This Coronavirus Winner Is Set to Emerge Even Stronger

COVID-19 turned the modern workplace on its head...

Because of the pandemic, millions of people are still working from home.

When the crisis began, businesses had to scramble to make sure they could maintain operations. That meant providing employees with computers and essential software so they could do their jobs.

And this trend may be here to stay...

According to Global Workplace Analytics, 56% of the workforce could do their jobs from home. And it estimates that 25% to 30% of the workforce will be working from home multiple days per week in 2021.

That's a huge boost for today's company...

DocuSign (Nasdaq: DOCU) is perfectly positioned for this remote-working reality. Its cloud-based e-signature software lets customers securely sign contracts electronically from almost any device anywhere in the world... laptops, tablets, or smartphones.

And it's the leader in the industry, taking up about 60% of market share. So it's likely the first choice of many businesses looking for e-signature solutions.

But that's not all it does. It has a suite of other products that can help businesses, like its partnership with Salesforce (CRM) that allows salespeople to create, route, and sign contracts all within Salesforce's software.

With businesses not able to work face to face, DocuSign's technology became mission-critical. And that boosted its business in the first quarter...

The electronic-document-management company's earnings per share ("EPS") reached $0.12, topping the estimated $0.10. Revenue for the quarter came in at $297 million, above the consensus of $281.1 million and up from $214 million this time last year. This represents an incredible revenue growth rate of 39%.

According to Chief Financial Officer Michael Sheridan, DocuSign added 68,000 new customers for the quarter... a company record. Its global customer base is now roughly 661,000.

Because of the pandemic-related uncertainty, many companies have withdrawn their forward guidance.

Not DocuSign...

The strong quarter also pushed the company to not only give a forecast – but to increase it.

For the second quarter, DocuSign now expects revenue as high as $320 million, ahead of the estimated revenue of $303 million. For the entire year, it expects revenue as high as $1.32 billion, topping the estimate of $1.26 billion.

In an interview on CNBC's Mad Money, DocuSign CEO Dan Springer said that the company has seen incredible demand from existing and new users, as well as government agencies, as a result of the coronavirus.

And the surge in demand isn't expected to go away anytime soon...

Springer said he thinks this demand surge is here to stay, as the pandemic has pushed forward the digital transformation of many businesses. The company added that the work-from-home trend is also here to stay.

"We don't anticipate customers returning to paper or manual-based processes," Springer said on the company's earnings call. "Once they take their first digital transformation steps with us and they realize the time, cost, and customer-experience benefits, they rarely go back."

So DocuSign is likely going to see high demand for its products and services when the pandemic clears, whether or not people return to their offices.

When we last covered DocuSign in February, the stock had just reached an all-time high at around $90 per share. Since then, the stock has continued to soar, hitting $150 per share. And DocuSign's shares have more than tripled over the past 12 months.

What's more, this run up could create even more demand for DocuSign shares...

On Friday, Nasdaq announced that DocuSign would be included in the Nasdaq 100 Index starting next week, replacing United Airlines (UAL). The Nasdaq 100 tracks the 100 largest non-financial stocks trading on the Nasdaq exchange.

This change means that any index funds tracking the Nasdaq 100 would now need to buy shares of DocuSign, pushing the price even higher.

With people continuing to work from home even after the pandemic subsides, DocuSign should continue to see strong demand for its products. DocuSign looks like it will be one of only a few companies to come out of the coronavirus pandemic stronger than it went in. That should be a sustained tailwind for the company's shares going forward.

Sometimes investing is simple.