Shares of the electronic signature software firm DocuSign Inc. jumped more than 17% in extended trading today after the company delivered a solid earnings beat and raised its full-year subscription revenue guidance.

The company reported earnings before certain costs such as stock compensation of 44 cents per share. Revenue for the period rose 22% from a year earlier, to $622.2 million. On its bottom line, Docusign reported a net loss of $45.1 million. The results exceeded Wall Street’s expectations, with analysts having modeled a slightly smaller adjusted profit of 42 cents per share on lower sales of $602.1 million.

It was a solid performance that provided a welcome relief to investors who have, until recently, had some big concerns over the company’s prospects. DocuSign sells tools that enable businesses and individuals to sign documents electronically without meeting anyone face-to-face. It also sells software that automates the filing of contracts over the internet.

As expected, DocuSign grew rapidly during the height of the COVID-19 pandemic as its tools enabled people to keep doing business without meeting face-to-face. However, as the pandemic abated and in-person meetings became a more regular occurrence, DocuSign’s growth slowed tremendously. In its prior quarter it notably failed to meet profit targets.

That poor performance was followed by the resignation of DocuSign’s longtime Chief Executive Dan Springer in June. Springer had been in charge since 2017 and was the man who led the company through its initial public offering. He oversaw significant revenue growth at the company, with sales rising from $381.5 million in fiscal 2017 to $2.1 billion in 2021, while also expanding its focus beyond electronic signatures to adjacent product categories, such as contract management software.

Springer didn’t give a reason for his departure, but it was likely the result of DocuSign’s poor performance this year. The company’s stock has fallen more than 60% over the past year amid investor’s concerns over its growth strategy. DocuSign is now led by interim CEO Maggie Wilderotter as it continues its search for a permanent replacement.

“We delivered solid results, with a strong finish to the first half of the year,” Wilderotter said in a statement today. “These results reflect the focus and dedication of our team on execution during this transition period, with a stronger foundation in place to deliver in the second half of the year. We enter this next phase with a clear set of vital few deliverables for our people initiatives and product roadmap, while driving sustainable and profitable growth at scale,”

Though it’s hard to say how much of an impact Wilderotter has had, given that she has only just stepped into Springer’s boots, her tenure has gotten off to a good start. DocuSign reported that its subscription revenue rose by 23% in the quarter, to $605.2 million. It’s a positive sign for the company given that subscriptions account for the bulk of its overall sales.

DocuSign also reported billings of $647.7 million, up 9% from a year ago. Billings is a key metric for software-as-a-service-based companies like DocuSign as it represents the amount billed to customers, and is therefore a useful gauge of future revenue.

Holger Mueller of Constellation Research Inc. said that despite the recent leadership upheaval, DocuSign is growing at a decent pace, with revenue increasing by more than 20% in the latest quarter. “It’s good to see the company finding strong growth in the post-pandemic economy, where it should reap a bigger share of IT spending,” Mueller said. “It’s offering positions it as a winner in the digital transformation game. The only concern investors will have is that its costs grew faster than revenue did, causing it to effectively double its loss per share for the first six months of the year. That’s something Maggie Wilderotter and her team will need to address.”

Looking to the third quarter, DocuSign said it expects sales of between $624 million and $628 million, the midpoint of which is just ahead of the analyst consensus estimate of $625 million. The company also raised its full-year subscription revenue guidance, up from an earlier range of $2.394 billion to $2.406 billion, to a new range of $2.405 billion to $2.417 billion.

Photo: DocuSign