Posted on Monday, Jul 2nd 2018
Electronic signature company and Billion Dollar Unicorn DocuSign went public in April on the NASDAQ exchange under the ticker DOCU. It recently announced strong results in its first earnings report as a public company.
DocuSign was founded in 2003 by Tom Gosner to build a platform for automating the agreement processes that need physical signatures. Today, its platform is available in multiple languages and it has over 400,000 paying customers and hundreds of millions of users. Its client list includes names like Salesforce, T-Mobile, Caldwell Banker Elite, Randstad, and Comcast.
DocuSign was initially set up to focus on the SMB segment, especially the real estate one. Over the years though, it has expanded its offerings to the enterprise segment as well. Last year, it launched a payments platform that embeds the payment processing capabilities for its enterprise users. It offers more than 300 off-the-shelf, prebuilt integrations with the applications offered by Google, NetSuite, Oracle, Salesforce, SAP, SAP SuccessFactors, and Workday so that they can create, sign, send, and manage agreements from directly within these applications.
DocuSign charges a subscription fee ranging from $10 per month for individuals to $40 per user per month or $480 per year for businesses. Since its inception, over 650 million Successful Transactions have been completed on its platform.
DocuSign reported first quarter 37% growth in revenue to $155.8 million. GAAP net loss was $270.68 million or $7.46 a share compared with losses of $19.4 million, or $0.66 a share a year ago. Net loss including a $262.8 million stock-based compensation charge. Non-GAAP EPS was $0.01 compared to a non-GAAP net loss per share of $0.30 a year ago. Analysts expected loss of $0.07 per share on revenue of $146.2 million.
GAAP gross margin was 63%, compared to 76% in the same period last year. Cash, cash equivalents and restricted cash was $269.8 million at the end of the quarter.
Subscription revenue grew 39% to $148.2 million. Professional services and other revenue grew 14% to $7.6 million. Billings were $168.9 million, an increase of 33% year-over-year.
First quarter revenue growth was driven by targeted international expansion. International business now accounts for $26 million or about 17% of overall sales, a growth of 52%.
As per its SEC filing, revenue for the year ended January 31, 2017 was $381.5 million, up 52% from $250.5 million in 2016. Net loss narrowed from $122.6 million in 2016 to $115.4 million in 2017. In the years ended January 31, 2016 and 2017, international revenues represented 16% and 17% of total revenues, respectively.
For the second quarter, the company expects $157-160 million in revenue, beating analyst estimate of $151.5 million. For the full 2019 fiscal year, it expects $652-658 million in revenue, above the analyst estimates of $627.6 million.
DocuSign’s Competition and Acquisitions
Its primary global competitor currently is Adobe, which began to offer an electronic signature solution following its acquisition of EchoSign in 2011 for an estimated $400 million. Other niche competitors include Nitro Cloud, HelloSign, Authentisign, SSL Europa France SAS, AssureSign, Sertifi, and Gemalto.
Last year, DocuSign acquired the IP rights and hire employees from Seattle-based machine learning and data platform startup Appuri for an undisclosed sum. Prior to the acquisition, DocuSign and Appuri were working together on a pilot project to integrate Appuri’s machine learning and AI technology into the DocuSign platform. Appuri’s product is a customer engagement platform that helps automate engagement. It is powered by audience segmentation technology to deliver targeted marketing messages and product recommendations.
The stock is currently trading at $53.04 with a market cap of $9 billion. Its stock had climbed to $39.10 on its first day of trading, well above its listing price of $26 to $28. The company had sold 19,314,182 shares of common stock, raising net proceeds of $524.8 million in its IPO. The company plans to use the funds for its international expansion.
Prior to going public, DocuSign was venture funded with $513.3 million in funding raised from investors including Dell Ventures, Intel Capital, Bain Capital Ventures, Founders Circle Capital, Sands Capital Ventures, Wellington Management, Wasatch Advisors, Iconiq Capital, Recruit Strategic Partners, BBVA Ventures, Salesforce, Telstra, Visa, MKI, EquityZen, SharesPost Investment Management, Cross Creek Advisors, Sigma Partners, Comcast Ventures, Kleiner Perkins Caufield & Byers, Accel Partners, Sapphire Ventures, Google Ventures, Frazier Technology Ventures, and Scale Venture Partners. Its last round of funding was held in May 2015 when it raised $233 million at a $3 billion valuation.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns.
This segment is a part in the series : Billion Dollar Unicorns
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