Shares of DocuSign (DOCU) are up more than 16% in Tuesday morning trading after Zoom (ZM) showing that it made more than four times as much revenue as it did a year ago. Zoom’s earnings, which topped expectations, suggested that technologies enabling remote business functions are still seeing explosive growth due to the pandemic.
DocuSign, which enables electronic signatures on legal documents, is due to report its own results after Thursday’s closing bell. Shares of workplace-messaging company Slack (WORK) is also seeing its stock rise more than 3% in Tuesday’s session. Zoom shares are up more than 45% in the session and they’e gained nearly 600% on the year as the S&P 500 (SPX) has risen 8.6%.
The at-home economy seems to be booming and the price of DOCU has been soaring. Prices need to “catch their breath” and consolidate some of the recent price gains. I would look for some sideways price action and keep in mind that the upcoming earnings report needs to deliver. Longs should risk a close below $225 now.
DocuSign (DOCU) reports earnings on Thursday
DocuSign is expected to report earnings of $0.08/share on $318.37 million in revenue. Meanwhile, the so-called Whisper number is $0.10. The Whisper number is the Street’s unofficial view on earnings.
DocuSign (DOCU) Company Outlook
With the rise of the pandemic, the need to consummate transactions at a distance has never been greater. DocuSign has long been the leader in the e-signature market, with an impressive pedigree to match. The company boasts hundreds of millions of users, with more than 660,000 paying customers. DocuSign also counts 18 of the top 20 global pharmaceutical companies, 10 of the top 15 global financial companies, and seven of the top 10 global technology companies among its customers. As a result, DocuSign controls an estimated 70% of the e-signature market.
That’s not to say the company lacks competition, as a number of high-profile competitors have popped up in recent years. DocuSign competes with pioneers like Adobe‘s Adobe Sign, as well as newer entrants like Dropbox‘s HelloSign, among others, each wanting to carve out a piece of the market for themselves.
It’s important to note that the opportunity for DocuSign is no longer just about facilitating electronic signatures. In early 2019, the company launched the DocuSign Agreement Cloud, a suite of applications and integrations designed to help organizations automate the entire agreement life cycle, including preparing, signing, acting upon, and managing those agreements. Some examples include preparing and managing offer letters to job candidates, managing the process of sales contracts between buyer and seller, and much more.
During the first-quarter conference call, CEO Dan Springer pointed out that digital signatures mark the beginning of a long-term relationship with customers. “Typically, e-signature is the first step that many customers take on their broader digital transformation journey with us,” Springer said. “So from a financial point of view, we believe this surge in e-signature adoption bodes well for future agreement cloud expansion.”
Is DocuSign (DOCU) a reliable investment?
Shares of DocuSign (DOCU) appear to be a very good investment option, the Money Midnight Indicator is expecting its price to increase considerably in the next several months. The majority of the metrics point to this investment being highly attractive.