DocuSign (DOCU +0.95%) has built a $1 billion annual revenue business from subscriptions to its e-signature service starting as low as $10 per month and has handed shareholders incredible market-beating returns since it went public in April 2018.
Stock prices from April 27, 2018 to May 20, 2020. DOCU data by YCharts.
Amazingly, management thinks they've only tapped about 1% of the company's potential customers and is investing heavily to build on its foundational technology in ways you might not have heard before.
Let's check out five ways DocuSign's development efforts could power growth in the coming years.
1. It's integrated with the software giants
DocuSign knows that an e-signature by itself is a time-saver, but integrating it into the platforms people use every day is game-changing. The company has built more than 350 integrations with the largest software players from Apple to SAP to make sure its core technology is darn near ubiquitous.
Image source: DocuSign.com
System integrators and representatives from these software giants are helping to expand its reach into more customers and more applications.
2. E-signatures are just the beginning
In the life of an agreement, the e-signature part is probably the shortest and least time-consuming part of the process.
From the creation process on the front end to acting on the contract and managing the terms on the back end, managing agreements can be administratively tedious. With the $220 million purchase and software integration of SpringCM, a contract lifecycle management platform, DocuSign's Agreement Cloud subscription service can now manage all aspects of the life of an agreement electronically.
Between a Gartner Magic Quadrant leader commendation and big-name customers such as Facebook, Aetna, and Lenovo, this contract lifecycle product suite has the credibility and momentum to tackle a huge $25 billion market.
3. It's into artificial intelligence
Earlier this year, DocuSign acquired Seal, a contract analytics and artificial intelligence technology provider, for $188 million in cash. It had already made a $15 million strategic investment with the company and was reselling its core offering as DocuSign Intelligent Insights, so it wasn't a big leap for the e-signature specialist to add it to its roster.
Seal enables smart search and detailed analytics for customers with a large number of contracts, even if the documents are photo images or Adobe PDFs. DocuSign is planning to integrate these powerful features across its Agreement Cloud subscription, which will strengthen the offering and make it more attractive for enterprise customers.
Image source: Getty Images.
4. It can help sell houses and more
The company even has some focused industry solutions, two of which are centered on the house-selling process. Its Rooms for Real Estate and Rooms for Mortgage products create a collaborative space in the cloud for the homebuyer and their agent or mortgage administrator. The tools have workflows, task lists, document upload/storage capabilities, and of course, e-signatures to enable a house sale and subsequent mortgage process to run in a structured and transparent way for all parties involved. In addition, there's a separate e-notary module available in 23 states to enable any notary-required signatures to be completed online.
For the medical device and pharmaceutical industries, it offers an enhanced e-signature product that meets all of the rigorous FDA documentation requirements for electronic records and is used by many of the top companies in these verticals.
These product extensions are great examples of how DocuSign is able to expand on its core technology to create unique industry and product solutions for more customers.
5. It's building a dedicated data center
Landing the U.S. government as a customer can be a big win for any company, but it usually comes with a long list of requirements. For cloud providers, a standard called the Federal Risk and Authorization Management Program (FedRAMP) details all the requirements around confidentiality, integrity, and availability that software vendors need to meet in order to process four graduated levels of sensitive government information.
Today, DocuSign has been authorized for three of the four levels, and it's building a dedicated data center to be completed in 2021 to help qualify for FedRAMP's highest level. This authorization would give it the ability to serve agencies dealing with highly sensitive information such as the Department of Defense, Veterans Administration, or Department of Homeland Security.
CEO Daniel Springer commented on the benefits of achieving end-to-end FedRAMP authorization in a recent interview and said that "the opportunity is huge. I think the growth is going to be substantial for us."
The bottom line for investors
Even though e-signature technology has enabled DocuSign to become a household name, this 17-year-old company is not resting on its past success. Investors should know about the numerous investments in software development and smart acquisitions that are opening up more opportunities to serve more customers in new and valuable ways. This passion for innovation is just one of the reasons I like DocuSign as a long-term investment.
