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Why DocuSign Stock Dropped Today

By Joe Tenebruso - Updated Mar 12, 2021 at 5:50PM

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Concerns about slowing growth rattled investors.

What happened

Shares of DocuSign (DOCU 1.02%) fell 6.6% on Friday, following the release of the e-signature leader's fourth-quarter results. 

So what

DocuSign's revenue surged 57% year over year to $430.9 million, while its adjusted earnings per share more than tripled, to $0.37. DocuSign's cash generation was also impressive. Its operating cash flow climbed 37% to $62.2 million, while its free cash flow soared 184% to $44 million.

"Fiscal 2021 was a milestone year for DocuSign," CEO Dan Springer said in a press release. "We became a pillar of the 'anywhere economy' that lets people increasingly do anything in life and work from anywhere."

A person is pointing to a stock chart that rises sharply and then falls.

Image source: Getty Images.

Despite this strong performance, DocuSign's shares pulled back after its earnings release. The company's guidance might be partly to blame. DocuSign guided for revenue to rise roughly 35% to nearly $2 billion in fiscal 2022. Although that's certainly a solid level of growth, it's a significant deceleration from the 49% increase the company saw in fiscal 2021.

Now what

The coronavirus, and the social distancing measures enacted to combat its spread, accelerated the trend toward remote work over the past year. That led to greater demand for DocuSign's digital contract management services.

But investors are now trying to determine just how much DocuSign's growth will slow in the coming years as the health crisis subsides, and they're demanding a lower price to account for this risk.

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