4. Docusign Inc. (NASDAQ:DOCU)
5-Year Net Income CAGR: 28.13%
TTM Net Profit Margin: 34.55%
Number of Hedge Fund Holders: 44
Docusign Inc. (NASDAQ:DOCU) is a software company that provides products for organizations to manage electronic agreements with electronic signatures on different devices, offering a cloud-based platform that enables businesses to streamline their document workflows, manage contracts, and automate various processes.
80% of the company is owned by institutional investors, which can be a sign of confidence in the company’s future. However, it also means the stock price could be more volatile depending on their trading decisions. While no single investor holds a majority stake, the top 23 shareholders control half the company. There’s also 5% insider ownership.
Revenue in FQ2 2025 improved 7.03% year-over-year, driven by a focus on product innovation, improved sales strategies, and operational efficiency. The customer base continued to grow, with a 12% increase in direct customers. Large-value customers also saw modest growth. Contract Lifecycle Management (CLM) revenue grew at a faster pace than overall revenue, and the company strengthened partnerships with major technology providers like Microsoft, SAP, and Salesforce.
In the second quarter, the company’s new Intelligent Agreement Management (IAM) platform was launched. It has the potential to address significant economic losses faced by organizations when managing agreements. IAM was initially introduced to small and mid-sized commercial customers in the US, Canada, and Australia, with training for salesforce teams planned for FQ3. Early results for IAM have been promising, with higher win rates, larger deal sizes, and faster closing times. Customer adoption is increasing steadily.
Docusign Inc. (NASDAQ:DOCU) remains a strong player in the electronic signature market, with a dominant market position and a growing demand for digital transformation. Despite challenges posed by increased competition and a post-pandemic slowdown, the company’s strong financial health, expanding use cases, and focus on innovation position it 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.”
