Docusign Shares Surge 28% in 3 Months: Right Moment to Invest?

Shuvra Shankar Dey
4 min read

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Docusign, Inc. DOCU has seen a notable rise in its stock price, soaring 27.9% in the past three months compared with the broader industry’s 7.3% growth.

As of the last trading session, DOCU’s stock closed at $71.78, close to its 52-week high of $73.8. Additionally, it is trading above its 50-day moving average, suggesting a bullish sentiment among investors.

Zacks Investment Research
Zacks Investment Research

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Given the continued strength in DOCU shares, investors might be tempted to buy the stock. But is it still a good time to buy DOCU? Let’s find out.

Docusign's Growth Fueled by Demand

Docusign’s top line is significantly benefiting from continued customer demand for eSignature in a large addressable market. DOCU’s customer base has grown steadily with 1.1 million in fiscal 2022, 1.3 million in fiscal 2023, and 1.5 million in fiscal 2024. Taking the trend into consideration, we can expect this growth to be sustained in the coming years as well. Despite this rising demand, the market for eSignature remains largely untapped. Therefore, Docusign has ample opportunities to expand eSignature across businesses globally which will boost its revenues.

Docusign’s subscription fees account for 97% of the total revenues. DOCU’s subscription fees include the use of its products and access to customer support and the subscriptions generally range from one to three years. A subscription model is very useful for software developers because it stabilizes revenue streams and improves the visibility of cash flows. It also makes expensive software more easily affordable and accessible to companies with limitations on resources, thus expanding the market.

DOCU’s direct and indirect go-to-market initiatives also facilitated growth for commercial and enterprise customers. Numerous customer programs and initiatives have gradually increased subscription revenue growth over time. In fiscal 2024, subscription revenues increased 10%, primarily due to the expansion of revenues from existing customers and new customer additions.

Docusign’s international revenues have increased consistently over the past three years. Its international revenues represented 23%, 25%, and 26% of total revenues in 2023, 2023 and 2024, respectively. DOCU started its international selling efforts in Canada, the U.K., and Australia where it can leverage its core technologies due to similar approaches to e-signature in these countries and the United States. The company has experienced a rise in demand across multiple geographies and is directing its sales and marketing efforts to tap this potential.

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