Replies to post #14563 on Keeping It Simple

[eastunder]

1 Growth Stock Down 86% You'll Regret Not Buying on the Dip
By Anthony Di Pizio – Sep 29, 2023 at 4:07PM

https://www.fool.com/investing/2023/09/29/1-growth-stock-down-86-youll-regret-not-buying-dip/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article

KEY POINTS

DocuSign's digital document technology made its stock extremely popular among investors at the height of the pandemic.
But as society returned to normal, the company struggled to maintain its momentum.
DocuSign stock is down 26% this year and 86% from its all-time high, but it might be time to consider buying.

The DocuSign growth story is stalling, but it's not all bad news.

The height of the pandemic during 2020 and 2021 drove some interesting trends as society adjusted to travel restrictions and lockdowns. It suddenly became more difficult for businesses to do deals because they couldn't physically get in the room with their counterparts to negotiate, so digital documents company DocuSign (DOCU -0.28%) became a godsend.

DocuSign is the leader in e-signature technology, but it rapidly expanded to serve more customer needs during the worst of the pandemic, and it now offers a portfolio of cloud-based document tools. But society is moving freely again and restrictions are a thing of the past, so the company has struggled to maintain its incredible momentum from that period.

As a result, investors have sent its stock down 26% in 2023 alone, and it's trading 86% below its all-time high. But has the sell-off gone too far? Here's why it might be time to buy the stock.

DocuSign has evolved from its days as an e-signature company

DocuSign has now developed a portfolio of tools designed to manage the entire contract life cycle, from document formation to negotiation to final signoff. This is done through its Agreement Cloud, which is a collection of over a dozen applications and 400 potential integrations with different third-party software platforms.

Like most companies in the technology space, DocuSign is also leaning on artificial intelligence (AI) to better serve customers. Earlier this year, it introduced a new tool called Agreement Summarization, which operates on Microsoft's cloud-based Azure OpenAI Service. It runs on the same generative AI technology that powers the ChatGPT chatbot, and it's designed to boil down complex agreements to their key points so the reader doesn't miss critical information.

DocuSign Insight is another AI-powered tool that can be trained to identify problematic clauses within contracts, or even potential opportunities. While DocuSign's AI tools aren't ready to replace your lawyer just yet, the technology is advancing at a rapid pace and the potential for cost savings is clear.

DocuSign has amassed more than 1 billion users worldwide, which is a sure sign it creates value for consumers and businesses. Around 1.44 million of those users are paying customers, and they include all of the Fortune 500 top 25 healthcare companies, all of the top 25 financial companies, and 18 out of 20 of the top technology businesses.

DocuSign's revenue growth has slowed, but there is a silver lining

In DocuSign's fiscal 2021 (ended Jan. 31, 2021), it generated $1.4 billion in revenue, which was a whopping 49% increase from the prior year. That growth rate slowed to 45% in fiscal 2022 (ended Jan. 31, 2022), and it decelerated even more dramatically to just 19% in fiscal 2023 (ended Jan. 31, 2023).

DocuSign's relentless focus on innovation simply wasn't enough to offset the removal of pandemic restrictions, which led to falling demand for digital document tools overall. Unfortunately, the downward trend in the company's growth has persisted in the first half of fiscal 2024 (ended July 31), with revenue increasing by just 11%.

However, the more recent slowdown is partly by design. DocuSign spent years losing money because it chose to invest aggressively in growth no matter the cost, but it has recently focused on profitability instead. That means carefully managing costs so more money flows to the bottom line, and in the first half of fiscal 2024, it only increased its operating expenses by 6%.

The results are clear. DocuSign delivered net income (profit) of $7.9 million for the six-month period, which is an enormous swing from the $72 million net loss it generated the same time a year ago. Its bottom line was even more impressive on a non-GAAP basis, which excludes one-off and non-cash expenses.

DocuSign dished out $291 million in stock-based compensation during the first six months of fiscal 2024, for example, which is a non-cash expense. Therefore, the company's non-GAAP net income came in at $299 million, up 78% from the year-ago period.

Why it might be time to buy DocuSign stock

Based on DocuSign's $2.6 billion in trailing-12-month revenue, its stock trades at a price-to-sales (P/S) ratio of just 3.2, which is near the cheapest P/S since the company listed publicly in 2018.

Plus, over the last four quarters, DocuSign has generated $2.66 in non-GAAP earnings per share. That places its stock at a price-to-earnings (P/E) ratio of roughly 16 (based on its current price near $42). That's a 47% discount to the broader technology sector as represented by the Nasdaq-100 index, which trades at a P/E of roughly 30.

As I mentioned at the top, DocuSign stock is trading 86% below its all-time high. Will it revisit that lofty level? Not anytime soon. But this is still a growing company, and there is upside potential based on its valuation alone.

Therefore, the multiyear sell-off in DocuSign stock might be overdone, and patient investors willing to buy this former pandemic darling could be rewarded going forward.

[eastunder]

DOCU Cpps @ 52.30

+B<49.99?
currently
200d @ 49.77
5d @ 48.57

[eastunder]

DocuSign surges on report that company is exploring a sale

Fri, December 15, 2023 at 11:59 AM MST·1 min read


(Bloomberg) — DocuSign Inc., whose software handles electronic signatures, rallied as much as 12% after the Wall Street Journal reported that it was considering a sale.

The company is working with advisers to explore a leveraged buyout, but the talks are in early stages, the newspaper said, citing unidentified people familiar with the situation. DocuSign’s market value was $12.8 billion as of Friday.

DocuSign’s revenue growth has slowed into the single digits this year after explosive leaps during the pandemic, when companies turned to remote work and needed to handle more documents online.

“DocuSign’s recent bookings data show a hint of stabilization in demand, but economic growth in 2024 could delay any significant improvement in sales,” Anurag Rana, an analyst at Bloomberg Intelligence, said earlier this month.

The shares rose as high as $62.77 in New York, marking the biggest intraday jump since December 2022. DocuSign had been up just 1.3% this year through Thursday’s close.

A representative for the San Francisco-based company didn’t immediately respond to a request for comment.

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3 Software Stocks for December Worth Buying

Kritika Sarmah
Dec 22, 2023
https://stocknews.com/news/docu-prgs-rdvt-3-software-stocks-for-december-worth-buying/

The software industry is currently thriving due to technological advancements and evolving business needs. Also, global businesses are increasingly investing in cloud computing infrastructure and application development, bolstering the software sector.

So, robust software stocks DocuSign, Inc. (DOCU ), Progress Software Corporation (PRGS), and Red Violet, Inc. (RDVT) could be solid buys this month. These stocks boast impressive profit margins.

Global business spending on cloud computing infrastructure is projected to surpass $1 trillion next year, fueled by the adoption of new platforms and as-a-service offerings, including artificial intelligence. Cloud services provide a scalable and accessible infrastructure, allowing Software as a Service (SaaS) providers to deliver software applications to a broad user base efficiently.

As a result, the SaaS market is anticipated to achieve a revenue of $141.40 billion this year. The industry is expected to grow at a CAGR of 5.6% by 2028, reaching $186 billion.

Additionally, the software application industry is experiencing dynamic growth propelled by the accelerating pace of digital transformation. Businesses are increasingly reliant on software applications to streamline operations, enhance productivity, and adapt to evolving market demands.

As technology continues to advance, the software application industry remains at the forefront of innovation, driving efficiency and convenience across sectors. The global application development software market is projected to grow at a CAGR of 24.3% until 2028.

On top of it, the business software market is poised for significant growth, driven by the increasing demand for high-speed data networks. Moreover, the market is driven by heightened demand in the banking, retail, and healthcare sectors.

The global business software market is expected to grow at a CAGR of 11.2% from $580.06 billion this year to $987.61 billion by 2028.

Given the industry tailwinds, it’s time to examine the fundamentals of the top three stocks in the software industry.

DocuSign, Inc.

DOCU provides electronic signature solutions in the United States and internationally. The company offers a DocuSign e-signature solution that enables the sending and signing of agreements on various devices. It provides Contract Lifecycle Management (CLM), Gen for Salesforce, Identify, Standards-Based Signatures, and Monitor.

DOCU’s trailing-12-month levered FCF margin of 36.42% is 326.9% higher than the 8.53% industry average. Its 79.38% trailing-12-month gross profit margin is 62.4% higher than the 48.88% industry average.

On November 30, DOCU obtained StateRAMP authorization, reinforcing its commitment to providing secure and smooth agreement experiences for state and local governments. StateRAMP establishes cloud security standards, educates on best practices, and verifies the security of vendors handling government data.

This authorization, alongside DOCU’s FedRAMP Moderate approval, enhances data security for state and local governments, ensuring efficient service delivery while maintaining a robust security posture.

On November 14, DOCU introduced WhatsApp Delivery, enabling users to expedite deal closures through the widely used messaging platform. This expansion allows customers to connect with signers effortlessly, with the DocuSign eSignature integration on WhatsApp providing real-time notifications linked directly to agreements for swift and secure signing.

DOCU’s total revenues for the third quarter ended October 31, 2023, rose 8.5% year-over-year to $700.42 million. Its non-GAAP income from operations increased 27.4% year-over-year to $187.41 million. Its non-GAAP net income rose 38.7% year-over-year to $163.80 million. Also, its non-GAAP EPS came in at $0.79, representing an increase of 38.6% year-over-year. Its net cash provided by operating activities increased 402.8% over the prior-year quarter to $264.18 million.

Analysts expect DOCU’s revenues for the fiscal fourth quarter ending January 31, 2024, to increase 6% year-over-year to $695 million. Its EPS is likely to be $0.64 in the same quarter. It surpassed the consensus EPS and revenue estimates in each of the trailing four quarters, which is remarkable.

Over the past three months, the stock has gained 43.3% to close the last trading session at 60.473.

DOCU’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.

It has an A grade for Growth and a B for Value and Quality. It is ranked #3 out of 21 stocks in the A-rated Software – SAAS industry.

To access DOCU’s additional Momentum, Stability, and Sentiment ratings, click here.

Progress Software Corporation

PRGS develops, deploys, and manages business applications. OpenEdge, Sitefinity, Kemp LoadMaster, Developer Tools, and DataDirect Connect are some of the company’s applications. It sells its products to end users, independent software vendors, original equipment manufacturers, and system integrators.

PRGS’ trailing-12-month EBIT and EBITDA margins of 20.12% and 34.10% are 312.3% and 268.7% higher than the industry averages of 4.88% and 9.25%, respectively.

On November 2, 2023, PRGS launched Progress Sitefinity 15, featuring enhanced generative AI (GenAI) capabilities that enable marketers to generate tailored content at scale. The update also includes the Sitefinity Integration Hub, offering no-code data connectivity with leading MarTech platforms for unified customer profiles.

The GenAI support empowers marketers to create and optimize personalized content based on real-time insights, enhancing the company’s prospects.

Its annualized dividend rate of $0.70 per share translates to a dividend yield of 1.27% on the current share price. Its four-year average yield is 1.49%. PRGS’ dividend payments have grown at CAGRs of 4% over the past five years.

PRGS’ non-GAAP revenue for the third quarter ended August 31, 2023, increased 14.8% year-over-year to $175.78 million. Its non-GAAP income from operations increased 13.8% year-over-year to $68.39 million. Its non-GAAP net income rose 10.6% year-over-year to $48.75 million. Also, its non-GAAP earnings per share came in at $1.08, representing an 8% year-over-year increase.

Street expects PRGS’s revenue to rise 9.4% year-over-year to $174.12 million in the fiscal fourth quarter ended November 2023. It exceeded EPS estimates in each of the trailing four quarters.

The stock has gained 9.6% over the past year to close the last trading session at $54.98.

PRGS’s POWR Ratings reflect its steady outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

PRGS has a B grade for Value and Quality. It is ranked #22 within the 131-stock Software – Application industry.

In addition to the POWR Ratings stated above, one can access PRGS’ additional PRGS’s Growth, Momentum, Stability, and Sentiment ratings here.

Red Violet, Inc.

RDVT specializes in proprietary technologies and applies analytical capabilities to provide identity intelligence. It delivers idiCORE, an investigative solution addressing diverse organizational challenges, and offers FOREWARN, an app-based solution that equips users with instant knowledge before engaging face-to-face with consumers.

RDVT’s trailing-12-month gross profit and net income margins of 78.04% and 22.43% are 59.6% and 856.1% higher than the industry averages of 48.88% and 2.35%.

On December 20, RDVT repurchased an additional $5 million of the company’s common stock, in addition to the existing $5 million repurchase program, of which about $500,000 remained authorized as of December 19, 2023.

Since November 3, 2023, the company has repurchased 93,814 shares at an average price of $19.97. Since the authorization of the previous $5 million repurchase program on May 2, 2022, the company has bought back $4.05 million of its common stock at an average price of $18.78. The decision reflects confidence in the business, pipeline, and ability to generate strong free cash flow.

On October 27, RDVT’s subsidiary FOREWARN, LLC, a prominent provider of real-time information solutions for real estate agents, announced a collaboration with the Georgia Multiple Listing Service (GAMLS). This partnership allows GAMLS to offer FOREWARN® services to its 52,000+ MLS subscribers across Georgia, enhancing proactive safety measures for real estate agents.

RDVT’s revenue increased 5.4% year-over-year to $15.84 million during the fiscal third quarter that ended September 30, 2023. Its adjusted EBITDA grew 3.4% from the prior year’s period to $5.36 million. Also, the company’s net income and EPS came in at $12.50 million and $0.87, up 453.4% and 443.8% year-over-year, respectively.

RDVT has gained 7.3% over the past year to close its last trading session at $20.50.

RDVT’s optimistic outlook is evident in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our proprietary rating system.

RDVT has a B grade for Quality and Stability. It is ranked #14 out of 43 in the B-rated Software – Business industry.

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EXCLUSIVE-Bain, Hellman & Friedman vying to acquire DocuSign-sources
3:32 PM ET, 01/11/2024 - Reuters
By Milana Vinn and Anirban Sen

NEW YORK, Jan 11 (Reuters) - Bain Capital and Hellman & Friedman are competing to acquire DocuSign Inc, the provider of online signature services with a market value of about $12 billion, according to people familiar with the matter.

The two private equity firms are among the final bidders in the auction for DocuSign, which is set to be one of the biggest leveraged buyouts of 2024, the sources said.

While the investment firms have not joined forces, it is possible that they may partner down the line to clinch a deal, the sources added. An outcome is expected in the coming weeks.

Blackstone Inc, another buyout firm, held talks about a potential deal with DocuSign but is no longer in contention, according to two of the sources.

The sources cautioned that no transaction is certain and asked not to be identified because the matter is confidential.

Representatives for Bain and Hellman & Friedman declined to comment. DocuSign and Blackstone did not immediately respond to a request for comment.

The Wall Street Journal reported in December that DocuSign was exploring a sale, without identifying any suitors.

DocuSign went public in 2018 at a $6 billion valuation. Its technology allows customers to sign documents online from any electronic device. It counts large corporations such as T-Mobile, United Airlines and Thermo Fisher among its clients.

Last month, DocuSign reported quarterly adjusted earnings of 79 cents?? per share for the quarter that ended in October, higher than the 57 cents it posted a year earlier. Revenue rose 8.5% to $700.4 million from a year ago.

A spike in financing costs in the last two years made financing leveraged buyouts more expensive and big deals hard to clinch. Yet some large transactions are slowly breaking through, as the financing outlook improves.

Blackstone and Permira unveiled a deal in November to buy European online classifieds company Adevinta ASA for about 14 billion euros ($15.36 billion).

In July, buyout firm GTCR agreed to buy a majority stake in Worldpay, the merchant services business of Fidelity National Information Services, in a deal that valued the unit at $18.5 billion. ($1 = 0.9112 euro) (Reporting by Anirban Sen and Milana Vinn in New York; editing by Jonathan Oatis

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DocuSign (NASDAQ:DOCU) could see $95 a share in a takeout by private equity based on other takeouts of software companies, though the price is likely to be lower, according to a Bank of America analyst.

https://www.msn.com/en-us/money/markets/docusign-likely-to-see-less-than-95-a-share-in-a-pe-takeover-analyst/ar-AA1mSsy9

Last year the average exit multiple for software companies purchased by private equity companies was 7.3x trailing twelve months revenue. If this multiple is applied to DocuSign (DOCU) it would imply a total purchase price of $19.8 billion, or a 70+ premium to the $56 a share price prior to takeover speculation, BofA analyst Brad Sills, who has a neutral rating on DOCU and raised his price target to $68 from $60, in a note on Friday.

"While we view DocuSign as an attractive asset, we view the 7.3x trailing twelve months exit multiple as rich given the slower growth profile of DocuSign (we model to +9%, +6%, and +7% y/y revenue growth for FY24E, FY25E, and FY26E, respectively)," Sills wrote in the note. "A takeout multiple, if any potential deal happens is likely to be lower in our view."

DocuSign (DOCU) jumped 9.3% Thursday after a Reuters report that private equity firms Bain Capital and Hellman & Friedman are competiton to acquire the provider of online signature services. Blackstone (BX) had discussions about a possible deal , though is no longer in the running, according to the Reuters report.

BofA's Sills sees limited potential interest from strategic buyers, given the specialized nature of the eSignature category and the larger purchase price for DocuSign (DOCU).

"DocuSign’s margin structure and cash flow profile is likely also attractive to private equity (we estimate 26% to 27% FCF margin for FY24E to FY26E), leaving plenty of room to expand margins faster than the current mid-single digit growth rate," Sills added.

The Reuters report follows a WSJ item last month that DocuSign (DOCU) could go private via leveraged buyout. The company, which provides software for e-signatures, had spoken to a number of parties and the talks are in the early stages, the WSJ reported at the time.

[eastunder]

Regarding DOCU


_______________________________________________________________________________
Same article
Activist Investors Are Acting Up
https://finance.yahoo.com/m/29674f15-a255-31d0-82ba-71da70acb08b/activist-investors-are-acting.html

Dylan Lewis: Before we go to break, we've got one more story of corporate intrigue. Shares of DocuSign up 10% after a report that the E Signature company has bids to take it private. Emily, it has been a tough two years to be a DocuSign shareholder. I know because it's sitting in my portfolio, I am a [laughs] shareholder and I know exactly what those declines feel like. It seems like the story for this business has shifted pretty dramatically from being a growth story to being a more of a cash flow story and a profitability story. Is that why we're starting to see some interest in maybe taking it private.

Emily Flippen: I think there's a couple of things that DocuSign shareholders can take from this. The first one being that we don't know. These are still rumors, so we don't know what the price of any potential deal could be. But the fact that the stock is up on this news says to the market, hey, we assume the price is going to be higher than we're DocuSign is trading now. So as you mentioned, if you're a DocuSign shareholder, hopefully you know this is a business that has consistently produced a fair amount of cash. So it's not like Twilio in the sense that it has not been burning hundreds of millions of dollars and is trying to keep itself afloat. But you're right that the growth story has changed and that's not necessarily what every investor signed up for when they bought shares of DocuSign, which have declined pretty substantially from its pandemic peaks. But the other thing you take from this is the fact that there are two private equity firms reportedly fighting over DocuSign, which is really interesting because if you actually look at private equity activity over the course of 2023, it was pretty low in comparison to what it has been in the past. As you can assume, largely result of rising interest rates, higher inflation, more concerned about the economy. But now, people are saying, hey, look, we're having this soft landing. This thing nobody thought possible. Maybe it's happening right now, maybe interest rates to Ron's earlier point, maybe they'll come down at some point over the course of the year. I don't know if I agree with that, but I do think it's telling that there's a ton of private equity cash sitting on the sidelines. It's actually up pretty substantially in comparison to where it was even back in 2018. So there's a lot of money to be had for private equity firms that are looking to make a buck and with a business like Docusign, which does produce a fair amount of cash flow, has a lot of room for improvement. It makes sense that there'd be two companies fighting over it.

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Private Credit Duels With Banks for $8 Billion DocuSign LBO Debt
John Sage, Silas Brown and Lisa Lee
Mon, January 22, 2024 at 8:29 AM MST·1 min read

https://finance.yahoo.com/news/private-credit-duels-banks-8-152938833.html

(Bloomberg) -- Direct lenders are vying with banks to finance a potential buyout of DocuSign Inc. with a debt package totaling as much as $8 billion, according to people with knowledge of the matter.

Bain Capital and Hellman & Friedman are jockeying to acquire the electronic signature platform, though the discussions are ongoing and details may change, according to the people, who asked not to be named discussing a private transaction.

Representatives for DocuSign, Bain and Hellman & Friedman declined to comment. Details about the potential take-private deal were reported earlier by Reuters.

The proposed loan would be the largest ever direct-lending deal by roughly $3 billion, according to data compiled by Bloomberg, and comes at a time when the competition between banks and direct lenders is reaching a fever pitch.

Conditions in the broadly-syndicated loan and junk-bond markets — where private equity firms have traditionally looked to finance multi billion-dollar buyouts — have improved in recent months, in part due to mounting speculation the Federal Reserve’s aggressive interest-rate hiking cycle is over. That could make a debt package arranged by banks more attractive compared to private credit and increase the rivalry between the two sets of lenders.

The revival means more competition in the $1.6 trillion private credit market, which boomed over the past 18 months as soaring rates and hung debt made banks cautious about underwriting fresh leveraged buyouts.

DocuSign has a market capitalization of nearly $13 billion and went public in 2018.

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1 Fantastic Growth Stock Down 80% Investors Can Buy Hand Over Fist in 2024
Manali Bhade, The Motley Fool
Wed, January 24, 2024 at 6:15 AM MST·5 min read

https://finance.yahoo.com/m/470a3e60-e10e-3013-9e73-48e2352bb2ab/1-fantastic-growth-stock-down.html

A darling of the stock market during coronavirus lockdowns, leading digital-signature and contract-management player DocuSign (NASDAQ: DOCU) has seen its shares drop by nearly 80% from their all-time high of $310 in September 2021.

Much of this drawdown can be attributed to very slow top-line growth amid an elongated sales cycle and increased competition from bigger players such as Adobe and Dropbox as well as new entrants in the digital-signature market.

Recently, however, the stock has been on an upswing, climbing nearly 62% from its low of $38 in this past October amid rumors of a potential buyout by a private equity firm. According to a Reuters report, Bain Capital and Hellman & Friedman may be among the final bidders in an auction for DocuSign.

However, even if such a take-out deal does not go through, there are still factors that could catapult DocuSign's shares higher in the coming months.

Global-market leader

The increasing shift toward digitization and the rising adoption of cloud-based solutions have fueled demand for electronic-signature and agreement-management solutions. The global electronic-signature market is estimated to grow at a compound annual rate of 35.1% from 2023 to 2030, reaching $43.1 billion.

As the market leader with a 67% share of the global e-signature market, DocuSign is seeing its solutions increasingly adopted by companies across industries for various uses. The company currently caters to over 1.4 million paying customers, while nearly a billion people use its platform globally.

DocuSign is seeing particular strength in international markets, where revenue is growing three times faster than in North America. The company's omnichannel, go-to-market strategy and rapid digital-channel growth are helping drive new customer acquisition.

Moreover, the company is leveraging artificial intelligence (AI) technologies to summarize agreements, analyze business and legal contracts to assess risks and opportunities, and extract common key terms and clauses to simplify the document review process.

Partnerships driving new opportunities

DocuSign is exploring more opportunities by expanding its product capabilities and penetrating new markets through collaborations with companies like Microsoft and Meta Platforms. The company is the sole digital-signature provider for Microsoft's Power Page Integration, helping website makers streamline signatures without code. The partnership has also enabled DocuSign to further explore opportunities in building pre- and post-signature workflows.

DocuSign's integration with Meta Platform's WhatsApp is also helping the digital-signature provider tap into the latter's broad user base. It can facilitate quicker agreement signings in geographies where WhatsApp dominates communication.

Agreement management

Going beyond its core digital-signature offering, DocuSign is also focusing on becoming a prominent player in the agreement-management business. The success of the company's contract lifecycle-management (CLM) solutions in North America, used by organizations to handle aspects such as the creation, negotiation, execution, and renewal of contracts, highlights the huge growth potential in the overall agreement-management market.

The company's Agreement Cloud platform, which encompasses over 12 applications and more than 400 integrations, helps streamline the entire agreement-management process and offers solutions such as CLM, identity verification, electronic notarization, and digital signing.

DocuSign has been consistently introducing new features and functionalities to reduce friction and improve the customer experience in the agreement-management process. Recently, the company has launched Microsoft Power Automate integration, which allows users to generate personalized, professional-looking documents and then sign them from Microsoft Power Automate.

While DocuSign has been working on this offering since early 2019, it is still mostly a negligible part of its revenue mix. Hence, although the CLM is estimated to be a $25 billion market opportunity, there is still much work needed to make it a material catalyst for the company.

Improving profitability and a robust balance sheet

Despite a slowing top line amid a difficult macroeconomic environment, DocuSign posted a net profit -- based on generally accepted accounting principles (GAAP) -- of $0.19 per diluted share in the third quarter (ended Oct. 31, 2023). That's an impressive improvement from $0.15 loss per share in the same quarter of the prior year.

DocuSign also saw a staggering 565% year-over-year jump in free cash flows to $240.3 million at the end of the quarter. The company has an impressive balance sheet with nearly $1.6 billion in cash and only $835 million in debt. These factors seem to have made the company an attractive option for potential leveraged buyout by private equity companies.

Is DocuSign a buy?

It is undeniable that DocuSign is facing a host of challenges such as a falling billings-growth rate and a slowing dollar-based net-retention rate. However, the company's large customer base, robust balance sheet, and focus on cost cutting can prove to be pivotal in reinvigorating long-term growth.

DocuSign is currently trading at a price-to-sales ratio of just 4.6, far lower than its five-year average of 12.7. Considering the company's multiple-growth tailwinds, stable financials, and bargain-bin valuation, investors can consider taking a stake in this stock.

[eastunder]

DOCU on stall news

Open Gaps
Direction Date range
up Nov-14-2023 41.42 to 42.08
up Nov-02-2023 38.94 to 39.21

OL's on CP and TGT gaps on RB?


DocuSign's deal talks with Bain, Hellman & Friedman stall-sources
11:49 AM ET, 02/05/2024 - Reuters
By Milana Vinn and Anirban Sen

Feb 5 (Reuters) - Bain Capital and Hellman & Friedman have cooled in their pursuit of DocuSign Inc over disagreements on how much they should pay to acquire the provider of online signature services, people familiar with the matter said on Monday.

The private equity firms, which were competing to buy DocuSign, have not been able to agree a deal price with the company, which has a market value of $11 billion, after weeks of talks, the sources said.

It remains, possible, however, that the deal talks will resume in the future, the sources added, requesting anonymity because the matter is confidential.

DocuSign shares dropped more than 7% in New York on Monday on the news.

A deal for DocuSign would have been one of the biggest leveraged buyouts of 2024. A spike in financing costs in the last two years has made financing leveraged buyouts more expensive and big deals harder to clinch.

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DocuSign price target cut to $45 amid report takeover talks stalled - analyst

https://www.msn.com/en-us/money/companies/docusign-price-target-cut-to-45-amid-report-takeover-talks-stalled-analyst/ar-BB1hOLaw

DocuSign's (NASDAQ:DOCU) price target was reduced at Wells Fargo following a report that its takeover talks with private equity firms have stalled. DocuSign slumped 7.2%.

The price target for the electronic signature firm was cut to $45 from $55 at Wells Fargo, analyst Michael Turrin, who has an underweight rating on DocuSign (DOCU), wrote in a note on Monday.

Talks between private equity firms Bain Capital and Hellman & Friedman and DocuSign (DOCU) have stalled as the parties have been unable to agree to a price after weeks of discussions, according to a Reuters report on Monday, which cited people familiar with the matter.

"We see challenges acquiring DOCU given current scale ($11B mcap) alongside our view the co is facing a tough fundamental backdrop (inc comp headwinds, pricing pressure), leaving mgmt w/ limited options for organic improvement (+ more limited negotiating power)," Turrin wrote. "We believe these issues are likely contributors to Reuter's suggestions interested parties are now cooling & note elevated risk for DOCU standalone given FQ4 just closed."

The latest update comes after Bloomberg last week reported that some banks were in talks to provide financing for a $13 billion purchase of the electronic signature firm.

DocuSign (DOCU) shares first surged 12.5% on Dec. 15 when the Wall Street Journal reported the company could go private via a leveraged buyout. The stock had risen 3.5% from the day before the WSJ news was released until Monday.

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DOCU currently held by 200

200d currently = $50.13

[eastunder]

Is Now the Time to Buy DocuSign Stock?
Robert Izquierdo, The Motley Fool
Sat, Feb 24, 20244 min read

KEY POINTS
DocuSign shares dropped after rumors of a takeover bid evaporated.
The company’s financials, such as free cash flow, are strengthening under new CEO Allan Thygesen.
DocuSign is working to expand product offerings beyond its core e-signature platform.

https://finance.yahoo.com/news/now-time-buy-docusign-stock-143500826.html


With over 1.4 million paying customers, DocuSign (NASDAQ: DOCU) is the largest e-signature company in the world. It's estimated to hold a nearly 68% share of the e-signing market.

Even so, its stock is currently well below the 52-week high of $66.98 achieved last March, and down from the more than $60 per share reached in January. The current dip in share price could be a buying opportunity, or a signal to avoid the company. To know which, you have to examine what's going on with DocuSign in more detail.

And now is a good time to do so, since DocuSign is scheduled to release fiscal fourth-quarter earnings on March 7. So let's dive into the company to determine if it's a worthwhile investment.

DocuSign's sales success

DocuSign shares shot up toward the end of 2023 and into 2024 because of news reports that the company was in talks to be acquired. However, no such deal appears to be happening at this time. As a result, DocuSign stock dropped.

Acquisition rumors aside, DocuSign's ability to successfully grow its business is what can drive its share price higher over the long run. The company's sales hit $700.4 million in its fiscal third quarter, ended October 31, representing 9% year-over-year growth. DocuSign's revenue has been on an upward trajectory since its 2018 IPO.

The company's sales gains are expected to continue. DocuSign forecasted fiscal Q4 revenue of at least $696 million, an increase over the prior year's $659.6 million.

Along with revenue growth, DocuSign exited Q3 with net income of $38.8 million. This is a dramatic turnaround from the previous year's $29.9 million net loss.

In fact, through three quarters of fiscal 2024, DocuSign's net income was at $46.7 million, compared to a net loss of $102.3 million in the year-ago period. So it's looking like this could be DocuSign's first year as a profitable company since its founding in 2003.

That's a major milestone, and it happened after DocuSign brought on Allan Thygesen, a former executive at Alphabet's Google, as CEO in September of 2022. In just a year, he helped bring financial health to DocuSign.

DocuSign's transformation under its new CEO
When he took over the CEO spot, Mr. Thygesen acknowledged DocuSign "didn't fully address the changing market dynamics, nor mature our operations and systems sufficiently" in response to the huge demand for online services generated by the COVID-19 pandemic's lockdowns, which dropped off after those lockdowns were removed.

But he has a vision for the company that holds promise and seems achievable. He stated, "We see opportunities beyond the replacement of paper signatures to deliver innovative new experiences and to integrate more deeply with partner applications."

To that end, DocuSign announced a partnership with Facebook parent Meta last November, and continues to deepen its relationship with Microsoft by expanding its e-signature integrations to more products, most recently to Microsoft Power Pages.

Mr. Thygesen mentioned "innovative new experiences," and one of these involves contract lifecycle management (CLM). With CLM, DocuSign's platform handles the entire workflow around business contracts digitally, including document creation and routing contracts for necessary approvals and reviews.

CFO Blake Grayson noted that the company's CLM business saw year-over-year double-digit growth in Q3, although DocuSign doesn't release financial details specific to CLM.

To buy or not to buy DocuSign
Under Allan Thygesen, DocuSign generated record free cash flow (FCF) in Q3, reaching $240.3 million, a significant increase from the prior year's $36.1 million. FCF provides insight into the cash available for DocuSign to invest in its business, pay debt obligations, and repurchase shares. Its strong FCF results allowed the company to buy back 1.8 million shares in Q3.

DocuSign also exited the quarter with a solid balance sheet. Its Q3 total assets were $3.3 billion, compared to $2.4 billion in total liabilities. Its cash and equivalents alone were $1.2 billion.

From a financial perspective, DocuSign is delivering solid results under Mr. Thygesen. Moreover, DocuSign stock's average price target among Wall Street analysts is $59.77, indicating some upside potential from where the stock is at currently.

When you take these factors into consideration, along with the impressive results achieved with Allan Thygesen at the helm and the stock's recent price drop, now looks like a good time to buy DocuSign shares.

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DOCU earnings:

SAN FRANCISCO, March 7, 2024 /PRNewswire/ -- DocuSign, Inc. (NASDAQ: DOCU), which offers the world's #1 e-signature product as part of its industry leading lineup, today announced results for its fourth quarter and fiscal year ended January 31, 2024.

"DocuSign ended Fiscal 2024 with momentum in product innovation, customer growth, and financial performance, including more than doubling free cash flow year-over-year," said Allan Thygesen, CEO of DocuSign. "The agreement management opportunity is massive, and we're excited to deliver category-defining innovation to our 1.5 million customers in Fiscal 2025 and beyond."

Fourth Quarter Financial Highlights

Total revenue was $712.4 million, an increase of 8% year-over-year. Subscription revenue was $695.7 million, an increase of 8% year-over-year. Professional services and other revenue was $16.7 million, an increase of 5% year-over-year.
Billings were $833.1 million, an increase of 13% year-over-year.
GAAP gross margin was 79% for both periods. Non-GAAP gross margin was 82% compared to 83% in the same period last year.
GAAP net income per basic share was $0.13 on 206 million shares outstanding compared to $0.02 on 202 million shares outstanding in the same period last year.
GAAP net income per diluted share was $0.13 on 210 million shares outstanding compared to $0.02 on 206 million shares outstanding in the same period last year.
Non-GAAP net income per diluted share was $0.76 on 210 million shares outstanding compared to $0.65 on 206 million shares outstanding in the same period last year.
Net cash provided by operating activities was $270.7 million compared to $137.1 million in the same period last year.
Free cash flow was $248.6 million compared to $113.0 million in the same period last year.
Cash, cash equivalents, restricted cash and investments were $1.2 billion at the end of the quarter. During the quarter, the company repaid $689.9 million principal amount of our 2024 convertible senior notes.
Fiscal 2024 Financial Highlights

Total revenue was $2.8 billion, an increase of 10% over the prior year. Subscription revenue was $2.7 billion, an increase of 10% over the prior year. Professional services and other revenue was $75.2 million, an increase of 2% year-over-year.
Billings were $2.9 billion, an increase of 9% over the prior year.
GAAP gross margin was 79% for both years. Non-GAAP gross margin was 83% compared to 82% in the prior year.
GAAP net income per basic share was $0.36 on 204 million shares outstanding compared to a loss of $0.49 on 201 million shares outstanding in fiscal 2023.
GAAP net income per diluted share was $0.36 on 209 million shares outstanding compared to a loss of $0.49 on 201 million shares outstanding in fiscal 2023.
Non-GAAP net income per diluted share was $2.98 on 209 million shares outstanding compared to $2.03 on 206 million shares outstanding in fiscal 2023.
A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures and Other Key Metrics."

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DOCU PT's

RBC Raises Price Target on DocuSign to $59 From $50 After 'Solid Quarter,' Says 'Margin Upside Offsets Muted Growth Outlook,' Keeps Sector Perform Rating

Evercore ISI Adjusts DocuSign Price Target to $60 From $55, Maintains In Line Rating

HSBC Adjusts DocuSign Price Target to $52 From $44, Maintains Hold Rating

JPMorgan Adjusts DocuSign Price Target to $50 From $45, Maintains Underweight Rating

Wedbush Raises DocuSign's PT to $65 From $56 After Higher-Than-Expected Fiscal Q4 Results, Maintains Neutral Rating

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DOCU Gap 54.11

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Market Chatter: DocuSign Wants to Stay Public Despite Private Equity Takeover Rumors, CEO Says
08:33:25 AM ET, 05/22/2024 - MT Newswires
08:33 AM EDT, 05/22/2024 (MT Newswires) -- DocuSign (DOCU) wants to remain a public company, Chief Executive Allan Thygesen told CNBC after reports surfaced that the company had drawn takeover interest from private equity firms.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)