DocuSign shares plunge 24% on shortfall and downgrades

The Docusign Inc. website on a laid out laptop in Dobbs Ferry, New York, U.S. on Thursday, April 1, 2021.

Tiffany Hagler Gear | Bloomberg | Getty Images

DocuSign shares plunged as much as 24% on Friday after the e-signature software maker reported first-quarter fiscal results that fell short of analysts’ estimates.

DocuSign on Thursday reported adjusted earnings per share of 38 cents, missing the 46 cents per share forecast by Wall Street. The profit loss eclipsed DocuSign’s higher revenue for the quarter, which was $588.7 million, compared to consensus estimates of $581.8 million.

DocuSign’s business saw a major boost in the early months of the coronavirus pandemic as online transactions increased, but has slowed in recent quarters as it faces tough comparisons with exceptional growth in 2020 and early 2021. Additionally, the company said on Thursday that it has struggled due to the deteriorating macroeconomic environment, particularly the war in Ukraine.

Several companies, including Evercore ISI, Bank of America and William Blair, downgraded the stock following the earnings report. William Blair’s Jake Roberge downgraded DocuSign to market performance, citing the company’s weaker-than-expected billing forecast for fiscal 2023.

DocuSign projected 7% to 8% year-over-year billing growth for the year, “well below the midpoint of DocuSign’s previous guidance which called for 15% growth,” Roberge said. .

“While customers are not leaving the platform, DocuSign is seeing many customers reduce platform consumption from pandemic peaks as their contracts come up for renewal,” Roberge said, adding that the company plans to reduce its hiring targets for the year to focus on profitability.

“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 range-bound in the coming quarters.” , he added.

—CNBC Jordan Novet contributed to this article.

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