DocuSign (NASDAQ:DOCU) stock is up 15% today after the electronic agreements company reported fiscal second-quarter earnings that beat Wall Street forecasts.
Expectations for the San Francisco-based company’s latest results were low heading into the earnings print as sales have slowed considerably this year with the Covid-19 pandemic winding down, and after Chief Executive Officer (CEO) Dan Springer resigned in June of this year. However, DocuSign’s Board Chair and interim CEO Maggie Wilderotter said the company was able to execute its business plan despite a difficult economy and during a “transition period,” leading to the quarter’s strong results.
What Happened
DocuSign reported that its fiscal second-quarter revenue rose 22% to $622 million, which was better than the $602 million that analysts had expected for the quarter. Profits amounted to 44 cents a share, which beat the average estimate among analysts of 42 cents. Looking ahead, DocuSign raised its forecast for full-year revenues to $2.57 billion from $2.54 billion previously. Analysts had been calling for annual revenues of $2.53 billion.
For the current third quarter, DocuSign said it expects revenues to be between $624 million and $628 million, up 15% from the $545.5 million it earned in Q3 2021. DocuSign said it could still take several months before it finds a new permanent CEO and that its current turnaround strategy remains ongoing.
Why It Matters
The strong quarterly print revives hope in DocuSign, which has been one of the companies hardest hit as investor sentiment soured on stocks that thrived during pandemic lockdowns. So far this year, DOCU stock has fallen 63% to trade at $57.95 a share. The stock is down nearly 80% over the past 12 months.
With pandemic lockdowns ending, the global economy reopening, and people returning to in-person work, the demand for the electronic contract management and e-signature services offered by DocuSign has been waning. Poor results and the steep selloff in DOCU stock led to the departure of the company’s CEO in June. However, it now looks like DocuSign might be able to turn its operations and share price around.
What’s Next for DOCU Stock
DOCU stock gets a big boost today following its better-than-expected quarterly financial results. While encouraging, investors should keep in mind that expectations were extremely low for DocuSign heading into the quarterly print. Also, the company’s share price remains well below the highs it reached during the pandemic when it was trading above $310 per share.
Going forward, DocuSign will need to string together several quarters of strong earnings growth to win back the confidence of Wall Street analysts and make true believers of investors.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
