DocuSign (DOCU) CEO Dan Springer is a touch miffed at the market’s harsh reaction to a second quarter that, for lack of better words, blew the minds of an already bullish Wall Street analyst community.
Shares fell 12% on Friday just hours after from the company’s latest earnings report amid a broader rout in red-hot tech stocks. The stock is now down about 26% from its Sept. 2, 52-week high, per Yahoo Finance Premium data.
Ultimately, Springer says, the market is going to do what the market is going to do. It’s simply not in his control.
“Trying to guess what’s going to happen on Wall Street is always dangerous. We were somewhat surprised the week before our earnings announcement to see our stock go up some 30-odd percent, and then after we announced, kind of give back all of that change that was built up before the earnings announcement,” Springer told Yahoo Finance’s The First Trade.
“If you talk to the analysts an investors, they are incredibly pleased to see this 45% revenue growth but also the 61% billings growth which has sort of been unprecedented for us in 10 quarters as a public company. So the momentum in the stock is strong. The run over the last year has been quite dramatic and while I am appreciative of seeing Wall Street respond so well to our over results, I try not to get too focused on the short-term fluctuations.”
To be sure, DocuSign presented a strong case this week that investors should quickly return to the work-from-home name once the selling in the markets subsides.
The company’s second quarter sales rose an impressive 45% from the prior year. Billings surged 61% from a year ago, accelerating from a 59% growth rate in the first quarter. Average contract value for customers that spend more than $300,000 annually with the company gained 41%. Average retention rate was an unworldly 120%, the highest ever for a single quarter for DocuSign (beat the first quarter record of 119%).
DocuSign disclosed it will move into the notary business via its acquisition of LiveOak. Springer pegs the size of the notary market as a $1 billion opportunity for DocuSign. The company is exploring video-based e-signatures as well, working closely with fellow work-from-home name Zoom (ZM).
“They [DocuSign] crushed it,” Wedbush analyst Dan Ives remarked to Yahoo Finance via email. “Given the eye-popping fundamental growth and work-from-home shift, we believe second-half guidance is likely very conservative although prudent and the smart approach in this fluid environment. To this point we believe that DocuSign is in a sweet spot to continue to receive significant customer spending given its unique solution set amidst an elongated work-from-home backdrop with an e-signature shift that has likely permanently changed among enterprises moving forward.”
Ives maintained an Outperform rating on DocuSign with a $270 price target.
Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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