: DocuSign shares plunge 25% amid a steep drop in projected billings

DocuSign Inc.’s stock plunged 25% on Friday, a day after the electronic-documents company cut its forecast for the full year and said it may have been too optimistic about continuing to benefit from favorable pandemic-era trends.

DocuSign
DOCU,
-24.40%
issued a second-quarter billings outlook of between $599 million and $609 million, far short of FactSet analysts’ projection of $619.4 million. For the fiscal year, DocuSign forecast $2.52 billion to $2.54 billion, while analysts polled by FactSet expect $2.57 billion.

“It wasn’t that we were not aware of the dramatic economics of it,” DocuSign Chief Executive Dan Springer said in a conference call with analysts following the company’s fiscal first-quarter results. “I think we just didn’t understand what portion of that would be things like one-time use cases or an acceleration where people bought in a more fulsome way so that the removal of that very, very strong tailwind effectively felt like a headwind.”

At the same time, DocuSign reporteda widening net loss in its fiscal first quarter of $27.4 million, or 14 cents a share, compared with a net loss of $8.35 million, or 4 cents a share, in the year-ago quarter. Adjusted earnings were 38 cents a share.

Revenue increased 25% to $588.7 million from $469.1 million a year ago. Analysts surveyed by FactSet had expected on average net earnings of 46 cents a share on revenue of $583 million.

“We believe that the end of DOCU’s core growth story is now essentially over with the clock striking midnight following a billings guidance drop of ~$200 million pointing to an uncertain future for the remainder of FY23,” Wedbush analyst Dan Ives wrote in a note to clients.

Shares of DocuSign have plummeted 57% this year, while the broader S&P 500 index SPX has tumbled 18%.