DocuSign's (NASDAQ:DOCU) Q4: Beats On Revenue, Stock Jumps 16.9%

Petr Huřťák /
2024/03/07 4:14 pm EST

E-signature company DocuSign (DOCU) announced better-than-expected results in Q4 FY2024, with revenue up 8% year on year to $712.4 million. The company also expects next quarter's revenue to be around $706 million, slightly above analysts' estimates. It made a non-GAAP profit of $0.76 per share, improving from its profit of $0.65 per share in the same quarter last year.

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DocuSign (DOCU) Q4 FY2024 Highlights:

  • Revenue: $712.4 million vs analyst estimates of $699.4 million (1.9% beat)
  • EPS (non-GAAP): $0.76 vs analyst estimates of $0.65 (17.5% beat)
  • Revenue Guidance for Q1 2025 is $706 million at the midpoint, above analyst estimates of $700.1 million
  • Management's revenue guidance for the upcoming financial year 2025 is $2.92 billion at the midpoint, in line with analyst expectations and implying 5.8% growth (vs 9.8% in FY2024)
  • Free Cash Flow of $248.6 million, similar to the previous quarter
  • Gross Margin (GAAP): 79.2%, in line with the same quarter last year
  • Market Capitalization: $10.7 billion

"DocuSign ended Fiscal 2024 with momentum in product innovation, customer growth, and financial performance, including more than doubling free cash flow year-over-year," said Allan Thygesen, CEO of DocuSign.

Founded by Seattle-based entrepreneur Tom Gonser, DocuSign (NASDAQ:DOCU) is the pioneer of e-signature and offers software as a service that allows people and organisations to sign legally binding documents electronically.

Document Management

The catch phrase "digital transformation" originally referred to the digitization of documents within enterprises. The growth of digital documents has spurred an explosion of collaboration within and between businesses, which in turn is driving the demand for e-signature and content management platforms.

Sales Growth

As you can see below, DocuSign's revenue growth has been mediocre over the last two years, growing from $580.8 million in Q4 FY2022 to $712.4 million this quarter.

DocuSign Total Revenue

DocuSign's quarterly revenue was only up 8% year on year, which might disappoint some shareholders. Looking at the last two quarters, we can see that revenue increased by $11.97 million in Q4 compared to $12.73 million in Q3 2024. We'd prefer see growing absolute levels of quarter on quarter revenue gains.

Next quarter's guidance suggests that DocuSign is expecting revenue to grow 6.7% year on year to $706 million, slowing down from the 12.3% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $2.92 billion at the midpoint, growing 5.8% year on year compared to the 9.8% increase in FY2024.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. DocuSign's free cash flow came in at $248.6 million in Q4, up 120% year on year.

DocuSign Free Cash Flow

DocuSign has generated $887.1 million in free cash flow over the last 12 months, an eye-popping 32.1% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.

Key Takeaways from DocuSign's Q4 Results

DocuSign delivered impressive free cash flow in Q$ and revenue guidance slightly exceeded estimates. Even though guidance suggests a slowdown in growth this quarter's results seemed fairly positive. The stock is up 16.9% after reporting and currently trades at $62.65 per share.

DocuSign may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.