What Happened:
Shares of e-signature company DocuSign (DOCU) jumped 5.42% in the pre-market session after the company's first-quarter results surpassed analysts' expectations on multiple fronts, including revenue, subscription revenue, billings, and earnings per share. The outperformance was particularly notable in billings, which exceeded estimates by over 8%. Gross margin also improved, and free cash flow came in strong. Moving ahead, revenue guidance for the next quarter and the full year came in above Consensus. Similarly, non-GAAP operating margin guidance for the next quarter and the full year also exceeded expectations. Like other companies, DocuSign touted AI as a "competitive advantage". The company also welcomed a new board member, Anna Marrs, who has a wealth of experience in leading roles at companies like American Express, Standard Chartered Bank. and McKinsey & Company. Overall, DocuSign delivered a strong performance, with significant improvement in key operating metrics. After the initial pop the shares cooled down to $59.11, up 1% from previous close.
What is the market telling us:
DocuSign's shares are very volatile and over the last year have had 47 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.
DocuSign is up 4.53% since the beginning of the year, but at $59.11 per share it is still trading 32.3% below its 52-week high of $87.36 from June 2022. Investors who bought $1,000 worth of DocuSign's shares 5 years ago would now be looking at an investment worth $996.31.
Is now the time to buy DocuSign? Access our full analysis of the earnings results here, it's free.