DocuSign Announces Third Quarter Fiscal 2022 Financial Results

DocuSign stock plunged after its October-quarter earnings and revenue topped Wall Street targets but revenue guidance for DOCU stock missed expectations.

San Francisco-based DocuSign (DOCU) reported third-quarter earnings after the market close on Thursday. Demand for its products surged during the early part of the coronavirus outbreak but many businesses are resuming in-person meetings.

“Third quarter revenue growth of 42% year-over-year and operating margin of 22% exceeded our expectations. After six quarters of accelerated growth, we saw customers return to more normalized buying patterns, resulting in 28% year-over-year billings growth,” said Dan Springer, CEO of DocuSign. “With a $50 billion TAM and 1.11 million customers worldwide, we are confident in the value DocuSign delivers in an increasingly digital anywhere economy.”

Third Quarter Financial Highlights

Total revenue was $545.5 million, an increase of 42% year-over-year. Subscription revenue was $528.6 million, an increase of 44% year-over-year. Professional services and other revenue was $16.9 million, an increase of 4% year-over-year.

Billings were $565.2 million, an increase of 28% year-over-year.

GAAP gross margin was 79% compared to 74% in the same period last year. The non-GAAP gross margin was 82% compared to 79% in the same period last year.

GAAP net loss per basic and diluted share was $0.03 on 198 million shares outstanding compared to $0.31 on 186 million shares outstanding in the same period last year.

Non-GAAP net income per diluted share was $0.58 on 208 million shares outstanding compared to $0.22 on 206 million shares outstanding in the same period last year.

Net cash provided by operating activities was $105.4 million compared to $57.4 million in the same period last year.

Free cash flow was $90.0 million compared to $38.1 million in the same period last year.

Cash, cash equivalents, restricted cash, and investments were $908.2 million at the end of the quarter.

For the final three months of the year, growth is expected to come in at around 30%, which CEO Dan Springer acknowledged as a disappointment after “exceptionally high growth rates at scale” during the first half of 2020.

“While we had expected an eventual step down from the peak levels of growth achieved during the height of the pandemic, the environment shifted more quickly than we anticipated,” Springer said on the earnings call.

Prior to the after-hours plunge, DocuSign’s stock was up about 4% for the year, trailing the S&P 500′s 20% gain. Last year, DocuSign shares tripled in value.

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