DocuSign (DOCU) -) shares slumped lower Friday after the online signature vending group posted stronger-than-expected first quarter earnings but only provided a modest lift it full-year revenue forecast and cautioned on narrower near-term margins.
DocuSign earned 72 cents per share over the three months ending in July, rising around 63% from last year topping Street forecasts on a non-GAAP basis by around 6 cents per share. The group also notched an 11% gain in revenues, which hit $669.4 million, again topping analysts' forecasts of a $677.5 billion tally.
The group said full-year sales would likely rise to between $2.73 and $2.74 billion, a nudge higher than its prior forecast, thanks in part to an expanded partnership with Microsoft (MSFT) -) which will see the tech giant using DocuSign's products and services in its contract management workflows.
However, the group guided to an operating margin of between 81% and 82% as it ramps up investments in AI and other technologies.
"While we are pleased with our results, like many others, we are seeing continued macro pressures tempering expansion rates," CEO Allan Thygesen told investors on a conference call late Thursday. "However, we remain focused on what we can control, executing against our initiatives to drive innovation and operational efficiency, further setting the foundation for growth while navigating an uncertain environment."
"As we continue our product evolution by adding intelligence and unlocking the data trapped in agreements, we're increasing productivity, reducing friction, and saving our customers time," he added. "This is a fundamental shift in the agreement space. I'm confident in our competitive advantage."
DocuSign shares were marked 4.5% lower in early Friday trading to change hands at $49.80 each, extending the stocks' year-to-date decline to around 12%.
"While the company lowered its operating margin guidance for FY24 from continued ramps in investments to drive top line growth that could temper optimism this morning, the company is well-positioned to expand its profitable growth profile by expanding to new opportunities internationally while maintaining a relatively sticky customer base with its value proposition to customers," said Wedbush analyst Dan Ives, who carries a 'neutral' rating with a $67 price target on the stock.
"We believe the DocuSign story is finally gaining traction in the market with an improved product portfolio embedded with Generative AI capabilities to drive customer interest and billings growth with an increased focus on expanding its international footprint," Ives added.
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