To The Moon

$Docusign(DOCU)$ is scheduled to release its fiscal Q1 2026 earnings on Thursday, June 5, 2025, after the close of the market.

Revenue: DocuSign previously guided for Q1 Fiscal 2026 revenue to be between $745.0 million and $749.0 million. The analyst consensus for Q1 2026 revenue is around $748.79 million. This guidance implies a year-over-year increase of approximately 5% at the midpoint.

Earnings Per Share (EPS): The consensus EPS forecast for Q1 Fiscal 2026 is around $0.25. The reported EPS for the same quarter last year (Q1 Fiscal 2025) was $0.29. It's important to note that non-GAAP EPS is often highlighted by the company, and the consensus for non-GAAP EPS for Q1 2026 is approximately $0.81.

Billings: While not explicitly guided for Q1, billings are a key metric to watch as they often precede revenue. In Q4 FY2025, billings grew 11% year-over-year, and the company expects an acceleration in billings growth for FY2026, particularly driven by their Intelligent Agreement Management (IAM) initiatives.

Intelligent Agreement Management (IAM): DocuSign has been emphasizing its shift towards Intelligent Agreement Management (IAM) as a key growth driver, moving beyond just e-signatures to provide more comprehensive workflow and automation solutions. Investors will be looking for updates on the adoption and revenue contribution from IAM, especially in new enterprise deals.

Profitability and Cash Flow: DocuSign has demonstrated strong free cash flow generation. In FY2025, free cash flow hit a record $920.3 million. Investors will be keen to see continued healthy cash flow in Q1 2026.

Share Buybacks: DocuSign has an active share buyback program. In Q4 FY2025, the company repurchased $161.7 million of common stock, and they have a renewed $2 billion buyback authorization. This can positively impact EPS.

DocuSign (DOCU) Last Positive Earnings Call Saw Share Price Rose By 14.74%

DocuSign had a positive earnings call on 13 March 2025 which saw its share price rose by 14.74% since.

The earnings call was largely positive, with significant achievements in revenue growth, IAM momentum, customer expansion, and improved profitability. However, there were some challenges with gross margin impacts due to infrastructure migration and deceleration in international growth. Overall, the positive aspects outweigh the challenges.

DocuSign (DOCU) Guidance

In the Fourth Quarter Fiscal Year 2025 earnings call for DocuSign, Inc., several key metrics were highlighted. DocuSign reported Q4 revenue of $776 million, marking a 9% year-over-year increase, and a fiscal year 2025 total revenue of $3 billion, representing an 8% increase from the previous year. The company achieved a dollar net retention rate of 101% in Q4, showing improvement from the previous fiscal year. Non-GAAP operating margins improved significantly to 29% in Q4 and 30% for the entire fiscal year. The fiscal 2026 guidance anticipates a 5% year-over-year revenue increase, with expected Q1 revenue between $745 million and $749 million. Billings for Q4 reached $923 million, up 11% year-over-year, and fiscal 2025 billings were up 7%.

DocuSign also generated $920 million in free cash flow, reflecting a 31% margin and a strong cash position of $1.1 billion with no debt. The fiscal 2026 outlook forecasts billings growth between $3.300 billion and $3.354 billion, with non-GAAP gross margins expected to range from 80.5% to 81.5%. DocuSign aims to leverage the Intelligent Agreement Management (IAM) platform to drive future growth, expecting IAM to represent a low double-digit percentage of its total subscription recurring revenue by the end of fiscal 2026.

What to watch for in the actual earnings report

Revenue and EPS performance relative to guidance and analyst expectations: A beat on both metrics would likely be viewed positively.

Q4 revenue was $776 million, up 9% year-over-year. Fiscal 2025 revenue was $3 billion, up 8% year-over-year. Non-GAAP gross margin for fiscal 2025 was slightly down year-over-year due to ongoing cloud infrastructure migration.

Billings growth: This will be a critical indicator of future revenue acceleration and overall business momentum.

Non-GAAP operating margin increased to 29% in Q4 and 30% for fiscal 2025. Free cash flow improved to $280 million in Q4, a 36% margin.

Updates on IAM adoption and pipeline: Details on how successful DocuSign is in cross-selling and upselling its IAM platform.

IAM represented a high single-digit percentage of in-quarter deal volume for the direct channel at over 20% of direct new customer deals. It has become the fastest-growing new product in DocuSign, Inc.'s history.

Subscription revenue growth: As a SaaS company, consistent growth in subscription revenue is vital.

Total customers grew 10% year-over-year to nearly 1.7 million. The number of large customers spending over $300,000 annually increased to 1,131 in Q4.

Net dollar retention: This metric indicates how much existing customers are expanding their spending with DocuSign. The company expects moderate gradual improvement throughout the year.

Guidance for Q2 Fiscal 2026 and full-year Fiscal 2026: Any changes to previously provided guidance will be significant for investor sentiment.

International revenue in Q4 represented 28% of total revenue and grew 12% year-over-year. International business encountered growth headwinds in fiscal 2025, despite overall growth.

DocuSign (DOCU) Price Target

Based on 16 analysts from Tiger Brokers offering 12 month price targets for DocuSign in the last 3 months. The average price target is $92.77 with a high forecast of $124.00 and a low forecast of $65.00. The average price target represents a 8.24% change from the last price of $85.83.

Technical Analysis - Exponential Moving Average (EMA)

If the clue from Nvidia earnings that corporate CAPEX spending does not decrease, so what will happen to DocuSign who are billing customer on OPEX basis, this would mean that companies would continue to use this tools for their AI journey, or rather simplify their business processes.

From the technicals, though there is a decline of the share price to close to 26-EMA and 50-EMA level, the momentum remains positive and I think DOCU could have a possible earnings surprise if they can give a strong billings growth

Positive Reaction: If DocuSign beats revenue and EPS expectations, provides strong billings growth, and offers an optimistic outlook for IAM and future quarters, the stock could see a positive reaction.

Negative Reaction: Missing expectations, particularly on revenue or billings, or providing conservative guidance, could lead to a negative stock performance. Concerns about the pace of IAM adoption or increased competition could also weigh on the stock.

Summary

Investors and analysts will be closely scrutinizing the Q1 2026 results to assess DocuSign's progress in its strategic shift towards Intelligent Agreement Management and its ability to drive sustainable growth in a competitive market.

If DOCU could provide a strong billings growth with the demand for AI growing and a positive progress towards its strategic shift towards Intelligent Agreement Management, I am expecting an earnings surprise.

Appreciate if you could share your thoughts in the comment section whether you think DOCU could provide an earnings surprise with strong billings growth and good progress towards its IAM.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.