The electronic signature software firm DocuSign Inc. finally caught a break today, posting stronger-than-expected third-quarter financial results that sent its stock much higher in extended trading.
The company reported earnings before certain costs such as stock compensation of 57 cents per share, down by just a penny from a year earlier and coming in ahead of Wall Street’s forecast of 42 cents per share. Revenue for the quarter rose 18%, to $646 million, soundly beating the consensus estimate of $627 million.
Breaking down the revenue by segment, DocuSign delivered $624 million in subscription sales and $21 million from professional services and other sources. DocuSign also reported $659.4 million in billings, which it defined as sales to new customers, subscription renewals and additional sales to its existing customer base. Analysts had been looking for just $588.6 million in billings.
It was an impressive quarter, but the company still came up short in its quest to generate a profit. All told, it delivered a net loss of $30 million for the quarter, up from a $6 million net loss it posted a year earlier.
DocuSign sells tools that enable businesses and individuals to sign documents electronically without meeting anyone face-to-face. It also sells software that automates the filing of contracts over the internet. The report generated plenty of optimism among investors, with DocuSign’s stock rising more than 11% in after-hours trading, adding to a gain of almost 4% earlier in the day.
The company badly needed a break. It was one of the clear winners during the COVID-19 pandemic, with the switch to remote work creating enormous demand for its services. However, as businesses resumed work in-person, that demand rapidly tailed off and the company’s growth slowed to a crawl.
As a result, DocuSign remains one of the most beaten stocks in the tech industry, down more than 71% this year, compared wit just a 17% decline in the S&P 500. The company’s poor performance led to the ousting of its former Chief Executive Officer Dan Springer in June. He was replaced two months later by former Google LLC marketing executive Allan Thygesen (pictured), and just prior to the new CEO’s arrival, the company announced it would lay off 9% of its staff to support its growth and profitability objectives.
Thygesen was all smiles today, highlighting the company’s “solid third-quarter results” and saying that he was pleased with the progress it has been making against its critical priorities.
“DocuSign is the pioneer and leader in eSignature,” Thygesen said. “This gives us a strong foundation to create and deliver a delightful and differentiated workflow experience, making agreements smarter and easier for companies of all sizes.”
For the coming quarter, DocuSign is looking at revenue of between $637 million and $641 million, the midpoint of which is just shy of Wall Street’s forecast of $641 million. The company also forecast $705 million to $715 million in bookings, versus Wall Street’s target of $707 million.
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