DocuSign, the leading electronic signature company, has slightly adjusted its full-year revenue outlook as it reported better-than-expected results for its fiscal second quarter. This upward revision comes after the firm revealed that revenue is now projected to fall between $2.94 billion and $2.95 billion for fiscal 2025.
Previously, the company's guidance had indicated a range of $2.92 billion to $2.93 billion. In parallel, the consensus estimate provided by Capital IQ sits at $2.95 billion, suggesting that the revisions align closely with market expectations. Subscription revenue, a crucial component of DocuSign's business model, is now forecasted to reach between $2.86 billion and $2.88 billion, which is an improvement over the earlier projections of $2.84 billion to $2.86 billion.
This positive trend is pivotal as subscription-based revenues typically represent a significant portion of the firm's overall earnings. An important metric for the company, billings—which encapsulate new customer sales, subscription renewals, and additional sales to existing clients—are anticipated to be in the range of $2.99 billion to $3.03 billion for the ongoing fiscal year.
This forecast is notably higher than the previous estimate of $2.98 billion, showcasing the company's resilience and operational strength amidst fluctuating market conditions. During the earnings call, Chief Financial Officer Blake Grayson emphasized that billings are directly influenced by the timing of customer renewals, resulting in notable variability from period to period.
"As continually shown in recent quarters and years, billings are heavily impacted by the timing of customer renewals, leading to meaningful variability from period to period," Grayson explained. He further noted that the impact of these renewals is magnified by the scale of DocuSign's substantial book of business, underscoring the importance of maintaining strong relationships with their clientele.
For the current three-month period ending in October, DocuSign is predicting revenue between $743 million and $747 million, while analysts expect a slightly more conservative figure of $745.6 million. Subscription sales, which directly contribute to the company's bottom line, are expected to be between $722 million and $726 million, with billings anticipated to be in the range of $710 million to $720 million.
However, despite the positive forecast adjustments, shares of DocuSign witnessed a decline of 1.4% in Friday's premarket activity, suggesting mixed investor sentiment following the report. In the quarter that ended on July 31, the company achieved adjusted earnings of $0.97 per share, significantly up from $0.72 in the prior year.
This figure surpassed the Street's expectations of $0.81 per share. Additionally, revenue demonstrated a healthy increase of 7% year over year, amounting to $736 million, which also exceeded analysts' estimates of $727.8 million. Breaking down the revenue streams, the company's subscription revenue surged to $717.4 million, markedly higher than the $669.4 million recorded in the same quarter last year.
Meanwhile, revenue from professional services and other sources inched up 2% to $18.7 million. Total billings increased by 2% to $724.5 million, which Grayson credited to last year's impressive renewal performance alongside the timing impacts of numerous customer contracts this year. As of the latest trading session, DocuSign's stock price stands at $56.14, reflecting a change of -0.79, translating into a percent change of -1.39%.
With these developments, investors and market analysts alike will be keenly watching DocuSign's future performance indicators as the company continues to navigate the complexities of its revenue landscape and customer engagement strategies..