Published: July 19, 2017 2:35 p.m. ET
DocuSign is looking to bring its $3 billion company to market by the beginning of next year.
The San Francisco-based company, which facilitates electronic signature and digital document management, is looking at the public market with its new chief executive and partnerships with major technology companies. In the run up, the company is getting close to breakeven on a cash flow basis and moving further into the payments space.
“I would be surprised by early next year if we weren’t filing or public,” said Daniel Springer, chief executive of DocuSign, in an interview with MarketWatch.
Springer joined the company in January, replacing Keith Krach, who stepped down after taking on the role in August 2011. He was previously chief executive of Responsys, an email marketing company that was acquired by Oracle Corp. ORCL, -0.33% in 2014.
DocuSign was founded in 2003 and has raised more than $500 million in funding, including a $233 million round in 2015, which valued the company at $3 billion, according to The Wall Street Journal.
The company is venture-backed by investors including Bain Capital and ClearBridge Investments, but also has funding from companies it provides the technology to and partners with, including Salesforce.com Inc. CRM, -2.70% Alphabet Inc. GOOG, -0.81% Intel Corp. INTC, -0.03% and Dell Inc., Springer said.
DocuSign has already been checking off boxes related to going public. Springer says the company’s revenue is “multiples” of $100 million, which is typically a threshold for companies to go public, and that it has a path to profitability.
“We are just getting to a place of being operating cash flow breakeven,” Springer said.
The company makes money through subscriptions for its services and has 300,000 paying customers. The top industries it serves are banking, insurance, pharmaceuticals, telecommunications and real estate — which is the first industry it targeted.
DocuSign has moved beyond just electronic signatures and now can track and authenticate documents as well as facilitate payments by using payment processors including Stripe and PayPal Holdings Inc. PYPL, -2.45%
The company has already begun migrating its earnings to new accounting standards that require a company to recognize deferred revenue, such as from subscriptions, over a shorter period, Springer said.
He added that the company already holds earnings calls each quarter with its investors to get used to the practice.
There are many competitors in the electronic signature space, including Adobe Systems Inc. ADBE, -2.79% AlphaTrust and EchoStar. However, DocuSign has the advantage of being an early adopter and has a good presence in both the retail and enterprise space, said Santosh Rao, head of research at Manhattan Venture Partners.
“When you think about signing electronically and digitally you think of DocuSign,” Rao said.
DocuSign had 40% of the e-signature market as of 2016, according to Forrester Research. Analyst Craig Le Clair noted in his report that “the company name is becoming a verb,” but said that it has the potential to be weighed down by its large valuation and the data centers it owns.
The electronic signature sector is particularly prone to mergers and acquisitions. Forrester notes that more than half of the companies mentioned in its e-signature report from the second quarter of 2013 had been acquired as of 2016.
That’s because the ability to have electronic signatures has become integral to doing business, according to Rao.
“It’s a must-have app on every retail-facing service,” he said.
Springer said DocuSign would look at the possibility of being acquired if the opportunity arose, but that it plans to run the business as an independent company and remain that way.
“It’s not what I expect to happen,” he said.