Why Did Docusign Stock Jump Today?

Key Points

• Docusign reported its Q2 earnings, beating Wall Street's targets.

• The company continues to show steady growth as it expands its product offerings.

• 10 stocks we like better than Docusign ›

Shares of Docusign (NASDAQ: DOCU) jumped on Friday, finishing the day up 4.8% after climbing as much as 8.9% earlier in the session. The move came as the S&P 500 (SNPINDEX: ^GSPC) dropped 0.3% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was flat.

The software maker reported its Q2 earnings Thursday evening, beating expectations across the board and raising its outlook as artificial intelligence (AI) features gain traction.

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Docusign delivers a clean beat

The company reported Q2 adjusted earnings per share of $0.92, beating analyst estimates. Sales jumped 9% year over year (YOY) to $800.6 million, while sales specifically from ads jumped 13% YOY.

Customer growth showed steady momentum, with the total number of customers increasing by 9% to exceed 1.7 million. Management raised guidance for the coming quarter, citing strength in its expanding AI capabilities.

Image source: Getty Images

CEO Allan Thygesen said of the performance, "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."

The company also repurchased more than $200 million of its stock and finished the quarter with a healthy balance sheet that includes more than $1 billion in cash and short-term investments.

DOCU looks solid

Docusign is executing well on its transition beyond simple e-signatures into broader agreement management and AI-powered contract analysis. The stock carries a very solid PEG ratio -- a handy valuation metric that combines P/E and growth rates -- of 0.4.

Docusign remains a mature software company in a competitive market, but I think it is positioning itself well and will continue to grow. It makes a nice addition to a well-diversified portfolio.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Docusign. The Motley Fool has a disclosure policy.