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Docusign

DocuSign Shares Are Ripping Higher – Here’s Why

Sep 9, 2022 | About 3 Minutes

Ticker Symbol: DOCU

DocuSign Inc, the application software company that provides electronic signature and e-filing storage solutions, reported second-quarter financial results that broadly beat consensus estimates. The company’s shares were last trading at $62.22, up over 7% for the day. The company’s shares have declined by 58.6% this year but are up roughly 17% from the bottom hit on September 6th. DocuSign trades at a forward price to sales multiple 5 times, which is generally considered cheap in the software industry.

The company reported second-quarter revenue of $622.2 million, up 22% from the same period last year and well ahead of Wall Street’s estimates for $603.4 million. The company reported a subscription revenue of $605.2 million, which was also ahead of the $584.4 million that was expected.

Billings, most critically, rose to $647.7 million, up 8.8% year over year and ahead of the estimated $603 million. The company also reported an adjusted gross margin of 82%, ahead of the 80.4% forecast, and free cash flow of $105.5 million also handily beat the $91.5 million that analysts had been anticipating.

The company reported adjusted earnings per share of 44¢, ahead of the expected 42¢. DocuSign provided third-quarter guidance that slightly missed investors’ expectations. It sees revenue for the period ending on October 31st to be between $624 million and $628 million. At the midpoint of that range, the firm’s revenue would climb 14.7% from the third quarter of 2021. The consensus forecast by analysts was for revenue of $627.5 million. The company also sees billings to be between $584 million and $594 million, against an estimate of $601 million.  

For the full year, the software company projected revenue to total between $2.47 billion and $2.48 billion, which is higher than investors’ expectations of $2.46 billion. Management also predicted that billings for fiscal 2022 would be between $2.55 billion and $2.57 billion. It previously saw billings of $2.52 billion to $2.54 billion. Wall Street estimated that billings would come in at $2.53 billion. At the midpoint of its revenue guidance, DocuSign’s top line would climb a strong 17.5% year over year.

This content is provided for general information purposes only and is not to be taken as investment advice nor as a recommendation for any security, investment strategy or investment account.