DocuSign shares soar as it beats Q2 estimates - search for new CEO underway

Derek du Preez Profile picture for user ddpreez September 9, 2022 Audio mode
Summary:
It has been a difficult period for DocuSign as the company has lost more than 60% of its value in the past year. But it looks like things could be on the up.

2d rendering Cloud computing cloud third wave concept © jijomathaidesigners - Shutterstock
(© jijomathaidesigners - Shutterstock)

DocuSign surprised analysts and investors with the announcement of its Q2 results, sending its shares soaring by 18% in after hours trading. The ‘digital agreement’ vendor beat revenue estimates this week after what has been a difficult year of trading, as the company has struggled to continue the momentum it experienced during the early stages of the COVID-19 pandemic. 

After the company lost more than 60% of its value in a year, CEO Dan Springer announced he would be stepping down and was replaced in the interim by Chairman of the Board Maggie Wilderotter. The search for a new CEO is underway and is expected to be announced soon. 

DocuSign is pursuing a strategy of building out its ‘Agreement Cloud’, which focuses on tying e-signatures into company processes as a way for organizations to interact with suppliers, customers and employees. 

The key numbers fo Q2 2023 are: 

  • Total revenue was $622.2 million, an increase of 22% year-over-year. Subscription revenue was $605.2 million, an increase of 23% year-over-year.

  • Billings were $647.7 million, an increase of 9% year-over-year.

  • 44,000 new customers were added during the quarter, an increase of 22% year-over-year, bringing the total number of global paying customers to 1.28 million. 

  • DocuSign said that for its third quarter, it expects revenue to be between $624M and $628M, or up to 15% more than the $545.5M in sales reported in the third quarter last year. DocuSign also forecast full-year revenue in a range of $2.47B to $2.48B, or as much as 18% more than its 2022 fiscal year sales of $2.1B.

Announcing the results, interim CEO Maggie Wilderotter used the opportunity to highlight her experience in delivering results for enterprise vendors. She said: 

I have been on the DocuSign Board for over 5 years and Board Chair for the last few years. In addition to my Board service here at DocuSign, I also sit on several other public and private Boards. I have had the privilege to serve on 51 corporate Boards in my career, 36 public and 15 private, starting at age 28 when I first joined a corporate Board. 

I also have 18 years of CEO operating experience at private and public companies, and most recently was CEO of a Fortune 500, Frontier Communications, for 12 years, retiring 5 years ago. I have had the privilege in my career to hire and lead great teams, to find clear strategies for success, driving results through clarity of deliverables and accountability. And I have also done so with a maniacal focus on serving customers, both internal and external. I am taking the same approach in my interim role as CEO of DocuSign.

Since joining as CEO, I prioritized connecting with customers and employees around the globe through frequent town halls, office visits, virtual connections and in-person meetings. This broad focus on listening, learning and interacting has enabled me to move quickly to set a new agenda for success. We entered Q3 with a clear set of vital few deliverables for our people initiatives, product roadmap and our focus on improving sustainable and profitable growth at scale.

DocuSign’s current focus

Whilst it has been a turbulent period for the company, Wilderotter said that DocuSign had signed a number of large enterprise deals during the quarter, including with companies such as Microsoft and Goldman Sachs. She pointed to a number of new executive hires that make up the company’s new leadership team, which will now be focused on driving DocuSign’s strategy forward. She said: 

Let me start with our strategy. DocuSign is the leader in providing end-to-end digital agreements on a fully integrated platform. This starts with delivering simple, intuitive, integrated and trusted customer and partner experiences that remove friction from all steps in creating, using and managing digital agreements. To support this strategy, we have upgraded talent, launched retention initiatives to include a new employee training program that will commence this month teaching our teams how to operate with excellence. 

Inhi Suh, our new President of Product has already put in place a clear product roadmap that mapped out releases starting next month. Steve Shute, our new President of go-to-market, has revamped our selling motion and performance expectations for the small, medium business and enterprise segments. Our marketing team is delivering new collateral, messaging and tools for Steve’s teams as well as a simplified digital motion for consumers and one-time users.

Finally, DocuSign has also added two additional seasoned scale leaders. I am pleased that Jennifer Christie is our new Chief Human Resources Officer and veteran Jim Shaughnessy is our new General Counsel. I am privileged to lead such a terrific group of executives who have all hit the ground running by working together with a single focus, setting the company on a path for continuous performance improvements in Q3 and Q4 and beyond. I am optimistic about the power of our brand, our value proposition for customers and partners and the renewed results orientation being embraced by our employee base.

Wilderotter said that over the past few months, with increasing interest rates and inflation on a macroeconomic level, DocuSign has started to see some softness in certain verticals like real estate and financial services. But added that despite these headwinds, the company benefits from a diversified customer base across industries, geographies and segments, which is helping it weather the storm. 

The current focus for the company is, however, finding a new CEO. Wilderotter said: 

Finally, the search for our next CEO is a top board priority. All of our independent directors have been actively interviewing great candidates and we are close to making a decision. Terrific candidate pool participating in this process has reinforced the strength of our brand and the shared belief that DocuSign has a tremendous future growth opportunity. I look forward to letting you know who the next CEO will be.

My take

All change at DocuSign, but it seems that the turnaround strategy is currently taking hold. 

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