Investors rally behind DocuSign after company exceeds earningS expectations

Shares in DocuSign Inc. jumped more than 10% in late trading today after the electronic signature company impressed investors with revenue and earnings beats in its fiscal fourth quarter and forecast a higher-than-expected outlook for the fiscal quarter and year ahead.

For the quarter that ended on Jan. 31, DocuSign reported adjusted earnings per share of 76 cents, up from 65 cents per share in the same quarter of the previous year, on revenue of $712.4 million, up 8% year-over-year. Both figures were ahead of the 65 cents per share and $698.35 million in revenue expected by analysts.

Billings in the quarter rose 13%, to $833.1 million. Net cash provided by operating activities was $270.7 million, up from $137.1 million in the same period last year, free cash flow was $248.6 million, up from $113 million a year ago, and DocuSign ended the quarter with $1.2 billion in cash, cash equivalents, restricted cash and investments on hand.

For its full fiscal year 2024, DocuSign reported adjusted earnings per share of $2.98, up from $2.03 in fiscal 2023, on revenue of $2.8 billion, up 10% year-over-year.

“DocuSign ended fiscal 2024 with momentum in product innovation, customer growth and financial performance, including more than doubling free cash flow year-over-year,” Chief Executive Allan Thygesen said in the company’s earnings release. “The agreement management opportunity is massive.”

The positive results come as reports swirl that DocuSign is looking to sell itself. Reports first emerged in December that DocuSign was exploring a leveraged buyout, an acquisition in which the buyer takes on debt, often using the acquired company’s assets as collateral, to finance the purchase.

On Jan. 12 it was reported that Bain Capital LLC and Hellman & Friedman Capital Partners LP are among the final bidders in an auction to sell DocuSign. The report also claimed that a deal could be struck in weeks, but that hasn’t happened. Whether a deal is still be in the works is unknown, since the company has not publicly commented on the reports.

A potential deal aside, DocuSign has been cutting costs, announcing plans to let go about 400 employees, or 6% of its workforce, on Feb. 6. The company’s third round of layoffs since 2022, the layoffs mainly affected its sales and marketing teams.

For its fiscal 2025 first quarter, DocuSign expects to see revenue of $704 million to $708 million, ahead of the analyst consensus of $699.1 million. For the full year, the company is forecasting revenue of $2.92 billion to $2.93 billion, which at the midpoint is ahead of an expected $2.92 billion.

Photo: DocuSign