DocuSign (DOCU) Stock: Why The Price Substantially Dropped

By Amit Chowdhry ● Dec 3, 2021
  • The stock price of DocuSign Inc (NASDAQ: DOCU) fell by over 30% pre-market today. This is why it happened.

The stock price of DocuSign Inc (NASDAQ: DOCU) fell by over 30% pre-market today. Investors responded negatively to what was revealed in the company’s fiscal quarter ended October 31, 2021.

Q3 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. 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.

The fourth-quarter forecast for the company missed the estimates. For the fourth quarter, the company said it is expecting revenue of $557 million to $563 million. Analysts were expecting slightly more than $573 million.

In terms of billings, DocuSign now expects $647 million to $659 million. And analysts were expecting fourth quarter billings of $705.4 million.

KEY QUOTE:

“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. 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.”

— Dan Springer, CEO of DocuSign

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.