DocuSign shares gained more than 10% in premarket trade Friday after the provider of document signing software impressed investors with its fourth quarter earnings and strong guidance.
For the quarter ended January 31, 2024, DocuSign posted an 8% year-over-year jump in revenue to $712.4 million, ahead of estimates of $698.1 million.
Subscription revenue increased 8% to $695.7 million while professional services and other revenue grew 5% to $16.7 million.
Adjusted earnings per share increased from $0.65 to $0.76, ahead of estimates of $0.64.
For the full year, revenue increased 10% to $2.8 billion while adjusted EPS grew from $2.03 to $2.98.
DocuSign’s fiscal 2025 guidance was another boost to the stock, with management projecting revenue in the range of $2.915 billion to $2.927 billion, compared to the Street estimate of $2.910 billion.
It also provided strong margin guidance, with gross margins seen at 81% to 82% and operating margins at 26.5% to 28%, above estimates of 81.7% and 24.4%, respectively.
Analysts at Wedbush raised their price target on DocuSign following the release of its earnings but reiterated their ‘Neutral’ rating.
“DocuSign delivered its fiscal 4Q 2024 results featuring beats on the top and bottom lines as the company continues seeing strength core technology while improving the reach of its go-to-market initiatives and further improvements in operating leverage in the business model,” they wrote in a note to clients.
They noted that, while the company continues to see pipeline expansion and steady improvements in the macro backdrop, its net retention rate came in at 98%, below the 100% previously seen, as it is impacted by software optimization and macro-related customer purchasing costs.
“With the company generating solid traction quarter after quarter, we continue to see further successful execution with its AI product portfolio picking up more steam heading into the 2025 fiscal year to accelerate profitable growth, but it will take more time to create more confidence with the Street with the AI story starting to pick up,” they wrote.
The Wedbush analysts upped their price target on the stock from $56 to $65.
Shares of DocuSign traded 9.6% higher at $58.86 shortly before Friday’s opening bell.