DocuSign shares drop despite Q2 earnings exceeding expectations

(Glenn Carstens-Peters/Unsplash)

DocuSign (ticker: DOCU) stock has gained 34% so far in 2021, but shares fell 2% in after-hours trading on Thursday, despite the company revealing better-than-expected earnings for its second quarter.

The San-Francisco-based company has experienced rapid growth since its launch in 2003 for its electronic signature technology, exceeding earnings targets for the last four quarters.

And its most recent quarter is no different, with DocuSign posting earnings of $0.47 per share, up from Zacks Consensus Estimate of $0.39 per share, and up from $0.17 per share from the same period a year prior.

The company posted revenues of $511.84 million for its second quarter ending in July 2021, up from $342.21 million in the same period a year prior, beating Zacks’s estimates by 6.09%.

So why the dip in share price? It could be to do with speculation that fewer contracts will have to be relied on electronically as offices open up around the globe post-pandemic.

However, there is also the notion that the reliance formed during the pandemic on virtual services such as Zoom and DocuSign has also laid a foundation for ongoing membership moving forward. 

Although moving forward companies like DocuSign may not experience such rapid growth as when the pandemic first hit, even when offices reopen, they will likely still retain a large portion of clients who had positive experiences using the services during the pandemic.

So what’s next for DocuSign? The company predicts revenue of $529 million for its current quarter ending in October, exceeding expectations of $522 million. It will be intriguing to see how the company performs against these estimates and forecasts in the months to come.

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