Docusign Inc (NASDAQ: DOCU) stock slightly corrects post an outstanding performance

Docusign Inc (NASDAQ: DOCU) stock fell 0.6% (as of 11:05:14 on December 9th, 2019; Source: after delivering an outstanding performance of 8.7%. The company has posted better than expected results for the third quarter of FY 20. On a four-quarter rolling average basis, the company has delivered the billings growth of 35%. Strong demand for the core eSignature solutions along with growing adoption of the broader portfolio of Agreement Cloud products had continued in the third quarter. The company has added approximately 25,000 new customers in the third quarter, 5,000 of which were direct customers this drove a 30% year-over-year increase in the commercial and enterprise installed base. This brings the total customer base to 562,000 with about thousand direct customers worldwide.

Moreover, DOCU has continued to experience progress in upsells of DocuSign CLM into the installed base. The combination of these factors increased the dollar net retention to 117% in the third quarter within the historical range of 112% to 119%. Customers with ACVs greater than $300,000 have posted the growth of 41% year-over-year to a total of 401 customers.

Further, the company posted the Non-GAAP gross margin for the third quarter of 79% consistent with a year ago. Subscription gross margin fell to 84% compared with 85% a year ago. Total non-GAAP operating expenses for the quarter were $180 million or 72% of total revenue compared with $142 million or 80% of total revenue for the third quarter of last year. Operating cash flow was negative $2 million as the company paid out the RPost settlement in the third quarter. This compared to a positive $4 million in Q3 of last year. Free cash flow came in at negative $14 million, compared to negative $4 million in the prior year.

DOCU in the third quarter of FY 20 has reported the adjusted earnings per share of 11 cents, beating the analysts’ estimates for the adjusted earnings per share of 3 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 40 percent to $249.50 million in the third quarter of FY 20, beating the analysts’ estimates for revenue by 3.40%. Subscription revenue rose 41% to $238.1 million year-over-year. Professional services and other revenue grew 28% to $11.4 million year-over-year. Total international revenue has increased by more than 40% year-over-year to $43 million. Total billings increased 36% year-over-year to $269 million.

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