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DocuSign Stock leaks when cutting to Outlook

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DocuSign reported fiscal first-quarter earnings well below Wall Street’s estimate.

Tiffany Hagler-Geard/Bloomberg

DocuSign

shares were down sharply early Friday after the e-signature company cut its guidance for the January 2023 fiscal year.

DocuSign
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(symbol: DOCU) Business has flourished during the pandemic, but has slowed in the past two quarters. The company has faced tough year-on-year comparisons, after business was boosted early in the pandemic by the use of its electronic signature software for Covid-related loans and government programs.

CEO Dan Springer said in an interview that DocuSign has also seen an increase in turnover from the company’s sales force, forcing the company to spend more time recruiting new employees. “We had to reorganize the organization on the ground,” he says. “It’s been a challenge.”

Springer adds that there has been some impact on the size of new contracts due to macroeconomic issues, particularly in a part of Europe closer to Ukraine.

Springer noted that April quarter results were “strong in tough times,” but billing guidance — a signal of future revenue growth — was cut sharply for the full year.

For the fiscal first quarter ended April 30, DocuSign reported revenue of $588.7 million, up 25% from a year ago and slightly ahead of the forecast range of the company from 579 to 583 million dollars. Billings for the quarter were $613.6 million, up 16%, ahead of the company’s forecast of $573 million to $583 million. On an adjusted basis, the company earned 38 cents per share, below the Wall Street consensus forecast of 47 cents.

For the July quarter, DocuSign expects revenue of $600 million to $604 million, in line with the Wall Street consensus forecast of $602 million. The company sees billings for the quarter of $599 billion to $609 billion.

For the January 2023 fiscal year, the company reiterated its revenue forecast of $2.47 billion to $2.482 billion, while reducing the billing forecast to a new range of $2.521 billion to $2.541 billion. , down from a previous target of $2.706 billion to $2.726 billion.

Springer noted that all of the discussion on the company’s post-earnings conference call was about guidance, and in particular about reducing the billing forecast. He said investors had hoped the company at this stage would have completed adjusting its business from the peak experienced during the pandemic, but the process is not quite complete.

DocuSign shares were down 23% in premarket trading Friday at $67.30. Shares of the company were down 43% this year as of Thursday’s close. Earlier this year, DocuSign provided insights that disappointed Wall Street.

Wall Street analysts were mixed on DocuSign. About 50% have buy ratings or the equivalent on the stock, while about 45% have hold ratings on the stock, according to FactSet.

Write to Eric J. Savitz at [email protected] and Tae Kim at [email protected]