What happened
Shares of DocuSign (DOCU 1.29%) crashed by 31.6% in June, according to data provided by S&P Global Market Intelligence.
This decline means that shares of the e-signature company are now down 63.5% year to date.
Image source: Getty Images.
So what
DocuSign released its fiscal 2023 first-quarter earnings during the month and continued to demonstrate steady growth. Total revenue was up 25% year over year to $588.7 million with subscription revenue taking up the lion's share at 96.7% of the total. Billings, a sign of future revenue, climbed 16% year over year to $613.6 million and the business generated healthy free cash flow of $174.6 million, up from $123 million a year ago.
NASDAQ: DOCU
Key Data Points
Investors, however, were probably concerned about slowing growth at the e-signature company as borders reopen and more people head back to the office. The need for digital signatures to process transactions and documents was heightened by social distancing requirements and the need to work from home, and the impetus to do so has gradually faded. Compared with Q1 2022's 58% year-over-year revenue growth, the 25% chalked up for Q1 2023 is less than half that rate. Furthermore, DocuSign has guided for total FY 2023 revenue of $2.48 billion, an increase of 17.5% year over year. This growth rate is far below FY 2022's 45% year over year jump in revenue and signals a slowdown as business conditions normalize.
CEO Dan Springer also announced that he will be leaving the company after five years in the top post. Mary Agnes Wilderotter, the chairman of the board, has been appointed as interim CEO as a national executive search firm has been appointed to smoothen succession and source for a replacement. Investors are rightfully concerned about DocuSign's future direction as changes in leadership can introduce significant uncertainty.
Now what
There are signs, however, that the company will be in good hands. A slew of new leadership appointments in early June means that experienced executives will be in charge of key functions within DocuSign. New appointments were made for president of worldwide field operations, chief legal officer, chief people officer, and chief product officer. The company also continues to introduce new capabilities such as scheduled send for its e-signature agreements, helping to improve response rates and ensure documents are sent out on time.
DocuSign's customer base continues to grow as well, hitting 1.24 million as of Q1 2023, more than double the number at the end of FY 2020. The total addressable market for e-signatures is estimated at $50 billion, allowing for significant room for the company to expand its business in the years to come.
