Market Analysis

DocuSign Earnings: What To Expect

Businesses are shifting to work-from-anywhere models, so DocuSign’s earnings should be a good indicator to see how this trend is growing. 

DocuSign (NASDAQ: DOCU) was built for the remote-working world and was one of the greatest beneficiaries of the pandemic in 2020. DocuSign not only aided distanced working but also proved just how easy collaborating with colleagues, new staff, and business partners could be if we never went back to the office. 

Expectations are high for DocuSign’s fourth-quarter earnings report this Thursday, but many analysts expect revenue growth to slow to normal levels. The company’s last earnings release was a hit, with revenue jumping 53% year-over-year (YoY) as companies continued to turn to electronic signatures to approve documents. Shareholders will be hoping that there is still a large market for the company to capture. 

DocuSign stock has skyrocketed more than 163% over the past year, driven mainly by rapid user growth in 2020 — the company added 73,000 customers in Q3 and 88,000 in Q2. 

DocuSign shareholders will be looking to get updates on the company’s subscription growth and for details on some plans to capture more users once the pandemic is over. 

When is DocuSign’s earnings date?

DocuSign reports earnings for the fourth quarter of 2020 on Thursday, 11th of March at 5:00 pm Eastern Time. 

How can I listen to DocuSign’s earnings call?

To listen to the call and to access the transcript, as well as the shareholder’s letter and the financial statements for the quarter, all you need to do is go to DocuSign’s investor relations page

What to expect from DocuSign’s earnings

For the quarter ending in January, DocuSign has estimated revenue to come in at $406 million. 

Wall Street expects the e-signature company to report Q4 earnings of $0.22 per share, representing YoY growth of 83.3% on revenues of $406.76 million, up 48% from the year-ago quarter. 

The San Francisco-based company has over 800,000 users, but only 113,000 are paying customers. In the third quarter, 96% of the company’s top-line growth came from subscription fees, so investors will be looking to see strong growth in paid users as this reliable revenue stream is the best indicator of the company’s performance. 

Cloud stocks have been hit hard by the recent tech sell-off with investors piling into more traditional investments as the economy has started to open back up. Shareholders might be worried that this will affect DocuSign’s share price. However, as we have witnessed over the last few months, many large multinationals have stated that, going forward, they will have a hybrid working model. Therefore, the need for remote signatures will still be high. 

Like many stay-at-home influenced stocks, DocuSign is expected to report slowing revenue growth. However, it’s important to remember that the company actually reported higher revenue growth, at 53%, in Q3 compared to only 45% in Q2. Similarly, billings of 63% YoY growth in Q3 were higher than in the second quarter. This is interesting because it means that demand for DocuSign was actually higher when lockdowns eased globally. 

If DocuSign reports strong subscriber growth on Thursday’s call, amid rising vaccine numbers and offices reopening, investors should see this company as more than just a pandemic stock. 

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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here

Nicole Byrne
Nicole's favorite stock is Etsy because she loves its original and handmade items. She believes people are going to stop buying mass-produced items and start purchasing ‘one of a kind’ fashions and furnishings. In a world of sameness, Etsy has the advantage.