DOCU · DocuSign
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $89.77
Note written ·
Price against the kill line
10.0% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $89.77, on record since 11 November 2026. The shares are up 35.0% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $89.77, clear of the 52-week intraday high of $85.90 set on 26 October 2026, would show the shares leading the S&P 500. Fiscal third-quarter revenue above the $890 million top of guidance with fiscal 2027 ARR growth guidance raised above 9.00% would also prove the call wrong.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 31 July 2026, filed 4 September 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 876
- Revenue, change on a year (%)
- +9.4
- Gross margin (%)
- 79.7
- Operating margin (%)
- 13.4
- Free cash flow, four quarters ($M)
- 1,198
- Price to earnings (×)
- 45.7
- Free-cash-flow yield (%)
- 7.9
All filed numbers
What DocuSign reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 876 | +9.4 | 79.7 | 13.4 |
| first filed | 830 | +8.7 | 79.4 | 13.4 |
| first filed | 837 | +7.8 | 79.7 | 10.5 |
| first filed | 818 | +8.4 | 79.2 | 10.4 |
| first filed | 801 | +8.8 | 79.3 | 8.1 |
| first filed | 764 | +7.6 | 79.4 | 7.9 |
| Pre-tax income ($M) | 125 |
| Net income ($M) four quarters: 330 | 77.7 |
| Diluted shares, change on a year (%) against the quarter to 31 July 2025 | −8.5 |
| Operating cash flow ($M) | 1,324 |
| Capital spending ($M) | 125 |
| Free cash flow ($M) | 1,198 |
| Cash and short-term investments ($M) | 528 |
| Debt ($M) | Not available |
| Net cash, cash less debt ($M) | Not available |
| Deferred revenue ($M) +9.6% on a year | 1,604 |
| Backlog, orders not yet delivered ($M) 0.0% on a year | 2,300 |
| Receivables ($M) | 371 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 1,719 |
| Market value ($M) | 15,094 |
| Enterprise value, market value plus net debt ($M) | Not available |
| Enterprise value to sales (×) | Not available |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | 45.7 |
| Price to book value (×) | 8.8 |
| Free-cash-flow yield (%) | 7.9 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 6.4% of shares outstanding sold short, 4.5 days of average trading to cover, +4.4% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $10.5M |
| 12 monthsfrom | $0 | $23.4M |
The thesis
DocuSign shares are more likely to lag the S&P 500 over the next three months. At $80.15 they trade above the analyst targets set after the September report, while company revenue is still guided to grow about 9%. The fiscal third-quarter 2027 report, expected in early December 2026, settles it: Intelligent Agreement Management (IAM) has to be tracking toward 18%–19% of annual recurring revenue (ARR) by year-end.
The case for the business is real. IAM was 15.1% of ARR at the 31 July 2026 quarter-end, up from 12.6% at 30 April 2026, according to DocuSign's 3 September 2026 results release. Management expects about 18%–19% when the fiscal year ends on 31 January 2027. Since then DocuSign has added SAP as a reseller (26 October 2026) and agreed to buy Suplari (3 November 2026).
The price already reflects much of that. The shares closed at $80.15 on 11 November 2026, up 25.1% over three months. That is above the $75 targets Morgan Stanley and Piper Sandler set on 4 September 2026, for a company guiding fiscal 2027 revenue to $3,499 million–$3,507 million, about 9% growth at the midpoint. The rating is Low because a report that only meets guidance leaves little room above those targets.
Bullish and bearish views on DocuSign, Inc.
The bull case on DocuSign, Inc. (DOCU), in brief: SAP adds a large sales channel. The bear case: the shares sit above post-report targets.
Bull case
- SAP adds a large sales channel. On 26 October 2026 DocuSign and SAP said SAP would sell Docusign IAM as SAP-branded solution extensions inside SAP Sales Cloud and SuccessFactors. This followed the 13 October 2026 expansion with Salesforce and Slack.
- IAM is gaining revenue mix. IAM rose to 15.1% of ARR at 31 July 2026 from 12.6% three months earlier, per the 3 September 2026 release. The 18%–19% year-end target needs another step up in the quarter ended 31 October 2026.
- Guidance went up in September. On 3 September 2026 DocuSign raised fiscal 2027 ARR growth guidance to 8.50%–9.00%. It guided third-quarter revenue to $886 million–$890 million and non-GAAP operating margin to 31.3%–31.7%.
- Cash flow funds large buybacks. Free cash flow was $295.8 million in the quarter ended 31 July 2026, a 34% margin, up from $217.6 million a year earlier. DocuSign repurchased $306.5 million of stock in that quarter and $624.0 million year to date, per the 3 September 2026 release.
- New products and a procurement use case. The company said its PDF Editor desktop app went on sale to IAM and eSignature customers on 2 November 2026. The Suplari deal, announced 3 November 2026 with undisclosed terms, adds spend and supplier data to IAM.
- Recognition as a leader. On 4 November 2026 DocuSign said IDC MarketScape named it a Leader in contract life-cycle management for 2026–2027.
Bear case
- The shares sit above post-report targets. On 4 September 2026 Morgan Stanley and Piper Sandler set $75 targets and Citigroup set $72, all with neutral-equivalent ratings; Wells Fargo was at $60. The 11 November 2026 close of $80.15 is above every one of them. No target changes dated after the SAP and Suplari news were found.
- Consolidated growth remains modest. Revenue grew 9% to $875.7 million in the quarter ended 31 July 2026, and about 1.3 points of that came from currency. Full-year revenue guidance implies about 9% growth.
- Insiders have been sellers. SEC Form 4 filings show CEO Allan Thygesen sold 26,250 shares at an average $69.29 on 1 October 2026, and Chief Revenue Officer Paula Hansen sold 3,300 shares at $81.82 on 2 November 2026. Both sales were under Rule 10b5-1 trading plans. The filings from 16 September to 3 November 2026 show sales and option exercises and no open-market purchases.
- Rivals court the same AI agents. On 6 October 2026 OpenAI named Ironclad, a contract-management competitor, as a partner for training and evaluating AI agents on enterprise contracting work.
Price setup
The shares closed at $80.15 on 11 November 2026, up from $77.66 the session before. That close is 6.7% below the 52-week intraday high of $85.90 set on 26 October 2026. Between 4 November 2026 and 11 November 2026 the shares closed in a range of $77.61 to $80.50.
The rise from the 52-week closing low of $41.75 on 23 February 2026 has been large. The shares closed at $64.09 on 13 August 2026, the reference for the 25.1% three-month change. As of 11 November 2026 the 50-day moving average was $73.42 and the 200-day moving average was $55.47. The last close is above both.
The October high of $85.90 is the level the case turns on. A move through it ahead of the December report would show buyers paying more than the September targets imply before results arrive.
Catalysts ahead
- ~3 December 2026 (est.): Fiscal third-quarter 2027 results (quarter ended 31 October 2026). Shows whether revenue clears the $886 million–$890 million guide and whether IAM share of ARR is on course for the 18%–19% year-end target, the result that would justify a price above the September analyst targets.
What would change the view
A daily close above $89.77, clear of the 52-week intraday high of $85.90 set on 26 October 2026, would show the shares leading the S&P 500. Fiscal third-quarter revenue above the $890 million top of guidance with fiscal 2027 ARR growth guidance raised above 9.00% would also prove the call wrong.
What it trades with
DocuSign trades with application software names caught in the debate over whether AI disrupts them, including Adobe and Microsoft, which compete in agreement workflows. SAP and Salesforce are now distribution partners, so their product and partner news affects how DocuSign is read. Ironclad, partnered with OpenAI, is the nearest named rival in contract management.
The evidence, claim by claim (8)
- Second-quarter fiscal 2027 revenue was $875.7 million, up 9% year over year, including about 1.3 percentage points of foreign-exchange benefit. DocuSign Q2 FY27 results release (8-K Exhibit 99.1) · as of
- IAM was 15.1% of total ARR at 31 July 2026 versus 12.6% at 30 April 2026; management expects about 18%–19% exiting fiscal 2027. DocuSign Q2 FY27 results release (8-K Exhibit 99.1) · as of
- Fiscal 2027 guidance: revenue $3,499 million–$3,507 million and ARR growth 8.50%–9.00%; third-quarter revenue guidance $886 million–$890 million. DocuSign Q2 FY27 results release (8-K Exhibit 99.1) · as of
- Free cash flow was $295.8 million (34% margin) in Q2 FY27; share repurchases were $306.5 million in the quarter and $624.0 million year to date. DocuSign Q2 FY27 results release (8-K Exhibit 99.1) · as of
- SAP will sell Docusign IAM offerings as SAP-branded solution extensions in Sales Cloud and SuccessFactors. SAP and DocuSign announcement · as of
- DocuSign announced the acquisition of Suplari, an AI-native procurement intelligence company; terms were not disclosed. DocuSign news center · as of
- CEO Allan Thygesen sold 26,250 shares at an average $69.29 under a Rule 10b5-1 plan. SEC Form 4 filed 2 October 2026 · as of
- Chief Revenue Officer Paula Hansen sold 3,300 shares at $81.82 under a Rule 10b5-1 plan. SEC Form 4 filed 3 November 2026 · as of
Sources
- DOCUSIGN, INC. - Form 8-K - FY2026 · sec.gov ·
- Docusign
- Introducing Docusign PDF Editor and a More Connected Agreement Experience · docusign.com
- Docusign Analyst Price Targets · benzinga.com
- Analysts lift DocuSign price targets after Q2, from Wells Fargo's $60 to Morgan Stanley's $75 · app.sentisense.ai
- bullstory.io
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