E-signature software company Docusign Inc. said today it’s primed for renewed growth after delivering a solid earnings beat and guidance in line with expectations.

But shareholders were not impressed, and the company’s stock dove more than 6% lower in extended trading.

The company reported first-quarter earnings before certain costs such as stock compensation of 82 cents per share, beating Wall Street’s forecast of 79 cents per share.

Revenue for the period rose 7%, to $709.6 million, edging past the Street’s consensus estimate of $707 million. Subscription revenue rose 8%, to $691.5 million, ahead of the consensus of $688 million.

Docusign also reported billings of $709.5 million, up 5% from the same period one year earlier and above its target range of $685 million to $695 million. All told, it logged net income for the quarter of $33.8 million, having broken even in the year-ago period.

Chief Executive Allan Thygesen (pictured) said in a press release that the company “continued to stabilize the business and improve profitability, allowing Docusign to continue investing for long-term growth.”

The company sells tools that allow businesses and individuals to sign documents electronically without meeting anyone face-to-face, together with software for creating and filing legal documents such as contracts. In the last couple of years, Docusign has pushed to expand beyond its core e-signature business, pioneering a new software category it calls “intelligent agreement management.”

During the quarter, the company formalized that strategic evolution of its platform with the launch of Docusign IAM, which is a suite of tools designed to help businesses transform “agreement data” into insights and actions, accelerate contract review cycles and boost productivity. The service seeks to address the issue wherein companies fall into what Docusign calls an “Agreement Trap,” where outdated agreement systems and processes slow their businesses down and trap business-critical information inside static, flat files unconnected to existing systems of record.

The company also revealed its ambitions to expand the Docusign IAM platform in the not-too-distant future, buying a startup called Lexion, which provides artificial intelligence-powered contract management tools.

Thygesen told Barron’s in an interview that the company has now reached an “inflection point” in that transformation, which had caused it to struggle with less-than-stellar results in recent quarters. He added that the company is now poised to return to double-digit growth in the not-too-distant future.

Docusign’s business had surged during the coronavirus pandemic, when many businesses shuttered and more work moved online, only to struggle as workers across the world returned to their offices.

Constellation Research Inc. analyst Holger Mueller said Thygesen and his team did well to boost its profitability, not only growing revenue but also by taking costs out of the business. “The main question for investors is why is DocuSign only able to deliver single-digit growth? And the only real answer is that the industry is losing customers,” he said. “DocuSign shares this problem with its competitors Box and Dropbox, and whoever can stop that loss first by making its offering more attractive to enterprises will see its growth rising back into the double-digits.”

For the second quarter, Docusign is predicting revenue of between $725 million and $729 million, which matches the consensus estimate of $727 million at the midpoint. It’s also looking for billings of $715 million to $725 million, in line with the Street’s target of $720 million.

The company’s longer-term outlook is slightly less optimistic, with officials calling for revenue of between $2.92 billion and $2.93 billion, just below Wall Street’s target of $2.93 billion at the midpoint. Full-year billings are expected to come to between $2.98 billion and $3.03 billion.

In addition to the results, Docusign announced it had authorized the repurchase of an additional $1 billion in stock, on top of the remaining $140 million in its existing stock buyback program. The amount equates to roughly 10% of all Docusign shares outstanding.

Photo: Docusign