William Blair maintains Market Perform on DocuSign stock

Friday - Analysts at William Blair have maintained a Market Perform rating on DocuSign Inc . (NASDAQ:DOCU) following the company’s fourth-quarter earnings release. With a market capitalization of $15.09 billion and impressive gross profit margins of 80.16%, DocuSign’s results exceeded consensus estimates on several key metrics, including a 9% growth in subscription revenue that surpassed expectations by 180 basis points. The company also saw an acceleration in billings growth and strong adoption of its Identity Authentication Management (IAM) platform. According to InvestingPro data, the company maintains strong financial fundamentals with 14 additional key insights available to subscribers.

IAM, which has only recently become available to enterprise customers, accounted for 20% of direct new customer deals during the quarter. DocuSign is experiencing a positive reception to the new platform with little resistance to the price increase associated with it. Although it is still early days for enterprise adoption, management is optimistic about the monetization of IAM, particularly from the commercial segment, expecting it to contribute a low-double-digit percentage to subscription revenue by the end of fiscal 2026. InvestingPro analysis shows the company maintains a "GREAT" overall financial health score of 3.19, suggesting strong fundamentals to support this growth initiative.

DocuSign is also adjusting its go-to-market strategy to prioritize IAM deals. This includes transitioning smaller accounts to a self-serve model and leveraging its partner network to drive IAM activity. Despite some international headwinds, the North American business has shown solid improvements, and the overall macro environment remains stable with consistent consumption trends.

For fiscal 2026, DocuSign has projected total revenue and subscription revenue growth of 5% and 6%, respectively, which is slightly below the consensus forecast of 7%. The Net Revenue Retention (NRR) rate is expected to be flat in the first quarter but should improve throughout the year, aided by better gross retention and the addition of IAM upsell deals. Additionally, an acceleration in billing growth to 7% is anticipated, which is expected to more significantly impact revenue growth in fiscal 2027. William Blair’s analysts believe that while it is early in the process, DocuSign is effectively executing on its IAM strategy and views it as a potential growth driver for the company in the coming years. Trading at a P/E ratio of 15.3, InvestingPro analysis indicates the stock is currently undervalued, with comprehensive insights and a detailed Pro Research Report available to subscribers.

In other recent news, Docusign Inc. reported strong fourth-quarter results, exceeding expectations in both revenue and billings. The company’s total revenue grew by 9%, surpassing the anticipated 6.8%, while subscription revenue increased by 8.9%, also above estimates. Billings surged by 10.8%, driven by early renewals and the strength of the Identity Access Management (IAM) segment. For fiscal year 2026, Docusign has provided guidance for subscription revenue between $3,062 million and $3,074 million, and billings between $3,300 million and $3,354 million, both exceeding the Street’s estimates.

Analysts have varied perspectives on Docusign’s outlook. Jefferies maintains a Buy rating with a $115 target, citing strong fourth-quarter performance and optimism about future growth. Meanwhile, Piper Sandler holds a Neutral rating with a $90 target, recognizing the solid results but expressing caution due to macroeconomic uncertainties. Morgan Stanley (NYSE:MS) also maintains an Equalweight rating with a $97 target, noting that the company’s FY26 billings guidance exceeds consensus estimates.

Wells Fargo (NYSE:WFC) has kept an Underweight rating with a $73 target, pointing to challenges in achieving growth acceleration. Evercore ISI initiated coverage with an In Line rating and a $100 target, observing Docusign’s solid fiscal year 2025 performance and potential for future revenue acceleration. These recent developments reflect a range of analyst opinions on Docusign’s financial health and strategic direction.

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