Its digital contract management tools have become very popular during the height of the pandemic.
After that, demand for the company’s products slowed, causing its inventory to plummet.
New contract management platform helps revive lost momentum.
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Docusign(NASDAQ: DOCU) in 2018 shares were distributed at $29, and in 2021 in September they rose more than tenfold to a record $310. The COVID-19 pandemic has fueled incredible demand for the company’s digital agreement tools, which have enabled businesses to continue transactions despite lockdowns and social restrictions.
However, this demand hit a wall when social conditions in 2022 returned to normal, making it difficult for Docusign to maintain pandemic-era revenue growth. Since then, its stock has fallen 78% from its all-time high, trading at just $67.
But last year, Docusign introduced a new platform called Intelligent Agreement Management (IAM), which is designed to make contract management processes even simpler with a set of artificial intelligence (AI)-driven features. The platform is helping the company regain lost momentum, so investors may want to buy Docusign shares for the new year.
Image source: Getty Images.
According to global consulting firm Deloitte, ineffective contract management processes cost the business community a staggering $2 trillion in economic value each year. This is called the “deal trap,” and IAM helps companies reclaim some of that value by using artificial intelligence to streamline contract drafting, negotiation, closing, and more.
At the heart of IAM is a feature called Navigator. It’s a digital repository where companies can store all their digital documents and uses artificial intelligence to extract valuable information from each one and make it searchable. This saves employees untold amounts of time as they no longer have to manually navigate through a stack of contracts to find what they are looking for.
Companies process tens of millions of contracts through Navigator each month. In fact, in 2026 In the fiscal second quarter (ended July 31), Docusign CEO Allan Thygesen said Navigator received 150% more documents than just six months earlier.
However, Navigator is one of the many features of IAM. For example, AI-assisted review analyzes each contract and identifies potential risks and opportunities based on predefined organizational standards. Then there’s Maestro, which allows companies to create an agreement workflow without writing any programming code. This is useful for quickly adding web forms or identification requirements to a contract.
Docusign’s revenue is more than doubled in the two years between fiscal 2020 and 2022, when demand was at its peak. But now it grows much more modestly; The company in 2026 earned 800.6 million in the fiscal second quarter. USD revenue, which was only 9% more than a year ago. However, this was actually an acceleration from the 8% growth achieved in the first quarter three months ago.
In fact, the strong performance prompted management to raise its full-year revenue guidance a second time in 2026. for the fiscal year. The company is now expected to bring in $3.201 billion.
During the height of the pandemic, Docusign invested heavily in growth-oriented operating expenses such as marketing and research and development, which is the main reason why its revenue has grown rapidly. However, this resulted in unbearable losses to the bottom line.
Currently, the company is spending more cautiously, and its total operating expenses in the first half of 2026 increased by just 5% year-on-year in the fiscal half. Although this shift results in slower revenue growth, it brings big profits. In the first half of the year, the company earned 135.1 million. USD of net income under generally accepted accounting principles (GAAP) and according to non-GAAP (adjusted) – 385.9 million.
By generating consistent profits, Docusign has the opportunity to start reinvesting in growth-oriented expenses like marketing, which can lead to further acceleration of revenue growth.
Docusign shares are trading at a price-to-sales (P/S) ratio of 4.6, a 63% discount to the average 12.7 in 2018. initial public offering. This is an even bigger discount to the peak P/E ratio, which as of 2021 is around 40.
DOCU PS ratio data by YCharts
Based on Docusign’s recent performance and clear progress in new AI-powered products like Navigator, its stock could be a great buy at its current price for investors looking for 2026.
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Anthony Di Pizio has no positions in any of the stocks mentioned. The Motley Fool has a position and recommends Docusign. The Motley Fool has a disclosure policy.
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