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Why DocuSign Stock Jumped 32% Last Month

By Jeremy Bowman - Oct 4, 2019 at 11:28AM

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Shares of the cloud stock surged following a strong earnings report.

What happened

Shares of DocuSign (DOCU 6.72%) surged in September after the eSignature leader posted a better-than-expected second-quarter earnings report with a jump in revenue and also raised its full-year guidance. According to data from S&P Global Market Intelligence, the stock finished the month up 32%. 

As the chart below shows, nearly all the gains came after the company reported earnings on September 5.

DOCU Chart

DOCU data by YCharts

So what 

The cloud-based company said that revenue jumped 41% in the quarter to $235.6 million, easily beating estimates at $220.9 million, as subscription revenue rose 39% to $220.8 million. The acceleration in top-line growth was encouraging to investors after a plunge following its first-quarter earnings report, and billing was also up 47% to $252.4 million, a promising sign for future revenue growth and the expanding adoption of its Agreement Cloud. 

A digital cloud image

Image source: Getty Images.

On the bottom line, adjusted earnings per share slipped from $0.03 to $0.01, in part due to the impact of its earlier acquisition of SpringCM, a cloud-based contract management company. 

CEO Dan Springer sounded optimistic about the future, saying, "In the second quarter, we added 29,000 new customers onto the platform, bringing our total to 537,000 worldwide. 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."

In the aftermath of the earnings report, the stock continued to climb even as the market bailed out of a number of SaaS stocks, a sign that investors don't believe Docusign is overvalued in the way that other cloud stocks may be.

Now what 

Looking ahead, management also lifted its full-year guidance aggressively, calling for revenue of $947 million to $951 million, up from a previous range of $917 million to $922 million. Third-quarter revenue guidance of $237 million to $241 million was also above expectations of $232 million.

Given that forecast, it's not surprising that the cloud-based document specialist increased its value by nearly a third last month even at a time when investors were turning away from cloud stock. 

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