Billings & Customer Retention: DOCU's Business Strength Indicators

Docusign’s DOCU core subscription business has displayed strength over the past quarters. During the first quarter of fiscal 2026, the dollar net retention rate increased to 101%, in line with the preceding quarter and up from the year-ago quarter’s 99%. The metric climbed to 102% during the second quarter of fiscal 2026. This rising trajectory signals heightened customer retention and customer base expansion fueled by the Intelligent Agreement Management (IAM) platform and eSignature offerings.

DOCU’s core subscription business showed favorable growth, with an 8% year-over-year increment in its revenues during the first quarter of fiscal 2026 and 9% year-over-year growth during the second quarter of fiscal 2026. This growth is indicative of DOCU’s shift towards a recurring and high-margin model. The sustainability of this momentum can be measured by its billings. During the second quarter of fiscal 2026, billings increased 13% year over year and 10.6% sequentially, highlighting traction in winning new agreements and broadening existing contracts, painting a clear picture of future revenues trends.

Docusign successfully expanded its customer base by 9% year over year, ending the second quarter of fiscal 2026 with over 1.7 million customers. Customer spending $300,000 annually increased by 7% year over year to 1,137, improving profitability prospects. During the second quarter of fiscal 2026, Docusign reported a non-GAAP operating margin of 29.8%, up 30 basis points from the preceding quarter. The surge in revenues due to higher customer demand, coupled with prudent expense management, led to the margin expansion.

Overall, it is obvious that Docusign’s performance across the past few quarters has displayed its subscription model’s strength and scalability. Such a performance was guided by customer base retention and expansion, and significant billings growth. This has paved the groundwork required for the company to solidify its position within the eSignature and contract lifecycle management domain.

DOCU’s Price Performance, Valuation & Estimates

Docusign has declined 22.7% over the past year compared to a marginal dip in its industry. The stock has underperformed Appian’s APPN and Arlo Technologies’ ARLO 9.6% and 12.8% growth, respectively, during the same time period.

1-Year Share Price Performance

From a valuation standpoint, DOCU trades at a 12-month forward price-to-earnings ratio of 16.53, cheaper than the industry’s 31.05. Docusign appears cheaper than APPN and ARLO 54.23 and 17.77, respectively.

P/E - F12M

Docusign has a Value Score of D. Appian and Arlo Technologies carry a Value Score of F.

The Zacks Consensus Estimate for DOCU’s fiscal 2026 EPS is pegged at $3.69, a marginal increase over the past 60 days. For fiscal 2027, the consensus mark is pinned at $4.06, rising marginally over the past 60 days.

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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This article originally published on Zacks Investment Research (zacks.com).

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