Last Update 19 Jan 26

Fair value Decreased 4.07%

DOCU: AI Agreement Tools And Buyback Program Will Support Future Upside

Analysts have trimmed their DocuSign fair value estimate from US$72.97 to US$70.00, reflecting slightly higher discount rate assumptions and a lower future P/E multiple, even as they model modest improvements in revenue growth and profit margins.

Analyst Commentary

With the fair value estimate now at US$70.00, bearish analysts are signaling that the risk and return trade off for DocuSign looks less compelling than before, even as they factor in modest improvements in growth and profitability. The lower target reflects a view that investors may need to be more selective on price, especially if execution or demand trends fall short of expectations.

Bearish analysts are also leaning on more conservative P/E assumptions, which effectively puts a tighter ceiling on what they think the market is willing to pay for DocuSign relative to its earnings. This kind of reset can matter a lot for a stock that has historically attracted investors willing to pay up for growth.

Bearish Takeaways

The trim in fair value from US$72.97 to US$70.00 highlights concern that higher discount rate assumptions and a lower future P/E multiple could limit upside, even if the business continues to grow.
By lowering the P/E multiple used in their models, bearish analysts are effectively pricing in a risk that DocuSign may not fully deliver on execution or that investor appetite for premium growth valuations could be more muted.
The higher discount rate in valuation work suggests increased caution around long term cash flow visibility, which can weigh on what analysts are comfortable paying for future earnings.
While modest improvements in revenue growth and margins are still in the models, the fair value cut signals that valuation support is more fragile, leaving less room for disappointment on product adoption, competition, or cost control.

What's in the News

Rumor-focused outlet Betaville flagged a potential DocuSign buyout rumor in an alert to its subscribers, drawing attention to possible M&A interest around the company (Betaville via The Fly).
DocuSign outlined new AI powered eSignature features aimed at simplifying legal language for signers and speeding up document preparation for businesses, including plain English summaries, Q&A style contract queries, and automated field placement, currently rolling out across the US, UK, and Australia.
The company issued earnings guidance for the quarter ending January 31, 2026, with total revenue expected between US$825 million and US$829 million, and for the full year with total revenue expected between US$3.208b and US$3.212b.
DocuSign reported progress on its share repurchase program, buying back 2,820,953 shares for US$215.04 million in the August 1 to October 31, 2025 window, and completing total repurchases of 22,857,046 shares for US$1,490.54 million under the program first announced in March 2022.
Management highlighted new AI led agreement tools that will be accessible directly within ChatGPT via the Model Context Protocol, allowing users to create and analyze contracts inside ChatGPT using DocuSign's Intelligent Agreement Management platform.

Valuation Changes

Fair Value Estimate: Adjusted from US$72.97 to US$70.00, a small cut that reflects tighter assumptions in the model.
Discount Rate: Moved slightly from 8.45% to about 8.47%, indicating a modestly higher required return on future cash flows.
Revenue Growth: Tweaked from roughly 5.65% to about 5.74%, a small uplift in the projected growth rate.
Net Profit Margin: Refined from about 7.54% to roughly 7.56%, signaling a minor change in expected profitability.
Future P/E: Reduced from about 64x to roughly 61x, pointing to a lower assumed earnings multiple in the updated model.

Heightened competition and commoditization in e-signature technology threaten DocuSign's pricing power, market share, and long-term profitability.
Regulatory challenges and costly expansion efforts could stifle international growth while platform consolidation by larger SaaS players erodes DocuSign's differentiation.
Deepening enterprise adoption, AI-driven differentiation, and global digitization trends position the company for durable growth, market leadership, and sustained profitability through operational efficiency and partnerships.

Catalysts

About DocuSign

Provides electronic signature solution in the United States and internationally.What are the underlying business or industry changes driving this perspective?

DocuSign's future revenue growth is at risk as e-signature technology becomes more commoditized, with increased adoption of low-cost and open-source alternatives, which will force pricing pressure and likely drive down both revenue growth rates and long-term net margins.
Mounting regulatory scrutiny around data privacy and data localization requirements may significantly raise compliance costs and limit DocuSign's ability to profitably expand in international markets, eroding net margin and restricting topline growth in non-U.S. regions.
Platform ecosystem consolidation by major SaaS players such as Microsoft and Google threatens DocuSign's differentiation, as these companies bundle e-signature capabilities into broader application suites, potentially diminishing DocuSign's competitive moat and accelerating customer churn, impacting both future revenue and gross retention rates.
Despite recent investments in AI-enabled workflows and intelligent agreement management, DocuSign risks underperforming in adjacent areas like contract lifecycle management if expansion beyond core e-signature stalls, leading to unsustainable diversification efforts and hindering the long-term acceleration of revenue and earnings.
Elevated customer acquisition costs from intensifying competition and required sales and marketing spend to defend existing market share are likely to continue depressing operating margins, hampering the company's ability to achieve consistent earnings growth and fully leverage topline gains.

DocuSign Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

This narrative explores a more pessimistic perspective on DocuSign compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts.
The bearish analysts are assuming DocuSign's revenue will grow by 5.2% annually over the next 3 years.
The bearish analysts assume that profit margins will shrink from 9.1% today to 6.8% in 3 years time.
The bearish analysts expect earnings to reach $246.4 million (and earnings per share of $1.23) by about September 2028, down from $281.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 77.6x on those 2028 earnings, up from 56.4x today. This future PE is greater than the current PE for the US Software industry at 36.2x.
Analysts expect the number of shares outstanding to decline by 0.91% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.41%, as per the Simply Wall St company report.

DocuSign Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The rapid growth and adoption of Docusign's IAM (Intelligent Agreement Management) and CLM (Contract Lifecycle Management) platforms, especially with large enterprise and international customers, position the company to access new markets and expand average deal sizes, which will likely drive both top line revenue and long-term earnings growth.
Docusign is effectively leveraging the global secular trend toward digitization, remote work, and automation-consistently growing key metrics like envelope send volume, customer retention rates, and international revenues, all indicating robust and sustainable demand that underpins strong future revenue streams.
The company's deep integration of proprietary AI models into agreement management and its access to an unmatched library of agreements create high entry barriers and differentiated value, which increases customer stickiness and can support pricing power and margin expansion over time.
Docusign's improving operational efficiency, as shown by strong non-GAAP operating and free cash flow margins, combined with disciplined capital allocations like regular share repurchases, signals ongoing profitability and the ability to generate shareholder returns, favorably impacting net margins and earnings.
Long-term strategic partnerships, such as those with Microsoft Azure and the US Federal Government's GSA, as well as a well-executed go-to-market overhaul, set the company up for multi-year growth acceleration and greater market share, which directly supports sustained revenue and net income growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The assumed bearish price target for DocuSign is $77.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of DocuSign's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $124.0, and the most bearish reporting a price target of just $77.0.
In order for you to agree with the bearish analysts, you'd need to believe that by 2028, revenues will be $3.6 billion, earnings will come to $246.4 million, and it would be trading on a PE ratio of 77.6x, assuming you use a discount rate of 8.4%.
Given the current share price of $78.82, the bearish analyst price target of $77.0 is 2.4% lower. The relatively low difference between the current share price and the analyst bearish price target indicates that the bearish analysts believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on DocuSign?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystLowTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystLowTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystLowTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Market Commoditization And Regulation Will Undercut Valuation