DocuSign stock gains after upbeat earnings

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DocuSign Inc.’s chief executive made the case Thursday that the company’s stock is more than just a work-from-home name, as the maker of technology that facilitates digital contracts exceeded earnings expectations once again.

Chief Executive Dan Springer told MarketWatch that he expects the trends driving DocuSign’s strong momentum this year to be long-lasting as customers find that the process of building contracts electronically offers broad benefits in terms of cost and efficiency.

DocuSign’s revenue for the fiscal third quarter climbed to $382.9 million from $250 million, while analysts tracked by FactSet were expecting $361 million. Billings for the period increased to $440.4 million from $269.4 million. The FactSet consensus was for $386.6 million.

Shares were up about 3% in after-hours trading Thursday.

Beyond electronic signatures, DocuSign offers more expansive services for contract management, including products that help businesses analyze trends across volumes of past agreements. Springer said that this part of the business saw accelerating growth earlier in the year, but some businesses put these sorts of projects on hold because they worried about taking on complex projects in the midst of the pandemic. Now this part of the business is bouncing back, according to Springer, as companies are better adjusted to the current reality.

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Springer argued that the company is fighting against paper, not other e-signature providers, and that the market is less than 10% penetrated.

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DocuSign acquired Liveoak in July in an attempt to bolster its notary offerings, with more states now allowing remote notary services. DocuSign is initially focusing on first-party notary services, for businesses like banks that have their own in-house notaries that they use when customers are signing agreements. Springer said the company also sees opportunities with third-party notary services, like mom-and-pop shops, though these might take longer to play out.

He argued that the pandemic could push jurisdictions that don’t currently allow remote notary work to reconsider their policies given safety advantages. “I think in the very near future there will be near ubiquitous coverage across the country,” he said.

DocuSign reported a fiscal third-quarter net loss of $58.5 million, or 31 cents a share, compared with a loss of $46.6 million, or 26 cents a share, in the year-earlier quarter. On an adjusted basis, DocuSign earned 22 cents a share, up from 11 cents a share a year prior and ahead of the FactSet consensus, which called for 13 cents a share.

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For the January quarter, DocuSign expects revenue of $404 million to $408 million, while the FactSet consensus was calling for $387 million. The company also anticipates billings of $512 million to $522 million, ahead of the FactSet consensus of $503.9 million.

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Shares of DocuSign have gained more than 200% so far this year as the S&P 500 has risen 13%.

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