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

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DocuSign, Inc. (DOCU - Free Report) 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-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 - Free Report) , Omnicom Group Inc. (OMC - Free Report) and Equifax Inc. (EFX - Free Report) 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.