Shares of DocuSign (DOCU) gained in after-hours trading after the electronic signature company reported earnings for its third quarter of Fiscal Year 2025. Earnings per share came in at $0.90, which beat analysts’ consensus estimate of $0.87 per share.
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Sales increased by 7.8% year-over-year, with revenue hitting $754.82 million. This also beat analysts’ expectations of $745.25 million. Subscription revenue was the main driver of growth, as it made up $734.7 million of total sales and grew by 8%. On the other hand, Professional services and other revenue increased by 11% to $20.1 million.
Interestingly, the firm achieved these solid results despite a slight decline in website traffic. As the image below shows, the number of total estimated visits fell during the most recent quarter by 0.71% when compared to the same quarter of last year. This shows that the company is doing a better job of monetizing the visitors that land on its website.
Guidance for FY 2025
Looking forward, management has provided the following guidance for FY 2025:
- Revenue of between $2,959 million and $2,963 million versus analysts’ estimates of $2,947 million
- Non-GAAP operating margin in the range of 29.5% to 29.7% versus expectations of 29.3%
As we can see, the company’s outlook is better than expected, which definitely helped give the stock a slight boost in after-hours trading.
Is DocuSign a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Hold consensus rating on DOCU stock based on three Buys, eight Holds, and three Sells assigned in the past three months. After a 77% rally in its share price over the past year, the average DOCU price target of $71.27 per share implies 15.1% downside risk. However, it’s worth noting that estimates will likely change following today’s earnings report.
