Docusign Beats Q3 Estimates on Strong Billings Growth
Company raises full-year outlook and reports 10% jump in billings, though shares dip in late trading as investors weigh future growth.
Docusign Inc. (DOCU) reported third-quarter financial results that surpassed analyst expectations for both profit and revenue, fueled by robust demand and a 10% year-over-year increase in billings. Despite the strong performance and an upward revision to its full-year forecast, the company's shares saw a modest decline in after-hours trading, suggesting investor expectations remain high for the e-signature pioneer's transition into a broader enterprise software provider.
The San Francisco-based company announced adjusted earnings of $1.01 per share, comfortably beating Wall Street consensus estimates of around $0.91. Revenue for the quarter came in at $818.4 million, a 1.4% beat over the anticipated $807.4 million, according to its Form 8-K filing with the SEC.
A key metric for the software-as-a-service company, quarterly billings, rose to $829.5 million. This performance underscores sustained customer spending and provides a forward-looking indicator of revenue. The results signal that Docusign's strategic push beyond its core electronic signature service is gaining traction, particularly with its Intelligent Agreement Management (IAM) platform, which the company noted has now surpassed 25,000 customers.
"Our results reflect the significant progress we're making in transforming our business," said Allan Thygesen, Docusign's Chief Executive Officer, in a statement. "We are seeing strong customer adoption of our expanded platform capabilities, which is driving momentum in our core business and laying the foundation for durable long-term growth."
In a sign of management's confidence and commitment to shareholder returns, Docusign repurchased $215.1 million of its common stock during the quarter. The move comes as the company navigates a post-pandemic market where the explosive growth seen in 2020 and 2021 has moderated, forcing a greater focus on profitability and strategic expansion.
In regular trading on Wednesday, Docusign shares closed at $71.10, up less than a percentage point. However, the stock gave back those gains and dipped more than 2% in extended trading following the earnings release. The muted reaction indicates that while the quarterly performance was solid, it may not have been enough to ignite a significant rally for a stock that is still trading well below its all-time highs.
Looking ahead, Docusign provided an optimistic outlook, raising its guidance for the full fiscal year. The company now expects billings of approximately $3.38 billion, which would represent a 9% increase over the prior year. For the upcoming fourth quarter, Docusign projects revenue to be in the range of $825 million to $829 million, positioning it for a strong finish to the year.
While the company continues to dominate the e-signature market, its long-term valuation will likely depend on its ability to successfully integrate and sell its broader suite of contract lifecycle management tools. Analysts at firms like Morgan Stanley and JPMorgan have been closely watching the adoption rate of these new products as a key indicator of future performance. The latest results provide a positive data point, but investors appear to be waiting for more conclusive evidence of a sustained growth re-acceleration.