The stock market had moved higher by Friday afternoon, but the gains were small. Jobs data released in the morning was weaker than expected, but the potential for a rate cut from the Federal Reserve may be helping the market maintain some optimism.

Index

Change at 1:30 p.m. EDT

Dow Jones Industrial Average (DJINDICES:^DJI)

0.39%

S&P 500 (SNPINDEX:^GSPC)

0.24%

Nasdaq Composite (NASDAQINDEX:^IXIC)

0.09%

Data source: Yahoo! Finance.

While the broader stock market was tepid on Friday, a few stocks made big moves. DocuSign (NASDAQ:DOCU) soared after a strong report and even stronger guidance, while shares of PagerDuty (NYSE:PD) tumbled as some customers dropped the platform.

Everything's going right for DocuSign

Shares of eSignature software provider DocuSign tumbled in August, but those losses were erased on Friday following an impressive second-quarter report. The bottom line missed expectations, but strong revenue growth and a guidance bump was more than enough to satisfy investors. The stock was up 19.7% at 1:30 p.m. EDT.

DocuSign grew its total revenue by 41% to $235.6 million, blowing past analyst estimates by more than $15 million. Almost all that revenue came from subscriptions, which grew by 39%. The company added 29,000 new customers during the quarter, bringing the total customer count to 537,000.

DocuSign turned a small profit of $0.01 per share on an adjusted basis, but that was $0.03 below what analysts were expecting. Given the strong revenue growth, investors gave the company a pass on the bottom line.

Also overshadowing the profit miss was the company's guidance. DocuSign raised its full-year guidance substantially:

Metric

New Guidance

Old Guidance 

Revenue

$947 million-$951 million

$917 million-$922 million

Billings

$1.063 billion-$1.083 billion

$1.010 billion-$1.030 billion

Data source: DocuSign.

In the long run, DocuSign sees its Agreement Cloud product, which combines eSignature with other functions, as a massive opportunity. "We truly believe the Agreement Cloud category has the potential to be as big as CRM and ERP one day and our customers are increasingly buying in," said DocuSign CEO Dan Springer.

The market sours on PagerDuty

PagerDuty stock was down 7.2% at 1:30 p.m. EDT, despite a solid second-quarter report from the incident response software provider. Revenue and earnings came in ahead of expectations, and the company's guidance compared favorably to analyst estimates. But a lofty valuation combined with some evidence that competition is picking up may be weighing on the stock.

A cloud.

Image source: Getty Images.

Before PagerDuty dropped its second-quarter numbers, the software-as-a-service provider was worth nearly $2.8 billion. That's about 17 times the company's guidance for full-year sales, a valuation that bakes in a lot of optimism.

PagerDuty's second-quarter results were positive: Revenue grew 45% to $40.4 million, more than $1 million above analyst estimates, and a non-GAAP EPS loss of $0.07 beat expectations as well. But a key metric showed signs of deterioration. The dollar-based net revenue retention rate, which measures expansion among exiting customers, was 132%, down a bit from historical levels. In the year ended Oct. 31, 2018, this metric was 139%.

This decline was driven by the loss of some customers during the quarter. "...in a business like ours, you're always seeing some customers come and go," said CEO Jennifer Tejada during the earnings call. While a retention rate of 132% is still strong, this could be a sign that PagerDuty is facing tougher competition.