DOCU Shares Fall 18.2% Despite Q1 Earnings & Revenue Beat

DocuSign, Inc. DOCU reported impressive first-quarter fiscal 2026 results, wherein earnings per share (EPS) and revenues surpassed the Zacks Consensus Estimate.

However, the better-than-expected results failed to impress the investors, as the stock has lost 18.2% since the company released results on June 5.

DOCU’s EPS (excluding 56 cents from non-recurring items) was 90 cents, which surpassed the Zacks Consensus Estimate by 11.1% and increased 9.8% from the year-ago quarter. Total revenues of $763.7 million beat the consensus mark by 2.2% and rose 7.6% from the first quarter of fiscal 2025.

The company’s shares have rallied 49.6% in the past year compared with the industry’s 37.3% rise and the Zacks S&P 500’s 10.8% growth.

DOCU’s Segmental Revenues

Subscription revenues totaled $746.2 million, increasing 8% year over year. The figure beat our estimate of $730.4 million. Professional services and other revenues of $17.5 million fell 4% from the year-ago quarter, beating our expectation of $17 million. Billings amounted to $739.6 million, up 4% from the year-ago quarter. The figure failed to meet our anticipation of $748.7 million.

The non-GAAP gross margin was 82.3%, beating our estimate of 81.4%. The non-GAAP gross profit of $628.7 million grew 8% year over year and outpaced our expectation of $608.4 million. The non-GAAP operating margin was 29.5%, increasing 100 basis points from the year-ago quarter. It beat our estimate of 27.6%.

Balance Sheet & Cash Flow of DocuSign

DocuSign exited the first quarter of fiscal 2026 with cash and cash equivalents of $657.4 million compared with $817.4 million at the end of the first quarter of fiscal 2025. Net cash generated by operating activities was $251.4 million for the reported quarter. Free cash flow generated was $227.8 million.

DOCU’s Q1 & FY26 Guidance

For the second quarter of fiscal 2026, the company expects revenues between $777 million and $781 million. The mid-point of the guided range ($779 million) is above the Zacks Consensus Estimate of $777.7 million.

DOCU anticipates subscription revenues in the range of $760-$764 million and billing revenues between $757 million and $767 million. The non-GAAP gross margin and the non-GAAP operating margin are expected to be 80.5-81.5% and 26.5-27.5%, respectively.

For fiscal 2026, the company expects revenues between $3.15 billion and $3.16 billion. The Zacks Consensus Estimate for the same is $3.15 billion.

DOCU anticipates subscription revenues between $3.08 billion and $3.09 billion and billings  between $3.29 billion and $3.34 billion. The non-GAAP gross margin and the non-GAAP operating margin are expected to be 80.7-81.7% and 27.8-28.8%, respectively.

Currently, DocuSign carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot

Fiserv, Inc. FI reported mixed first-quarter 2025 results. The company’s earnings beat the Zacks Consensus Estimate, while revenues missed the mark.

FI’s adjusted earnings per share of $2.14 beat the consensus mark by 2.9% and gained 13.8% year over year. Adjusted revenues of $4.8 billion lagged the consensus estimate by 1.6% but rose 5.5% on a year-over-year basis. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

The Interpublic Group of Companies, Inc. IPG reported mixed first-quarter 2025 results. The company’s earnings topped the Zacks Consensus Estimate, while revenues missed the mark.

IPG’s adjusted earnings of 33 cents per share surpassed the Zacks Consensus Estimate by 10% but decreased 8.3% from the year-ago quarter. Revenues before billable expenses (net revenues) of $2 billion missed the consensus estimate by a slight margin and declined 20% year over year. Total revenues of $2.3 billion decreased 7.2% year over year but beat the Zacks Consensus Estimate of $2 billion.

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This article originally published on Zacks Investment Research (zacks.com).

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