Newb here. Really enjoying this board, especially the disciplined focus and generous sharing of everyone here.
So I’m trying to digest the board knowledge base and info in the announcement stickies but of course the market humbles you when you think you understand anything.
Tonight I’m curious how everyone else read the DOCU earnings report and whether members of this board were surprised by the drop magnitude. I gather that the minor deceleration in subscriptions played a large part in that along with other concerns about future growth potential but overall the earnings looked pretty good to an inexperienced eye like mine.
I’m curious if this was expected by more seasoned hands and what might have tipped me off that this was a possibility versus other companies favored on this board.
The large drop is a head scratcher to me as well. By no means was it a blowout quarter though. I am also a shareholder of DOCU and listened to conference call. A couple notes that gave me caution related to the slowdown in Billings growth. Management attributed this to an elongated sales cycle as they introduce their new suite of products. Previously, closing a deal consisted of a few decision makers. Now that the offerings have become more expansive, upselling has caused more cooks in the kitchen when making decisions and closing deals. Management tried spinning this as a positive because they think it is critical to expanding the TAM and offering a more comprehensive set of solutions, rather than just esign. They eluded to this elongated cycle for the foreseeable future and not just a one off occurrence. Quite a few questions in the Q and A about this as well. There was also a deceleration in subscription revs and a substantial increase in lower margin service revenue. I’m not sure I really heard a good answer for the deceleration but management was happy with the numbers as this is where they thought they would be. Did not think there were any misses. Bottom line, company is plodding along. I would like to see trend of increasing subscription rev and decrease in service revs. I think another quarter may give management a better idea of traction with the new suite of products. It still seems early innings. Anyway, my two cents. I’m holding, but will be watching closely margins, Billings, and subscription revs.
It’s also beyond me why DOCU took such a hit after-hours yesterday, on a beat/beat/in-line (guidance was pretty much right down the middle). I guess just about anything can spook investors these days.
Whether you believe management’s explanation is up to you, but for now I think I do. I’m considering adding more (even before the market opens, perhaps) since it would considerably raise my avg cost per share, but it’s already almost a full position for me. And since it likely isn’t going to be a fast grower – something we already knew – I’m thinking long and hard before I do that. Still, the current price is now roughly close to what it was a month after IPO, and that’s a striking data point, no pun intended.
Net-net, I’m not sure what I will do yet (continue to hold or add to the position), but I am definitely not planning to sell out at this point.
Billings growth stood out, but wouldn’t you expect this to be a little lumpier based on contracts being signed/renewed? Based on the numbers I got from their site, overall revenue growth increased very slightly from last quarter (don’t remember the numbers but something like 34% vs 35%). I wouldn’t really call that acceleration, but it’s not deceleration either.
Right. I wouldn’t say it was a blow-out quarter, but it wasn’t a NTNX- or CLDR-style train wreck, either. I just can’t justify such a significant hit based on the numbers reported, unless someone knows something we don’t…
I tried to snag more shares pre-market, but the prevailing wind was pulling DOCU back up. Bad for my “add to” strategy, but more in line with my sense of the quarterly earnings takeaways. YMMV, of course.
I kinda think in three or five says, it will be back to where it was before earnings, once the actually-smart (not analysts) money votes with their brokerage accounts. But I have no crystal ball.