DocuSign Earnings: DOCU stock sits flat ahead of Thursday's Q1 results

DocuSign (DOCU) stock is flat to down in Thursday's premarket ahead of earnings results expected after the close. At the time of writing, DOCU shares are exchanging hands at $89.47, 0.7% lower than Wednesday's close. Wall Street consensus is expecting the fiscal first quarter that ended in April to yield adjusted earnings per share of $0.46 on revenue of $581.85 million in revenue.

DocuSign is a lot like Coupa Software (COUP), which has not missed earnings expectations even once in five years. Since going public in April 2018, DOCU has only missed Wall Street's earnings consensus once out of 16 quarters and has never missed its revenue forecast. The software-as-a-service (SaaS) company provides a platform for digital signatures and other corporate processes that has become the leader in its sub-sector.

Also read: Apple Stock Deep Dive: AAPL price target at $100 on falling 2023 revenues

DocuSign Earnings: All about the guidance

Analyst consensus is calling for just a 5% increase in YoY EPS but a 24% growth in revenue. Like many SaaS companies, DocuSign burns through cash as it focuses on user growth and market share. The market will focus this round on how well DocuSign is controlling costs.

DOCU stock closed down 41.6% in a two-session period last December when it once again beat market expectations for earnings and revenue but produced guidance for slowing growth in 2022. It said the fiscal 2022 calendar, which ends on January 31, 2023, would yield $2.48 billion. The company produced revenue of $2.1 billion in fiscal 2022. Guidance then is the most important factor in Thursday's earnings release.

Some observers think DocuSign may have a decent turnaround case like Zoom Video Comunications (ZM) did several weeks ago. That led to a 29% rally over the following two weeks for Zoom stock. Like DocuSign, Zoom benefited from heavy demand due to work-from-home employees during the era of pandemic-induced office closures. Like Zoom, DocuSign management says that longer-term demand growth got pushed forward and now see a period of slower growth on the horizon.

Shareholders will also look for color on DocuSign's expanded partnership with Microsoft that was announced earlier this week. Microsoft has added DocuSign's eSignature product to its Teams collaboration platform and its Microsoft 365, Power Platform and Microsoft Dynamics 365 products. Analysts will want to know how much this partnership will add to DocuSign's top line.

DocuSign Stock Forecast: Good earnings beat could push DOCU to $112 resistance

DOCU stock has been slowly rising since it latest bottom on May 12 at $64.92. Currently shares are trading just under the $90 to $92 resistance zone that promulgated itself in the first quarter of 2020 just before the Covid-19 pandemic collapsed share prices. A major earnings beat could take DocuSign stock up to resistance at $112. This area is the range high from late March and early April. Above there are two more resistance levels to note. One is slight resistance at $119, and the other is heavier resistance at $129. The latter stems from early February, and overtaking this level would mean that DOCU is back in bull mode.

The 9-day moving average is leading its 21-day counterpart by a decent amount, which is a positive sign and shows bulls have entered to buy the dip in the second half of May. Another positive sign is that the Moving Average Convergence Divergence (MACD) line (blue) is leading the signal line (orange). The fact that the MACD has surpassed the zero threshold is more evidence of optimism.

Due to the overhang of rising interest rates, multiple compression and generally slowing growth in 2022, we think DOCU shares will remain compressed below $112 for a while longer. Support sits at $71 and $65 in the case of an earnings miss or another cut to guidance.

DOCU daily chart