DocuSign shares rose sharply in after-hours trading on Thursday after the electronic signature company reported better-than-expected results for the fiscal quarter ended April 30 and raised its outlook for the fiscal year ended January 2024.
For the April quarter, DocuSign (Ticker: DOCU) reported revenue of $661.4 million, up 12% from the year-ago quarter and well above the company’s guidance range of $639 million to $643 million and the Street consensus of $642 million. Billings were $674.8 million, well above the company’s guidance range of $615 million to $625 million. This represents an increase of 10% compared to the company’s original target of 1% to 2%.
The Street should be particularly pleased about the strong growth in billings.
“While there is still much work to be done, I am encouraged by our progress in enabling smarter, simpler and more trustworthy agreements. “As we continue to execute on our strategy and leverage our competitive advantages, particularly in the AI space, DocuSign is well positioned for the future,” CEO Allan Thygesen said in a statement.
In an interview with Barron’s, Thygesen said he was pleased with the financial results, but added that he was “really pleased with our much faster pace of product innovation” and “improved go-to-market execution.”
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However, Thygesen added that it remains cautious on the macro outlook as corporate customers are slightly more cautious, offset by relative strength in the small business segment. And he pointed out that the company’s forecast does not assume a significant change in the economic environment.
On the subject of the quarter’s strong billing performance, he said the company had its “greatest” on-time renewal rate ever this quarter. He notes that the targets for the July quarter point to some moderation in the trend.
For the July quarter, DocuSign is forecasting revenue of $675-$679 million, beating Street’s consensus forecast of $670 million. The settlements are estimated at 646 to 656 million US dollars; in the middle, that’s roughly Street’s value of $651 million.
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For fiscal 2024, the company is now expecting revenue of between $2.713 billion and $2.725 billion, slightly above the consensus of $2.7 billion, versus a previous range of $2.695 billion to $2.707 billion. DocuSign’s new guidance for full-year billing is $2.737 billion to $2.757 billion, up from a previous guidance of $2.705 billion to $2.725 billion.
Meanwhile, the company is making some progress in adding new generative AI capabilities to its contract management software. This is mailing software that creates summaries of documents to make them easier to understand for all signers. By the end of the year, Thygesen said, DocuSign will begin rolling out new software to analyze trends and search through all of a company’s corporate agreements — in some cases hundreds of thousands of contracts.
In late trade, DocuSign was initially up more than 11%, but the gain slowed after the company’s earnings announcement, and profits shrank to about 4%.
Write to Eric J. Savitz at [email protected]