DocuSign plunged on Friday after its January-quarter earnings met estimates and revenue topped views. But fiscal 2023 guidance for DOCU stock came in well below expectations as its Covid-related gains are dissipating.
DocuSign stock tumbled 20.1% to close at 75.01 on the stock market today. San Francisco-based DocuSign reported fourth-quarter earnings after the market close on Thursday.
"The demise of the DocuSign growth story continued as the work-from-home poster child delivered good January results, which were more than offset by very weak and concerning guidance which speaks to some darker days ahead," said Wedbush analyst Daniel Ives in a report.
DocuSign earnings came in at 48 cents a share on an adjusted basis, up 30% from a year earlier, said the maker of electronic signature software. Revenue rose 35% to $580.8 million, the company said.
A year earlier, DocuSign earnings were 37 cents a share on sales of $431 million.
More In-Person Meetings
Demand for DocuSign products surged during the early part of the coronavirus outbreak but many businesses are resuming in-person meetings.
In addition to accommodating electronic signatures, the company's software also automates the filing of contracts over the internet.
Analysts that follow DocuSign stock expected the company to report earnings of 48 cents a share on sales of $561.6 million.
Billings in the fourth quarter rose 25% to $670.1 million, topping estimates for 22% growth.
For fiscal 2023, DocuSign forecast revenue in a range of $2.47 billion to $2.48 billion, missing estimates. Analysts had projected revenue of $2.61 billion.
"The combination of reduced visibility, due in part to ongoing sales improvement efforts, weaker billings growth, lighter margins and additional management turnover all reduce our forward confidence and make a near-term catalyst less certain," said Baird analyst William Power in a report. He downgraded DOCU stock to neutral from buy.
DOCU Stock Repurchase Program
In addition, DocuSign announced a $200 million stock repurchase program.
"We believe DOCU is facing decelerating growth, fading Covid tailwinds, sales execution issues, and contracting margins, which is not a good combination," said RBC Capital analyst Rishi Jaluria in a report. "Having said that, we believe there is still a meaningful market opportunity ahead."
Thus far in 2022, DOCU stock had retreated 35% heading into the earnings report.
DocuSign stock holds a Relative Strength Rating of only 9 out of a best-possible 99, according to IBD Stock Checkup.
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