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DocuSign (NASDAQ:DOCU) surged on Friday climbing over 15% in early trading, with analysts seeing a clearer path to double-digit growth in fiscal 2026, despite the company's cautious outlook.
A major driver is Intelligent Agreement Management (IAM), DocuSign's AI-powered platform, which is expanding faster than expected. IAM has cut some customer contracting times by 75% and is now the company's fastest-growing product. In Q4, it accounted for a high single-digit percentage of deal volume and over 20% of direct new customer deals in the small and mid-market segment.
Morgan Stanley analysts, led by Josh Baer, noted that improving retention rates and strong IAM billings make double-digit growth increasingly realistic. IAM is projected to grow fivefold to a $320 million annual run rate in fiscal 2026, despite initial traction coming primarily from smaller businesses rather than large enterprises.
Citizens maintained its Market Outperform rating and $124 price target, citing DocuSign's dominance in e-signatures, a $50 billion total addressable market, and strong leadership. Meanwhile, Evercore ISI sees a revenue reacceleration by fiscal 2027 as current billings convert into revenue.
DocuSign is set to showcase its latest AI advancements at its Momentum25 event on April 16 in New York.
Adobe (ADBE), a rival in the e-signature space, edged up 1% in early trading.
This article first appeared on GuruFocus.