DocuSign Macro Risks Could Cap Upside Despite AI, IAM Traction: Analyst

JP Morgan analyst Mark R Murphy maintained a Neutral rating on DocuSign, Inc. DOCU with a price forecast of $81 on Tuesday.

Heading into DocuSign’s fiscal first-quarter earnings report, Murphy maintained a cautiously optimistic view, expecting the company to deliver relatively stable execution despite a dynamic-but-manageable macro environment.

The analyst noted that DocuSign’s recent pattern of fairly conservative guidance sets the company up well to deliver upside to current fiscal first-quarter estimates, while still likely allowing it to maintain some cushion for the back-half of the year to account for ongoing macroeconomic and geopolitical volatility.

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He continues to sense a more balanced risk-reward profile for DocuSign in the medium term, with Intelligent Agreement Management (IAM) traction continuing to drive some stabilization and improvement in growth rates. This is partially balanced by an inferior GAAP profitability framework amid an ongoing IAM investment cycle and some exposure to macro-sensitive end-markets.

Murphy noted that DocuSign is well positioned to meet or exceed its fiscal first-quarter guidance bar, calling for +6% CC revenue and proforma billings growth. Both of these call for some deceleration versus the prior quarter, though they include some leap year impact.

While DocuSign may elect not to entirely pass through any fiscal first-quarter upside nor incremental currency favorability to the full-year guidance, similar to peers, the analyst noted this could create a favorable setup for the second half, particularly as IAM contributions continue to feather in. Partially balancing this, Murphy said that DocuSign’s fiscal 2026 outlook assumes consistent macro trends relative to when it was provided in mid-March. As a result, any degradation in underlying demand activity could exert some drag against ongoing improvements in the core business and go-to-market efforts.

While the analyst noted the potential for some continued variability in key metrics, such as customer adds and DNR, he continued to monitor for commentary related to envelopes sent and consumption, for which the company’s indications have been encouraging in recent quarters, to assess the underlying health of the core business, including in more macro-volatile verticals and geographies. In addition, coming off DocuSign Momentum, where the company highlighted new AI-driven products such as AI Contract Agents backed by its Iris AI engine, Murphy remains focused on DocuSign’s ability to drive further upsell and diversification from its core eSign base through newer features, likely to aid retention trends over time.

As a reminder, DocuSign also commented that it expects this IAM contribution to grow in fiscal 2026 and represent a “low-double-digit” percentage share of its total subscription recurring book of business (ARR) by the fiscal fourth quarter.

Overall, Murphy remains encouraged by the pacing of adoption for this broader IAM platform, which has aligned with his view of an accelerated adoption cycle relative to contract lifecycle management (CLM).

He noted that much of the penetration today has been in the small and mid-market segments, with the enterprise segment and self-serve motion likely to ramp gradually as the year progresses.

As a reminder, DocuSign disclosed at its Momentum conference in April that over 10K customers had purchased IAM.

The analyst noted that IAM adoption by a “low-double-digit” share of the total Subs ARR base by year-end could drive a fairly meaningful uplift in the spending of existing eSign users, potentially resulting in a low-single-digit tailwind to growth trends in the medium-term.

Overall, Murphy noted this as a fairly tepid reading on balance when evaluated on a Y/Y growth basis, though he noted that these results for the first quarter land above five of the past ten quarters.

While an informative additional data point, he cautioned investors from over-indexing these web traffic figures, given the volatility in these metrics and an absence of supporting transaction-based trends within this data.

Murphy projected first-quarter revenue of $747 million and adjusted EPS of $0.82.

Price Action: DOCU stock is trading higher by 1.10% to $92.62 at last check Wednesday.

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