After the closing bell on Sept. 3, DocuSign Inc. (DOCU, Financial) reported earnings for its second quarter of fiscal 2021, which ended on July 31.
The eSignature cloud software provider reported total revenue of $342.2 million, an increase of 45% year over year, topping Wall Street's target of $318.6 million. The GAAP net loss per share of 35 cents compared to 39 cents in the prior-year quarter, while adjusted earnings per share came in at 17 cents compared to 1 cent a year ago, also beating Wall Street's adjusted earnings target of 8 cents per share.
Following the news, DocuSign's stock continued to slip in after-hours trading after losing 7.79% during the day's broader tech selloff.
Earnings results
DocuSign's customer count increased to 749,000, up 39% from the prior-year quarter, with enterprise customers increasing at an even faster clip of 55% to 99,000 over the same timeframe. Net cash was $118.1 million compared to $26.4 million in the same period of fiscal 2020, while free cash flow came in at $99.8 million compared to $11.9 million.
For the quarter, billings were $405.7 million, up from $252.4 million in the prior-year quarter and beating the FactSet consensus estimates of $339.6 million.
The GAAP gross margin of 74% and non-GAAP gross margin of 78% were both flat year over year.
The company attributes its increasing cash flows to the acceleration in the remote working trend, which has reclassified its eSignature services for many customers from an alternative method of signing to the default or even required method of signing.
CEO Dan Springer had the following to say on the earnings report:
"In an accelerating digital world where business can be conducted from anywhere, the need to agree electronically and remotely has never been stronger, as shown in our 61% year-over-year billings growth. We are just scratching the surface of our Agreement Cloud opportunity and believe we are increasingly becoming an essential cloud-software platform for organizations of all sizes."
The GAAP operating loss showed a modest decrease to $58.63 million compared to $64.72 million in the second quarter of fiscal 2020. It is worth noting that non-GAAP results for this company are often misleading. For example, DocuSign reported non-GAAP operating income of $33.73 million for the recent quarter, with the discrepancy of more than $90 million compared to GAAP operating income being mostly attributed to $68 million in executive stock compensation and $7 million in related amortization expenses.
Balance sheet
At the end of the quarter, cash, cash equivalents, restricted cash and investments were $740.6 million. Excluding investments, cash, cash equivalents and restricted cash stood at $442.51 million compared to $236.64 million a year ago.
Total current liabilities amounted to $854.3 million, up from $693.96 million in the prior-year quarter, while total current assets were $968.02 million compared to $943.89 million at the same time last year.
Outlook
In addition to an encouraging quarter, DocuSign reported optimistic guidance. For the third quarter, the company expects total revenue to fall between $358 million and $362 million, with billing revenue between $380 million and $390 million and non-GAAP gross margin of 78% to 80% .
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research and/or consult registered investment advisors before taking action in the stock market.
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