Disruptive tech firms often observe the identical journey. It begins with sturdy income progress which represents one thing being disrupted and market share being captured. Then, they set up some gross margin cadence which displays the long run potential for profitability. Lastly, they begin realizing constructive working money flows which paves the way in which from progress to worth. An organization with excessive gross margins (80% or increased) and constructive working money flows that sells merchandise/companies to over 1,000,000 purchasers may be very enticing. Why? As a result of they’re a sustainable franchise with established gross sales channels that can be utilized to up promote and cross promote. That’s the enchantment of at the moment’s firm, DocuSign (DOCU).
Issues With DocuSign Inventory
You can not have disruption with out sturdy income progress. What’s sturdy? We think about double-digit progress to be a minimal, which is why DocuSign has us nervous. It’s been nearly two years since we revealed a bit titled, Is It Time to Fear Concerning the Slowdown in DocuSign Inventory? That was adopted by extra considerations voiced final yr round dismal SaaS metrics, three of which we stated have been most vital to observe. From final yr’s piece:
Income progress: Later this yr DocuSign will announce subsequent yr’s steering, maybe on the similar time they launch this yr’s actuals. Any disappointments right here will underscore our considerations.
Web retention price: Has now dropped for eight quarters in a row. That is our greatest concern – current prospects discover rising spend with DocuSign as non-compulsory.
# of Shoppers over 300K: Giant purchasers are spending much less,
