DocuSign (DOCU) to report Q3 earnings on Thursday: What to expect?

After delivering a mixed performance in the July-quarter, DocuSign (NASDAQ: DOCU) had predicted stronger-than-expected results for the third quarter. The e-signature technology company is all set to unveil the results on Thursday after the regular trading hours. Market watchers expect earnings of $0.03 per share, which marks an improvement from last year’s breakeven. Revenues are forecast to grow 38% to $239.86 million.

SpringCM, which was added to the DocuSign fold last year, underwent a makeover recently, providing customers a better experience. Catering to more and more base customers, the cloud platform will be a key growth driver in the to-be-reported quarter. The other positive factors include the steady uptick in the company’s customer base and solid subscription sales.

Bullish View

Considering its impressive history of beating earnings estimates, the company is unlikely to disappoint the market this time. In general, experts’ views on the third quarter have been positive, with the latest being RBC Capital which lifted the price target on the firm from $80 to $93 and reiterated the outperform rating.  

Positive Shift

On the operational front, what changed since last year is the shift from core e-sign offerings to a wider portfolio. The company, which is yet to achieve sustainable profitability, might look for a turnaround this year. To its advantage, the favorable factors that prevailed in the second quarter continued in the three months ended October. The company is estimated to have witnessed robust customer activity during that period.

Past Performance

For the second quarter, the San Francisco, California-based firm reported a wider loss of 0.39 per share, despite a 41% growth in revenues. On an adjusted basis, earnings dropped to just one cent. The bottom line, which was negatively impacted by higher expenses, also missed the estimates.

Also see: DocuSign Q2 2020 Earnings Conference Call Transcript

Last month, DocuSign shares climbed to an all-time high, continuing the rally that followed the last quarterly report. Since the beginning of the year, the stock has gained 72%. Currently, analysts’ consensus rating on the stock is strong buy.

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