DocuSign (DOCU) Gains From eSignature Strength Amid Expense Woes

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

DocuSign recently reported first-quarter fiscal 2023 non-GAAP earnings per share of 38 cents that 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.

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 its footprint around the world.

DocuSign’s current ratio (a measure of liquidity) stood at 1.01 at the end of first-quarter fiscal 2023, higher than the 0.96 recorded at the end of the prior quarter. The gradually increasing current ratio bodes well for DocuSign as it implies that the risk of default is less.

DocuSign is seeing an increase in expenses as it continues to invest in sales, marketing and technical expertise. Total operating expenses of $475.5 million increased 26.9% year over year in the first quarter of fiscal 2023. Total operating expenses of $1.3 billion increased 34.8% year over year in fiscal 2022. Hence, the company's bottom line is likely to remain under pressure going forward.

The company’s shares have declined 61.6% over the past six months compared with 53.8% decline of the industry It belongs to.

DocuSign Price

DocuSign price | DocuSign Quote

Zacks Rank and Stocks to Consider

DocuSign currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group CAR,Cross Country Healthcare CCRN and CRA International CRAI.

Avis Budget sports a Zacks Rank #1 at present. CAR has a long-term earnings growth expectation of 19.4%. 

Avis Budget delivered a trailing four-quarter earnings surprise of 102%, on average. 

Cross Country Healthcare sports a Zacks Rank of 1 at present. CCRN has a long-term earnings growth expectation of 6.9%.

Cross Country Healthcare delivered a trailing four-quarter earnings surprise of 29.2%, on average. 

CRA International carries a Zacks Rank #2 (Buy), currently. CRAI has a long-term earnings growth expectation of 14.3%.

CRAI delivered a trailing four-quarter earnings surprise of 35.8%, on average.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.