What Happened:
Shares of e-signature company DocuSign (DOCU) fell 9.4% in the afternoon session after the company reported first-quarter earnings results. Its gross margin declined compared to the previous quarter and the same period last year. The sales outlook was underwhelming as revenue guidance for the next quarter was mostly in line. Furthermore, full-year revenue and operating margin guidance were maintained. Zooming out, this was a mixed but weaker quarter for the company.
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What is the market telling us:
DocuSign's shares are very volatile and over the last year have had 7 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 14.4% on the news that the company reported fourth-quarter results that exceeded analysts' revenue, billings, and EPS estimates. Guidance was also decent, with revenue production for the next quarter coming in ahead of expectations, while full-year guidance was roughly inline. Management highlighted the top drivers for the improved growth performance, including 1.) Solid execution around renewals, especially with large customers 2.) Stabilization in customer usage and retention 3.) Strong new customer acquisition volume. Even though guidance suggests a slowdown in growth, this quarter's results seemed fairly positive.
DocuSign is down 9.1% since the beginning of the year, and at $51.83 per share it is trading 18.4% below its 52-week high of $63.55 from January 2024. Investors who bought $1,000 worth of DocuSign's shares 5 years ago would now be looking at an investment worth $1,076.
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