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DocuSign Shares Crater on Weaker-Than-Expected Guidance

DocuSign estimates revenue of $557 million to $563 million for the current fiscal quarter, below the analyst consensus of $575 million.
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DocuSign  (DOCU) - Get Free Report shares tanked Friday, after the e-signature stalwart offered earnings guidance below expectations and said its pandemic-aided boom has faded.

“After six quarters of accelerated growth, we saw customers return to more normalized buying patterns, resulting in 28% year-over-year billings growth,” CEO Don Springer said in the company’s quarterly earnings release.

Profit, Revenue Up for DocuSign

Profit and revenue for the quarter topped analyst expectations by a wide margin, but that wasn’t enough to boost the stock.

It recently traded at $160.10, down 32%, adding to a slump of 17% year to date through Thursday.

As for guidance, DocuSign estimates revenue of $557 million to $563 million for the quarter ending Jan. 31 and billings of $647 million to $659 million. That’s below the FactSet analyst consensus of $575 million for sales of $575 million and $705.4 million for billings.

The Street Reacts

In reaction to the bad news, Wedbush analyst Daniel Ives downgraded the company to neutral from outperform and slashed his price target to $200 from $340.

“Last night was a debacle quarter from DOCU, as the high growth e-signature play hit a major growth hurdle during its October quarter with customer buying behavior that appeared to change overnight,” he wrote in a commentary.

“Instead of billings handily beating the Street, the company missed on this key metric as it appears management was caught blindsided by the quickly changing sales environment, which is a worrying trend for the Street….

“The company is seeing a much more difficult selling environment as the company expands into broader CLM [contract-lifecycle-management] deals with e-signature going through a major growth transition in the field.