DocuSign Hit by Slowing Growth and Macro Headwinds
Shares of a technology company plunged on Friday as its latest earnings fell short of earnings expectations amid slowing growth.
In a conference call, DocuSign CEO Dan Springer said “the level of growth in some areas is below our prior expectations” as the company has been rocked by macroeconomic headwinds.
Shares of DocuSign (DOCU) fell 26% in U.S. trading ahead of Friday’s trade and 21% by mid-morning. The stock is down 40% in the past six months. Over the same period, the Nasdaq index (US100) fell by 25%.
DocuSign Inventory (DOCU)
“Given limited management visibility, a sales restructuring that will take several quarters, and a lack of near-term catalysts, we believe DocuSign’s stock will remain limited in the coming quarters,” said William Blair analyst Jake Roberge in a statement. search note.
DocuSign (DOCU) pioneered electronic signature technology and also provides document management solutions used in paperless offices.
The company has over one million paying customers and over one billion users worldwide.
1st quarter results
For the fiscal first quarter ended April 30, DocuSign reported adjusted earnings of 38 cents per share on revenue that rose 25% to $588.7m (£473m, €557m ).
Analysts had expected earnings of 46 cents per share on revenue of $583 million, according to figures widely available on financial news sites.
As office workers migrated to their homes, the business saw an increase in business. As offices reopen in its key markets, activity has slowed in recent quarters.
Speaking to analysts and investors on the conference call, Chief Financial Officer Cynthia Gaylor said the company would modify its hiring plans to align with the current business climate and growth outlook, reducing the number of people it will hire.
Looking ahead, DocuSign said it expects revenue of between $600 million and $604 million in the second quarter, while analysts expect $601 million.
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Subscription revenue for the current second quarter is between $583 million and $587 million, while billings are expected to be between $599 million and $609 million.
In March, the company forecast revenue of $2.5 billion for its current fiscal year 2023.
The growth story is over – analyst
“As management continues to figure out how to manage growing complications and headwinds to improve sales execution in this environment, we believe the end of DOCU’s core growth story is now virtually complete with the clock striking midnight following a decline in billing guidance of approximately $200. I point to an uncertain future for the remainder of FY23,” Wedbush Securities analyst Daniel Ives said in a note.
As a technology company reliant on sales and billing, DocuSign has yet to name a successor to current chief revenue officer Loren Alhadeff, who will end a 14-year tenure with the company once that a successor will eventually be named.
DocuSign made other leadership changes, appointing Inhi Cho Suh as President of Products and Technology, Jennifer Christie as Director of Human Resources, Jim Shaughnessy as Chief Legal Officer and the promotion of Jérôme Levadoux to product manager position.