DocuSign (DOCU) just posted a good quarter- is it a buy?
DocuSign Q4 FY1/24 Earnings Review
DocuSign's revenue growth continues to slow, but its EBITDA and unlevered pretax FCF margins are improving.
The company's balance sheet is also strengthening, now with around $1.2bn net cash. Valuation is inexpensive.
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Too Boring, Nobody Is Paying Attention
DocuSign ($DOCU) is a busted flush, as everybody knows. Adobe is eating its lunch from above and myriad low-cost point-solution vendors are nipping at its heels from below. The company just failed in its quest to be acquired by a deep-pocketed friend, and all in all it’s not looking good for this washed-up has-been coulda-been software company.
Well, maybe.
The quarter just printed was pretty good. Here’s the headline numbers.
Revenue growth slowed a little, to +8% on the quarter and +10% on a TTM vs PY basis. The rate of decline in growth seems to be slowing, but we’ll only know once it actually bottoms out.
TTM EBITDA margins are climbing very nicely, from +23% to +27% in the space of four quarters.
TTM unlevered pretax FCF margins are doing even better, from +9% in the April 2023 quarter to +22% just now.
The balance sheet now features a little shy of $1.2bn in net cash, up from $700m in the April quarter.
Read on to get our valuation analysis, our take on the stock chart, and the full set of fundamentals. (The full text below is available to our paying Inner Circle and Tech Select Newsletter members.)
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