DocuSign Shares Down Despite Upbeat Q2 Print: What 4 Analysts Think

Shares of DocuSign Inc DOCU tanked in early trading on Friday, even after the company reported upbeat fiscal second-quarter earnings.

The results came amid an exciting earnings season. Here are some key analyst takeaways from DocuSign’s earnings release.

RBC Capital Markets On DocuSign: Analyst Rishi Jaluria maintained a Sector Perform rating and price target of $59.

DocuSign’s quarterly results were “mixed,” with a healthy billings outperformance but soft guidance, Jaluria said in a note.

“Macro pressures remain challenging as NRR (net recurring revenues) suffered a 3-point contraction, and the $300K+ customer cohort experienced its second-ever sequential decline,” the analyst wrote.

“Margin trends were solid (but upside was more subdued), and guidance assumes ramping 2H investments,” he added.

Wedbush On DocuSign: Analyst Daniel Ives reiterated a Neutral rating and price target of $67.

DocuSign delivered “another quarter of significant strength with beats on the top and bottom-line demonstrating continued durability with its core technology while leveraging its operating model despite increased customer scrutiny,” Ives wrote.

The company achieved a revenue beat on “increased customer interest in its new innovative product portfolio for the entire agreement journey,” the analyst stated. DocuSign plans to “continue implementing Generative AI to its product portfolio which proves to bring more opportunities in the pipeline,” he added.

Check out other analyst stock ratings.

Evercore On DocuSign: Analyst Kirk Materne reaffirmed an In-Line rating and price target of $75.

DocuSign reported “solid” results, but the wait for NRR trends to stabilize is not over, Materne said.

“While billings growth was solid in the quarter, the company continues to see pressure on NRR rates, with the 102% this quarter expected to tick down again next quarter, creating a bit of a drag on the billings outlook,” the analyst wrote. Margins came in-line with expectations as the company “continues to take a balanced approach between profitability while continuing to invest to drive growth acceleration,” he added.

Needham On DocuSign: Analyst Scott Berg maintained a Hold rating on the company.

“Billings growth handily beat expectations due to better execution of on-time renewals versus a positive change to new bookings,” Berg said in a note. He added however, the billings could be impacted in the final quarter of fiscal 2024 as customers “continue to right-size their DocuSign usage and limit product expansions.”

“The business continues to be impacted by the macro, with slower expansion rates driving lower customer count for those with >$300k ACV, lower customer addition trends, and NDRR decelerating to 102% from 105% with further compression expected,” the analyst further stated.

DOCU Price Action: Shares of DocuSign had declined by 4.87% to $49.61 at the time of publication Friday.

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Photo: Courtesy DocuSign