DocuSign (NASDAQ:DOCU) is a leader in the e-signature space, boasting over a half million paying customers. It counts Adobe Systems (NASDAQ:ADBE), which also offers e-signature software, among its competitors.

Both have enjoyed stellar growth this year, and it makes sense. E-signature services give organizations a convenient, efficient way to process business documents. And the coronavirus pandemic accelerated e-signature adoption as in-person signing opportunities evaporated.

So if both are doing well, is one a better buy than the other? Let's take a look at both to answer that question.

Businesswoman digitally signs a document on a tablet.

Image source: Getty Images.

The case for Adobe

Adobe, with its more than $200 billion market cap, is a much larger company than DocuSign at $40.9 billion. So is this an unfair competition? A bigger company has more resources to achieve success, right?

There's definitely a lot to like about Adobe. Revenue was $3.23 billion for its fiscal third quarter, which ended Aug. 28, the best third quarter in company history. Adobe's performance continued its historic year, having delivered records in the first and second quarters as well.

Its e-signature solution, Adobe Sign, is rated the best for enterprise organizations. The product is part of Adobe's Document Cloud division, which encompasses the company's business software. This segment saw third-quarter revenue hit $375 million, an increase over the previous year's $307 million.

Those familiar with the Adobe brand know it offers far more than business document services. Its bread and butter is the company's Creative Cloud segment, which consists of Adobe's software for creative pursuits and includes brands such as Photoshop. This division brought in $1.96 billion in third-quarter revenue, up from last year's $1.65 billion.

This growth isn't just the result of pandemic-induced digital services adoption. Adobe has enjoyed many years of revenue growth.

ADBE Revenue (Quarterly) Chart

Data by YCharts.

The company's prosperity is a testament to its excellent products, and the success of its shift to a software-as-a-service (SaaS) subscription model for selling software. SaaS enables Adobe to collect reliable recurring revenue every month.

DocuSign's strengths

DocuSign shares traits with Adobe beyond competing products. Like Adobe, DocuSign adopted an SaaS model, which accounted for 95% of revenue as of its fiscal second quarter, which ended July 31.

Also like Adobe, DocuSign enjoyed revenue growth before the pandemic (although it's been a public company only since 2018).

DOCU Revenue (Quarterly) Chart

Data by YCharts.

Despite these similarities, it is nowhere near the billions Adobe pulls in. DocuSign generated $342 million in second-quarter revenue. Its solutions aren't as diversified as Adobe's, either. Its products focus on business e-signature and digital document management.

But when looking just at Adobe's competing Document Cloud segment, DocuSign's second-quarter sales show it's closing in.

Metric Adobe Document Cloud Segment DocuSign
Fiscal quarter Q3 2020 Q2 2021
Revenue $375 million $342 million
Year-over-year growth 22% 45%

Data source: Adobe Systems and DocuSign.

These results followed DocuSign's previous quarterly performance.

Metric Adobe Document Cloud Segment DocuSign
Fiscal quarter Q2 2020 Q1 2021
Revenue $360 million $297 million
Year-over-year growth 22% 39%

Data source: Adobe Systems and DocuSign.

DocuSign's average 28% year-over-year customer growth over the past five quarters fueled its revenue increases. Its successful customer acquisition starts with a leading e-signature product.

The company anticipates continued success in its fiscal third quarter. A key piece is DocuSign's international business, which saw second-quarter revenue rise 59% year over year.

Results won't come out until Dec. 3, but DocuSign expects third-quarter revenue between $358 million and $362 million. Last year, the company earned $249.5 million in its third quarter.

The final verdict

If I had to pick one, Adobe has the edge. It's a more diversified business with a longer track record of success. Its Creative Cloud segment isn't growing at the 22% year-over-year rate of its Document Cloud segment, but it still enjoyed healthy 19% growth in the third quarter.

Adobe also has one other major selling point over DocuSign: It's profitable. Adobe's third-quarter net income was $955 million. DocuSign suffered a second-quarter net loss of $64.6 million.

That said, it's not uncommon for tech stocks to lack profitability. DocuSign continues to invest in its business, making acquisitions to expand its product portfolio, such as a notary service that doesn't require in-person signatures. It's also investing in international expansion.

As a result, when it comes to which is better, both companies are worthwhile investments. Their products make managing business documents easier and more efficient. People won't stop seeking these benefits after the pandemic passes, so both companies promise more growth ahead as organizations continue to transition to digital document solutions.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.