DocuSign Earnings: Impressive Margin Expansion Alongside Continued Platform Development Efforts

Narrow-moat DocuSign's fourth quarter was strong, with both revenue and non-GAAP operating margin exceeding our expectations. Management’s fiscal 2025 targets were higher than our initial estimates, as the firm expects an uptick in subscriptions thanks to a stabilizing environment, as well as margin expansion from recent restructuring efforts. We are encouraged by DocuSign’s focus on broadening its capabilities beyond its flagship eSignature offering, such as contract lifecycle management, WhatsApp integration, and international expansion, which we expect to be fundamental in driving growth. Given our increased near-term outlook and expectations for a modestly higher margin profile in the medium term, we raise our fair value estimate to $80 per share from $74. While we view shares as currently attractive for long-term investors, we continue to prefer some of our wide-moat names for their more consistent growth profiles.