DocuSign Beats on Earnings but Shares Plummet Anyway

Shares of electronic-signature company DocuSign were falling on Thursday, on their way to their worst single day decline in the company’s whole entire history.

The company reported its second-ever earnings report that beat on earnings. DocuSign also raised its outlook.
So why the drop then?

Looking ahead, Docusign said it expects revenue of $172 million to $175 million for its October quarter. This is better than what analysts were expecting.

The company also forecast billings of $169 million to $179 million for the current period, while analysts are waiting for $174.7 million.

“I don’t see what people would pick out that would be negative except maybe sense of expectations,” Chief Executive Dan Springer told MarketWatch.

“Maybe people thought we’d go even higher on billings,” he added.

J.P. Morgan analyst Sterling Atuy remarked, “Similar to other earnings reports this week the year-to-date performance of the stock had investor expectations at a level where it would have been difficult to see a significant positive reaction in the stock post earnings.”

He added, “We believe the company represents one of the best secular technology adoption stories in our coverage.” The analyst raised his price target from $70 to $88.

Piper Jaffray analyst Alex Zukin also upped his price target from $62 to $67 and JMP Securities analyst Patrick Walravens raised his price target from $63 to $68.

For the last quarter, DocuSign reported adjusted earnings of 3 cents a share and revenue of $167 million. Both topped analyst estimates.

Disclaimer: We have no position in Docusign Inc. (NASDAQ: DOCU) and have not been compensated for this article.