DocuSign (DOCU) Stock Forecast & Price Target

DocuSign reported a total revenue increase of 9.0% year-over-year, exceeding consensus estimates, with subscription revenue growth at 8.9% year-over-year contributing to this positive performance. The company demonstrated strong financial health with operating cash flows of $307.9 million and a robust operating margin of 39.7%, which highlights effective cost management and operational efficiency. Despite mixed guidance for future quarters, the consistent revenue growth trajectory and solid cash flows position DocuSign favorably in the market, reinforcing a positive outlook for its stock.

The negative outlook on DocuSign's stock is primarily driven by a deceleration in customer growth, with a quarterly addition of 30,000 customers stagnating compared to the previous quarter and reflecting a year-over-year decline from 40,000, ultimately leading to a total of 260,000 customers. Additionally, the company has provided weak margin guidance for FY26, anticipating gross margins of 80.5% to 81.5% and operating margins of 27.8% to 28.8%, both below market expectations, alongside a projected one percentage point headwind from cloud migration costs. Compounding these concerns, the challenges associated with attracting new customers, combined with the evolving competitive landscape and potential risks of data breaches, suggest that DocuSign's revenue growth may face significant limitations going forward.