Cloud-based electronic signature provider DocuSign, Inc. (DOCU) delivered stellar second-quarter results with upbeat guidance and exceeded the Street’s expectations. During the quarter, DocuSign helped over one million customers and over one billion users move forward with its Agreement Cloud software and eSignature offerings.
DocuSign reported quarterly earnings of $0.47 per share, increasing 176.5% year-over-year and beating the Street’s estimate of $0.40 per share. (See DocuSign stock charts on TipRanks)
Revenue climbed 50% year-over-year to $511.84 million and surpassed analysts’ estimates of $487.5 million. Revenue growth was driven by a 52% year-over-year increase in subscription revenue and a 47% rise in the billings to $595.4 million.
Commenting on the company’s solid results, Dan Springer, CEO of the company, said, “Organizations of all types and sizes are leveraging the power of the Agreement Cloud to digitize the most foundational process of doing business—the agreement process—starting with eSignature. In partnership with our customers, we are eliminating paper, automating end-to-end agreement processes, and enabling better experiences in the anywhere economy.”
Based on its robust second-quarter results, DocuSign guided for its third-quarter revenue to be in the range of $526 – $532 million compared to consensus estimates of $520.62 million.
Additionally, full-year Fiscal 2022 revenue is projected to be in the range of $2.078 – $2.088 billion, while the consensus estimate is pegged at $2.05 billion.
Following DocuSign’s strong quarterly performance, Oppenheimer analyst Brian Schwartz raised the price target on the stock to $310 (5.2% upside potential) from $260 while maintaining a Buy rating.
Schwartz said, “While the magnitude of revenue and billings beats are moderating mostly from challenging comparisons, we believe the strong F2Q results are a salient proof point that not only is DocuSign being viewed as mission-critical to keep business operations flowing during disruptions and as employees return to work, but more importantly, as a strategic technology for the new digital future of work.”
The analyst believes DocuSign is well-positioned to gain a disproportionate share of future digital agreement management spend and is a “best-of-breed back-office automation technology” provider.
Also, Schwartz believes that the company’s Agreement Cloud and its flagship eSignature product will accelerate its future growth and make DocuSign a much bigger and more profitable business.
Overall, the stock commands a Strong Buy consensus rating based on 12 Buys and 1 Hold. The average DocuSign price target of $295.23 implies that the shares are fairly valued at current levels. Shares have gained 21.7% over the past year.
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