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The Chief Executive Officer of DocuSign, Dan Springer, has resigned today following the company’s latest disappointing performance as the pandemic tailwind that once lifted the firm’s results appears to have faded entirely.

Investors appear to be reacting positively to the news as DOCU stock is rising 4% at $63.05 per share. However, this positive performance cannot be solely attributed to this development as equities as a whole are performing quite positively with the tech-heavy Nasdaq 100 index posting 3.1% gains so far in the session.

The official press release published by the firm earlier today states that Springer has “agreed to step aside”. The phrasing points to the Board of Directors possibly being discontent with the performance of the firm lately and ultimately pushing for his resignation.

Mary Agnes Wilderotter has been appointed interim CEO for the time being while the company looks for a substitute for Springer.

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Springer’s departure comes after 5 years at the helm. During his tenure, he took the company public and managed to take advantage of the tailwind provided by the pandemic to digital businesses to grow DocuSign’s user base and revenues.

“Maggie’s extensive experience managing executive teams as well as boards of directors make her the natural choice to lead the company during our search process”, stated Pete Solvik, DocuSign’s newly appointed Lead Independent Director.

A reorganization of the business appears to have been occurring for a while prior to Springer’s departure as indicated by the latest appointments made by DocuSign. The company recently designated a new Chief Legal Officer, Chief People Officer, Chief Product Officer, and President of Product and Technology.

DocuSign’s Disappointing Quarterly Report Paved the Way for Springer’s Departure

On 9 June, DocuSign reported its financial results covering the first quarter of the 2023 fiscal year. Revenues during the period grew 25% to $588.7 million compared to the previous year while billing increased 16% on a year-on-year basis to $613.6 million.

Meanwhile, gross margins stood unchanged at 78% while GAAP losses from operations increased to $19.23 million compared to $10.74 million the firm shed in Q1 2022. Moreover, GAAP net losses nearly tripled to $25.53 million.

As a result, GAAP and non-GAAP earnings per share dropped to minus $0.14 and $0.38 respectively on a fully diluted basis compared to minus $0.04 and $0.44 the firm reported during the same period a year ago. DocuSign’s adjusted EPS was 8 cents lower than analysts’ consensus estimate for the quarter.

In addition, the company’s guidance for the second fiscal quarter of 2022 came in line with analysts’ estimates but billings show a downtrend in the firm’s growth rates.

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In this regard, analysts from RBC Capital Markets stated: “Management now expects FY23 billings growth of 6%-7% YoY, including F2Q up 1%-2% YoY, implying deferred revenue is flat QoQ (a first, to our knowledge) and possibly down QoQ in F3Q”.

Meanwhile, Wedbush analysts stated: “DocuSign delivered yet another disappointing quarter as the company once again lowered billings guidance which continues to overshadow the top-line revenue beat the company experienced this quarter”.

Finally, analysts’ from Oppenheimer also referred to the report as a “disappointing” one as billings guidance keeps showing weaknesses in the firm’s prospects. In addition, analysts from the financial services firm said that the picture gets even more complicated considering the significant macroeconomic headwinds that the company will be facing in multiple latitudes.

DocuSign’s Losses Double Those of a Key Benchmark

docusign stock price chart

DocuSign (DOCU) price chart – Source: TradingView

DocuSign stock dropped 24% a day after the quarterly earnings report came out. So far in 2022, DOCU accumulates a 60% loss while the tech-heavy Nasdaq 100 is shedding nearly 29% during that same period.

Despite the latest weakness in both the stock and the business, the consensus recommendation from analysts as per data compiled by MarketBeat is hold with a total of 9 firms rating the stock as such.

Meanwhile, the average price target for DOCU is standing at $132.6 per share resulting in 115.8% gain if that target is hit. The highest 12-month target from analysts is standing at $340 per share and the lowest at $50 per share.

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