DocuSign’s (NASDAQ:DOCU) Q3 CY2025: Beats On Revenue

Electronic signature company DocuSign (NASDAQ:DOCU) reported Q3 CY2025 results topping the market’s revenue expectations , with sales up 8.4% year on year to $818.4 million. The company expects next quarter’s revenue to be around $827 million, close to analysts’ estimates. Its non-GAAP profit of $1.01 per share was 10.4% above analysts’ consensus estimates.

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• Revenue: $818.4 million vs analyst estimates of $807 million (8.4% year-on-year growth, 1.4% beat)

• Adjusted EPS: $1.01 vs analyst estimates of $0.91 (10.4% beat)

• Adjusted Operating Income: $257.1 million vs analyst estimates of $231.3 million (31.4% margin, 11.1% beat)

• Revenue Guidance for Q4 CY2025 is $827 million at the midpoint, roughly in line with what analysts were expecting

• Operating Margin: 10.4%, up from 7.8% in the same quarter last year

• Free Cash Flow Margin: 32.1%, up from 27.2% in the previous quarter

• Billings: $829.5 million at quarter end, up 10.3% year on year

• Market Capitalization: $14.2 billion

“Q3 was a strong quarter with growing customer investment into the IAM platform, where we now have more than 25,000 customers,” said Allan Thygesen, CEO of Docusign.

Creating the digital equivalent of “sign on the dotted line” for over a billion users worldwide, DocuSign (NASDAQ:DOCU) provides an agreement management platform that enables businesses to electronically prepare, sign, and manage documents and contracts.

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Thankfully, DocuSign’s 19.5% annualized revenue growth over the last five years was decent. Its growth was slightly above the average software company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within software, a half-decade historical view may miss recent innovations or disruptive industry trends. DocuSign’s recent performance shows its demand has slowed as its annualized revenue growth of 8% over the last two years was below its five-year trend.

This quarter, DocuSign reported year-on-year revenue growth of 8.4%, and its $818.4 million of revenue exceeded Wall Street’s estimates by 1.4%. Company management is currently guiding for a 6.5% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 6.3% over the next 12 months, a slight deceleration versus the last two years. This projection doesn’t excite us and suggests its products and services will see some demand headwinds.

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Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

DocuSign’s billings came in at $829.5 million in Q3, and over the last four quarters, its growth was underwhelming as it averaged 9.6% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in acquiring/retaining customers.

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.

DocuSign is extremely efficient at acquiring new customers, and its CAC payback period checked in at 14.2 months this quarter. The company’s rapid recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.

We enjoyed seeing DocuSign beat analysts’ billings expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The market seemed to be hoping for more, and the stock traded down 1.5% to $70.19 immediately following the results.

So do we think DocuSign is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.