DocuSign Earnings Miss and Stock Falls

Published on: 07 Jun, 2019

DocuSign Inc. (NASDAQ: DOCU) on Thursday reported earnings for the first quarter of fiscal 2020 that sent the stock crashing. Total revenue for the quarter was USD 214 Million, a 37% increase from the same quarter in the year prior. Subscription revenue accounted for a majority of the total revenue. Subscription revenue was USD 201.5 Million while professional services and other revenue totaled USD 12.5 Million, a 36% increase and a 64% increase, respectively.

Free cash flow swelled to USD 30.4 Million, compared to only USD 8.8 Million in the same quarter in the prior year. Net cash provided by operating activities was USD 45.7 Million, compared to USD 15 Million in the same period last year.

The increase in revenue for DocuSign was in large part due to the DocuSign Agreement Cloud.

The DocuSign Agreement Cloud was first announced in March. The Cloud is a suite of more than a dozen products and 350 integrations for digitally transforming how organizations prepare, sign, act on and manage agreements. The DocuSign Agreement Cloud helps to automate and connect the entire agreement process while doing business faster, lowering risk, and lowering costs as well.  Along with the release of the Agreement Cloud, DocuSign also released multiple new products in the Spring. These new products include; DocuSign Gen for Salesforce, DocuSign Click, and DocuSign Identity.

The Company reported non-GAAP net income per diluted share was USD 0.07 on 189 million shares outstanding. This figure compares to the same quarter last year when non-GAAP net income per share was USD 0.01 on 60 million shares outstanding.

DocuSign’s earnings fell somewhat in-line with analyst estimations this quarter. Analysts surveyed by FactSet had estimated earnings of USD 0.05 per share on revenue of USD 208 Million.  The Company slightly surpassed each estimation with earnings per share of USD 0.07 on revenue of USD 214 Million.

DocuSign acquired a company known as SpringCM last fall. SpringCM does a similar job to DocuSign as it is a secure cloud platform that manages contracts and documents. The Company is using the assets of the new acquisition to push tools that allow companies to work more efficiently and securely on legal documents.

"Overall, we posted a solid first quarter for Fiscal 2020—revenues grew 37% year-over-year, we were again profitable on a non-GAAP basis, and we now have over half a million paying customers around the world. What's more, we are seeing strong results from the work we've done to optimize our go-to-market sales motion, bringing in net new customers and expanding use cases within our installed base. And with the announcement of the DocuSign Agreement Cloud this quarter—our suite of products and integrations for automating the entire agreement process—we can now deliver a much broader set of solutions to market, positioning us as the next 'must-have' cloud." said Dan Springer, Chief Executive Officer of DocuSign.

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Bryan Nifenecker

Email: bryannif@financialbuzz.com

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