DocuSign stock soars on pace of second quarter earnings and strong billing outlook

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DocuSign Inc. (DOCUMENT) Shares jumped on Friday after the online signature sales group posted stronger-than-expected second-quarter earnings and a strong near-term outlook.

DocuSign, which is struggling to retain investor interest as pandemic-era restrictions bring more professionals back to the office, earned 44 cents per share in the three months to July, beating Street’s guidance on a non-GAAP basis by about 2 cents per share.

The group also posted a 22% gain in revenue to $622.2 million, and said full-year sales were likely to rise to between $2.47 billion and $2.48 billion. dollars and billings between $2.5 billion and $2.57 billion, thanks in part to an expanded partnership with Microsoft. (MSFT) which will see the tech giant use DocuSign’s products and services in its contract management workflows.

Cost reductions and reduced spending plans helped improve operating margins on a sequential basis to 18%, the company said, a figure that is expected to hold up in the second half of its fiscal year.

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“We are entering this next phase with a clear set of a few vital deliverables for our people initiatives and product roadmap, while driving sustainable and profitable growth at scale,” the CEO said Thursday evening per acting Maggie Wilderotter. “We have a $50 billion market opportunity, an industry-leading digital deal platform, a strong market position and an experienced management team.”

DocuSign shares rose 17.3% in premarket trading to show an opening price of $67.99 each.

Earlier this summer, Dan Springer stepped down as group CEO to make way for DocuSign board member Wilderotter. The group said a decision would soon be made on a permanent replacement, while Wilderotter noted that despite the transition period employee attrition rates have moderated.

“As the board nears a decision on a new CEO, Wilderotter favored building a digital deal platform rather than focusing on a cloud environment, operationalizing the business and delivering profitable growth at scale,” said Patrick, an analyst at JMP Securities. Walravens, which carries a “market outperform” rating with a price target of $84 on the stock.

“While DocuSign is focused on building the business over the long term, we believe this business has significant strategic value for a potential acquirer such as Salesforce or Microsoft, and we believe this view is supported by recent revisions to the terms separation and change of control agreements for several DocuSign executives,” he added.

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