DocuSign Inc. (NASDAQ: DOCU) has confirmed the release date of its earnings, which is on Thursday, March 10, 2022, after the market closes.
What to look for: in the third quarter, the company announced various new products that are expected to have impacted earnings in the fourth quarter. Equally, the company expanded its partnership with Salesforce to create new joint products that can facilitate how agreements are made. As a result, when the company releases its results, it is expected to show robust earnings and revenue.
Earnings: Stockearning’s Estimated EPS for the quarter under review is $0.01. The company last released earnings on December 2, 2021, reporting earnings of $0.59 per share to beat consensus estimates of $0.46 per share. Historical EPS performance shows that in the past 12 quarters, the company has topped estimates eight times (53%), matched once (6%), and missed six times (40%).
Revenue: The company is expected to report revenue of $560.8 million up from 40.15% YoY. In the third quarter, the company had revenue of $545.5 million, a 42% YoY increase, while subscription revenue increased 44% to $528.6 million and professional services and other revenues increased 28% to $565.2 million.
Stock movement: DOCU shares have gained 51.1% since the company released its last earnings release. Interestingly, following the earnings release, the company’s shares have been UP 8 times in the past 15 quarters. So, the historical price reaction suggests a 53% probability of the share price going UP following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-11%, while the predicted volatility on the seventh day is +/-12%.
What analysts are saying: Piper Sandler analyst Rob Owens slashed his price target on the stock from $200 to $175 and maintained a hold rating. Owens told investors in a research note that most of those demand drivers that boosted cybersecurity investment in 2021 are still in play in 2022. According to the analyst, add in a "pretty upbeat" IT investment expectation for 2022, with security prioritization expected to persist, and the "perfect storm" for rising cybersecurity demand will continue.
Morgan Stanley Stan Zlotsky downgraded the stock from Buy to Hold and lowered a price target from 4350 to $165. According to Zlotsky, DocuSign's recent Q3 results have changed his mind about the sustainability of growth in the face of harsh post-COVID comps. He believes it will take time to return on the pre-pandemic fundamentals of selling, rebuild the pipeline, and translate that into growth. Meanwhile, he believes management will continue to be cautious in their guidance, perhaps creating noise for the buy-side vs consensus expectations, according to Zlotsky.
Wolfe Research analyst Alex Zukin downgraded the stock from Buy to hold. Zukin added that in addition to updating his models after the firm's earnings report, his discussions with management indicate that the go-to-market challenges are likely to linger longer. As a result, the analyst does not expect a trigger for stocks to re-rate upward in the next quarters and thinks there is more danger to the downside.
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