DocuSign Stock Surges 9% in Premarket Trading After Earnings Beat

Key Takeaway

• DocuSign's stock surged 9% in premarket trading to $58.40 after reporting earnings, revenue, and bookings above expectations.
• Wedbush raised its price target to $65 from $56 but maintained a Neutral rating amid cautious analyst sentiment on new AI initiatives.
• Despite positive earnings, analysts await further evidence of impact from go-to-market and product changes before changing ratings.

Positive Earnings Report

Shares of DocuSign experienced a notable increase of 9% in premarket trading to $58.40, following a period where the stock saw a 7.8% gain over the last 12 months but a decline of 10% so far this year. The company's fourth-quarter earnings announcement was met with optimism, as Wedbush analyst Dan Ives described it as a “big step in the right direction for the DOCU story.” Ives subsequently raised his price target on the stock to $65 from $56, while maintaining a Neutral rating.

DocuSign reported earnings, revenue, and bookings that surpassed analysts’ expectations after the market closed on Thursday. Additionally, the company provided revenue guidance that exceeded forecasts. Chief Executive Allan Thygesen highlighted the significant increase in business from customers signing and renewing multiyear multimillion-dollar contracts with DocuSign during the company’s earnings conference call.

AI Initiatives and Market Reaction

DocuSign also shared its plans to leverage artificial intelligence (AI) to manage corporate agreements, signaling a strategic focus on AI initiatives. Despite the positive results and outlook, many analysts remain cautious. Out of 26 analysts surveyed by FactSet, eight recommend buying the stock, 15 suggest holding, and three advise selling. Dan Ives noted, “We continue to see further successful execution with its AI product portfolio picking up more steam heading into FY25 to accelerate profitable growth, but it will take more time to create more confidence with the Street with the AI story starting to pick up.”

Analysts’ Perspectives

Needham analyst Scott Berg reaffirmed his Hold rating on DocuSign without specifying a price target, calling the fourth-quarter results “solid.” However, he expressed concerns that the initial FY25 billings guidance indicates that macroeconomic factors will continue to pressure net new business trends and make expansions challenging. DocuSign’s fiscal 2025 billings are expected to be between $2.97 billion and $3.02 billion, with the lower end aligning with Wall Street estimates.

William Blair analyst Jake Roberge also maintained his Market Perform rating without a price target. He stated, “While the company’s recent results have been encouraging, we are maintaining our Market Perform rating until we see more evidence that DocuSign’s go-to-market and product changes are having a positive impact on the business.”

Street Views

• Dan Ives, Wedbush (Neutral on DocuSign):

  "Fourth-quarter earnings were a big step in the right direction for the DOCU story... We continue to see further successful execution with its AI product portfolio picking up more steam heading into FY25 to accelerate profitable growth, but it will take more time to create more confidence with the Street with the AI story starting to pick up."

• Scott Berg, Needham (Neutral on DocuSign):

  "The fourth-quarter results were solid. However, initial FY25 billings guidance suggest macro will continue to pressure net new business trends and expansions to remain challenging."

• Jake Roberge, William Blair (Neutral on DocuSign):

  "While the company’s recent results have been encouraging, we are maintaining our Market Perform rating until we see more evidence that DocuSign’s go-to-market and product changes are having a positive impact on the business."

Management Quotes

• Allan Thygesen, CEO of DocuSign:

  "We substantially increased the amount of business from customers signing and renewing multiyear multimillion dollar contracts with DocuSign."