DocuSign Declines 17.2% Despite Upbeat Q4 Results

DocuSign, Inc. (NASDAQ: DOCU), a cloud-based software company focused on e-signature solutions, has reported stronger-than-expected results for the fourth quarter ended January 31, 2022. Robust growth in revenues drove the overall solid results of the company.

Following the news, shares of the company tanked 17.2% to close at $77.77 in Thursday’s extended trading session. The decline can partly be attributed to wider market concerns.

Revenue & Earnings

DocuSign reported quarterly revenues of $580.8 million, up 35% from the same quarter last year. Further, the figure comfortably surpassed the consensus estimate of $561.47 million. Subscription revenue, up 37% year-over-year to $564 million, accounted for over 97% of the total quarterly revenues of the company, lending strength to the overall revenue growth.

Earnings for the quarter stood at $0.48 per share, up 29.7% year-over-year. The figure also surpassed the consensus estimate of $0.47 per share.

Other Operating Metrics

DocuSign reported billings of $670.1 million for the quarter, up 25% year-over-year.

The company’s gross margin also improved to 81% from 80% in the same period last year.

DocuSign’s net cash provided from operating activities for the quarter also rose from $62.2 million in the year-ago quarter to $87.8 million. Further, its free cash flow balance stood at $70.3 million against $44 million a year ago.

Share Repurchase

The company’s board has approved a stock repurchase program of up to $200 million of DocuSign’s outstanding common stock. The repurchase is expected to take place by taking into account the general business and market conditions. However, the timing of the repurchase will be determined by DocuSign’s management, subject to the prevailing market conditions.

Outlook

For the first quarter of Fiscal 2023, DocuSign anticipates revenues to be in the range of $579 to $583 million versus the consensus estimate of $594.4 million.

For Fiscal 2023, the company expects revenue between $2.47 billion and $2.482 billion against the consensus estimate of $2.61 billion.

Management Commentary

The CEO of DocuSign, Dan Springer, said, “In fiscal 2022, we grew revenues by 45% and billings by 37% year-over year, while generating record operating and cash flow margins. While the year unfolded differently than expected, we are proud of the ongoing performance and resilience of our team as we scaled to become a multi-billion dollar company. Together, we helped another 280,000 new customers begin digitizing how they agree as we surpassed 1.17 million total customers overall.”

Stock Rating

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 2 Buys and 5 Holds. The average DocuSign price target of $143.83 implies that the stock has upside potential of 53.2% from current levels. Shares have declined 58.3% over the past year.

Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into DocuSigns performance this quarter.

According to the tool, year-to-date, the DocuSign website traffic recorded a fall of 10.82%, compared to the previous year.

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