DocuSign shares sunk 15% after-hours: why is it being punished?


DocuSign Inc (NASDAQ: DOCU) shares are down more than 15% in extended trading on Thursday after the eSignature company gave disappointing guidance for the full year. Its Q4 revenue, however, came in better-than-expected.

DocuSign Q4 financial highlights

Adjusted earnings printed at 48 cents a share versus 37 cents a share last year.
At $580.8 million, revenue in the fourth quarter was up 35% year-over-year.
FactSet consensus was for 48 cents of adjusted EPS on $562 million in revenue.
Subscription and professional services revenues were up 37% and 19%, respectively.
Billings climbed to $670.1 million; an annualised growth of 25%.

Including the after-hours price action, DocuSign shares are down 50% for the year. Last month, Potomac Wealth Advisors’ Mark Avallone said the sharp sell-off in DOCU meant a great buying opportunity.

Future guidance and share buyback

For the full fiscal 2023, DocuSign forecasts total revenue to fall between $2.47 billion and $2.48 billion, including $2.40 billion in subscription revenue. It expects up to $2.73 billion in billings this year.

In comparison, analysts had called for a higher $2.60 billion in full-year total revenue. DocuSign also announced a $200 million share repurchase programme on Thursday. In the earnings press release, CEO Dan Springer said:

As we head into Fiscal 2023, digital transformation and the need to agree from anywhere remains a high priority for organizations across the globe. As people begin to return to the office, they are not returning to paper. eSignature and the broader Agreement Cloud will only continue to gain prominence in the evolving Anywhere Economy.

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