DocuSign's COVID-19 Quarantine Benefits Could Last Longer, But Not Enough To Move BofA From Sidelines

DocuSign Inc DOCU delivered upbeat first-quarter results, with strength across the board, driven by shelter-in-place orders boosting customer adoption of its e-signature solutions, according to BofA Securities.

The DocuSign Analyst

Kash Rangan maintained a Neutral rating for DocuSign, raising the price target from $80 to $165.

The DocuSign Thesis

DocuSign reported revenue growth of 39% and billings growth of 59%, markedly higher than BofA’s estimates of 30% and 24% respectively, Rangan said in the note.

He added that the quarter was driven by accelerated adoption of the company’s e-signature offering from a broad range of industries as well as a high dollar net retention rate of 119%.

DocuSign exhibited strong execution in the quarter, with net new customer additions growing by a whopping 72,000 to 661,000. The analyst mentioned the company addresses a relatively nascent market and faces competitive risks.

Management raised the total revenue and billings guidance for fiscal 2021 from $1.27 billion to $1.32 billion and from $1.44 billion to $1.53 billion, respectively, at the mid-point, as heightened demand for e-signature is expected to continue.

“We recognize COVID benefits, but remain cautious on lower margin potential vs best in class SaaS companies,” Rangan wrote.

DOCU Price Action

Shares of DocuSign fell about 1.56% to $137.88 at the time of publication Friday.