William Blair Reiterates Docusign (DOCU) at Outperform, Sales Restructuring is Concerning, but Company has Large Market Opportunity and Enjoys Strong Secular Growth Trends

William Blair analyst Bhavan Suri reiterated an Outperform rating on Docusign Inc. (NASDAQ: DOCU), following the company's Q4 report.

The analyst quotes: "After the markets closed on March 10, DocuSign announced fourth-quarter results that saw revenue and profitability outperform Street estimates. However, DocuSign issued fiscal 2023 revenue guidance calling for 18% growth at the midpoint, well short of prior consensus estimates that called for 25% growth. Guidance for the first quarter also missed expectations by about $15 million, with DocuSign expecting revenue to grow 24% year-over-year to $581 million, implying flat sequential growth. DocuSign also announced a sales leadership transition with current chief revenue officer, Loren Alhadeff, expected to resign from the company. DocuSign has already commenced a search for Alhadeff’s replacement. The company is undergoing this transition as it continues to experience business headwinds related to the refocusing of its salesforce from demand fulfillment to demand generation. While we acknowledge that a sales restructuring of this magnitude is concerning and that the stock will likely become a “show-me” story in the near term, we believe that DocuSign’s long-term business fundamentals remain intact. Despite the sales restructuring and underwhelming guidance, we remain positive on DocuSign considering the continued strength in new logo wins, strong customer retention, and the company’s clear market leadership in the e-signature market. We believe DocuSign serves a large market opportunity and that the company has solid exposure to secular growth trends around digital commerce and workflow automation, and thus we are reiterating our Outperform rating."

For an analyst ratings summary and ratings history on Docusign Inc. click here. For more ratings news on Docusign Inc. click here.

Shares of Docusign Inc. closed at $93.88 yesterday.

By Vlad Schepkov | [email protected]

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