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DocuSign surges amid earnings beat, outlook hike

 

Friday, September 08, 2023

Today’s headlines

What’s happening: Shares of DocuSign gained in after-hours trading on Thursday, following the release of the company’s quarterly results.

What happened: The e-signature company reported better-than-expected earnings for its second quarter.

DocuSign also boosted its guidance for the year, sending its shares higher during the extended trading hours.

How were the results: The San Francisco, California-based company swung to a profit in the second quarter.

  • Revenues grew 11% year-over-year to $687.7 million, topping the consensus estimates of $677.56 million.
  • Net income came in at $7.4 million, or 4 cents per share, compared to a year-ago loss of $45.1 million, or 22 cents per share.
  • Adjusted earnings rose to 72 cents per share, from 44 cents per share in the year-earlier period, beating Wall Street expectations of 66 cents per share.

Why it matters: DocuSign’s growth slowed significantly in 2022, following the pandemic-driven boom. To curtail costs, the company announced two major rounds of layoffs last year, resulting in a 16% reduction in its workforce.

Billings rose 10% year-over-year to $711.2 million in the latest quarter, while gross margin widened to 79%. Net cash from operating activities came in at $211 million and free cash flows at $183.6 million.

The company closed the quarter with $1.5 billion in cash, equivalents, restricted cash and investments.

DocuSign’s board also authorised a share repurchase program of $300 million, after buying back 583,000 shares for approximately $30 million in the second quarter.

“We increased our pace of innovation by delivering key new features, while strengthening our self-service and partner distribution channels, and we’ve received tremendous enthusiasm on our product roadmap, particularly from our enterprise customers,” CEO Allan Thygesen said during the earnings call.

Management guided to revenues between $687 million and $691 million for third quarter, higher than market estimates of $686.03 million. For the year, DocuSign raised its revenue outlook to between $2.73 billion and $2.74 billion, from its prior projection of $2.71 billion to $2.73 billion.

How shares responded: DocuSign’s shares gained 2.8% to $53.59 in after-hours trading, following the release of quarterly results. The stock has lost around 21% over the past six months.

What to watch: Investors will watch the overall economic growth, especially in the US, which could provide a boost to DocuSign’s results ahead.

The markets today

The Canadian dollar will be in focus today ahead of the country’s jobs report

Context: The CAD/USD forex pair fell on Thursday, amid a decline in crude oil prices.

Details: As widely expected, the Bank of Canada kept interest rates unchanged at 5% during its September meeting on Wednesday.

Oil prices had been on a nine-day uptrend, after Saudi Arabia announced plans to extend output cuts. However, a profit-taking led decline in the price for crude oil, one of Canada’s major exports, weighed on the loonie on Thursday. WTI crude oil for October delivery declined by 67 cents to close at $86.87 per barrel on Thursday.

Strength in the US dollar also exerted pressure on the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.2% to reach 105.06 on Thursday.

Investor sentiment was supported by a rise in the Ivey Purchasing Managers Index for Canada to 53.5 in August, from 48.6 in the earlier month. The figure also topped market expectations of 49.2. However, the total value of building permits declined by 1.5% to $11.7 billion in July, after 7.5% growth in the prior month.

The CAD/USD forex pair fell around 0.3% to 1.3688 on Thursday. The S&P/TSX Composite Index also declined by 0.47% to close at 20,132.08.

What to watch: Traders await the release of jobs data from Canada today. The unemployment rate in Canada, which rose to 5.5% in July, is expected to increase further to 5.7% in August. Analysts expect employment in Canada to decline by 8,000 in August. Average hourly earnings for permanent employees in Canada are expected to grow by 4.8% year-over-year in August, following a 5% rise in the previous month.

Other Markets: US trading indices closed mostly lower on Thursday, with the S&P 500 and Nasdaq 100 down by 0.32% and 0.73%, respectively, and the Dow Jones index up by 0.17%.

The news shaping the markets

Russia’s Foreign Minister Sergey Lavrov assured Bangladesh that the country will complete a nuclear power project on time despite sanctions from Western nations. Despite the geopolitical concerns, the safe-haven US dollar index declined this morning.


The Philippines said its trade deficit shrank to $4.20 billion in July, from $6.0 billion in the year-ago month, lending support to the PHP/USD forex pair.


Japan’s economy expanded by 4.8% year-over-year in the second quarter, accelerating from 3.2% in the previous period, which sent the JPY/USD pair higher in forex trading this morning.


South Korea posted a current account surplus of $3.58 billion for July. This being the third month of surplus in a row lent support to the KRW/USD forex pair.


Colombia’s annual inflation rate eased for the fifth straight month to 11.43% in August, from 11.78% in previous month. However, the figure coming in higher than market estimates of 11.17% sent the COP/USD pair lower in forex trading this morning.

What else to watch today

Germany’s consumer price inflation rate, France’s Industrial production and foreign exchange reserves, Spain’s industrial production, India’s Foreign exchange reserves, value of deposits and value of loans, US wholesale inventories, Baker Hughes crude oil rigs, used car prices and consumer credit change, as well as Russia’s inflation rate and gross domestic product.


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