TTM revenue is $2.4 billion. Gross profit is $1.8 bill.
They are losing money because they spend a fortune on sales and marketing. As all growing enterprise software companies do. And it's sensible. To make an analogy, if you have 1000 oil wells with high IRRs, you get drilling. You'll lose money for a while because they cost a lot to drill, and then the money just flows in.... It's the same as acquiring large customers with a sticky enterprise software offering. The only difference is that due to accounting standards oil & gas companies categorize drilling as capex while enterprise software companies categorize it as operating expense (mostly, there are a few minor exceptions).
It's sensible only when you know you can flip a switch and turn to profit mode. This is true in the oil drilling example, but not at all guaranteed for tech companies.
So much of VC funding in the last decade has assumed (not only for enterprise software, but everything), that if you grow by some metric enough, one day you can flip a switch and *poof* profits. This same logic pervaded the "new economy" thinking right before the dotcom bust.
With the cost of many going up more and more of these large, unprofitable tech companies are going to have to start proving that they really can flip that switch and remain at the scale they are. I think a concerning amount will find they can't.
Their service is undifferentiated from the competition. When they try to make more money by increasing costs their users move to a similar, cheaper solution.
They have customers whose products/services call into Docusign APIs at dozens of locations. It's sticky.
One day we sat down and did the math on earning a medical degree and ending up debt free via borrowing vs not borrowing and her eyes figuratively popped.
Money is possibly the cheapest resource of any tech startup.
now that a 5 year bond outperforms most tech companies they are beginning to rethink their headcounts and all that sales and marketing spending
The IRR on sales & marketing spend at Docusign is way above 4% (approx current yield on 5 year).
a 5 year treasury bond right now has a yield of 4%. if you were to buy and hold to maturity, after 5 years you get 4% return. this is what is meant by "outperforms" in this context. If it was about the past, one wouled add -ed and give the start date.
now, docusign stock price is 62% down ytd (2022.10.01), and is only trading 7% over its ipo price. So I don't care what the IRR is, I predict a 4% increase from the current price in 5 years is highly unlikely and the downward move will deepen across the tech sector hence I will never buy this meme stock. I will check in 5 years to verify if my prediction is correct. you are more than welcome to waste your money on this, just maybe don't bet your house on it.
Stock down 62% ytd = avoid ...isn't great logic. But, no need to check back in in 5 years, there is easy money here to be had - just write a bunch of DOCU call options, long dated. Invest all the proceeds in the 5 year bond.
For those worried about "unlimited loss", just buy a wildly out of the money call, well above the price they sell them at.
Easy money - assuming it is in fact "highly unlikely" that the stock will outperform the 5 year bond.
For comparison, consider Cisco, a company most people think of as a bloated dinosaur... it has ~75000 employees on a gross revenue of $51.557B for FY22.
So roughly 10x the employees, but 83x the gross revenue. And this is Cisco, hardly a tech darling at this point.
What the hell do 7400 people do at Docusign?
https://www.macrotrends.net/stocks/charts/CSCO/cisco/net-pro...
I don't think it's a fair assumption that only sales/marketing orgs are oversized anymore. Oversized engineering orgs also lead to oversized opex spend due to added difficulty in having ~1k engineers contribute to a common code base.
A particular principal engineer was prone to arguing that Engineers should be getting paid between half a million and a million per year. On the basis that our contributions were much greater than what we were paid. That Engineer is a CTO now.
Hopefully they took some business classes between then and now.
Let's Encrypt has a staff of 16. I'm not unsympathetic to sales, marketing, DevRel, etc (ongoing BAU and solid growth are both crucial to an established enterprise) but a gap of low teens to 7000 people for using emails to proof identity and store documents for retention periods? Come onnnnnnn.
For instance, marketing sometimes has its own developer / engineering teams, rather than running their work through the engineering org. Thats an example.
At Bulksign https://bulksign.com, we're building a digital signatures platform which has comparable features with a tiny team.
DocuSign and HelloSign are terrible in this respect. Just give me a simple, straightforward way (Ie couple clicks max) to dump every single signed document and their metadata so I can pass it to auditors. That would be a great feature.
Also, at this point I feel they could coast a bit on the sales. They are the standard in the USA, period. IMHO the service is suitably viral and must sell itself in large part. (I could be way off on the last assumption.)
HelloSign on the other hand provides a library for embedding an agreement into a flow and makes it a cinch. I didn't need to create a HelloSign account--I just `npm install`ed the library and got it working within minutes without having to look at any docs.
I'd imagine this is a big factor given that developers often have a lot of sway in influencing these kinds of decisions and get annoyed by unnecessary "enterprise" baloney when it's not really needed.
On selling it smells like attempting to sell huge, broad "solutions" that cover 20 different departments to try to get so stuck into an enterprise that they will never churn. This will cause very expensive and slow sales cycles. It can only be justified if these solutions are actually getting DocuSign in a place where they are uniquely positioned to upsell into all of these different functions down the road, taking into account that Microsoft is probably building crappier but cheaper versions of the same offerings.
On R&D it sounds like they're either 1) way too inefficient or 2) supporting a ton of integration for the huge solutions that need 500 different connectors into every legacy app ever written. Again, this could make sense, but requires them to attain a Microsoftish level of integration into company workflows that ensures that the customer is a permanent golden goose.
So true... I could have done that in a weekend!
https://danluu.com/sounds-easy/
Seriously you're dead right. I just never get tired of that callback.
1) That's not white collar tech jobs, that's ALL jobs in SF
2) That's base salary, not inclusive of other comp like stock and bonus
3) Benefits are a huge slice of the compensation pie: insurance is not cheap, most companies 401k match, etc
4) Payroll tax is a big chunk too
5) There's overhead associated with hires. At a minimum they get a laptop, but if they're onsite you have to furnish a cubicle and pay all associated costs
Fully loaded, the annual expense of a generic tech hire in SF is definitely more like $200k
Right! Because:
>If we are take an average SF salary...
>No way average SF salary is that low.
:)
From HN guidelines “Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.”
Please do the same. My response can basically be read as...
Someone: "I don't think that the average SF salary is $100k."
Me: "You'd be surprised!"
... because I didn't know the answer to that either and found it interesting. That's it, basically.
But maybe DocuSign doesn't do it that way, I don't actually know.
They started in Seattle: DocuSign Tower, 999 3rd Ave #1800, Seattle, WA 98104
>> The city where our company was founded, Seattle continues to play a deeply important role in many aspects of our culture and business with teams from many functions including Engineering, Sales & Marketing and Global Customer Support.
Also, Adobe Sign seems to have reached feature/integration parity.
No need for grandiose visions for their software, just support it with minor improvements here and there and aim for profitability rather than pushing the concept beyond what it should be.
Electronic signing as a product will likely become pretty much 100% free over time as competitors build out. Cost structure for Docusign must be lean to be viable long term
How are they losing so much money?