10. Docusign Inc. (NASDAQ:DOCU)
Market Capitalization as of September 13: $11.49 billion
Number of Hedge Fund Holders: 44
Docusign Inc. (NASDAQ:DOCU) provides products for organizations to manage electronic agreements with electronic signatures on different devices, streamlining workflows and reducing paper consumption. Its software is used in industries like legal, real estate, human resources, and finance, with ~1.5 million clients in 180 countries.
The company launched the first version of its Intelligent Agreement Management (IAM) platform in Q2, which is a rather significant release in its history as it has the potential to address the $2 trillion in lost economic value organizations face when managing agreements.
IAM was introduced to small and mid-sized commercial customers in the US, Canada, and Australia, and its training for salesforce teams is a Q3 focus.
In the second quarter of this year, revenue for the company was $736.03 million, recording an improvement of 7.03%. The earnings per share were $0.97. Both metrics beat Street estimates. This strong performance reflects the company’s focus on enhancing product innovation, evolving omnichannel go-to-market strategies, and boosting operational efficiency.
Direct customer growth remained strong, up 12% year-over-year. Large-value customers with over $300,000 in ACV saw modest improvement. Contract Lifecycle Management (CLM) revenue growth exceeded overall growth, while the company strengthened partnerships with Microsoft, SAP, and Salesforce, with co-selling through the Azure Marketplace and Copilot integrations.
Docusign Inc.’s (NASDAQ:DOCU) early results with its new IAM platform are promising, with higher win rates, larger deal sizes, and faster time to close. Customer adoption is increasing month-over-month, and the company is focused on continuously enhancing IAM’s value to more customers. This positions the company for long-term success.
Polen Focus Growth Strategy made the following comment about DocuSign, Inc. (NASDAQ:DOCU) in its Q3 2023 investor letter:
“We eliminated our remaining 1% position in DocuSign, Inc. (NASDAQ:DOCU). While the company remains the leader by a wide margin at the higher end of the digital signature market, it has become clearer to us that its addressable e-signature market is likely significantly smaller than we had believed or will take much longer to develop than we had anticipated. The lower end of the market is highly competitive. We were patient with our very small position. Impressive new management joined from Google and The Trade Desk in hopes of them being able to reinvigorate growth in core e-signature. Still, it does not appear that this is likely anytime soon with new management articulating that the company will need to develop new products to achieve higher levels of e-signature growth despite what we considered to be low penetration rates within existing e-signature products. As such, we used the proceeds of our sale as part of the funding for our Novo position.”
