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DocuSign (DOCU) Rides on eSignature Strength Amid Expense Woes
DocuSign, Inc. (DOCU - Free Report) is benefiting from continued customer demand for eSignature, the company’s anchor product.
The company recently reported second-quarter fiscal 2024 non-GAAP earnings per share of 72 cents, which beat the Zacks Consensus Estimate by 10.8% and grew 50% year over year. Revenues of $687.7 million surpassed the consensus estimate by 1.6% and increased 10.5% year over year.
How is DocuSign Faring?
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. We expect its revenues to increase 8.5% in fiscal 2024.
The company’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 it in a position to expand its footprint around the world. Its total customers increased 26.8% year over year in fiscal 2023, and we expect customers to increase 18.5% in fiscal 2024.
DocuSign has deepened its relationship with partners like Salesforce (CRM - Free Report) and Microsoft (MSFT - Free Report) .
It has expanded its global strategic partnership with Salesforce. The two companies jointly develop solutions for the automation of the contract process and expansion of collaboration among organizations that use Salesforce’s Slack. DocuSign made an eSignature integration with Microsoft Teams last year and is currently an official electronic signature provider for Microsoft Teams’ Approvals app.
DocuSign’s current ratio (a measure of liquidity) stood at 0.88 at the end of second-quarter fiscal 2024, lower than the 1.02 recorded at the end of the year-ago quarter. A decline in the current ratio does not bode well.
DocuSign is seeing an increase in expenses as it continues to invest in sales, marketing and technical expertise. Total operating expenses increased 21.8% year over year in fiscal 2023.