DocuSign (DOCU, Financial) saw its shares increase by 4% following an impressive fourth-quarter report for January, which surpassed expectations in both revenue and earnings. Despite an initial surge of up to 17% in after-hours trading, the stock experienced a significant pullback at the market's open. This reaction comes amidst the company's efforts to boost growth and manage expenses effectively.
Key highlights from DocuSign's recent performance include:
- Non-GAAP operating margin expanded by 100 basis points year-over-year to 25%, aligning with the higher end of their forecast. This improvement contributed to a 17% increase in adjusted EPS year-over-year to $0.76, surpassing consensus estimates.
- Although revenue growth decelerated to 8% year-over-year, reaching $712.39 million, billings growth accelerated to 13% year-over-year. This marks a significant recovery from the previous quarter's slowdown.
- Several factors contributed to the uptick in billing growth, including enhanced customer usage across key sectors, stable customer retention with strong momentum among large customers, and a robust increase in new customer acquisitions, which ended the year 11% higher year-over-year.
- International revenue, which is vital for DocuSign's long-term success, grew at more than double the overall company growth rate, now representing 27% of total revenues.
- Looking ahead to FY25, DocuSign aims to continue improving profitability, with a target for non-GAAP operating margin growth to 26.5-28.0%, and projects revenue between $2.915-2.927 billion, a 6% increase year-over-year at the midpoint, with billings expected to rise by 3%.
Despite facing challenges from the Federal Reserve's rate hikes over the past two years, DocuSign is showing signs of stabilization and recovery, highlighted by its strongest year-over-year billings growth in more than a year. The company remains optimistic about its future, signaling the potential for a broader recovery ahead.
