DocuSign Earnings Preview: Can DOCU turn things around this quarter?

DocuSign (DOCU) shareholders are hoping for one thing in regard to the second quarter earnings results expected after the close on September 8. They do not want a repeat of last time. During the first quarter release back in June, DocuSign managment revised guidance lower than expected, and the company missed significantly on the bottom line.

DOCU stock is down 0.9% to $54.65 in Thursday's morning trading session.

DocuSign earnings preview

Wall Street is gunning for $0.42 a share in adjusted earnings per share (EPS) and $-0.16 in GAAP EPS. For revenue, analysts' consensus pins the company down at $602.25 million. This would amount to a 10% pullback in adjusted EPS YoY and a 17.6% expansion of revenue.

Last quarter's results were poor enough that CEO Dan Springer left the company, so this will be the first earnings call with Mary Wilderotter as the chief executive. You will recall that Wilderotter was the former chair of the board. The COO also left following the past earnings call.

Rishi Jaluria from RBC Capital Markets said there is a definitive path for growth at DocuSign but that it will take a number of quarters until the market trusts the new CEO and her strategy reset. 

UBS expects management to offer a further lowering of guidance for the back half of the year as competition with Adobe over the latter's eSignature software and DocuSign's executive turnover situation work themselves out. 

RBC's Jaluria had said that DocuSign would be one of the hardest hit software stocks in a recession. Jaluria said the same thing about Coupa Software (COUP) though, and we know how that turned out this week. 

DocuSign stock forecast

DOCU stock has been in a depressed state since the prior earnings call, so it needs a good result to break out of this funk. Better than expected guidance or a sizable EPS beat could send shares up by about $10. Any rally would likely get caught at resistance near the 50-day or 100-day moving averages however. The 50-day is at $64.40, and the 100-day is around $70.80.

The Relative Strength Index (RSI) is showing a near oversold reading, but it is not quite there yet. The recent low at $53.25 is the lowest price for DOCU since August 2019. At that time three years ago DOCU bottom around $44, and that again is the target if DOCU offers up a major earnings miss this time around.

DOCU daily chart