We feel now is a pretty good time to analyse DocuSign, Inc.'s (NASDAQ:DOCU) business as it appears the company may be on the cusp of a considerable accomplishment. DocuSign, Inc. provides cloud based software in the United States and internationally. The US$41b market-cap company posted a loss in its most recent financial year of US$208m and a latest trailing-twelve-month loss of US$218m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which DocuSign will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
According to the 17 industry analysts covering DocuSign, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2023, before generating positive profits of US$60m in 2024. So, the company is predicted to breakeven approximately 3 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 45% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving DocuSign's growth isn’t the focus of this broad overview, though, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one issue worth mentioning. DocuSign currently has a debt-to-equity ratio of 114%. Typically, debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are too many aspects of DocuSign to cover in one brief article, but the key fundamentals for the company can all be found in one place – DocuSign's company page on Simply Wall St. We've also put together a list of relevant factors you should look at:
Valuation: What is DocuSign worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether DocuSign is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on DocuSign’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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