DocuSign, the leading e-signature company, saw its shares rise in late trading Thursday as it exceeded expectations with its financial results. The company appears to be recovering from the slowdown experienced post-Covid.
For the fiscal third quarter that ended on October 31, DocuSign reported revenue of $700.4 million, marking a 9% increase from the previous year. This surpassed the Wall Street consensus of $690 million. On an adjusted basis, the company achieved earnings of 79 cents per share for the quarter, surpassing the 16-cent Wall Street consensus according to FactSet. Under generally accepted accounting principles, DocuSign earned 19 cents per share.
Following the release of the earnings report, the company's stock surged by 8% in late trading on Thursday.
The billings for the quarter amounted to $691.8 million, a 5% year-on-year increase from the previous year. This figure also exceeded the consensus estimate of $672.8 million. Subscription revenue reached $682.4 million, growing by 9% and surpassing Wall Street's expectation of $671 million.
Looking ahead to the fiscal year ending in January 2024, DocuSign anticipates revenue between $2.746 billion and $2.75 billion, with billings ranging from $2.835 billion to $2.845 billion. This forecast surpasses the previous Wall Street consensus of $2.73 billion in revenue and $2.814 billion in billings.
However, despite being within DocuSign's target range, this growth projection represents a decrease from the remarkable 50% expansion witnessed in fiscal 2021 when the company experienced a surge in demand for e-signing software during the pandemic. The noticeable deceleration in growth explains the stock's 15% decline so far this year.
CEO Allan Thygesen emphasized that the company continues to prioritize innovation and product releases while expanding the range of purchase options. DocuSign aims to offer more self-service options to its customers.
Regarding macroeconomic conditions, Thygesen noted that although demand worsened in the first half of the year, conditions have now stabilized. While there is optimism for improvement, he stressed that it is not factored into the company's guidance.
Although Thygesen did not provide specific guidance for the fiscal year ending in January 2025, he indicated that DocuSign is laying the foundation for growth reacceleration, albeit acknowledging that it will take time. Thygesen expressed his intention to avoid leading a company with low single-digit growth.
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