• February 4, 2023

DocuSign beats on earnings but stock falls

DocuSign Inc. exceeded revenue and earnings expectations for the last quarter and provided a better-than-expected outlook on these metrics. However, the electronic signature company’s shares fell late in the trading day.

The company recorded a net loss of $ 72.4 million, or 38 cents per share, for the fourth quarter, compared with a net loss of $ 47.4 million, or 26 cents per share, a year earlier. After adjusting for stock-based payments and other expenses, DocuSign
DOCU, + 5.90%
earned 37 cents per share, compared to 12 cents per share last year. Analysts tracked by FactSet forecast 22 cents per share.

Revenue for the quarter rose from $ 258 million to $ 410 million, while analysts were expecting $ 408 million.

DocuSign was a big winner during the pandemic. Inventory grew 200% over the past year as more jobs poured into the company’s software for digital signatures and other types of contract management in a world where more business is done remotely.

Cynthia Gaylor, chief financial officer, told MarketWatch that the company is “really well positioned for the secular trends we’re seeing in terms of digitizing and automating agreements.”

DocuSign stock lost 3.9% after close of trading on Thursday after rising 5.9% in the regular session.

“The big question now for DocuSign is how much a return to more normal workplaces and patterns could hurt their growth,” wrote Scott Kessler, global technology, media and telecommunications leader for Third Bridge.

The company’s billing outlook for the current quarter implies growth of 35%, which would represent a sequential slowdown from last quarter when DocuSign’s billing increased 46%.

For the current quarter, DocuSign is forecasting revenues of 432 to 436 million US dollars, while analysts searched for 419 million US dollars.

Looking at the full fiscal year ending next January, DocuSign expects revenue to be between $ 1.963 billion and $ 1.973 billion. Analysts modeled $ 1.89 billion.

Gaylor said DocuSign’s business grew nearly 50% in fiscal 2020, arguing that the company’s guidance is “pretty solid and impressive considering how big the business has grown in a relatively short period of time”.

She sees DocuSign early in its quest for a market that the company believes will reach an addressable market of $ 50 billion. Half of this comes from electronic signatures and the other half from efforts to help customers manage contracts more efficiently. While the company faces some competition from other document software vendors, she argued that the company has the most complete solution in a market where “the main competition is pen and paper.”

Gaylor believes DocuSign will continue to see benefits even after the economy recovers. DocuSign is working on a remote notary product that “is a great example of people not going back to what they were like when they could do it online,” she said. The company is also focused on getting customers who have tried the e-signature product to add other DocuSign solutions such as risk assessment and analysis.

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