DocuSign Inc (NASDAQ:DOCU) shares jumped over 8% in premarket trading Friday following the release of stronger-than-expected second-quarter results and an optimistic full-year revenue forecast. The rally reflects investor confidence in the company’s solid core performance and growing adoption of its AI-enhanced Intelligent Agreement Management (IAM) platform.
For the fiscal second quarter ending July 31, DocuSign reported adjusted earnings of $0.92 per share, beating Wall Street estimates by seven cents. Revenue rose 9% year-over-year to $800.6 million, surpassing analysts’ expectations of $779.78 million.
Billings, a key metric for future growth, climbed 13% to $818 million, while subscription revenue increased 9% to $784.4 million. Professional services revenue declined 13% to $16.2 million.
“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,” said DocuSign CEO Allan Thygesen. “Q2 business results outperformed, leading to one of DocuSign’s highest growth and profitability quarters in recent years.”
The company highlighted momentum in its IAM platform, introducing AI-powered tools like Agreement Preparation and Custom Extractions in Navigator to streamline contract creation and data extraction. Additional enhancements included deeper integration with enterprise identity providers and the launch of Maestro Workflow Templates to accelerate agreement workflows.
DocuSign raised its full-year revenue guidance to a range of $3.19 billion to $3.20 billion, above analyst expectations of $3.16 billion. For Q3, revenue is projected between $804 million and $808 million, representing roughly 7% year-over-year growth. Full-year billings guidance was increased to $3.34 billion, up from a previous estimate of 6.5% growth, implying 7.4% year-over-year growth. Q3 billings are projected at $790 million, or 5% growth compared with the prior year.
“While renewal timing created quarterly billings growth volatility, we view the FY billings guidance raise positively as it is ahead of initial target and implies acceleration from last year, with mgmt passing through only half of the Q2 beat, embedding reasonable conservatism,” Wolfe Research analysts said.
Bank of America analysts added that DocuSign’s “Q2 results suggest that DocuSign’s recovery story is very much back on track.” They also highlighted the long-term potential for IAM, stating: “We are bullish on the long term opportunity for IAM, as the solution brings Docusign into more strategic workflow and large deal sizes. However, the cycle is early and we believe that go to market efforts in both the direct and partner channel are a work in progress.” BofA noted that “much of the near-term upside is priced into the shares” and raised its price target from $85 to $102.
Strategic board additions, including former Salesforce EVP Mike Rosenbaum and incoming Board Chair James Beer, were highlighted by Thygesen as key drivers for transformation. “Mike’s extensive experience in scaling platform SaaS businesses will be an immense resource for Docusign as we continue our transformation to an Intelligent Agreement Management company,” he said.
With a cash balance of $1.1 billion and free cash flow of $217.6 million in Q2, DocuSign is well-positioned to capitalize on the growing shift toward AI-driven workflows and maintain long-term competitive advantage through innovation and operational efficiency.
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