Why Docusign Inc (NASDAQ: DOCU) stock is going gangbusters today

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Docusign Inc (NASDAQ: DOCU) stock surged over 23% on 6th September, 2019 (as of 9:43 am GMT-4; Source: Google finance) as results beat expectations on revenue. In Q2, the company has completed the first federal sale that exceeded $1 million in ACV and this sale included significant components of both eSignature and CLM. The company has added a total of approximately 29,000 new customers this quarter, of which 4,000 were new direct customers. This was an increase of 31% in the commercial and enterprise installed base. This brings the total customer base to 537,000 with 64,000 direct customers worldwide. Non-GAAP gross margin for the second quarter was 78%, compared to 81% in the same quarter last year. Subscription gross margin in the quarter was 84%, compared with 87% a year ago. These margin impacts relate primarily to the addition of SpringCM, as well as higher capacity needs of the outsourced data centers in developing regions, where the company do not have the own proprietary data centers. Total non-GAAP operating expenses for the quarter were $185 million or 78% of total revenue, compared with $132 million or 79% of total revenue for the second quarter last year. Non-GAAP operating loss was less than $1 million in Q2, which includes the $6 million of RPost expenses. This compares to a $4 million non-GAAP operating income or 3% operating margin in Q2 of fiscal ’19.

Why Docusign Inc (NASDAQ: DOCU) stock is going gangbusters today

Moreover, DOCU’s free cash flow came in at $12 million, compared to $18 million in the prior year and generated $26 million in operating cash flow.

DOCU in the second quarter of FY 20 has reported the adjusted earnings per share of 1 cents, missing the analysts’ estimates for the adjusted earnings per share of 4 cents, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 41 percent to $235.6 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $220.8 million. Subscription revenue led the way at $220.8 million, up 39% year over year. North American business was particularly strong this quarter. Further, international revenues grew 47% year-over-year to $42 million. Second quarter billings increased 47% year-over-year, to $252 million. On a four quarter rolling average basis, billings grew 36%.

For the current quarter, DocuSign said it expects revenue of $237 million to $241 million, easily topping estimates of $231.9 million.

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