DocuSign: Downgrading Moat Rating to None and Lowering FVE to $65 From $80

After reconsidering DocuSign's rollercoaster performance during the lockdowns and in the postcovid hangover period, we are lowering our moat rating to none from narrow. We see the company’s business as moaty in general as a result of the proof point from covid and a high degree of recurring revenue, with the underlying moat source being switching costs. However, we are concerned that the company derives nearly all of its revenue from e-signatures and has been unable to gain more meaningful traction with some of its newer solutions, such as contract lifecycle management, thus far. We also see Adobe, the company’s main competitor, as making inroads with pricing and packaging, as well as usage drivers for both Acrobat and Adobe Sign, which could have an impact on DocuSign’s leadership position.