DocuSign, Inc. DOCU presented impressive second-quarter fiscal 2024 (ended Jul 31) results, with both earnings and revenues beating the Zacks Consensus Estimate and growing year over year.
Non-GAAP earnings per share (excluding 68 cents from non-recurring items) of 72 cents beat the consensus mark by 10.8% and grew 50% from the year-ago fiscal quarter’s reported figure. Revenues of $687.7 million also surpassed the consensus estimate by 1.6% and increased 10.5% from the year-ago fiscal quarter’s reported figure.
However, the better-than-expected results failed to impress shareholders as the company lost 9.8% since the earnings release on Sep 7.
=DocuSign Price, Consensus and EPS Surprise
DocuSign price-consensus-eps-surprise-chart | DocuSign Quote
Quarter in Detail
Subscription revenues came in at $669.4 million, up 10.6% year over year, beating our estimate by 1.5%. Professional services and other revenues for the reported quarter beat our estimate and increased by 7.8% from the year-ago fiscal quarter’s reported figure to $18.3 million.
For the reported quarter, billings came in at $711.2 million, 10% above the year-ago fiscal quarter’s reported figure, and beat our estimate by 9.3%. The non-GAAP gross margin was 82%, in line with the year-ago figure and our estimate. The non-GAAP gross profit of $565.8 million increased 11.3% year over year and surpassed our estimate by 2.3%. The non-GAAP operating margin was 25%, up from the year-ago figure of 18%.
Balance Sheet & Cash Flow
DocuSign ended the quarter with cash and cash equivalents of $1.02 billion compared with $940.5 million at the end of the previous quarter. It generated $211 million in cash from operating activities and a capex of $27.4 million. Non-GAAP free cash flow was $183.6 million.
Third-Quarter Guidance
The company expects revenues in the range of $687-$691 million, revised upward from the $675-$679 million band. The Zacks Consensus Estimate for revenues is pegged lower at $683.8 million.
In segmental revenues, subscription revenues are expected in the $669-$673 million band, revised upward from the $658-$662 million range. Billings are expected in the range of around $668-$678 million, up from the previous range of $646-$656 million. The non-GAAP gross margin and the non-GAAP operating margin are expected at 81-82% and 22-23%, respectively.
Fiscal 2024 Guidance
The company expects revenues in the range of $2.725-$2.737 billion, raised from the previous guidance in the band of $2.71-$2.73 billion. The Zacks Consensus Estimate for revenues is pegged lower at $2.72 billion.
In segmental revenues, subscription revenues are expected in the $2.649-$2.661 billion band, revised from $2.64-$2.65 billion band. Billings are expected in the range of $2.804-$2.824 billion, up from the previously guided range of $2.74-$2.76 billion. The non-GAAP gross margin and the non-GAAP operating margin are expected at 81-82% and 23-24%, respectively.
Currently, DocuSign carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks to Consider
Here are some other stocks from the broader Business Services sector that have performed well in their recent earnings releases:
Automatic Data ADP reported better-than-expected fourth-quarter fiscal 2023 results. Adjusted earnings per share of $1.89 (excluding 1 cent from non-recurring items) beat the Zacks Consensus Estimate by 3.3% and grew 26% from the year-ago fiscal quarter’s figure. Total revenues of $4.47 billion beat the consensus estimate by 1.8% and improved 8.5% from the year-ago fiscal quarter’s reading on a reported basis and 9% on an organic constant-currency basis. ADP currently carries Zacks Rank #2.
TransUnion TRU reported impressive second-quarter 2023 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Quarterly adjusted earnings of 86 cents per share (adjusting 58 cents from non-recurring items) surpassed the consensus mark by 3.6% but decreased 12.2% year over year.
Total revenues of $968 million beat the consensus mark by 1% and increased 2.1% year over year on a reported basis. Revenues were up 3% on a constant-currency basis, mainly driven by strength in international markets. TRU currently carries Zacks Rank #2.
Gartner IT reported better-than-expected second-quarter 2023 results. Adjusted earnings per share (excluding 37 cents from non-recurring items) of $2.85 beat the Zacks Consensus Estimate by 14.9% and matched the year-ago reported figure.
Revenues of $1.5 billion beat the consensus estimate by 1% and improved 9.2% year over year on a reported basis and 10% on a foreign currency-neutral basis. The total contract value was $4.6 billion, up 8.9% year over year on a foreign currency-neutral basis. IT currently has a Zacks Rank #3 (Hold).
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