Can DOCU Stock Reverse Its Revenue Decline?
Key Takeaways
DocuSign has added AI agents to its Intelligent Agreement Management to help users extract essential information and elevate its product offering.
DOCU stock continues to trend down in 2025, with a decline in revenue anticipated for Q2 earnings this week.
Market remains uncertain for DocuSign and other productivity stocks as effects of AI on software unfolds.
DocuSign [DOCU] is a San Francisco-based software company whose products are used to manage electronic signatures.
According to estimates from 6Sense, DocuSign is not just the digital market share leader, but holds an overwhelming majority of 55.63%, as the graph above shows.[1]
DOCU stock was one of the pandemic darlings that benefited from the shift to remote working, alongside the likes of Dropbox [DBX] and Zoom [ZM].
Ahead of DocuSign’s Q2 2026 earnings being reported after the bell on September 4, we take a look at the company’s recent financial performance, why DOCU stock has been in a downward trend over the past few months and how it is aiming to fuel future growth.
DocuSign Launches AI Contract Agents
While DOCU stock initially became synonymous with simply signing electronic documents, DocuSign has since pivoted to ironing out the inefficiencies in agreements with the launch of DocuSign Intelligent Agreement Management (IAM) in 2024.[2] Recent research carried out in partnership with Deloitte found that businesses globally lose $2trn annually as a result of poor agreement management.[3]
DocuSign CEO Allan Thygesen told CNBC following Q4 results in March that IAM customers “take all the completed agreements and we can extract all the essential data. We can tell you what is in your agreements, when they are up for renewal, which terms you want to negotiate, or even benchmark them against other deals”.[4]
In April, DocuSign added artificial intelligence (AI) contract agents to the IAM platform to expedite the review process. These agents can analyze documents within seconds and flag any issues that require human intervention.[5]
DOCU Stock’s Slump
Despite enterprise enthusiasm for IAM, the DocuSign share price has been trending lower over the past few months.
DOCU stock has gained 25.1% in the past 12 months through September 2. It is down 17.65% since the beginning of the year, but has recovered from a 2025 low of $66.35 on August 12 to $74.07 at the most recent close.
Lower Billings Guidances Sparks Investor Concerns
The recent selloff in the DocuSign share price was sparked by the Q1 2026 results reported on June 5.
On the face of it, the report was a good one. Earnings per share were $0.90 and revenue came in at $764m, up 7.61% year-over-year. These numbers comfortably beat Wall Street’s expectations of $0.81 per share and $748m.[6]
“Q1 was an important quarter for DocuSign’s long-term transformation as we delivered on an ambitious product roadmap and surpassed 10,000 [IAM] customers,” said CEO Thygesen in the earnings release.[7]
However, investors reacted negatively to news regarding its billings, a key sales metric. They came in at $739.6m in Q1, lower than the $746m analysts had been expecting. Of more concern was DocuSign’s decision to lower its full-year billings guidance from a range of $3.3bn–3.35bn to a revised outlook of $3.29bn–3.34bn.
As for Q2, revenue is expected to come in between $777m–781m, up 5.8% at the midway point from the $736m reported in Q2 2025.[8] This would be a decline in quarterly revenue growth, which has been in the 7–9% range for the previous seven quarters and double-digit growth before that.[9]
For comparison, Zoom’s Q2 2026 revenue, reported on August 21, was up 4.7% year-over-year to $1.21bn.[10] Meanwhile, Dropbox’s Q2 2025 revenue, reported on August 7, fell 1.4% to $625.7m.[11]
Here is how the current fundamentals of the three work productivity stocks compare.
Both DOCU stock and ZM stock are trading above the industry P/S ratio for the software industry.[12] While DBX stock looks better valued, Dropbox’s declining revenue over the next couple of years could be a concern. DocuSign’s higher forward P/E ratio could make DOCU stock overvalued.
DOCU Stock: The Investment Case
The Bull Case for DOCU Stock
On August 21, DocuSign was named by IDC as a leading vendor in the contract lifecycle management application market.[13]
“We believe this recognition underscores the value of our IAM platform-based approach to agreement management, making it possible for us to meet the unique needs of specific lines of business,” said Thygesen in the press release.
The Bear Case for DOCU Stock
Concerns over whether the billings guidance cut is a sign of softer growth ahead led several analysts to lower their price targets on DOCU stock following the Q1 earnings.
Wedbush slashed its price target from $100 to $85, Morgan Stanley cut its target from $92 to $86, and UBS reduced its target from $85 to $80. All three maintained an ‘equalweight’ or ‘neutral’ rating.[14]
Conclusion
DocuSign is confident that demand for its IAM platform will help to drive growth in the future, but it remains to be seen if and when revenue may reverse its decline.
In the near term, DOCU stock could come under further pressure as sentiment around the software theme wanes amid concerns about what AI will mean for the future of the software industry.[15]
This is for informational purposes only. OPTO Markets does not recommend any specific securities or investment strategies. Investing involves risk and investments may lose value, including the loss of principal. Past performance does not guarantee future results.
[1] https://6sense.com/tech/digital-signatures
[2] https://investor.docusign.com/investors/press-releases/press-release-details/2024/DOCUSIGN-UNVEILS-NEW-AI-POWERED-INTELLIGENT-AGREEMENT-MANAGEMENT-PLATFORM-FOR-NEW-SAAS-CATEGORY/default.aspx
[3] https://www.docusign.com/en-gb/blog/deloitte-research-costly-problems-agreement-process
[5] https://www.docusign.com/blog/ai-contract-agents-future-agreement-management
[6] https://www.cnbc.com/2025/06/06/docusign-stock-billings-earnings.html
[7] https://investor.docusign.com/investors/press-releases/press-release-details/2025/Docusign-Announces-First-Quarter-Fiscal-2026-Financial-Results-Announces-1-0-Billion-Increase-to-Share-Repurchase-Program/
[8] https://investor.docusign.com/investors/press-releases/press-release-details/2024/Docusign-Announces-Second-Quarter-Fiscal-2025-Financial-Results/default.aspx
[9] https://stockanalysis.com/stocks/docu/revenue/
[10] https://investors.zoom.us/news-releases/news-release-details/zoom-communications-reports-financial-results-second-quarter
[11] https://investors.dropbox.com/news-releases/news-release-details/dropbox-announces-fiscal-2025-second-quarter-results
[12] https://fullratio.com/ps-ratio-by-industry
[13] https://investor.docusign.com/investors/press-releases/press-release-details/2025/Docusign-Named-a-Leader-in-the-IDC-MarketScape-Worldwide-AI-Enabled-Buy-Side-Contract-Lifecycle-Management-Applications-2025-Vendor-Assessment/default.aspx
[14] https://www.marketscreener.com/quote/stock/DOCUSIGN-INC-43180302/news-broker-research/
[15] https://www.bloomberg.com/news/articles/2025-08-25/ai-disruption-fear-sparks-investor-scrutiny-of-software-stocks
The Q2 revenue guidance at 5.8% growth versus the historical 7 to 9% range is the real issue not just the billings miss. What makes this tricky for DOCU is they're trying to execute a platform transition while legacy e-signature revenue declerates which creates aJ-curve effect that's hard for investors to stomoch. The 10,000 IAM customers is encouraging but the market needs to see those customers generating meaningfully higher ACVs to justify the current valuation at 5.4x forward sales. The comparison to Zoom and Dropbox shows all three pandemic darlings are struggling with post boom normalization but DOCU at least has a credible TAM expansion story unlike the other two.
This feels like a classic case of a company trying to innovate its way out of a post-peak hangover. While AI contract agents are a smart move to add value beyond signatures, the core challenge remains: DocuSign’s product became a commodity during the remote work boom.
Now, it’s not just about managing agreements; it’s about proving that their AI features are differentiated enough to justify renewed growth and fend off competition from broader platforms baking similar tools into existing suites.
The real test is whether customers see DocuSign as a must-have AI partner or just a nice to have utility.