DocuSign Shares Slide 22% as Margins Face Scrutiny
DocuSign Inc.
DOCU -23.23%
shares lost more than a fifth of their value Friday after the company warned of a worsening macroeconomic backdrop and analysts raised concerns about stepped-up competition for e-signature options.
Shares of the e-signature company were down 22% to $50.34 in midday trading. The stock is down about 49% over the last 12 months.
The drop comes after DocuSign late Thursday swung to a profit in its fiscal fourth quarter and reported better-than-expected sales.
Analysts, however, were downbeat on DocuSign’s outlook for the current year, as the company’s customers remain reluctant to boost their technology spending in the current environment.
“When you look at the macro environment, it certainly hasn’t gotten better and you could probably tend to say we’ve gotten a little bit worse,” Chief Financial Officer
Cynthia Gaylor
said on Thursday’s earnings call. DocuSign also said that it was searching for its next finance chief, with Ms. Gaylor stepping down in the coming months.
J.P. Morgan
cut DocuSign shares to underweight from neutral, citing deteriorating demand trends, as well heightened competition from
Adobe Inc.
and the possibility of others launching a competing e-signature option. Analysts at the firm said that DocuSign’s core e-signature product, a staple that thrived during the Covid-19 pandemic as businesses turned to virtual options to sign paperwork, “operates in what we view as an increasingly challenging competitive environment.”
DocuSign, after reducing its workforce by 9% in September and then a 10% reduction in February, isn’t projecting margins to improve as much as some analysts expected. Instead, the company plans to reinvest savings in areas of product development with an eye on growth.
“We do have some investing to do to catch up,” Chief Executive
Allan Thygesen
said in an interview. “That’s what we’ll be doing here over the next few quarters, and we freed up some capital to do that.”
Analysts at RBC Capital Markets said while investing in research and development might be a right move for the long term, the margin outlook is “tough to swallow.”
DocuSign’s transition comes as companies tighten their spending amid concerns about the economy. But JMP Securities analysts still like the company for a few reasons, including its shift of investment from the sales organization to product development and the hiring of former
Alphabet Inc.
executive Anwar Akram as chief operating officer.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
DocuSign Inc.
DOCU -23.23%
shares lost more than a fifth of their value Friday after the company warned of a worsening macroeconomic backdrop and analysts raised concerns about stepped-up competition for e-signature options.
Shares of the e-signature company were down 22% to $50.34 in midday trading. The stock is down about 49% over the last 12 months.
The drop comes after DocuSign late Thursday swung to a profit in its fiscal fourth quarter and reported better-than-expected sales.
Analysts, however, were downbeat on DocuSign’s outlook for the current year, as the company’s customers remain reluctant to boost their technology spending in the current environment.
“When you look at the macro environment, it certainly hasn’t gotten better and you could probably tend to say we’ve gotten a little bit worse,” Chief Financial Officer
Cynthia Gaylor
said on Thursday’s earnings call. DocuSign also said that it was searching for its next finance chief, with Ms. Gaylor stepping down in the coming months.
J.P. Morgan
cut DocuSign shares to underweight from neutral, citing deteriorating demand trends, as well heightened competition from
Adobe Inc.
and the possibility of others launching a competing e-signature option. Analysts at the firm said that DocuSign’s core e-signature product, a staple that thrived during the Covid-19 pandemic as businesses turned to virtual options to sign paperwork, “operates in what we view as an increasingly challenging competitive environment.”
DocuSign, after reducing its workforce by 9% in September and then a 10% reduction in February, isn’t projecting margins to improve as much as some analysts expected. Instead, the company plans to reinvest savings in areas of product development with an eye on growth.
“We do have some investing to do to catch up,” Chief Executive
Allan Thygesen
said in an interview. “That’s what we’ll be doing here over the next few quarters, and we freed up some capital to do that.”
Analysts at RBC Capital Markets said while investing in research and development might be a right move for the long term, the margin outlook is “tough to swallow.”
DocuSign’s transition comes as companies tighten their spending amid concerns about the economy. But JMP Securities analysts still like the company for a few reasons, including its shift of investment from the sales organization to product development and the hiring of former
Alphabet Inc.
executive Anwar Akram as chief operating officer.
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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