DocuSign, Inc. DOCU has had an impressive run on the bourses in the year-to-date period. Shares of the company have gained 35.2%, outperforming the 30.7% rally of the industry and the 26% rise of the Zacks S&P 500 composite.

DOCU has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get the true sense of the quality and sustainability of its growth.

The company’s earnings for fiscal 2025 and 2026 are expected to improve 15.8% and 5.9%, respectively, year over year. DOCU has a long-term (three to five years) expected earnings growth rate of 9.3%.

Factors That Augur Well

DocuSign’s top line has been significantly benefiting from continued customer demand for eSignature in a large addressable market. DOCU’s customer base has grown steadily, with 1.1 million customers in 2022, 1.3 million in 2023 and 1.5 million in 2024. Taking the trend into consideration, we expect this growth to continue in the coming years as well. Despite this rising demand, the market for eSignature remains largely untapped. Therefore, Docusign has ample opportunities to expand eSignature across businesses globally, which will boost its revenues.

DocuSign’s subscription fees account for around 97% of the total revenues. DOCU’s subscription fees include the use of its products and access to customer support and the subscriptions generally range from one to three years. A subscription model is very useful for software developers because it stabilizes revenue streams and improves the visibility of cash flows. It also makes expensive software more easily affordable and accessible to companies with limitations on resources, thus expanding the market.

DOCU’s direct and indirect go-to-market initiatives also facilitated growthat commercial and enterprise customers. Numerous customer programs and initiatives and expanded customer use cases have gradually increased subscription revenue growth over time.In fiscal 2024, subscription revenues increased by 10% due to the expansion of revenues from existing customers and new customer additions.

DocuSign has deepened its relationships with tech giants such as Salesforce CRM and Microsoft MSFT. For instance, the company has expanded its global strategic partnership with Salesforce. DocuSign and Salesforce jointly develop solutions for automating the contract creation process and expanding collaboration among organizations that use Salesforce’s Slack. Docusign made an eSignature integration with Microsoft Teams last year and is currently an official electronic signature provider in Microsoft Teams’ Approvals app. These partnerships enable the company to sell into a far greater number of accounts than it could have done alone.

Concerns for DOCU

DocuSign has never declared dividends and currently does not have any payout plan. So, the only way to achieve a return on investment on the company’s stock is through share price appreciation, which is not guaranteed. Investors seeking cash dividends should avoid buying DocuSign’s shares.

Docusign’s current ratio (a measure of liquidity) was 0.84 at the end of second-quarter fiscal 2025, lower than the preceding quarter's 0.93 and the year-ago fiscal quarter's 0.88. A current ratio of less than 1 indicates that the company may find it difficult to cover its short-term obligations.

DOCU’s Zacks Rank

DocuSign currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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