DocuSign Stock: Some Major Concerns for Investors

How can you tell if a technology is emerging or disruptive? The former has emerged, but not yet disrupted. Disruptive technologies are those which are actively capturing market share through strong revenue growth, but they’re different from growth companies. Leading global index provider MSCI (MSCI) defines growth using five factors, three of which involve earnings per share. Your typical disruptive technology company won’t have positive earnings until they capture as much market share as their funding allows.

Only one of MSCI’s growth factors – historical sales per share – looks at revenue growth using five years of history. Consequently, disruptive technology companies may not appear on the radar of traditional growth investors. Revenue growth is one of the most important variables we consider when looking at disruptive technology stocks. If you’re not capturing market share, you’re not disrupting. When a disruptive technology company stops growing revenues, it loses its status as a disruptor. So, what’s an objective rule that would indicate stalled revenue growth?

When Revenue Growth Stalls

Revenues that grow at 3-5% per year simply represent natural inflation. Firms will often implement price increases which their clients begrudgingly sign off on when convinced said price increases are accompanied by added value over time. (A price increase notice will almost always make mention of product improvements that have client visibility.) The implication is that companies need to continue evolving products/services development just to achieve 3-5% growth. Therefore, if you back out inflation, actual “double-digit growth” starts somewhere around 13-15% (not 10% as the name implies). Similarly, 8% revenue growth becomes 3-5% real growth. This