DocuSign, Inc. DOCU reported impressive third-quarter fiscal 2025 results, wherein earnings per share (EPS) and revenues outpaced the Zacks Consensus Estimate.

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The earnings beat and the raised revenue guidance impressed the investors, as the stock has rallied 22.2% since the company released results on Dec. 5.

For fiscal 2025, the company raised its revenue guidance to $2.95-$2.96 billion from the prior quarter’s view of $2.94-$2.95 billion. The current Zacks Consensus Estimate for revenues is pegged at $2.95 billion. The present estimate meets the lower end of the company’s raised guided range.

DOCU’s EPS (excluding 60 cents from non-recurring items) was 90 cents, which surpassed the Zacks Consensus Estimate by 4.7% and increased 13.9% from the year-ago quarter. Total revenues of $754.8 million beat the consensus mark by 1.4% and gained 7.8% from third-quarter fiscal 2024.

The company’s shares have gained 84.9% in the past three months compared with the 23.2% rise of the industry it belongs to and 10.5% growth of the Zacks S&P 500.

DOCU’s Segmental Revenues

Subscription revenues totaled $734.7 million, increasing 7.8% year over year. The figure beat our estimate of $722.1 million. Professional services and other revenues of $20.1 million gained 11.3% from the year-ago quarter, missing our expectation of $21.3 million. Billings amounted to $752.3 million, up 9% from the year-ago quarter. The figure surpassed our anticipation of $716.5 million.

The non-GAAP gross margin was 82.5%, beating our estimate of 81.2%. The non-GAAP gross profit of $622.3 million grew 7% year over year and outpaced our expectation of $601.8 million. The non-GAAP operating margin was 29.6%, increasing by 280 basis points from the year-ago quarter. It beat our estimate of 28.5%.

Balance Sheet & Cash Flow of DocuSign

DocuSign exited third-quarter fiscal 2025 with cash and cash equivalents of $610.9 million compared with $619.1 million at the end of the fiscal second quarter. Net cash generated by operating activities was $234.3 million for the reported quarter. The free cash flow generated was $210.7 million.

DOCU’s Q4 & FY25 Guidance

For the fourth quarter of fiscal 2025, the company expects revenues between $758 and $762 million. This guided range is higher than the current consensus estimate of $755.4 million.

DOCU anticipates subscription revenues in the range of $741-$745 million and billing revenues between $870 million and $880 million. The non-GAAP gross margin and the non-GAAP operating margin are expected to be 81-82% and 27.5-28.5%, respectively.

For fiscal 2025, subscription revenue guidance was raised to $2.885-$2.889 billion from $2.86-$2.87 billion provided in the previous quarter. Billings’ guidance increased to $3.05-$3.06 billion from the preceding quarter’s view of $2.99-$3.03 billion. The non-GAAP gross margin and the non-GAAP operating margin are expected to be 81.9-82.1% and 29.5-29.5.7%, respectively.

Currently, DocuSign carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Snapshot of DOCU’s Peers

Republic Services, Inc. RSG reported mixed third-quarter 2024 results.

RSG’s EPS (excluding 1 cent from non-recurring items) of $1.8 outpaced the Zacks Consensus Estimate by 11.7% and grew 17.5% from the year-ago quarter. Revenues of $4.1 billion missed the consensus mark by a slight margin but increased 6.5% on a year-over-year basis.

Corpay CPAY reported impressive third-quarter 2024 results.

CPAY’s EPS of $5 beat the consensus estimate by a slight margin and increased 11.4% on a year-over-year basis. Total revenues of $1 billion outpaced the consensus estimate marginally and grew 6% from the year-ago quarter.

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