DocuSign plunged Friday after the software maker reported April-quarter earnings that missed estimates. The company also cut its fiscal-year billings guidance for DOCU stock.
San Francisco-based DocuSign reported earnings after the market close on Thursday. DocuSign earnings for the first quarter came in at 38 cents a share, down 14% from a year earlier, missing estimates of 46 cents.
In addition, the maker of electronic signature software said revenue rose 25% to $588.7 million. A year earlier, DocuSign earnings were 44 cents a share on sales of $469.1 million.
The key, however, is that the company lowered its fiscal 2023 billings guidance by $185 million, which sent shares reeling. Billings, a sales metric, may signal a slowdown in revenue growth.
DocuSign stock plummeted 24.5% to close at 65.93 on the stock market today.
More In-Person Meetings Hits Business
"Management now expects fiscal year billings growth of 6% to 7% year-over-year," RBC Capital analyst Rishi Jaluria said in a research note to clients. "We note this is the third consecutive quarter DOCU guided next quarter billings below consensus, which to us is disappointing."
Demand for DocuSign products surged during the early part of the coronavirus outbreak but many businesses are resuming in-person meetings.
"DocuSign delivered yet another disappointing quarter as the company once again lowered billings guidance which continues to overshadow the top-line revenue beat the company experienced this quarter," Wedbush analyst Daniel Ives said in a note.
At Bank of America, analyst Brad Sills said in a report: "Guidance for fiscal 2023 revenue growth of 18%, implies mid-teens growth in the second half, which is inconsistent with billings guidance, implying mid/high single digit billings growth in the second half. This suggests perhaps further downside to already reset fiscal 2023 revenue estimates."
In addition to accommodating electronic signatures, the company's software also automates the filing of contracts over the internet.
DOCU Stock Down 43% In 2022
Thus far in 2022, DOCU stock had retreated 43% heading into the earnings report.
Also, DocuSign stock holds a Relative Strength Rating of only 16 out of a best-possible 99, according to IBD Stock Checkup.
If you're new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns for issues such as DOCU stock is one key to the investment guidelines.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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