附近上门

DocuSign is, at last, going public. Its the firm’s recent financial performance, showing quick subscription revenue growth, improving margins, stiff losses, and operational efficiency improvements.

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Like with any S-1, we have a bit of work聽ahead of us.聽To make this easier for you, we’ll detail the critical bits up top in easy-to-grok bullet points and then dive into each in detail. After all, given the sheer number of IPOs that we’ve had to crawl through, I suspect you are looking for something quick among the surfeit SEC documents.

First, while DocuSign’s filing is incredibly exciting, it is also out of date. The firm only details its results up to January 31, 2017. As such, we’re looking聽back聽into the firm’s financial results. I suspect, and this is a hunch, that the firm will update its S-1 with an S-1/A that will include its calendar 2017 (fiscal year ending January 31, 2018) results when they are completed. Certainly, the firm can’t go public without more recent information.

But let’s not let that stop us from trying to get our聽hands on its prior performance. Here’s all the context you need to get started: DocuSign raised over $500 million in its life as a private company, and it had a $3 billion pre-money valuation in 2015 at the time of its Series F聽.

Takeaways

As promised, here’s what you need to know in bullets:

• 搁别惫别苍耻别:听DocuSign grew its revenue 52 percent (good) in its the fiscal year ending on January 31, 2016聽from $250.5 million (a large figure) to $381.5 million in the fiscal year ending January 31, 2017 (a very solid, IPO-ready figure).
• Operating Expenses:聽DocuSign’s growth was expensive. The firm spent $240.8 million on sales and marketing in its fiscal year ending January 31, 2017. That was up about $70 million from its $170 million sales and marketing costs in the preceding fiscal year.
• Net Losses: DocuSign lost $122.6 million in its fiscal year ending January 31, 2016, and $115.4 million in its fiscal year ending January 31, 2017.
• 颁补蝉丑蹿濒辞飞:听DocuSign’s free cash flow (operating cash flow + investing cashflow + financing cash flow) fell from -$96.3 million in its fiscal year ending January 31, 2016, to -$48.1 million in its fiscal year ending January聽31, 2017. Even more, the firm consumed just $4.8 million in cash to fund its operations in the latter fiscal year.
• Dollar-based net retention rate: 115 percent for both fiscal years in discussion.

Got all that? Let’s unpack.

Revenue

Given the numbers detailed above, what matters for DocuSign is scale. And the firm has reached it. DocuSign managed to keep growing at a quick clip while generating IPO-level top line. Some companies see their top line growth slip far under the 50 percent mark by the time that they scale past $100 million in trailing revenue.

Of course, there is a considerable premium attached to present-day revenue that is growing quickly.

The other point of interest in regards to DocuSign’s top line is the percent of it that recurs. In its most-recently-detailed fiscal year, the firm’s $381.5 million in aggregate revenue included $348.6 million in subscription top line. As the kids say: not bad.

Operating Expenses

DocuSign’s enormous sales and marketing spend will be interesting to vet when we get the company’s next set of results in. Spending a quarter billion dollars on sales and marketing in its fiscal year ending January 31, 2017, should have helped the firm set in place a good base.

At this point, I’d take us through the firm’s quarterly results to get an idea of how quickly its revenue ramped during the fiscal year; however, DocuSign failed to give us that information in its filing. Therefore, we can’t tell you how fast DocuSign grew under the boost of that huge expense. (The firm spent 63 percent of its revenue on sales and marketing during the year.)

So here we can only say that DocuSign is not afraid to pour money into selling its service. More when we know it.

Net Losses

In the above paragraphs, we looked at the firm’s GAAP net losses. Those deficits represent the firm’s revenue minus its fully-loaded costs. But what if we back out some costs and get a milder result? Enter adjusted EBITDA, which will allow us to skim a bunch of stuff off the top.

Here’s what it looks like for the two fiscal periods:

The above demonstrates that even with the most generous and gentle profit metrics, DocuSign still loses stiff amounts of money. Its response to that is probably “yes, but we grew at over 50 percent in our last reported fiscal year from a revenue base of a quarter billion.” It’s an explanation that does carry some merit.

Still, after a 1.5 decades or so of time in business, DocuSign loses money.

Cashflow

Here we have a question: Did DocuSign keep up its operational cashflow improvements and, if so, did it manage to generate operational cash over the last 12 months? If it did, that would go a long way to helping dispel profit worries. Free cashflow is a non-GAAP metric, but one that matters for SaaS businesses which can consume lots of cash to grow.

But if that trends reverses and is coupled with a slowing growth rate and still-tough GAAP losses, DocuSign might get its potential valuation reduced somewhat.

Dollar-Based Net Retention Rate

And finally, let’s do some math. If the firm spent diddly on sales and marketing (this is a thought experiment, relax), and it instead only grew by its prior dollar-based net retention rate, the firm would have expanded to $438.7 million in revenue for its fiscal year ending January 31, 2018.

So whatever revenue growth it posts above that we can presume came from its calendar 2017 sales and marketing efforts (provided that the firm manages to keep its dollar-based net retention rate flat).

That’s the quick look. There’s a . Have fun!