DocuSign’s (DOCU) Q1 Earnings Miss Estimates, Revenues Beat

DocuSign, Inc. DOCU reported mixed first-quarter fiscal 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same.

Non-GAAP earnings per share of 38 cents missed the consensus mark by 17.4% and decreased 13.6% year over year. Revenues of $588.7 million surpassed the Zacks Consensus Estimate by 1.3% and increased 25.5% year over year.

DocuSign continues to focus on its go-to-market strategy and has achieved significant momentum in digital transformation in the quarter.

The company’s shares have lost 23.4% in after-hours trading in reaction to the earnings miss. Shares have lost 63.2% over the past year compared with 68.3% decline of the industry it belongs to.

Quarter Detail

Subscription revenues came in at $569.3 million, up 26% year over year. Professional services and other revenues increased 13% year over year to $19.4 million. International revenues increased 43% year over year and contributed 25% to total revenues. Billings of $613.6 million were up 16% year over year. The company added 67,000 new customers in the quarter, increasing the total global customer base to 1.24 million.

Non-GAAP gross margin of 81% was flat year over year. Non-GAAP operating profit of $102 million increased 9.7% year over year. Non-GAAP operating margin of 17% declined from 20% in the year-ago quarter.

DocuSign ended the quarter with cash and cash equivalent balance of $638.2 million compared with $509.1 million at the end of the previous quarter. The company generated $196.3 million of cash from operating activities and Capex was $21.7 million. Non-GAAP free cash flow was $174.6 million.

DocuSign Price, Consensus and EPS Surprise

DocuSign Price, Consensus and EPS Surprise

DocuSign Price, Consensus and EPS Surprise

DocuSign price-consensus-eps-surprise-chart | DocuSign Quote

Guidance

For the second quarter of fiscal 2023, DocuSign expects revenues in the range of $600 million to $604 million, higher than the current Zacks Consensus Estimate of $581.06 million. Billings are expected between $599 million and $609 million. Non-GAAP gross margin is anticipated to be between 79% and 81%. Non-GAAP operating margin is expected between 16% and 18%.

For fiscal 2023, DocuSign expects revenues in the range of $2.47 billion to $2.482 billion. The Zacks Consensus Estimate is currently pegged at $2.48 billion. Billings are expected between $2.521 billion and $2.541 billion. Non-GAAP gross margin is anticipated to be between 79% and 81%. Non-GAAP operating margin is expected between 16% and 18%.

DocuSign currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Business Services Companies

Within the broader Business Services sector, ManpowerGroup Inc. MAN, Omnicom Group Inc. OMC and Equifax Inc. EFX recently reported first-quarter 2022 results.

ManpowerGroup’s quarterly results beat earnings and revenue estimates. Adjusted earnings of $1.88 per share beat the consensus mark by 20.5% and improved 69.4% year over year.

MAN’s revenues of $5.14 billion surpassed the consensus mark by 0.7% and inched up 4.5% year over year.

Omnicom reported earnings of $1.39 per share that beat the consensus mark by 8.6% and increased 4.5% year over year.

OMC’s total revenues of $3.4 billion surpassed the consensus estimate by 5.4% but declined slightly year over year.

Equifax adjusted earnings of $2.22 per share that beat the consensus estimate by 3.3% and improved 13% on a year-over-year basis.

EFX’s revenues of $1.36 billion outpaced the consensus estimate by 2.4% and improved 12.4% year over year.

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