HomeTrading NewsDocuSign Shares Fall More Than 40% as Customer Behavior Shifts

DocuSign Shares Fall More Than 40% as Customer Behavior Shifts

DocuSign helps businesses from banks to real-estate firms electronically complete transactions.


Tiffany Hagler-Geard/Bloomberg News

DocuSign Inc.’s

DOCU -42.22%

shares sank 42% on Friday after the company warned that consumers were returning to more normalized buying patterns with the widespread rollout of Covid-19 vaccines and the gradual return to the workplace.

The e-signature software maker missed on a key earnings metric during the October quarter, pulling in $565.2 million in billings, falling short of its prior guidance between $585 million and $597 million. Billings reflects new-customer sales, subscription renewals and add-on sales for existing customers, the company said.

“While we had expected an eventual step-down from the peak levels of growth achieved during the height of the pandemic, the environment shifted more quickly than we anticipated,” Chief Executive

Dan Springer

said on a call with analysts.

DocuSign fits into a larger category of companies that made working from home easier to manage and as a result saw their values rise. Its share price tripled in 2020 and was up 5% so far this year through Thursday’s close.

With shares closing Friday at $135.09, roughly $19.4 billion was erased from the company’s market value—similar to the size of

Domino’s Pizza Inc.

DocuSign’s selloff came on a day when the Nasdaq Composite fell 1.9%.

Use of DocuSign services surged early in the pandemic as businesses adapted to remote and paperless environments, but it has since shifted as people have become comfortable meeting face to face again. Mr. Springer said the company’s execution in responding to the change was off.

“We hadn’t taken all those new folks that had only joined in the time of that ‘meet demand’ sort of mode, and we didn’t shift fast enough back to a mode of a normal generating demand,” Mr. Springer said.

DocuSign will invest in increasing its global sales capacity and training to help generate new sales leads, as well as increasing marketing spending to drive more brand awareness, he said. The company also plans to spend more on product innovation to give new and existing customers more use cases for its products and services.

“Sales now needs to pivot from a focus on demand fulfillment to demand generation,” JPMorgan analysts said. “We think that this will take a couple of quarters to play out.”

Still, JPMorgan analysts said that electronic signatures and digital contracting will be here to stay, helping improve efficiency and cost savings for companies.

“We see little true churn risk, given few signs that reopening is driving agreements back to paper,” said Citigroup analysts, led by Tyler Radke.

DocuSign expects billings to come between $647 million and $659 million in the fourth quarter, growing at a 21% to 23% pace. By comparison, billings grew 40% year over year in 2020’s fourth quarter.

It expects billings between $2.34 billion and $2.35 billion for the full year and revenue around $2.08 billion to $2.09 billion.

The company added 59,000 customers in the third quarter to a total of 1.11 million customers world-wide.

Founded in 2003, DocuSign is considered one of the early leaders in the digital transaction services space, helping businesses from banks to real-estate firms electronically complete transactions.

Write to Kimberly Chin at kimberly.chin@wsj.com

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Appeared in the December 4, 2021, print edition as ‘DocuSign Falls 42% As Billings Slow Down.’

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