DocuSign Q1 earnings top estimates: guidance fails to impress

DocuSign Inc (NASDAQ: DOCU) just came in ahead of Street estimates for its first financial quarter. Shares of the software company are still slipping in extended hours.

DocuSign stock sinks on downbeat guidance

The stock is being hit primarily because the guidance did not particularly impress. $DOCU now forecasts revenue to fall between $2.92 billion and $2.93 billion in fiscal 2025.

Analysts, in comparison, were at $2.93 billion. Allan C. Thygesen – the chief executive of DocuSign said in a press release today:

The Nasdaq listed firm improved its free cash flow by 8.0% to $232.1 million in Q1. DocuSign stock is now down close to 20% versus its year-to-date high in January.

DocuSign Q1 earnings snapshot

• Earned $33.7 million versus the year-ago $0.53 million
• Per-share earnings also climbed from break even to 16 cents
• Adjusted EPS printed at 82 cents as per the earnings report
• Revenue jumped 7.0% year-over-year to $709.6 million
• Consensus was 79 cents a share on $707.3 million in revenue

DocuSign Inc took a 50 basis points hit to its gross margin that came in at 78.9% in Q1. CEO Thygesen also said on Thursday:

What else was noteworthy in $DOCU's Q1 report

DocuSign saw its subscription revenue pop 8.0% on a year-over-year basis in its first financial quarter that helped offset an 18% hit to professional services and other revenue.

The eSignature company ended the quarter with $1.2 billion in cash including cash equivalents, restricted cash, and investments. It also announced a $1.0 billion increase to share buyback authorisation on Thursday.

In May, $DOCU spent $165 million on buying Lexion - a provider of AI-enabled agreement management software. At the time, its CEO Allan Thygesen said:

Wall Street currently has a consensus "hold" rating on DocuSign stock.