DocuSign (DOCU) Surges After Beat and Raise, Analysts Remain Cautious

Shares of DocuSign (NASDAQ: DOCU) are trading over 17% higher in premarket Friday trading after the e-signature company reported better-than-expected Q2 results and raised its full-year billings outlook.

DOCU reported an EPS of $0.44 on revenue of $622.2 million to beat the consensus of $0.42 on revenue of $605.2 million. Billings were reported at $647.7 million, up 8.8% y/y, and ahead of the estimate of $602.9 million.

"We delivered solid Q2 results, with a strong finish to the first half of the year. These results reflect the focus and dedication of our team on execution during this transition period, with a stronger foundation in place to deliver in the second half of the year,” said Maggie Wilderotter, DocuSign's Interim CEO and Board Chair.

For this year, DOCU sees revenue in the range of $624 million to $628 million, ahead of the $625 million consensus. The company’s Q3 forecast for billings sits at $589 million at the midpoint of the range, lower than the analyst estimate of $600.8 million.

On a full-year basis, DocuSign said it expects to generate revenue between $2.47 billion and $2.482 billion, ahead of the consensus of $2.47 billion. Billings are seen in the range of $2.55 billion to $2.57 billion, up from the prior forecast of $2.52 billion to $2.54 billion and better than the estimate of $2.53 billion.

Evercore ISI analyst Kirk Materne remains cautious on DOCU shares despite the solid results.

“While we believe the results and guidance provide a bit of a backstop for the shares, we believe it is going to take some time to build back confidence in DOCU’s ‘normalized’ growth rate. Furthermore, until a new CEO is announced and the FY24 guidance is provided (i.e. de-risked), we believe there are more attractive risk/reward opportunities in the broader software space,” Materne said in a client note.

Piper Sandler analyst Rob Owens reiterated an Underweight rating and a $54 per share price target after “glass-half-empty” results.

“We note slowing trends in new customer acquisition, NRR below the historic range, billings and revenue expectations being lowered on a net basis for the back half of the year, 6 of 8 key new management positions being filled just recently, macro weakness in key verticals with softening fundamentals into quarter’s end and management effecting cost cutting ahead of the new CEO joining. Further, we believe that any continued deterioration in the macro could have a more profound impact on the company’s growth prospects,” Owens wrote in a research note.

By Senad Karaahmetovic

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