Last Update 02 Feb 26

Fair value Decreased 1.61%

DOCU: AI Expansion And Buybacks Will Support Future Bullish Re Rating

Analysts have trimmed their DocuSign fair value estimate by about $1 to roughly $85, reflecting slightly lower assumed future P/E while keeping revenue growth and profit margin expectations largely unchanged.

Analyst Commentary

Analysts see the modest trim to DocuSign’s fair value estimate as more about a reset in assumed P/E than a shift in the fundamental outlook for growth or margins. With revenue and profitability expectations held largely steady, the debate now sits more squarely on what multiple the market is willing to assign to those cash flows.

Below are the key points analysts are weighing as they reassess DocuSign’s risk and reward profile around the updated US$85 fair value marker.

Bullish Takeaways

Bullish analysts view the limited US$1 adjustment as a sign that their core assumptions on revenue growth and margins remain intact, suggesting that recent work has not uncovered major execution concerns.
The focus on slightly lower future P/E rather than changes to earnings power points to a view that valuation is the main swing factor, not a downgrade to DocuSign’s underlying business prospects.
Some see room for upside if DocuSign delivers consistent execution against existing margin expectations, arguing that any improvement beyond current models could warrant a higher multiple over time.
For investors comparing across software names, the refined fair value near US$85 gives a clearer reference point for judging whether the current share price implies a discount or premium on expected earnings.

Bearish Takeaways

Bearish analysts interpret the lower assumed P/E as a signal that the market may be less willing to pay earlier valuation levels for DocuSign, even if revenue and margin assumptions are unchanged.
The fact that the fair value cut stems from the multiple rather than the model’s income statement inputs highlights concern that re rating risk could weigh on returns, even if operations track expectations.
Some are cautious that holding revenue and margin forecasts steady leaves little buffer if DocuSign underperforms those targets, which could justify further pressure on the fair value estimate.
There is also a view that, with the fair value anchored near US$85, any disappointment on execution or competitive position could prompt analysts to revisit both the earnings outlook and the P/E assumption together.

What's in the News

Orlando Bravo told the Financial Times that the software selloff is creating what he views as a "huge buying opportunity," a comment that has put additional attention on software names such as DocuSign (Financial Times).
DocuSign announced new AI powered eSignature features that summarize contracts in plain language, answer signer questions such as cancellation terms or warranty expiry, and use contract specific AI to automate document preparation and field placement, with new capabilities rolling out across the US, UK and Australia.
The company outlined quarterly revenue guidance of US$825 million to US$829 million and full year revenue guidance of US$3.208b to US$3.212b for the year ending January 31, 2026.
DocuSign reported that from August 1, 2025 to October 31, 2025 it repurchased 2,820,953 shares for US$215.04 million, and that total repurchases under its March 10, 2022 buyback now stand at 22,857,046 shares for US$1.49054b, representing 11.27% of the company.
DocuSign marked a decade in Ireland with a €4.5 million investment to expand its AI Centre of Excellence in Dublin, including a planned 20% increase in its engineering team to support customers across Europe, the Middle East and Africa.

Valuation Changes

Fair Value Estimate moved slightly lower from US$86.50 to about US$85.11, keeping the adjustment modest in dollar terms.
Discount Rate edged down from roughly 8.45% to about 8.42%, a very small change in the rate used to value future cash flows.
Revenue Growth held effectively steady at around 6.61%, indicating no material change to the long term top line assumption.
Net Profit Margin remained essentially unchanged at about 11.93%, suggesting stable expectations for future profitability.
Future P/E was trimmed slightly from about 46.63x to around 45.84x, reflecting a modestly lower multiple applied to expected earnings.

Growing demand for AI-powered agreement solutions, international expansion, and new verticals is boosting recurring revenue, customer retention, and long-term earnings diversification.
Operational efficiencies through automation and cloud migration are strengthening cash flow, enabling capital returns and margin expansion as upfront technology costs decline.
Maturing core markets, margin pressures, uncertain new product adoption, and rising competition threaten long-term growth, profitability, and pricing power for DocuSign.

Catalysts

About DocuSign

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

Sustained adoption of digital workflows across global industries and increased prevalence of remote/hybrid work environments is driving persistent demand for eSignature, contract lifecycle management (CLM), and AI-powered agreement management (IAM) solutions; this is reflected in accelerating direct sales, healthy new bookings, and improving renewal rates, providing strong ongoing support for revenue and billings growth.
Enhanced regulatory focus on data security and compliance continues to make Docusign's solutions a core component of organizational workflows, resulting in higher gross retention, increasing dollar net retention rates, and reduced customer churn, positively impacting recurring revenue and earnings stability.
Rollout and ramp-up of the IAM platform, with AI-native features and deep enterprise system integrations, is unlocking significant upsell opportunities as customers migrate from core eSignature to broader agreement management, driving improved ARPU and supporting double-digit future topline growth.
Expansion into underpenetrated international markets and new verticals (such as U.S. federal government via the GSA partnership) is outpacing domestic growth and is expected to further diversify revenue streams and contribute to higher long-term revenue and earnings.
Operational efficiency initiatives-including automation, cloud migration, AI-driven R&D investment, and measured hiring-are sustaining strong free cash flow generation, supporting robust capital returns (e.g., buybacks) and setting the stage for net margin and EPS expansion as cloud migration costs ease in the coming fiscal year.

DocuSign Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming DocuSign's revenue will grow by 7.3% annually over the next 3 years.
Analysts assume that profit margins will increase from 9.1% today to 9.4% in 3 years time.
Analysts expect earnings to reach $359.8 million (and earnings per share of $2.15) by about September 2028, up from $281.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $409.4 million in earnings, and the most bearish expecting $229.6 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 64.3x on those 2028 earnings, up from 57.1x 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?

Docusign's guidance indicates slowing revenue and billings growth (7–8% year-over-year, down from the recent quarter's double-digit pace), suggesting possible maturation of the core eSignature market and reducing the likelihood of sustained high long-term growth, which could ultimately constrain future revenue and EPS expansion.
The company continues to face persistent operating and gross margin headwinds due to ongoing migration to cloud infrastructure, higher hosting costs, and shifts from equity to cash compensation, limiting near-term and potentially longer-term improvements in net margins and earnings leverage.
Despite efforts to expand internationally and in the enterprise, Docusign management repeatedly notes these are still early days, with federal and global opportunities not yet material revenue contributors, revealing execution risk and the possibility that international and enterprise expansion may take longer, or prove less profitable, than expected-pressuring long-term topline growth and margins.
There are signs of intensifying competition and potential commoditization risk in the agreement management and e-signature space, with customers having alternatives and AI/LLM-enabled software vendors seeking to enter the market, which could erode Docusign's pricing power, lower renewal rates, and compress both revenue and net margins over time.
The company's reliance on upselling its existing 1.7 million eSign customers to the new AI-native IAM platform is a key part of growth projections, but adoption rates and demonstrated economic uplift from IAM remain unclear and early-stage, creating risk that expectations for future ARPU expansion and revenue acceleration could fall short if customer transition is slower or less lucrative than modeled.

Valuation

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

The analysts have a consensus price target of $93.162 for DocuSign based on their expectations of its future earnings growth, profit margins and other risk factors. 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 analyst's consensus, you'd need to believe that by 2028, revenues will be $3.8 billion, earnings will come to $359.8 million, and it would be trading on a PE ratio of 64.3x, assuming you use a discount rate of 8.4%.
Given the current share price of $79.8, the analyst price target of $93.16 is 14.3% higher.
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.

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Disclaimer

AnalystConsensusTarget 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 AnalystConsensusTarget 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 AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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