This should be pretty easy, just compare my priors (https://discussion.fool.com/docusign-priors-34920245.aspx) to what they reported (https://investor.docusign.com/investors/press-releases/press…).
Prior Belief: Docusign’s Revenue will come in around 520m (up 52% YoY and 10.9% sequentially). I wouldn’t be devastated with 515m as long as the guide is strong.
Update: They came in at 511.8m…which is a tad disappointing at best.
Prior Belief: Docusign’s Billings will be at least 600m (like RunnerGuy said). Maybe I should say a range of 600m - 620m…
Update: It was 595m. Not the strength or upside surprise I was hoping for.
Prior Belief: Docusign will add between 80,000 and 100,000 New Customers.
Update: They added about 65,000. They said this would continue to be strong, so I don’t think they drop back to 30,000 or anything, but I’m not sure what to expect going forward. Maybe 50,000 - 75,000 per quarter is reasonable. You’d like to see a little more (or at least on the high side of that range) since they’re spending up on salespeople to go after the opportunity.
Prior Belief: Docusign’s Enterprise Customers and customers with ACV > $300k will be up around 10% each from their levels of 136,000 and 673 last quarter. Frankly it wouldn’t bother me if these grew 8% and it wouldn’t get me too excited if they grew 12%. But it’s nice to see them going up of course!
Update: 148,000 was a 9% increase on Enterprise, and 714 was just a 6% increase on ACV > 300k. That plus the slight downtick in NRR may mean that customers aren’t begging DOCU to take more of their money. Again, not a huge problem here, but slightly disappointing.
Prior Belief: Docusign will raise its FY Revenue Guide to at least 2110m and its FY Billings Guide to at least 2450m. Again, that’s just assuming they add slightly more than they did last quarter.
Update: These came in at 2088m and 2429m respectively. Again, have to call that disappointing.
One of my lesser priors was that FCF would tick up. It certainly did – from 123m in Q1 to 161.7m. To end on a positive, this company is a profit machine, and only getting better.
Conclusion
So, every single major belief update was at least slightly disappointing. (The minor beliefs were mostly pleasantly confirmed.) Granted, my expectations were that Docusign could sustain some momentum from its breakout the last several quarters. But it seems they are returning to a more normal, steady pace. Their business is strong, but others are faster. I mean, I can’t sell a company like Snowflake when they’re growing at 105% because of my future-looking concerns, and then turn around and give Docusign a pass when they’re growing at 50% and the slow down is present tense. Yes, the expectations for Docusign are way lower. Night and day. But I’m looking for companies that will outperform expectations. Docusign is probably just meeting them, and that usually leads to boring returns. I don’t see this company as fundamentally undervalued or exploding or…well, it’s a fine, even strong enterprise. Doesn’t mean it’s one of the best ideas I can find.
I don’t plan to sell out, because I do believe Docusign shares are a better bet than holding cash. But I will certainly reduce the allocation. For top positions, I hope I can do better.
Bear