Analyst Note
| Dan Romanoff |Narrow-moat DocuSign reported a good first quarter, with both top line and non-GAAP operating margin exceeding the high end of guidance. Operating margin benefited from recent headcount reductions, although guidance indicates margins will decline as the year progresses and investments ramp. Management said the environment is largely unchanged, with various pockets of strengths and weaknesses. Despite the macroeconomic headwinds, results and guidance indicate DocuSign has corrected course in terms of focusing on margins, streamlining the sales approach, and accelerating product innovation. Based on results and guidance, we fine-tuned our model and raised our fair value estimate to $74 per share, from $72. We see shares as attractive for patient investors, but continue to prefer some of our wide-moat names as macroeconomic uncertainty persists.