Docusign stock is on the road to recovery, but it's still a long way from its all-time high. Docusign (DOCU -2.64%) has built an entire portfolio of digital document software to handle every stage of the agreement lifecycle, from contract drafting to final signatures. Its platform was a hit during the pandemic because it helped businesses close deals even though their employees couldn't physically meet. As a result, Docusign stock soared from $80 to $310 between March 2020 and September 2021. Unfortunately, ...

Docusign, Inc. (DOCU) reported impressive second-quarter fiscal 2025 results, wherein earnings per share (EPS) and revenues surpassed the Zacks Consensus Estimate. The stock price has not witnessed any significant impact of the earnings beat since the company released results on Sept. 5, 2024. DOCU's EPS (excluding $3.29 from non-recurring items) was 97 cents per share, which surpassed the Zacks Consensus Estimate by 21.3% and increased 34.7% from the year-ago quarter. Total revenues of $736 million beat th ...

Revenue Growth - Total revenue for the three months ended July 31, 2024, was $736.0 million, an increase from $687.7 million for the same period in 2023, representing a growth of approximately 7.0%[95] - Subscription revenue accounted for 97% of total revenue for both the three and six months ended July 31, 2024, and 2023, indicating a stable revenue model[91] - The number of customers increased to approximately 1.6 million as of July 31, 2024, up from over 1.4 million a year earlier, reflecting a growth of about 14.3%[93] - Subscription revenue increased by $48.0 million, or 7%, in the three months ended July 31, 2024, and by $100.2 million, or 8%, in the six months ended July 31, 2024[114] - Total revenue for the three months ended July 31, 2024, was $736.0 million, a 7% increase compared to $687.7 million in the same period of 2023[114] - Total billings for the period reflect strong sales to new customers and subscription renewals, contributing to the overall revenue growth[144] Profitability - Net income for the three months ended July 31, 2024, was $888.2 million, significantly higher than $7.4 million for the same period in 2023[95] - Gross profit for the three months ended July 31, 2024, was $580.6 million, representing a gross margin of 79%[112] - Non-GAAP gross profit for the three months ended July 31, 2024, was $605,036, compared to $565,791 for the same period in 2023, reflecting an increase of 6.9%[146] - GAAP income from operations for the three months ended July 31, 2024, was $57,801, significantly up from $6,612 in the same period of 2023[147] - Non-GAAP income from operations for the six months ended July 31, 2024, was $439,245, compared to $345,635 for the same period in 2023, representing a growth of 27.1%[147] - GAAP net income for the three months ended July 31, 2024, was $888,211, a substantial increase from $7,395 in the same period of 2023[148] - Non-GAAP net income for the six months ended July 31, 2024, was $373,837, compared to $299,835 for the same period in 2023, indicating a rise of 24.7%[148] - Free cash flow for the three months ended July 31, 2024, was $197,928, up from $183,637 in the same period of 2023[149] Expenses and Cost Management - Total costs and expenses for the three months ended July 31, 2024, were $678.2 million, slightly lower than $681.1 million for the same period in 2023, reflecting cost management efforts[95] - Total operating expenses for the three months ended July 31, 2024, were $522.8 million, a decrease of 2% compared to $535.5 million in the same period of 2023[112] - Research and development expenses increased to $147.6 million, or 20% of total revenue, compared to $136.0 million, or 20% of total revenue, in the same period of 2023[112] - Sales and marketing expenses decreased to $287.5 million, or 39% of total revenue, compared to $294.8 million, or 43% of total revenue, in the same period of 2023[118] - Cost of subscription revenue increased by $16.2 million, or 14%, in the three months ended July 31, 2024[115] - Cost of professional services revenue decreased by $6.3 million, or 21%, in the three months ended July 31, 2024[117] - General and administrative expenses decreased by $16.8 million, or 16%, in the three months ended July 31, 2024, primarily due to reductions in professional fees and stock-based compensation[121] Cash and Liquidity - The company had approximately $1.0 billion in cash, cash equivalents, restricted cash, and investments as of July 31, 2024, providing a strong liquidity position[95] - As of July 31, 2024, the company had $938.4 million in cash and cash equivalents and short-term investments, with no outstanding borrowings under its $500 million credit facility[123] - Cash provided by operating activities was $475.0 million for the six months ended July 31, 2024, compared to $444.7 million for the same period in 2023[130][131] - Net cash used in investing activities was $236.9 million for the six months ended July 31, 2024, primarily due to the acquisition of Lexion for $143.6 million[132] - Cash used in financing activities was $408.9 million for the six months ended July 31, 2024, mainly for repurchasing 6.3 million shares of common stock at an average price of $55.02 per share[133] - The company repurchased 6.3 million shares for $350.8 million during the six months ended July 31, 2024, as part of its stock repurchase program[127] Strategic Initiatives - Docusign's IAM platform was introduced on a user-based subscription basis, with plans for continued rollout across additional segments and geographies, enhancing product offerings[90] - The company plans to continue investing in research and development to accelerate product innovation and enhance operational efficiency, supporting long-term growth strategies[96] - The company continues to focus on operational efficiency and strategic investments to drive future growth and market expansion[143] - Future capital requirements will depend on growth rate, customer retention, and potential acquisitions, with a possibility of seeking additional equity or debt financing[125] Tax and Regulatory - The company recognized a $837.7 million income tax benefit due to the release of a valuation allowance related to U.S. deferred tax assets[111] - The provision for income taxes showed a significant benefit of $(816.3) million in the three months ended July 31, 2024, primarily due to the release of $837.7 million of valuation allowance related to U.S. deferred tax assets[122] - The projected non-GAAP tax rate for fiscal 2024 and 2025 is set at 20%, providing consistency across reporting periods[142] Market and Foreign Currency - International revenue represented 28% of total revenue for the three and six months ended July 31, 2024, compared to 26% for the same periods in 2023, showing an increase in global market penetration[100] - A hypothetical 100 basis point increase in interest rates would lead to an approximate $2.7 million decrease in the fair value of the investment portfolio[152] - The company has not engaged in hedging foreign currency transactions to date, although it may consider this in the future[153] - Foreign currency translation adjustments are accounted for as a component of "Accumulated other comprehensive loss" within "Stockholders' equity"[153] - The company does not believe that a 10% increase or decrease in the relative value of the U.S. dollar to other currencies would have a material effect on its operating results[153]

Thitima Uthaiburom/iStock via Getty Images Investment Thesis DocuSign, Inc.'s (NASDAQ:DOCU) FY 2025 Q2 results gave investors a strong performance despite the market's pessimism on this COVID darling. The digital signature and contracts management company exceeded expectations in terms of revenue and adjusted earnings per share (it was a really solid quarter all around). As of the time of this writing, shares are up slightly today (Friday), up 2.46% as I think investors are starting to price in the concept ...

Shares of Docusign Inc DOCU were climbing over 3.2% in early trading on Friday, after the company reported upbeat second-quarter results. The company reported its results amid an exciting earnings season. Here are some key analyst takeaways. RBC Capital Markets analyst Rishi Jaluria reiterated a Sector Perform rating, while raising the price target from $52 to $57. JPMorgan analyst Mark Murphy maintained an Underweight rating and price target of $50. JMP Securities analyst Patrick Walravens reaffirmed a Mar ...

Core Insights - DocuSign Inc reported better-than-expected second-quarter financial results, with revenue of $736 million, surpassing the consensus estimate of $727.36 million, and adjusted earnings of 97 cents per share, exceeding analyst estimates of 80 cents per share [1][2] Financial Performance - The company achieved record operating profit due to improved business stability and increased efficiency [2] - For the third quarter, DocuSign expects revenue in the range of $743 million and second-quarter billings between $710 million and $720 million [2] - The fiscal year 2025 revenue guidance has been raised to a new range of $2.94 billion to $2.952 billion [2] Stock Performance and Analyst Ratings - DocuSign shares fell 0.9% to close at $56.93 following the earnings announcement [2] - The consensus price target for DocuSign is $63.18 based on ratings from 20 analysts, with a high of $86 from Citigroup and a low of $42 from HSBC [4] - Recent analyst ratings indicate an average price target of $55.33, suggesting an implied downside of -6.37% from these ratings [4] Analyst Actions - Baird analyst William Power maintained a Neutral rating and raised the price target from $55 to $59 [5] - Wells Fargo analyst Michael Turrin maintained an Underweight rating and increased the price target from $48 to $50 [5] - RBC Capital analyst Rishi Jaluria maintained a Sector Perform rating and raised the price target from $52 to $57 [5]

Financial Data and Key Metrics Changes - Total revenue for Q2 was $736 million, representing a 7% year-over-year increase, marking the second consecutive quarter of growth [6][17] - Non-GAAP operating margins increased to 32%, an all-time high, compared to 25% in Q2 fiscal 2024 [6][21] - Free cash flow generation was strong, approaching $200 million, resulting in a 27% yield for the quarter [6][23] - Non-GAAP diluted EPS for Q2 was $0.97, up from $0.72 last year, while GAAP diluted EPS was $4.26 compared to $0.04 last year [25] Business Line Data and Key Metrics Changes - Subscription revenue was $717 million, also growing 7% year-over-year [17] - Dollar net retention rate remained consistent at 99% [19] - The number of large customers spending over $300,000 annually increased to 1,066 in Q2 [20] Market Data and Key Metrics Changes - International revenue represented 28% of total revenue and grew at approximately double the rate of overall revenue [18] - Digital revenue growth outpaced overall growth, indicating a positive impact from e-commerce initiatives [18][14] Company Strategy and Development Direction - The company is focusing on three strategic pillars: accelerating product innovation, evolving omnichannel go-to-market capabilities, and improving operating efficiency [6][27] - The launch of the Intelligent Agreement Management (IAM) platform is seen as a significant opportunity for future growth, addressing a $2 trillion market in lost economic value from agreement management [7][9] - The company aims to enhance its partner and self-serve channels, with strategic relationships strengthened with Microsoft, SAP, and Salesforce [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the early traction and customer feedback for the IAM platform, indicating larger deal sizes and faster closes [31][35] - The company anticipates continued growth opportunities in international markets and plans to roll out IAM to additional segments and geographies [18][52] - Management expects operating margins to decline slightly in the second half of the year due to investments in IAM, but still anticipates year-over-year improvements [21][26] Other Important Information - The company repurchased $200 million worth of shares during Q2, effectively redeploying 100% of its quarterly free cash flow generation back to shareholders [24] - The company ended Q2 with $1 billion in cash and no debt on the balance sheet, allowing for continued investment in the business [23] Q&A Session Summary Question: What are the main reasons for confidence in sustaining growth? - Management highlighted stabilization in the core business and positive trends in operating metrics, with international and CLM providing short-term growth, while IAM is seen as a long-term growth lever [30][31] Question: What is the ceiling for operating margins in the next year or two? - Management noted significant improvements in operating margins and emphasized the balance between productivity and growth, particularly focusing on the IAM growth engine [32][33] Question: What early feedback has been received for IAM? - Customers have expressed satisfaction with the ease of use and quick deployment of IAM, with many reporting significant organizational benefits [34][35] Question: What changes are expected in the sales strategy with the new Chief Revenue Officer? - The strategy remains focused on direct sales, partnerships, and self-serve channels, with the new CRO expected to accelerate execution [39] Question: Why is dollar net retention not expected to expand? - Management indicated that the impact of pandemic renewal cohorts is diminishing, and future improvements in dollar net retention will rely on enhancing renewals and leveraging IAM [64] Question: How is the pricing model for IAM evolving? - The pricing model is shifting from envelope-based billing to a seat-based model with additional features, reflecting the value delivered to customers [48]

For the quarter ended July 2024, DocuSign (DOCU) reported revenue of $736.03 million, up 7% over the same period last year. EPS came in at $0.97, compared to $0.72 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $726.15 million, representing a surprise of +1.36%. The company delivered an EPS surprise of +21.25%, with the consensus EPS estimate being $0.80. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street ex ...

| --- | --- | --- | --- | |---------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | Bringing Agreements | | | | | to Life | | | | | | | | | | Q2 FY25 | | | | | | | | | | | | | | | | | | | Safe Harbor This presentation contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on our management's beliefs and assumptions and on information c ...

DocuSign (DOCU) came out with quarterly earnings of $0.97 per share, beating the Zacks Consensus Estimate of $0.80 per share. This compares to earnings of $0.72 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 21.25%. A quarter ago, it was expected that this provider of electronic signature technology would post earnings of $0.79 per share when it actually produced earnings of $0.82, delivering a surprise of 3.80%. Over the las ...