DOCU – Market expectations are for a positive inflection in Uniform ROA, but management may have concerns about growth, Agreement Cloud, and digital transformation

• DocuSign, Inc. (DOCU:USA) currently trades at a significant premium to UAFRS-based (Uniform) assets, with a 47.8x Uniform P/B. At these levels, the market is pricing in expectations for profitability to inflect positively, but management may have concerns about customer additions growth, Agreement Cloud opportunities, and digital client transformation.
• Specifically, management may lack confidence in their ability to capitalize on Agreement Cloud opportunities, preserve customer additions growth, and digitally transform clients’ internal and external contracting processes. In addition, they may have concerns about the revenue mix for NewCo’s existing customers, the customer mix between existing and new customers, and PPP loans turning to loan forgiveness. Moreover, they may also lack confidence in their ability to land larger customers, maintain dollar-based net expansion levels, and sustain strong execution for the fiscal year. Finally, they may be exaggerating their optimism for the future.