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DocuSign (DOCU) Gains From eSignature Strength Amid Expense Woes

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DocuSign, Inc. (DOCU - Free Report) is currently benefiting from continued customer demand for eSignature, the company’s anchor product.

DocuSign recently reported fourth-quarter fiscal 2022 non-GAAP earnings per share of 48 cents that matched the Zacks Consensus Estimate and increased 29.7% year over year. Revenues of $580.8 million surpassed the consensus mark by 3.6% and increased 34.8% year over year.

The company’s shares have declined 48.2% over the past year compared with 59.4% decline of the industry it belongs to.

How is DocuSign Doing?

DocuSign remains focused on continuously acquiring eSignature customers, expanding eSignature use cases within existing customers, improving its offerings, popularizing other Agreement Cloud products to new and existing customers, and expanding internationally. The company continues to invest in sales, marketing and technical expertise across a number of industry verticals.

DocuSign’s top line is significantly benefiting from continued customer demand for eSignature. Despite this rising demand, the market for eSignature remains largely untapped, and this keeps DocuSign in a position to expand the same across businesses around the world.

The acquisitions of Seal Software and Liveoak Technologies in 2020 have added functionality to DocuSign Agreement Cloud and significantly expanded the company’s eNotary offerings. These buyouts aid the company in continuously developing new features internally while also aptly utilizing investments to tap a large addressable market.

DocuSign is seeing an increase in expenses as it continues to invest in sales, marketing and technical expertise. Total operating expenses of $474.6 million increased 34% year over year in the fourth quarter of fiscal 2022.  Total operating expenses of $1.3 billion increased 36.6% year over year in fiscal 2021. Hence, the company's bottom line is likely to remain under pressure going forward.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the broader Business Services sector that investors may consider are Cross Country Healthcare (CCRN - Free Report) , NV5 Global (NVEE - Free Report) and Clean Harbors (CLH - Free Report) .

Cross Country Healthcare sports a Zacks Rank #1 (Strong Buy). The company has a long-term earnings growth of 6.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cross Country Healthcare delivered a trailing four-quarter earnings surprise of 41.5%, on average. CCRN’s shares have surged 77.6% in the past year.

NV5 Global also carries a Zacks Rank #1. The company has an expected earnings growth rate of 6.1% for the current year. It delivered a trailing four-quarter earnings surprise of 22.2%, on average.

NV5 Global’s shares have surged 44.6% in the past year. The company has a long-term earnings growth of 14.2%.

Clean Harbors carries a Zacks Rank #1. The company pulled off a trailing four-quarter earnings surprise of 43.2%, on average.

CLH’s shares have jumped 24% in the past year.