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On Friday, Evercore ISI initiated coverage on Docusign Inc. (NASDAQ:DOCU) with an In Line rating and a price target of $100. The firm’s analysts highlighted DocuSign’s solid performance in the fiscal year 2025, with total revenue growth at 9%, surpassing estimates of approximately 7%. Billings growth was also noted at around 11%, which was significantly higher than the anticipated 5%. According to InvestingPro data, DocuSign maintains a "GREAT" financial health score of 3.19, with analysts setting price targets ranging from $70 to $124. The company, currently valued at $15.09 billion, appears undervalued based on InvestingPro’s Fair Value analysis.
DocuSign’s first-quarter and full fiscal year 2026 revenue guidance were slightly below Street estimates, considering a headwind of approximately 170 basis points in the first quarter. This is partly due to the previous leap year and foreign exchange impacts. For the full fiscal year 2026, the company is facing a roughly 70 basis point headwind. Despite these factors, billings guidance for fiscal year 2026 suggests a 7% year-over-year growth, accounting for a 100 basis point foreign exchange headwind and another 100 basis points due to a strategic shift in go-to-market efforts aimed at driving upsell and expansion. The company maintains impressive gross profit margins of 80.16%, and InvestingPro analysis reveals 15 additional key insights about DocuSign’s financial performance and market position.
The company’s gross retention and Net Revenue Retention (NRR) have shown improvement, with NRR reaching 101% in the most recent quarter. NRR is expected to stay relatively flat in the first quarter and then improve modestly throughout the year, supported by continued momentum in Identity Access Management (IAM). Management has indicated that IAM accounted for a low single-digit percentage of subscription revenue in the fourth quarter of 2025 and is expected to grow to a low double-digit percentage by the fourth quarter of 2026.
Evercore ISI views the growth in IAM and the overall ’platformization’ of DocuSign’s services as a strategic move that will contribute to an acceleration in NRR and billings over the course of the year. The firm also observed that while Partner/Sales revenues might decline due to a shift towards the partner channel, DocuSign appears to have a clear path to reaccelerating revenue growth by fiscal year 2027 as the adjusted billings from fiscal year 2026 begin to reflect in revenues.
The analysts concluded that DocuSign’s diverse customer base might be shielding the company from significant macroeconomic headwinds. The company’s strong finish in fiscal year 2025 and the potential for business acceleration in the coming years position DocuSign as a robust small to mid-cap stock idea as the calendar year 2025 progresses. The price target of $100 is based on approximately 6 times the enterprise value to calendar year 2026 sales ratio. Trading at a P/E ratio of 15.3, DocuSign shows promising fundamentals with net income growth expected this year. For a deeper understanding of DocuSign’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which provides detailed analysis of the company’s financial health, market position, and growth potential.
In other recent news, Docusign Inc. reported impressive fiscal fourth-quarter results, surpassing expectations in both revenue and billings. The company achieved a notable 11% year-over-year growth in billings, which exceeded the 5% guidance, and introduced its fiscal year 2026 billing guidance at 7% growth, or 8% on a constant currency basis. Jefferies analyst Brent Thill highlighted Docusign’s subscription revenue growth of 8.9%, outperforming the anticipated 6.8%, and emphasized the company’s strong performance in its Identity and Access Management (IAM) segment. Despite these positive results, Piper Sandler and BofA Securities maintained a cautious stance, with Piper Sandler reiterating a Neutral rating and BofA Securities lowering its price target from $112 to $98 due to valuation concerns.
Morgan Stanley (NYSE:MS) also maintained an Equalweight rating, noting the company’s strong gross retention and IAM billings, while Wolfe Research held a Peerperform rating, acknowledging the company’s solid quarter but expressing caution regarding FY26 guidance. The IAM segment, which now accounts for over 20% of direct new customer deals, is expected to grow significantly, potentially reaching a $320 million annual recurring revenue run rate by FY26. Docusign’s net dollar retention rate improved to 101%, indicating better usage trends and gross retention. The company has set an upbeat subscription and billings guidance for fiscal year 2026, with expectations exceeding the Street’s estimates, and plans to introduce new offerings, including enhancements to IAM and Contract Lifecycle Management, at its upcoming user conference.
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