DocuSign Stock Jumps After Q2 Earnings: 4 Analysts React To eSignature Momentum, Agreement Cloud Traction

Docusign Inc (NASDAQ: DOCU) shares traded higher by 5.1% on Friday after the company reported a second-quarter earnings beat and raised its guidance.

On Thursday, DocuSign reported second-quarter adjusted EPS of 47 cents on $511.8 million in revenue. Both numbers beat consensus analyst estimates of 40 cents and $487.5 million, respectively. Revenue was up 50% from a year ago.

DocuSign reported $492.8 million in subscription revenue in the quarter, up 52% from a year ago. Quarterly billings were $595.4 million, up 47%.

GAAP gross margins improved to 78%, up from 74% a year ago. Free cash flow in the second quarter was $161.7 million, up from $99.8 million in the second quarter of 2020.

Looking ahead, DocuSign guided for third-quarter revenue of between $526 million and $532 million, beating consensus analyst estimates of $520.6 million. For the full fiscal year, DocuSign guided for revenue of between $2.078 billion and $2.088 billion, beating analyst expectations of $2.05 billion.

Related Link: Chewy Analysts Break Down Q2 Earnings: 'We Would Have Expected Higher Growth'

Growth Story Intact: Bank of America analyst Brad Sills said net revenue retention of 124% is encouraging for DocuSign.

“Key growth metrics largely holding on tougher comparisons, indicates sustained eSignature momentum in both land and expand deals,” Sills wrote.

Wolfe Research analyst Alex Zukin said DocuSign reported some impressive numbers given its extremely difficult year-over-year pandemic comps.

“Shares are likely to be range-bound as flowing through current upside to revenue and billings yields an exit growth rate for 4Q of 40% for subscription revs and 37% for billings,” Zukin wrote.

Positive Agreement Cloud Trends: Needham analyst Scott Berg said DocuSign’s sales metrics remain above pre-COVID-19 pandemic levels.

“Commentary on incremental Agreement Cloud demand was positive, suggesting an additional growth tailwind combined with solid international can further aid 2HF22,” Berg wrote.

Wedbush analyst Daniel Ives said DocuSign is a special growth story that is showing no signs of slowing down.

“Last night DOCU reported another home-run quarter handily beating Street estimates with Billings, FCF, and net dollar retention ratio all well above expectations as the CLM machine continues to flex its muscles,” Ives said.

Ratings And Price Targets:

• Bank of America has a Buy rating and a $360 target.
• Wolfe Research has an Outperform rating and a $340 target.
• Needham has a Buy rating and a $340 target.
• Wedbush has an Outperform rating and a $340 target.

Photo: Courtesy DocuSign