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DOCU Suffers Worst Day After Earings Beat

|About: DocuSign, Inc. (DOCU)

Summary

NASDAQ:DOCU reported year loss of $36.7 million or 22 cents per share.

Sales increased to $167 million, up from $125.5 a year ago.

DOCU raised next year's revenue forecast to a range of $683 million to $688 million.

DocuSign (NASDAQ:DOCU) turned in a mixed quarterly report that had shares of the electronic-signature company falling hard.

The company suffered its worst trading day ever after reporting its second-ever earnings report. It was a very busy quarter with the company’s chief executive Dan Springer saying during the earnings call, “I’d like to start by saying that it’s been an exceptionally busy and successful quarter for the team here at DocuSign. We continue to demonstrate strong growth in our core business. We successfully closed the acquisition of SpringCM, which accelerates our vision to modernize the world’s Systems of Agreement, and finally we showcased new innovation across our solution portfolio.”

He also said, “Our growth continues to be driven by two primary factors; acquiring new customers and growing usage within our existing customers across their lines of business. At the end of Q2, we had almost 430,000 paying customers, an increase of 25,000 over the previous quarter.”

For the second quarter, DocuSign (NASDAQ:DOCU) reported losses of $36.7 million, or 22 cents a share, on sales of $167 million, up from $125.5 million a year ago.

The company saw an adjusted profit of 3 cents a share. This is up from an adjusted loss of 5 cents a share a year ago. Analysts were expecting a penny a share for adjusted earnings on sales of $158.7 million.

DocuSign also raised its annual forecast for revenue, to a range of $683 million to $688 million from $652 million to $658 million. For billings, the company increased its forecast from $680 million to $700 million. to $732 million to $752 million.

Despite beating on earnings and a boosted outlook, shares still slipped and fell over 4% after the report. CEO Springer told MarketWatch, “I don’t see what people would pick out that would be negative except maybe sense of expectations.” He added, “Maybe people thought we’d go even higher on billings.”

“Similar to other earnings reports this week the year-to-date performance of the stock had investor expectations at a level where it would have been difficult to see a significant positive reaction in the stock post earnings,” remarked J.P. Morgan’s Sterling Auty.

Auty has raised his price target on the stock from $70 to $88. He added, “We believe the company represents one of the best secular technology adoption stories in our coverage.”

Disclosure: I am/we are long DOCU.

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