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The Zacks Consensus Estimate for earnings in the to-be-reported stands at 80 cents, indicating 11.1% growth from the year-ago reported quarter. The consensus estimate for revenues stands at $726.2 million, indicating 5.6% year-over-year growth. There has been no change in analyst estimates or revisions lately.
Image Source: Zacks Investment Research
The company has an impressive earnings surprise history. Earnings surpassed the Zacks Consensus Estimate in the trailing four quarters with an earnings surprise of 15.7%, on average.
Image Source: Zacks Investment Research
Lesser Chance of Q2 Earnings Beat for DocuSign
Our proven model doesn’t conclusively predict an earnings beat for DOCU this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Customer Acquisition Should be DOCU’s Key Driver in Q2
We expect an increase in revenues from existing customers and the addition of new customers to have driven top-line growth in the quarter. With direct and indirect go-to-market initiatives in place, we expect that DocuSign will significantly increase its sales in the quarter.
The consensus estimate for subscription revenues is pegged at $706.8 million, indicating 5.7% year-over-year growth. The consensus mark for professional services and other revenues is pegged at $19.4 million, indicating 5.6% year-over-year growth. Strong margin performance is likely to have benefited the bottom line in the quarter.
DOCU Stock Doesn’t Look Pricey
The stock has gained 10.5% in the past three months compared with the 8.5% rally in the industry it belongs to and the 6.5% rise in the Zacks S&P 500 composite.
3 Months Price Performance
Image Source: Zacks Investment Research
The stock is not looking pricey despite the recent surge. Based on training 12-month EV-to-EBITDA, DOCU is currently trading at 26.6X, way below the industry’s 50.6X. If we look at the forward 12-month Price/Earnings ratio, DOCU shares are currently trading at 17.6X forward earnings, well above the industry’s 35X.
Investment Considerations for DOCU
DocuSign's flagship product, eSignature, facilitates the secure and virtual signing and sending of agreements from anywhere, on any device. The company's revenue is benefiting significantly from the growing demand for eSignature services, although the market remains largely untapped, presenting opportunities for global expansion.
In the first quarter of fiscal 2025, DocuSign reported a 14% year-over-year increase in non-GAAP earnings per share to 82 cents and a 7% rise in total revenues to $710 million. The company continues to make strides in its strategic goals: accelerating product innovation, enhancing omnichannel go-to-market strategies, and improving operational and financial efficiency. DocuSign is seeing strong performance, especially with customers managed by its direct sales force, including major contracts with Fortune 500 companies and government agencies.
Recent product innovations, like AI-enabled identity verification and QES-compliant Identity Wallet, are gaining traction. Additionally, DocuSign's partnerships with Salesforce (CRM - Free Report) and Microsoft (MSFT - Free Report) have strengthened its market position, while the acquisition of Lexion enhances its Intelligent Agreement Management platform with AI-driven capabilities.
Your Strategy Before Earnings
Given the upcoming second-quarter fiscal 2025 earnings report, a hold strategy for DocuSign appears prudent. The Zacks Consensus Estimate suggests moderate earnings growth of 11.1% and a 5.6% increase in revenues, with no significant changes in analyst estimates recently. This suggests a stable outlook but not a clear catalyst for a substantial price surge.
DocuSign’s historical performance is impressive, with consistent earnings surprises. However, the current combination of Earnings ESP and Zacks Rank reduces the likelihood of another significant earnings beat this quarter.
On the positive side, DocuSign’s stock is not overpriced, trading at a lower EV-to-EBITDA and forward Price/Earnings ratio compared to its industry peers. The company’s strong position in the growing eSignature market, along with strategic innovations and partnerships, underpins its long-term growth potential.
Considering these factors, holding onto DocuSign shares is advisable. The stock offers solid long-term prospects, but the near-term outlook suggests limited upside, making a cautious approach appropriate until more definitive performance data is available.
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DocuSign Stock Before Q2 Earnings: To Buy or Not to Buy?
DocuSign, Inc. (DOCU - Free Report) will report its second-quarter fiscal 2025 results on Sep. 5, after the bell.
The Zacks Consensus Estimate for earnings in the to-be-reported stands at 80 cents, indicating 11.1% growth from the year-ago reported quarter. The consensus estimate for revenues stands at $726.2 million, indicating 5.6% year-over-year growth. There has been no change in analyst estimates or revisions lately.
The company has an impressive earnings surprise history. Earnings surpassed the Zacks Consensus Estimate in the trailing four quarters with an earnings surprise of 15.7%, on average.
Lesser Chance of Q2 Earnings Beat for DocuSign
Our proven model doesn’t conclusively predict an earnings beat for DOCU this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
DOCU has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Customer Acquisition Should be DOCU’s Key Driver in Q2
We expect an increase in revenues from existing customers and the addition of new customers to have driven top-line growth in the quarter. With direct and indirect go-to-market initiatives in place, we expect that DocuSign will significantly increase its sales in the quarter.
The consensus estimate for subscription revenues is pegged at $706.8 million, indicating 5.7% year-over-year growth. The consensus mark for professional services and other revenues is pegged at $19.4 million, indicating 5.6% year-over-year growth. Strong margin performance is likely to have benefited the bottom line in the quarter.
DOCU Stock Doesn’t Look Pricey
The stock has gained 10.5% in the past three months compared with the 8.5% rally in the industry it belongs to and the 6.5% rise in the Zacks S&P 500 composite.
3 Months Price Performance
The stock is not looking pricey despite the recent surge. Based on training 12-month EV-to-EBITDA, DOCU is currently trading at 26.6X, way below the industry’s 50.6X. If we look at the forward 12-month Price/Earnings ratio, DOCU shares are currently trading at 17.6X forward earnings, well above the industry’s 35X.
Investment Considerations for DOCU
DocuSign's flagship product, eSignature, facilitates the secure and virtual signing and sending of agreements from anywhere, on any device. The company's revenue is benefiting significantly from the growing demand for eSignature services, although the market remains largely untapped, presenting opportunities for global expansion.
In the first quarter of fiscal 2025, DocuSign reported a 14% year-over-year increase in non-GAAP earnings per share to 82 cents and a 7% rise in total revenues to $710 million. The company continues to make strides in its strategic goals: accelerating product innovation, enhancing omnichannel go-to-market strategies, and improving operational and financial efficiency. DocuSign is seeing strong performance, especially with customers managed by its direct sales force, including major contracts with Fortune 500 companies and government agencies.
Recent product innovations, like AI-enabled identity verification and QES-compliant Identity Wallet, are gaining traction. Additionally, DocuSign's partnerships with Salesforce (CRM - Free Report) and Microsoft (MSFT - Free Report) have strengthened its market position, while the acquisition of Lexion enhances its Intelligent Agreement Management platform with AI-driven capabilities.
Your Strategy Before Earnings
Given the upcoming second-quarter fiscal 2025 earnings report, a hold strategy for DocuSign appears prudent. The Zacks Consensus Estimate suggests moderate earnings growth of 11.1% and a 5.6% increase in revenues, with no significant changes in analyst estimates recently. This suggests a stable outlook but not a clear catalyst for a substantial price surge.
DocuSign’s historical performance is impressive, with consistent earnings surprises. However, the current combination of Earnings ESP and Zacks Rank reduces the likelihood of another significant earnings beat this quarter.
On the positive side, DocuSign’s stock is not overpriced, trading at a lower EV-to-EBITDA and forward Price/Earnings ratio compared to its industry peers. The company’s strong position in the growing eSignature market, along with strategic innovations and partnerships, underpins its long-term growth potential.
Considering these factors, holding onto DocuSign shares is advisable. The stock offers solid long-term prospects, but the near-term outlook suggests limited upside, making a cautious approach appropriate until more definitive performance data is available.