DOCUSIGN, INC. (DOCU): what the price requires
At today's price, DOCUSIGN, INC. (DOCU) is priced for today's economics sustained for ~11.5 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Source: https://boothcheck.com/report/DOCU
Headline
| Field | Value |
|---|---|
| Ticker | DOCU |
| Company | DOCUSIGN, INC. |
| Current price | $49.44/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 6.4% |
| Operating margin today | 10.0% |
| Margin compression implied | -3.6pp |
| Must persist for | 11.5y |
| Multiple paid | 28x operating income |
The operating-margin requirement is derived from the framework's value band at year 8, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 12.4% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.1 years.
Reconcile: at the x-ray's 9.3% required return this reads ~5.6 years; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| cohort percentile (of 178 peers) | 51 |
| sustained it ~10 years at this level | 15% |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.76x | 5 | expensive |
| Earnings | 2.37x | 4 | expensive |
| Relative | 0.82x | 3 | justifies |
| Growth | 0.66x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.8%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $143.80 | 0.34x | yes | FCF base $1.2B, growth 8% (input: historical growth), terminal g 4.0%, WACC 8.8%, 6yr projection |
| DCF Exit Multiple | Growth | $75.32 | 0.66x | yes | Exit EV/EBITDA: 18.6x / 20.6x / 22.6x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $60.42 | 0.82x | yes | P/E 35x (static sector reference · 2026-04), scenarios: 29.1x / 35.0x / 40.9x (bear / base = reference held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $17.34 | 2.85x | yes | BV/sh $9.26, ROE (TTM) 17.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $23.42 | 2.11x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $41.70 | 1.19x | yes | Rev $3.3B, growth 8% (input: historical growth; tapered), Terminal P/S: 2.5x / 3.0x / 3.5x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $4.97 | 9.95x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.12B × (1−34%) / WACC 8.8% → EPV (no growth) |
| Residual Income | Asset | $23.47 | 2.11x | yes | BV $9.26 + 5yr PV of (ROE (TTM) 17.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $17.91 | 2.76x | yes | √(22.5 × EPS $1.54 × BVPS $9.26) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $59.94 | 0.82x | yes | EBITDA $0.47B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $62.09 | 0.80x | yes | FCF $1120.2M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $28.08 | 1.76x | yes | SBC-adj FCF $0.50B (FCF $1.12B − SBC $0.62B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $1.29 | 38.33x | yes | EPS $1.54 × (8.5 + 2×-4.9%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $4.48 | 11.04x | yes | BV $9.26 × (ROIC 4.3% / WACC 8.8%) |
| P/Sales Sector | Relative | $133.80 | 0.37x | yes | Revenue $3.29B × sector P/S 8.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $16.65 | 2.97x | yes | EPS $1.54 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $814.2m |
| Net debt / NOPAT (after-tax) | -3.81x (net cash) |
| Net debt / operating income (pre-tax) | -2.53x (net cash) |
| Interest coverage | 128.3x |
| Share count CAGR (buyback) | -0.4% |
| Burning cash | no |
Bullet Takeaways
DocuSign's revenue growth has settled near 8%, but its profitability has been climbing: operating margin around 29%, free-cash-flow margin near 30%, and over $1.1 billion of trailing free cash flow. The company is debt-free with about $814 million of cash.
At about $43 the price embeds roughly a decade of sustained cash flow at about 25 times operating income; the relative-multiple and growth-DCF methods support it while asset and earnings-power frames call it expensive.
The whole thesis hinges on the new Intelligent Agreement Management platform reaccelerating growth. IAM passed 10,000 customers, but billings have run soft and AI-era competition from Adobe and others is the key risk. The company is buying back stock aggressively, with billions added to its authorization.
Bull Case
The trajectory worth watching at DocuSign is profitability, and it has been moving the right way even as revenue growth cooled. Operating margin has expanded to around 29%, free-cash-flow margin reached about 30%, and the company generated more than $1.1 billion of trailing free cash flow. That is a mature software franchise harvesting the cash from a product that became a verb, e-signature, while staying debt-free with roughly $814 million of cash. The cash generation funds an aggressive buyback: the board added $1 billion to the repurchase program in the spring and later raised the authorization by another $2 billion, retiring shares while the stock trades at a depressed multiple.
The growth lever is the pivot to Intelligent Agreement Management, the company's attempt to expand from signing documents to managing the entire agreement lifecycle. DocuSign frames IAM in its filings as a new software category without incumbent competitors, even as elements of it compete with contract-lifecycle and analytics tools (DocuSign FY2025 10-K, accession 0001261333-25-000024). The early traction is real: IAM surpassed 10,000 customers, self-serve digital revenue is contributing, and the company has built AI features into the platform, including integrations aimed at agreement workflows. If IAM converts even a fraction of DocuSign's enormous installed base of e-signature customers to the higher-value platform, it reaccelerates growth on top of the existing cash machine.
The valuation gives the pivot a reasonable runway to work. A 17.3% return on equity and the towering free-cash-flow yield mean the downside is cushioned by real cash, not just a story. The bull thesis is a profitable, cash-rich category leader buying back stock while it retools for a larger agreement-management opportunity, with the AI era a chance to expand the product rather than only a threat.
Bear Case
The fragile assumption baked into the price is that Intelligent Agreement Management reaccelerates growth before the core e-signature business matures into a low-growth utility. Revenue growth has stalled near 8%, billings have come in soft, slightly below guidance on lower-than-expected early renewals, and the company itself made go-to-market changes that it warned would depress early-renewal billings. The price still implies roughly a decade of sustained cash flow, which only holds if IAM does the heavy lifting. IAM passing 10,000 customers is encouraging, but it is early, and a new category that the company concedes overlaps with existing contract-management tools has to prove it can grow faster than the legacy signature product is decelerating.
The competitive threat is the most specific risk, and it is intensifying in the AI era. DocuSign's own filings name Adobe Sign as its primary global e-signature competitor (DocuSign FY2025 10-K, accession 0001261333-25-000024), and Adobe, Salesforce, and Microsoft are all pushing AI into document and agreement workflows from positions of strength in adjacent software. AI-native rivals add another vector, and the worry that generative AI commoditizes the simpler parts of the signing and document workflow is exactly why a Citi downgrade in April flagged stalled growth and mounting competition. If AI lets larger platforms bundle agreement features into suites customers already buy, DocuSign's pricing power and its IAM differentiation both come under pressure.
The valuation already prices in the turnaround working. The asset-based and earnings-power methods land in the single digits to mid-teens, well below the price, so the stock is not cheap on what it earns at zero growth; only the growth-dependent and relative methods reach it. Heavy stock-based compensation, more than $600 million a year, means reported free cash flow overstates the cash truly available to shareholders, and the SBC-adjusted FCF-yield method lands near $28, below the price. The buybacks help offset dilution but also signal that management sees the stock as cheap, which is itself a tacit admission that growth is the problem. The bet at $43 (June 27, 2026) is that IAM reignites the top line against AI-armed incumbents, and the bear case is that a stalled-growth software company with a new-category pivot and strong competitors is a value trap dressed as a turnaround.
Valuation
At about $43 the price inverts on a duration basis: it implies roughly ten years of sustained cash flow at about 25 times operating income to justify the level. The composite read is elevated, with a fade flag, and the solve runs at a 12.4% cost of capital. The implied margin assumption fades from today's 10.6% toward the mid-single digits, so the price is leaning on durable cash generation rather than aggressive margin expansion.
The model X-ray splits between cautious and optimistic. The asset-based methods land in the $17 to $23 range off a $9.26 book value, and the earnings-power value at zero growth is only about $5, because a 10.6% operating margin produces little value without growth. The relative methods reach higher, with the sector P/E near $60 and EV/EBITDA near $60, and the FCF-yield method near $62 on the large reported free cash flow, though the SBC-adjusted version drops to about $28 once the heavy stock compensation is netted out. The growth methods straddle, with the perpetual-growth DCF high and the future-market-cap projection near $37.
The pattern is a cash-rich software company priced above its no-growth value but supported by its multiples and forward cash flow. The price sits above the reverse-DCF base, so it is not obviously cheap, and the gap between reported and SBC-adjusted free cash flow is the key caveat: the headline cash flow looks dominant, but a meaningful slice is consumed by stock compensation. The bet at $43 is that IAM reaccelerates growth and that the real, dilution-adjusted cash flow justifies the duration the price assumes, not that the shares are cheap on a conservative reading, where they are fully valued.
Catalysts
The recent prints framed the debate. In the first quarter of fiscal 2026, revenue grew 8% to $764 million with operating margin around 29.5% and free-cash-flow margin near 30%, but billings grew only 4% and came in slightly below guidance on lower early renewals; the company surpassed 10,000 IAM customers and added $1 billion to its buyback. Full fiscal 2026 revenue reached about $3.22 billion, up 8%, with fourth-quarter revenue of $836.9 million, and the board added a further $2 billion to the repurchase authorization. Citi downgraded the stock to Neutral in April, citing stalled growth and competition.
The forward catalysts center on the IAM ramp and the AI-era competitive response. The company has rolled out AI agreement-workflow features and new integrations, and the key question is whether IAM adoption converts the large e-signature base fast enough to reaccelerate revenue. The watch items are billings growth and net retention quarter to quarter, IAM customer and revenue contribution, the competitive moves from Adobe, Salesforce, and Microsoft as they push AI into agreement workflows, the pace of buybacks against the multibillion-dollar authorization, and the gap between reported and stock-compensation-adjusted free cash flow. Analysts hold a Hold consensus with a wide range of targets.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- ADBE (ADOBE INC.)
- FY2025 10-K: …significance to us. NOTE 2. REVENUE Segment Information We report segment information based on the "management" approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments. Our Chief Executive Officer,…
- FY2025 10-K: …or operational restrictions or other structural or behavioral remedies) that could limit the anticipated benefits of the transaction; • entry into markets in which we have minimal prior experience and where competitors in such markets have stronger market positions; • inability to retain personnel, key customers,…
- DBX (Dropbox, Inc.)
- FY2025 10-K: …expenditures and the related depreciation expense, or other increases in our infrastructure costs, as well as revenue fluctuations. We expect gross margin to remain relatively constant in both the near term and long term. Operating expenses Research and development . Our research and development expenses consist…
- FY2025 10-K: …platform to assure its compatibility with that of other third parties following development changes. If we are unable to ensure compatibility of our platform with desired third-party services, our business may be adversely impacted. In addition, several of our competitors own, develop, operate, or distribute…
- NOW (ServiceNow, Inc.)
- FY2025 10-K: …of record" operators may attempt to create technology solutions or other mechanisms that would prevent our systems from integrating with theirs. They may create pricing pressures by reducing the price of competing products, services or subscriptions or bundling their offerings, causing our offerings to appear…
- FY2025 10-K: …adapt how we offer our products in response to rapidly evolving technological changes and in the midst of an intensely competitive market may harm our competitive position and business prospects. We compete in markets that evolve rapidly. The pace of innovation will continue to accelerate as customers recognize the…
- OKTA (Okta Inc)
- FY2025 10-K: …especially from larger, well-established companies, and we may lack sufficient financial or other resources to maintain or improve our competitive position. The markets for our solutions are rapidly evolving, highly competitive, and subject to shifting customer needs and frequent introductions of new technologies. As…
- FY2025 10-K: …that customers can use to build their own identity solutions. Our competitors vary in size and in the breadth and scope of the products and services offered. However, certain of our 12 competitors have substantial competitive advantages, such as significantly greater financial, technical, sales and marketing,…
- FRSH (Freshworks Inc.)
- FY2025 10-K: …in a fiercely competitive environment; • pricing pressure as a result of competition or otherwise; • seasonal buying patterns for software spending; • declines or increases in the values of foreign currencies, primarily the Indian rupee, British pound, and euro, relative to the U.S. dollar; • general economic…
- FY2025 10-K: …infrastructure, customer support, and professional services organizations, as well as the amortization of costs associated with capitalized internal-use software. 54 Table of Contents Overhead Allocation We allocate shared costs, such as facilities costs (including rent, utilities, and depreciation on capital…
- PCOR (Procore Technologies, Inc.)
- FY2025 10-K: …their needs through focus groups at our innovation labs, trade shows, and conferences (including Groundbreak), and with customers and collaborators on the jobsite. Our Competition The market for construction management software is competitive and rapidly evolving. We believe the market is in its early phases of…
- FY2025 10-K: …commissions, and bonuses. Additionally, cost of revenue includes non-personnel-related expenses, such as third-party hosting costs, amortization of capitalized software development costs related to our platform, amortization of acquired technology intangible assets, software license fees, and allocated overhead. We…
- BL (BlackLine, Inc.)
- FY2025 10-K: …or at all. Our business is substantially dependent on enterprises recognizing that accounting errors and inefficiencies are pervasive and are not effectively addressed by legacy solutions. Our ability to accelerate or grow sales is dependent on customers continuing to invest in work transformation. Deterioration in…
- FY2025 10-K: …platform. In the future, a competitor offering ERP software could include a free service similar to ours as part of its standard offerings, may offer a free standalone version of a service similar to ours, or may limit our ability to access the data housed within the ERP that is necessary for our customers to realize…
- MANH (MANHATTAN ASSOCIATES, INC.)
- FY2025 10-K: …executives and employees. We face significant competition for individuals with the skills required to perform the services we offer, and thus we may encounter increased compensation costs that are not offset by increased revenue. In the broader technology industry in which we compete for talented hires, there is…
- FY2025 10-K: …that require special skills. We also use third-party translation companies to localize our application software into various languages including Chinese, French, Japanese and Spanish. Competition Our solutions are solely focused on enterprise commerce capabilities. Our solutions help global distributors, wholesalers,…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.