Analyst Note| Dan Romanoff, CPA |
DocuSign reported second-quarter results that exceeded the high end of guidance for revenue and were at the high end for non-GAAP operating margin. More importantly, the company increased its billings growth outlook for the year by about 100 basis points based on improvement in sales execution issues with bolstered leadership. Management maintained revenue and non-GAAP operating margin guidance for the year, is close to naming a new CEO, and repurchased $25 million worth of shares in the quarter. Based on these factors, we see light at the end of the tunnel, although we do not think the company is out of the woods yet. Macro conditions are deteriorating and DocuSign saw some lengthening deal cycles and smaller deals in real estate and financial services. Based on these factors, we are maintaining our fair value estimate of $88 per share, and see upside to shares, but advise investors to proceed with caution given recent missteps.