DocuSign Shares Decline 4.9% Since Q3 Earnings & Revenue Beat

Core Insights - DocuSign, Inc. (DOCU) reported strong third-quarter fiscal 2026 results, with earnings per share (EPS) and revenues exceeding the Zacks Consensus Estimate, yet the stock declined by 4.9% post-earnings release on December 4 [1] Financial Performance - EPS, excluding 61 cents from non-recurring items, was $1.01, surpassing the Zacks Consensus Estimate by 9.8% and increasing 12.2% year-over-year [2] - Total revenues reached $818.4 million, beating the consensus mark by 1.5% and rising 8.4% from the same quarter in fiscal 2025 [2] Segmental Revenues - Subscription revenues amounted to $800.96 million, a 9.02% year-over-year increase, exceeding the estimate of $788.4 million [3] - Professional services and other revenues were $17.39 million, down 13.6% year-over-year, falling short of the expectation of $17.70 million [3] - Billings totaled $829.5 million, up 10% from the previous year, surpassing the anticipated $792.8 million [3] Profitability Metrics - Non-GAAP gross margin was 81.8%, compared to 82.5% in the same period last year, exceeding the estimate of 81.1% [4] - Non-GAAP gross profit was $669.5 million, a 7.6% year-over-year growth, beating the expectation of $653.9 million [4] - Non-GAAP operating margin increased to 31.4%, up 180 basis points year-over-year, surpassing the estimate of 28.1% [4] Balance Sheet & Cash Flow - At the end of Q3 fiscal 2026, cash and cash equivalents were $583.29 million, down from $648.6 million at the end of fiscal 2025 [5] - Net cash generated from operating activities was $290.3 million for the reported quarter, with free cash flow of $262.9 million [5] Guidance - For Q4 fiscal 2026, the company expects revenues between $825 million and $829 million, with a midpoint of $827 million slightly above the Zacks Consensus Estimate of $826.3 million [6] - Subscription revenues are anticipated to be in the range of $808-$812 million, and billing revenues between $992 million and $1 billion [6] - For fiscal 2026, revenues are expected to be between $3.208 billion and $3.212 billion, aligning closely with the Zacks Consensus Estimate of $3.21 billion [7]