Choosing Between Cloud Stocks: A Comparison of DocuSign and Confluent
In the rapidly evolving digital landscape, two tech companies, Confluent and DocuSign, are making significant strides. While DocuSign excels in the electronic signature and agreement cloud market, Confluent, a real-time data streaming platform based on Apache Kafka, is gaining momentum, particularly in industries increasingly reliant on real-time data integration, event-driven architectures, and cloud data infrastructure.
Over the past five fiscal years, Confluent's revenue has grown at a staggering CAGR of 42%, with an adjusted gross margin expanding from 70% to 79%. In contrast, DocuSign's revenue has grown at a CAGR of 20%, reaching a profitable status on a GAAP basis over the past two fiscal years.
The broader market demand for real-time data processing, cloud-native architectures, and digital transformation is fueling Confluent's higher growth expectations. Confluent serves multiple verticals, including finance, healthcare, and retail, with mission-critical data pipelines, potentially leading to diversified and expanding revenue.
As enterprises move more workloads to the cloud, platforms like Confluent that enable seamless data flow grow in strategic importance. Confluent's growth is also driven by the accelerating adoption of real-time data streaming services, expansion of its higher-margin cloud-based ecosystem, and new overseas customers.
On the other hand, DocuSign's core e-signature market is more mature, potentially leading to slower growth compared to a rapidly expanding technology segment like data streaming. DocuSign generates most of its revenue from subscriptions to its e-signature platform, CLM tools, and other cloud-based services.
Confluent's insiders have shown warmer sentiment compared to DocuSign, with the former buying 17.2 million shares and selling 17.6 million shares over the past 12 months. However, it's important to note that market conditions and individual investment decisions should be carefully considered before making any investment decisions.
Analysts expect DocuSign's revenue to grow at a slower CAGR of 8% from fiscal 2025 to fiscal 2028, while Confluent's GAAP EPS is expected to decline in fiscal 2026 but grow at a CAGR of 41% from 2026 to 2028.
In conclusion, while both companies are thriving in their respective markets, Confluent's focus on real-time data streaming and its strategic position in the cloud and AI markets position it for potentially faster growth in the coming years. However, it's crucial to conduct thorough research and consider various factors before making investment decisions.
Investing in Confluent could be beneficial, given its growth in the real-time data streaming market, expanding cloud-based ecosystem, and increasing focus on industries relying on data integration and cloud infrastructure. This growth is complemented by the surge in demand for real-time data processing, cloud-native architectures, and digital transformation.
On the other hand, while DocuSign continues to perform well in the electronic signature and agreement cloud market, its growth may be slower compared to tech segments like data streaming, due to the maturity of its core e-signature market. DocuSign primarily generates revenue from subscriptions to its e-signature platform and other cloud-based services.
