Docusign Posts Q3 Beat; Outlook Reflects Revenue Deceleration

Shares of Docusign Inc (NASDAQ:DOCU) tanked in early trading on Friday, even after the company reported upbeat third-quarter results.

Here are some key analyst takeaways:

• JPMorgan analyst Mark Murphy maintained a Neutral rating, while reducing the price target from $80 to $78.
• Needham analyst Scott Berg reaffirmed a Hold rating on the stock.

Check out other analyst stock ratings.

JPMorgan: Docusign's total revenue grew 8.4% year-on-year to $818 million, beating consensus, Murphy said in a note. He added that billings rose 10.3% year-on-year to $829 million, with upside being drive by:

• Stronger than-expected early renewals
• Favorable renewal timing
• Modest mix shift toward annual billing
• Slight FX favorability

"Total customers grew 9.2% y/y, up from 8.7% last quarter, with Enterprise & Commercial customers up 7.8% y/y to 276K, a modest acceleration vs. 7.1% last quarter," the analyst wrote. Management guided to fourth-quarter total revenue of $827 million at the midpoint, implying a sequential deceleration to around 6.5% year-on-year growth, he further stated.

Needham: Docusign's revenue beat "was modestly disappointing," compared to the outperformance delivered for the previous three quarters, Berg said. Billings growth decelerated to 10.3% year-on-year, from 12.9% in the previous quarter, he added.

Excluding early renewals, billings grew only around 8%, the analyst stated. Billings guidance was raised to $3,379-$3,389 million, implying 8.8% growth at the midpoint and incorporating "a lower assumption for early renewals and a cautious macro forecast," he further wrote.

Price Action: Shares of Docusign had declined by 6.23% to $66.67 at the time of publication on Friday.

Read More:

• A Look Into Docusign Inc’s Price Over Earnings

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