By Jeremy C. Owens
DocuSign Inc. shares plummeted nearly 30% in after-hours trading Thursday, after the company’s billings and revenue forecast missed expectations and its chief executive admitted a pandemic boom wore off in the quarter.
DocuSign (NAS:DOCU) easily topped third-quarter expectations with its earnings report Thursday afternoon, but the company’s billings — which reflect future business under contract — and fourth-quarter forecast came in lighter than expected. In a statement, the electronic-signature company’s chief executive said the immense growth experienced during the COVID-19 pandemic appeared to be dissipating.
“After six quarters of accelerated growth, we saw customers return to more normalized buying patterns, resulting in 28% year-over-year billings growth,” CEO Don Springer said in Thursday’s announcement.
DocuSign shares dove more than 25% to prices that would be a 52-week low in the extended session, a move that would wipe away more than $10 billion in market capitalization if it maintains through Friday’s trading session. DocuSign was worth less than $20 billion when the pandemic began, but spiked beginning in April 2020 to a market cap of more than $40 billion as businesses sought to complete deals without the ability to sign documents in person.
DocuSign reported a third-quarter loss of $5.7 million, or 3 cents a share, on sales of $545.5 million, up from $382.9 million a year ago. After adjusting for stock-based compensation and other effects, the company reported earnings of 58 cents a share, up from 22 cents a share a year ago. Analysts on average expected adjusted earnings of 46 cents a share on sales of $532.6 million, according to FactSet, a bar that DocuSign easily cleared.
However, the company reported billings of $565.2 million, short of its own guidance for $585 million to $597 million as well as analysts’ average forecast of $594 million. For the fourth quarter, management guided for revenue of $557 million to $563 million and billings of $647 million to $659 million, while analysts on average were projecting sales of $575 million and billings of $705.4 million, according to FactSet.
After spiking early in the pandemic, DocuSign shares had already leveled off in 2021, gaining 5.2% so far this year as the S&P 500 index (S&P:SPX) added 20.2%.