Shares of Docusign (DOCU +2.36%) jumped on Friday, finishing the day up 4.8% after climbing as much as 8.9% earlier in the session. The move came as the S&P 500 (SNPINDEX: ^GSPC) dropped 0.3% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was flat.
The software maker reported its Q2 earnings Thursday evening, beating expectations across the board and raising its outlook as artificial intelligence (AI) features gain traction.
NASDAQ: DOCU
Key Data Points
Docusign delivers a clean beat
The company reported Q2 adjusted earnings per share of $0.92, beating analyst estimates. Sales jumped 9% year over year (YOY) to $800.6 million, while sales specifically from ads jumped 13% YOY.
Customer growth showed steady momentum, with the total number of customers increasing by 9% to exceed 1.7 million. Management raised guidance for the coming quarter, citing strength in its expanding AI capabilities.
CEO Allan Thygesen said of the performance, "Q2 was an outstanding quarter, with AI innovation launches and recent go-to-market changes leading to strong performance across the eSignature, CLM, and IAM businesses."
The company also repurchased more than $200 million of its stock and finished the quarter with a healthy balance sheet that includes more than $1 billion in cash and short-term investments.
DOCU looks solid
Docusign is executing well on its transition beyond simple e-signatures into broader agreement management and AI-powered contract analysis. The stock carries a very solid PEG ratio -- a handy valuation metric that combines P/E and growth rates -- of 0.4.
Docusign remains a mature software company in a competitive market, but I think it is positioning itself well and will continue to grow. It makes a nice addition to a well-diversified portfolio.
