Volatile stock to watch: Docusign Inc (NASDAQ: DOCU)

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Docusign Inc (NASDAQ: DOCU) stock fell over 3% on 7th December, 2018 (as of 9:59 am GMT-5; Source: Google finance). While the gross margins increased year-over-year, there was a slight decrease from Q2 primarily due to the impact of SpringCMs lower gross margins. The company has increased the non-GAAP operating expenses to $142 million or 80% of total revenue in Q3 from $105 million or 80% of total revenue for the third quarter of the prior year. Professional fees associated with the acquisition of SpringCM and additional investments to support the integration as well as costs associated with the secondary and convertible offerings contributed to this increase. As a result, the non-GAAP operating loss for the third quarter was $1 million or a negative 1% operating margin compared with a $3 million loss and negative 2% operating margin in Q3 of last year.

The company’s growth continues to come primarily from acquiring new customers and growing usage within the existing customers across their lines of business. At the end of Q3, DOCU had 454,000 paying customers, an increase of 25,000 over the previous quarter. As the company have said this growth is not limited to the U.S. The international business represented 17% of the overall revenue this quarter and it continues to be an area of significant focus.

DOCU in the third quarter of FY 19 has reported the adjusted earnings per share of less than 1 cents, while adjusted revenue growth of 37 percent to $178.4 million in the third quarter of FY 19. Excluding SpringCM, DocuSign revenues were up 34% year-over-year. Total subscription revenue reached 38% year-over-year growth at $169 million or 95% of total revenue with strong performance across geographies and vertical markets. Billings increased 40% year-over-year to $198 million and DocuSign’s standalone billings grew 38% over the last year.

International revenue reached $31 million in the third quarter or 17% of total revenue. This growth included a year-over-year growth rate of over 40% in core DocuSign products offset in part by the continued sunsetting of some legacy acquired products. The combined year-over-year international revenue growth was 28%.

Non-GAAP gross margin for the third quarter of fiscal 2019 increased to 79% from 78% in the third quarter of fiscal 2018. Non-GAAP subscription gross margin in the quarter came in at 85% compared with 83% in the third quarter of fiscal 2018.

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