DocuSign, Inc (NASDAQ:DOCU) stock climbed after the company reported better-than-expected third-quarter financial results and issued fourth-quarter and fiscal 2025 revenue guidance above estimates.
On Thursday, DocuSign reported third-quarter revenue of $754.8 million, up 8%, topping the consensus estimate of $745.26 million. It reported third-quarter adjusted EPS of 90 cents, above analyst estimates of 87 cents.
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DocuSign forecasts fourth-quarter revenue of $758 million—$762 million, compared to analyst estimates of $755.95 million.
Wall Street rerated the stock and raised its price targets.
- RBC Capital analyst Rishi Jaluria maintained DocuSign with a Sector Perform and raised the price target from $57 to $90.
- Piper Sandler analyst Rob Owens reiterated DocuSign with a Neutral and raised the price target from $60 to $90.
- JPMorgan analyst Mark R Murphy maintained an Underweight on DocuSign with a price target of $70.
RBC Capital: Due to peer multiple expansion, the price target reflects 18x Enterprise Value/Calendar 2025 Free Cash Flow from the prior 11x.
DocuSign reported a good beat-and-raise quarter, leading to an after-hours stock rally. Billings acceleration highlighted the quarter. One-third of billings came from early renewals, but usage trends are increasing.
The company raised its guidance well ahead of outperformance, and NRR improved. While there was improvement in the core business, the case for meaningful acceleration rests on ramping up Intelligent Agreement Management (IAM), which remains early.
Jaluria noted most of the outperformance coming from results in the third quarter as more of a function of the demand environment stabilizing. He wants to see more proof points regarding IAM adoption to get comfortable underwriting acceleration.
Operating margin expansion was impressive, but the upside is becoming more muted. Jaluria expects this trend to continue into fiscal 2026 as management strives to accelerate growth back to double-digits. Overall, the quarter was solid, but clarity into IAM driving a sustained growth acceleration still needs improvement.
Jaluria projects fourth-quarter revenue of $760.2 million and EPS of $0.83.
Piper Sandler: The third-quarter top- and bottom-line metrics came in above expectations, with billings growth showing upside on an easy comp, driven partly by early quarterly renewals. IAM showed strength in its first full quarter, with ~80% of sales representatives closing three or more IAM deals.
While Owens is encouraged by the acceleration, he noted it is still too early until newer products and solutions contribute meaningfully to the model – and overall growth. The analyst awaits durable signs of inflection from newer growth levers.
Owens projects fourth-quarter revenue of $760 million and EPS of $0.87.
JP Morgan: In Murphy’s preview, he expressed a positive tone heading into DocuSign’s third-quarter results while raising his price target, calling out the likelihood for positive early indications on newer product initiatives such as IAM, improvements in transactional activity including envelope and consumption patterns, and further operational refinements to the business that could support a pick-up in underlying organic growth trends.
Overall, Murphy noted this aligns well with DocuSign results as it posts a mild uptick in third-quarter revenue growth and billings growth, which is picking up more noticeably off a very depressed second-quarter level alongside positive demand commentary.
As a reminder, across his recent notes, he had explicitly called out DocuSign as among a group of beaten down, pandemic pull-forward stocks that could see positive share price reactions if they deliver growth rates that are stabilizing or picking up, which has primarily played out across this group, including for Twilio Inc (NYSE:TWLO) and Zoom Communications, Inc (NASDAQ:ZM) in recent months.
Overall, Murphy remains complimentary of DocuSign’s turnaround execution and innovation efforts. However, it remains focused on a more straightforward path to recapturing sustainable, long-term double-digit growth, reiterating it as an aspirational target today, alongside a cleaner GAAP profitability framework to provide further valuation support that SBC doesn’t inflate.
While acknowledging a moderation in the pace of revenue deceleration, Murphy noted the risk/reward dynamic for DocuSign shares as inferior relative to our broader software coverage list, with revenue and billings growth continuing to show muted growth.
The analyst noted it would take time for the company’s investments in self-serve motion and product innovation to bear fruit and regain investor confidence in its long-term ability to drive higher ARPU and steady new customer wins, particularly among large enterprises.
Murphy projects fourth-quarter revenue of $760.0 million and EPS of $0.85.
Price Action: DOCU stock is up 28% at $107.00 at last check Friday.
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