DocuSign (NASDAQ: DOCU) stock jumped over 10% in pre-market trading Friday after the company posted fourth-quarter earnings that beat Wall Street expectations. However, its revenue forecasts for the current quarter and full fiscal year disappointed analysts.
The company reported earnings per share (EPS) of $0.86, beating the consensus estimate of $0.84. Revenue for the quarter reached $776.3 million, above the expected $760.99 million.
Looking forward, DocuSign (NASDAQ: DOCU) provided guidance for the first quarter of fiscal 2026, expecting revenue between $745 million and $749 million. This range is below the consensus estimate of $755.7 million. For the full fiscal year, the company forecasts revenue between $3.129 billion and $3.141 billion, compared to the Wall Street expectation of $3.15 billion.
The earnings update follows a recent analysis from JPMorgan, which upgraded DocuSign to Neutral and increased its price target to $75. The investment bank pointed to the “potential for gradual improvement in business trends” after a prolonged reset following the pandemic.
JPMorgan noted that DocuSign (NASDAQ: DOCU) shares have “treaded water for the last three years” and have dropped 25% since early December. This decline has left the stock trailing the broader market’s performance over the same period.
Still, the firm sees reasons for optimism. It pointed to “some subtle improvements developing in fundamental business trends” and believes the company’s revamped management team has made “a series of logical and pragmatic moves” that could help restore investor confidence.
DocuSign’s core eSignature business appears to be stabilizing, according to JPMorgan. The bank cited “the volume of envelopes sent and consumption” as key signs of strength in this critical area.
However, the report cautioned that “macro remains a material wildcard,” particularly due to DocuSign’s “exposure to mortgage-related end-markets.” The company also faces competition from Adobe’s Document Cloud suite, which could challenge its market position.
On a brighter note, JPMorgan expressed optimism about DocuSign’s Intelligent Agreement Management (IAM) suite. The firm believes this product could “support an improvement in bookings trends over the next several quarters,” potentially driving future growth.
The bank noted early success with IAM, stating that “80% of its eligible reps closed three or more deals since launch as of FQ3.” This suggests the suite is gaining traction among sales teams and customers
Despite the upgrade, JPMorgan remains wary of DocuSign’s profitability on a GAAP basis. The firm noted that “stock-based compensation remains a disproportionate amount of free cash flow relative to peers,” which could limit financial flexibility.
In summary, JPMorgan views DocuSign’s risk/reward as fairly balanced. The analysts see “subtle signs of stabilization to improvement” in business trends but stressed that investors will need patience as DocuSign works to strengthen its outlook.
