DocuSign (DOCU) earnings are here! It was definitely a case of one step forward, two steps back for the electronic signature software vendor. DocuSign reported adjusted earnings of 38 cents per share for the first quarter, which was 8 cents below what analysts expected, according to Refinitiv. The company’s GAAP net loss per share was 14 cents, wider than a 4 cent loss by the same metric in the year-ago period.
For the quarter ended April 30, DocuSign’s revenue increased 25% from the year-earlier period. But as investors shift away from a focus on growth to profitability, DocuSign’s miss on earnings overshadowed that revenue gain. The stock is down 43% this year as of Thursday’s close, tumbling alongside the rest of the cloud software sector. The business also announced further losses to the business with its net loss widening to $27.4 million from $8.3 million during the year-earlier period.
The disappointing stock news comes on the back of the signature vendors' announcement that it's expanding its partnership with Microsoft (MSFT). DocuSign and Microsoft are providing new integrations and capabilities that enhance their joint customers’ ability to prepare, sign and manage agreements in the cloud, from practically anywhere. This strategic partnership helps joint customers further achieve ‘anywhere’ collaboration and builds on Microsoft’s relationship as a DocuSign customer and partner.
Why it matters
DocuSign experienced strong growth during the early months of the pandemic with the increase in online transactions. The pace of that business has slowed in recent quarters, similar to other pandemic boom businesses such as Zoom (ZM) and Peloton (PTON). The business is looking to keep its head above water after the tanking of cloud-based businesses on the stock market, as evident by the expansion of its Microsoft partnership.
