Shares in DocuSign popped on Friday after it reported earnings and revenue that topped estimates amid sharply lowered expectations. DocuSign stock analysts debated the company's turnaround plan from its new chief executive.
DocuSign stock soared 12.4% to close at 49.16 on the stock market today. Heading into the earnings report, shares were down 71% this year.
The San Francisco-based software maker cleared a low bar for the third quarter, Jefferies analyst Brent Thill said in a note to clients.
"(DocuSign) delivered a beat across the board against low expectations aided to some extent by early (contract) renewals," Thill said. "Despite the beat, management's billings growth outlook for fiscal 2024 is appropriately prudent given the tougher macro environment. (DocuSign) remains focused on improving its go-to-market motion, but it will take a few quarters."
DocuSign Stock: New CEO Came From Google
The maker of electronic signature software brought in a former Google executive, Allan Thygesen, as its new CEO in September. Former DocuSign CEO Dan Springer resigned in June following a string of disappointing earnings reports.
"While we await signs of improvement, we're positive on the vision, including revamped go-to-market (digital self-serve, simplified product packaging, bolstered partner ecosystem, aligned sales incentives)," DocuSign stock analyst Rishi Jaluria from RBC Capital said in a note.
DocuSign earnings for the October-ending quarter came in at 57 cents a share, down 2% from a year earlier, but ahead of estimates for 42 cents.
Revenue rose 18% to $645 million. Analysts had predicted revenue of $627 million.
DocuSign Fiscal 2024 Outlook De-Risked?
Sterling Auty, DocuSign stock analyst at MoffettNathanson, said the company's turnaround will take time.
"DocuSign's new CEO, Allan Thygesen, laid out several initiatives that were concrete and had legitimate specificity," Auty said in his note.
"On fiscal 2024, preliminary commentary is for revenue growth in the high single digits — fine, consensus was at 9.6% prior so not too disappointing. Operating margins to be at the low-end of the 20- 25% range — also fine, maybe less exciting after the layoffs," Auty went on to say.
He added: "The billings comments are not good. Not only because it was much further below consensus estimates for next year than the others. But also because of what it portends for the following year or years."
Demand for DocuSign products surged during the early part of the coronavirus outbreak. But many businesses are resuming in-person meetings. The company's software also automates the filing of contracts over the internet.
DocuSign stock owned a Relative Strength Rating of 10 out of a best-possible 99, according to IBD Stock Check-up.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
