DOCU
DocuSign, Inc.
$50.44
High-Growth Software
80%
Revenue × Terminal Margin DCF
Moderate
·
Conviction
Undervalued
Trading 28.6% below fair value
You pay
$50.44
Bear
$53.80
Fair
$70.62
Bull
$90.40
Bear
$53.80
+6.7%
8% rev growth, 21% terminal margin
Fair
$70.62
+40.0%
10% rev growth, 28% terminal margin
Bull
$90.40
+79.2%
13% rev growth, 32% terminal margin
Key Value Driver
Revenue growth (10%) × margin expansion to 28%
Terminal Value % of EV
47%
Implied Market Multiple
2.8x
Summary
Our base-case estimate uses a discounted cash flow model based on revenue growth and long-run free cash flow margins. We then blend that result with the average analyst price target of $56.83 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $70.62 per share.
Warnings
Gross margin of 79% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $56.83 (from 28 analysts). Our estimate is 32% above the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep