The rise continues for the e-signature software-as-a-service company, with its share price more than doubling from $75.90 since the start of the year.
The company announced a sparkling set of first-quarter 2021 earnings, with revenue increasing by 39% year over year. Subscription revenue, which was also up 39% year over year, made up close to 95% of total revenue. Although the net loss for DocuSign remained at around the same level as the prior year, the company continued to generate solid free cash flow of around $33 million.
DocuSign continues to show strong growth, with billings up 59% year over year to $342 million. Its customer base is also growing at a rapid pace, up 30% year over year to 661,000. Of these, 89,000 are classified as "enterprise and commercial customers," which are businesses included in the Global 2000, or mid-market companies with more than 250 employees.
Dan Springer, CEO of DocuSign, talked about how the COVID-19 pandemic has accelerated the adoption of digital solutions for businesses, of which the company's Agreement Cloud is one of them. With remote work here to stay, business processes will become more digital and more agreements will have to be completed (and signed) from almost anywhere and on any device. This digital transformation is happening quickly as the pandemic forces businesses to adopt practices they used to be reluctant to try out. And when these customers discover the time and cost savings associated with these conveniences, they rarely, if ever, want to go back to physical processes again.
Not only has DocuSign added many new customers, but the company has also seen strong e-signature expansions and upsells into its existing customer base, leading to dollar net retention of 119% for the quarter.
Business continues to be so brisk that DocuSign had pulled forward some of its sales hires and expanded its marketing efforts. Strong tailwinds arising from the pandemic should continue to boost the company's business development efforts. Investors should be ready for more good news in the quarters ahead.