Shares of the electronic signature company DocuSign Inc. rose 3% higher in after-hours trading today after it reported earnings that beat expectations and raised its full-year outlook.

The gains helped erase an earlier decline of just over 1% during the regular trading session.

DocuSign reported second-quarter net income of $7.4 million, up from a loss of $45.1 million a year earlier. Earnings before certain costs such as stock compensation came to 72 cents per share, while revenue jumped 11%, to $687.7 million. Wall Street had been looking for lower earnings of 66 cents per share on lower sales of $677.6 million.

The company also reported billings, a key metric that indicates future revenue, of $711.2 million, up 10% from a year earlier. That also came in ahead of Wall Street’s forecast of $652.2 million.

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.

Its strong performance in the past quarter comes 15 months into a big corporate reorganization that has seen many of the company’s leading executives replaced. The most notable new hire was Chief Executive Allan Thygesen (pictured), who took on the company’s top role last October, replacing former CEO Dan Springer. This year, DocuSign also hired new Chief Financial Officer Blake Grayson, who replaced Cynthia Gaylor, as well as new chief product and chief information officers.

On his first earnings call as DocuSign’s CFO, Grayson said the company’s leadership reshuffle is now done and dusted, telling analysts that there are “no major plans” for any more major hires. After announcing two waves of layoffs in the last 12 months, DocuSign now has 6,748 employees, Grayson said, down 16% from its 8,061 staff headcount one year earlier.

Thygesen said in a statement that the results reflect strong progress on the company’s business transformation. “We increased our pace of innovation by delivering key new features, while strengthening our self-service and partner distribution channels, and we’ve received tremendous enthusiasm on our product roadmap, particularly from our enterprise customers,” he said.

Looking forward, DocuSign’s forecast came up short in some areas, with Thygesen telling analysts on the call that his view of macroeconomic conditions remains unchanged from three months earlier. Then, the CEO warned of smaller deal sizes and cautious customer behavior.

“We’re seeing continued macro pressures tempering expansion rates,” Grayson admitted to analysts on the call. “However, we remain focused on what we can control, executing against our initiatives to drive innovation and operational efficiency, further setting the foundation for growth while navigating an uncertain environment.”

That admission came before the company revealed a somewhat conservative revenue forecast. For the third quarter, DocuSign said it sees sales of between $687 million and $691 million, below Wall Street’s forecast of $697.5 million. For the full year it looks a bit brighter, though, with DocuSign offering guidance of between $2.73 billion and $2.74 billion in sales, up from an earlier estimate of $2.71 billion to $2.73 billion. Wall Street is targeting $2.72 billion in annual sales.

DocuSign’s forecast for billings is more optimistic. It expects third-quarter billings of $668 million to $678 million, ahead of Wall Street’s target of $668.2 million. For the full year, DocuSign is forecasting billings of $2.8 billion to $2.82 billion, versus the consensus estimate of $2.75 billion.

Despite the somewhat iffy revenue forecast, DocuSign said its board has authorized a move to spend an additional $300 million on its stock buyback program, bringing the total authorization to $500 million. The company said it bought back 583,000 shares during the quarter for around $30 million.

Holger Mueller of Constellation Research Inc. said it was good to see DocuSign accelerating its growth, which rose from a pedestrian level of under 10% to 11% in the quarter. “DocuSign’s growth is fueled by product innovation, and with its new head of product Dmitri Krakovsky this is likely to continue, helping the company to capture a bigger share of the document-centric future of work market,” he said. “DocuSign has done good cost control too, reducing sales and marketing expenses while investing more into R&D, helping it to net an overall profit. This is what investors want to see.”

Following today’s after-hours gain, DocuSign’s stock remains down almost 6% year-to-date, compared with a 16% gain from the S&P 500 Index and a 31% increase in the tech-heavy Nasdaq.

Photo: DocuSign