Shares of DocuSign (DOCU 0.39%) were up 8.6% as of 12:40 p.m. ET on Friday. The company reported a revenue increase of 22% year over year, with adjusted earnings per share showing a notable improvement over the previous quarter.
Worries over lower demand for the company's e-signature product sent the stock plummeting this year, but low expectations usually set the stage for a rebound, which is what happened following the earnings report.
The 22% increase in revenue was slightly down from the 25% increase in the first quarter. As CEO Maggie Wilderotter noted, it was a "strong finish" to the first half of fiscal 2023.
If there was a negative from the quarter, it was the deceleration in billings, which accounts for sales to new customers, subscription renewals, and additional sales to existing customers. Billings slowed from a 16% increase in the first quarter to just 9% in the second quarter. While DocuSign added 44,000 new customers, spending by existing customers slowed, as noted by a 2-percentage-point decrease in the dollar net retention rate, which fell to 110%.
DocuSign is not out of the woods yet. Management is calling for billings growth to decelerate again to between 3% to 5% in the next quarter. There is still a lot of uncertainty about the economy, and that could continue to weigh on corporate spending. Chief Financial Officer Cynthia Gaylor said, "Visibility into the business is still not what we would like it to be."
Management seems to be looking for stability in the business before positioning for more growth in fiscal 2024. With a $50 billion long-term addressable market, DocuSign still has a lot more growth ahead.