscal 2019, we do not model GAAP profitability for several years still. Also, E-signatures may ultimately be a feature rather than a full-fledged solution suite. Finally, as the company moves upstream to increasingly larger clients, it is likely to face intensifying competition, particularly from Adobe.