The non-GAAP gross margin and the non-GAAP operating margin are expected at 81-82% and 22-23%, respectively. Billings are expected in the range of around $668-$678 million, up from the previous range of $646-$656 million. In segmental revenues, subscription revenues are expected in the $669-$673 million band, revised upward from the $658-$662 million range. The Zacks Consensus Estimate for revenues is pegged lower at $683.8 million. The company expects revenues in the range of $687-$691 million, revised upward from the $675-$679 million band. Non-GAAP free cash flow was $183.6 million. It generated $211 million in cash from operating activities and a capex of $27.4 million. Balance Sheet & Cash FlowĭocuSign ended the quarter with cash and cash equivalents of $1.02 billion compared with $940.5 million at the end of the previous quarter. The non-GAAP operating margin was 25%, up from the year-ago figure of 18%. The non-GAAP gross profit of $565.8 million increased 11.3% year over year and surpassed our estimate by 2.3%. The non-GAAP gross margin was 82%, in line with the year-ago figure and our estimate. Professional services and other revenues for the reported quarter beat our estimate and increased by 7.8% from the year-ago fiscal quarter’s reported figure to $18.3 million.įor the reported quarter, billings came in at $711.2 million, 10% above the year-ago fiscal quarter’s reported figure, and beat our estimate by 9.3%. Subscription revenues came in at $669.4 million, up 10.6% year over year, beating our estimate by 1.5%. Competitive threats have since emerged, but DocuSign's foothold and brand strength have been tough to shake.=DocuSign Price, Consensus and EPS SurpriseĭocuSign price-consensus-eps-surprise-chart | DocuSign Quote Quarter in Detail On the bright side, DocuSign remains the clear leader in the e-signature space, a market it basically created when it launched in 2003. In sharp contrast to the early COVID-19 days, when businesses were beating down the door to get digital signature solutions, a cautious, more deliberate sales process has taken over. It's also taking longer for DocuSign to attract new customers, amplifying the company's broader macro challenges. Inflation, higher rates and supply chain issues weigh on corporate outlooks and many would-be DocuSign customers have limited IT spending. Unfavorable Macro EnvironmentĪside from the recent disappointing earnings figures, management has made concerning comments about business activity slowdown. Given the anticipated growth over the next 12 months, the PEG ratio isn't exactly compelling compared to its peers. At 28x trailing earnings, the stock is roughly on par with the average tech sector P/E of 25x. The good news is that DocuSign is nowhere near as expensive as it once was from a valuation standpoint. As interest rates go up, should it need to take on additional leverage, it will have to do so at a higher cost of capital. This places it in the bottom quintile among its technology peers. As of the end of last quarter, debt comprised 64% of DocuSign's capital structure. Below peer growth and negative net margins have been the market's primary beef, but the balance sheet may be the biggest concern. The incoming CEO will inherit a set of financial statements that look vulnerable. This leaves the company on shaky ground as it forms a new leadership team and a new growth strategy. Fundamentals Have WeakenedĭocuSign's inability to find that next gear of growth prompted the resignation of longtime CEO Dan Springer as well as COO Scott Olrich in June 2022. When this weakens, software budgets also go down and enterprises decide that they can operate with paper-stuffed file cabinets for longer. At the same time, have learned how highly dependent DocuSign is on global business confidence and activity. Instead, a normalization of demand seems to have settled in. Are DocuSign's tools any less relevant than they were during the pandemic? Have we gone back to paper-based document management? Neither are true.
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