DocuSign Q4, guidance top estimates but CFO step-down stokes jitters

(Updated - March 10, 2023 6:31 AM EST)

By Yasin Ebrahim and Geoffrey Smith

Investing.com -- DocuSign (NASDAQ: DOCU) stock fell sharply in premarket trading on Friday after the surprise departure of Chief Financial Officer Cynthia Gaylor unnerved investors.

Gaylor is leaving without an appointed successor less than two years into the job, although the company promised a smooth transition. The company has also recently appointed a new Chief Operating Officer, bringing in Anwar Akram, who was most recently VP of Operational Effectiveness at Google (NASDAQ: GOOGL).

The news added to disappointment after a lackluster report on its fourth quarter for last year. While earnings and revenue were both slightly ahead of expectations - EPS was 65c rather than the 52c expected, while revenue was $20 million ahead of forecasts at $660M- the company's guidance for the current quarter was underwhelming, reviving fears for its longer-term outlook.

Analysts at Morgan Stanley said the company's guidance for billings and revenue - at 2% and less than 10%, respectively, "does not warrant a premium valuation," in the context of an uncertain macroeconomic environment. The analysts worried about the increasing commoditization of DocuSign's business, which they expected to put long-term pressure on profitability.

They noted disappointment at the fact that an expected improvement in margins next year due to earlier cost savings will be eaten up by an increase in the research and development budget. In addition, the company is shaking up its sales force in the coming months, something that management said may disrupt revenue.

DocuSign stock was down 12.6% in premarket, caught also by the negative sentiment toward 'profitless tech' companies generated by the news from Silicon Valley Bank on Thursday.

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