DocuSign (DOCU) has faced challenges as the business has lost more than 60% of its value in the last year.

DocuSign (NASDAQ:DOCU)

Shares of DocuSign (NASDAQ:DOCU) jumped more than 16% on Friday after the electronic agreement business revealed second-quarter results and guidance that exceeded expectations. Analysts praised the results despite the company’s uncertain future.

DocuSign’s (NASDAQ:DOCU) next phase of growth will come from selling more to its larger installed base, according to J.P. Morgan analyst Sterling Auty has a neutral rating on the company. Auty noted that while this is still in the “early innings,” there may be hiccups along the way, even though its financial profile is sound.

In a note to clients, Auty stated that while DocuSign “continues to carry an attractive free cash flow profile at scale,” near-term profitability “may remain weaker relative to the elevated levels seen in fiscal 2022,” as the company “leans into investments in key growth areas, including international expansion and multi-product adoption in an effort to reaccelerate growth.”

Forecast

DocuSign (NASDAQ:DOCU) stated that it anticipates revenue for the third quarter to be between $624 million and $628 million, up to 15% more than the $545.5 million it brought in last year. Additionally, compared to $2.1 billion the previous year, it anticipates full-year revenue to be between $2.47 billion and $2.48 billion.

Auty also mentioned that DocuSign (NASDAQ:DOCU), which is operating under an interim CEO following Dan Springer’s resignation in June, is pursuing a turnaround strategy that might take several quarters to succeed.

As a result, the analyst stated, “We believe that Docusign shares offer a fairly balanced risk/reward arrangement in the near term.” We believe that the material upside to shares is predicated on sustainable sales execution under a new leadership team.”

Ives’ stock market take 

DocuSign’s (NASDAQ:DOCU) results were hailed by Wedbush Securities analyst Dan Ives as a “good start in the right direction,” but he added that there are still obstacles to overcome. In a statement to clients, Ives stated, “We continue to remain cautious based on our checks that the momentum at DOCU continues and hence maintain our UNDERPERFORM rating given the risk/reward in shares at present prices.”

An additional guide-down from DOCU was possible last month, according to investment company UBS, which also noted a “right-sizing” in renewals and rising competition from Adobe (ADBE).

Featured Image-  Megapixl @Transversospinales

Please See Disclaimer