Shares of DocuSign, Inc. (DOCU) have dropped 32.8% over the past month. The company provides electronic agreement and e-signature solutions through its cloud-based software.
The company recently reported better-than-expected third-quarter results marked by 42% year-over-year top-line growth and a 163.6% jump in the bottom line. Despite this robust performance, lower than estimated Q3 billings and weaker than expected Q4 guidance contributed to the recent slide in the company’s share price.
With these developments in mind, let’s have a look at what’s changed in DocuSign’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, DocuSign’s top risk category is Finance & Corporate, comprising 38% of the total 53 risks identified. In the recent quarterly report, the company changed four key risk factors.
DocuSign highlighted that it has taken on a substantial level of debt ($740.2 million at the end of October) which may decrease its business flexibility and access to capital, limit its use of cash flow generated, and also potentially place it at a competitive disadvantage compared to its competitors. Additionally, the company’s outstanding 2023 notes have a conditional conversion feature. This may affect DocuSign’s financial condition as well as its operating results.
DocuSign depends on co-located data centers and third-party cloud providers, along with its own operations infrastructure, to provide products and solutions. Any delays or disruptions to its offerings could lead to customer dissatisfaction, reputational damage, and loss of customers and revenue.
Finally, DocuSign noted that its success and future growth hinges on the performance of skilled personnel, including its management and key personnel. Any failure to attract or retain employees could adversely affect the company.
Compared to a sector average Production risk factor of 12%, DocuSign’s is at 6%.
Hedge Fund Activity
TipRanks data shows that Wall Street’s best hedge funds have decreased their holdings in DocuSign by 967.9 thousand shares in the last quarter, indicating a Very Negative hedge fund confidence signal based on the activity of 11 hedge funds.
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