DocuSign Inc. (DOCU) shares surged higher Friday after the online signature vending group posted stronger-than-expected second quarter earnings and a solid near-term outlook.
DocuSign which has been struggling to hold investor interest as pandemic-era restrictions bring more and more professionals back to the office, earned 44 cents per share over the three months ending in July, topping Street forecasts on a non-GAAP basis by around 2 cents per share.
The group also notched a 22% gain in revenues, which hit $622.2 million, and said full-year sales would likely rise to between $2.47 and $2.48 billion and billings of between $2.5 and $2.57 billion, 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.
Cost cuts and pared-back spending plans helped operating margins improve on a sequential basis to 18%, the company said, a figure that is likely to hold up over the back half of its financial year.
"We enter this next phase with a clear set of vital few deliverables for our people initiatives and product roadmap, while driving sustainable and profitable growth at scale," interim CEO Maggie Wilderotter said late Thursday. "We have a $50 billion market opportunity, an industry leading digital agreement platform, strong market position, and an experienced leadership team."
DocuSign shares were marked 7.4% higher in Friday trading to change hands at $62.25 each, a move that would still leave the stock nursing a year-to-date decline of around 60%.
Earlier this summer, Dan Springer stepped down as group CEO to make way for Wilderotter, a member of the DocuSign board. The group said a decision will be made on a permanent replacement soon, while Wilderotter noted that despite the transition period, employee attrition rates have moderated.
"While the board is close to making a decision on a new CEO, Wilderotter has driven the creation of a digital agreement platform versus a focus on a cloud environment, operationalizing the business, and driving profitable growth at scale," said JMP Securities analyst Patrick Walravens, who carries a 'market outperform' rating with an $84 price target on the stock.
"While DocuSign is focused on building the business for the long term, we believe this business has significant strategic value to a potential acquirer like Salesforce or Microsoft, and we think that view is supported by recent revisions to the terms of severance and change in control agreements for multiple DocuSign executives," he added.
