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DocuSign’s share price plummeted after the company weakened its guidance in the fourth quarter

Docusign Inc on a laptop computer located in Dobbs Ferry, NY, USA on Thursday, April 1, 2021. Website.

Tiffany Huggler-Geared | Bloomberg | Getty Images

Stocks of digital signature software makers DocuSign After the company, it decreased by about 40% on Friday morning Reported fourth-quarter guidance below analysts’ estimates..

DocuSign predict According to Refinitiv, fourth-quarter revenues ranged from $ 557 million to $ 563 million, with analysts’ average monthly revenue forecast of $ 573.8 million.

Still, DocuSign exceeded analysts’ expectations for the third quarter, with earnings per share of 58 cents, adjusted for analysts’ forecast of 46 cents, and revenue of $ 545.5 million, expected at 53,100. It was a million dollars.

Several companies including JP Morgan, Piper Sandler, UBS, Wedbush Lowered the valuation of the stock Following the revenue report.Citi analyst Tyler Radke maintained a buy rating, but he lowered the target price from $ 389 to $ 231 per share, making the report “the biggest.” [software as a service] In my recent memory. “

“The pandemic tailwind stopped much faster than DocuSign expected, and the company was surprised,” JP Morgan analyst Sterling Oti wrote in a note to customers.

CEO Dan Springer said in an interview with CNBC’s “TechCheck” on Friday that the main reason for the slowdown in growth was not the power of macros, but the execution of the company.

“What DocuSign missed was last year, when we arrived at a place that had met demand for a year and a half,” Springer said. “And what we’ve always done is create demand, drive customer success, and find new use cases.”

“We shouldn’t have done that because we’ve withdrawn from it,” Springer said.

But he said the ship shouldn’t take too long to recover, as the company can retain its customers and need to revert to its previous strategy of creating new use cases for its products.

He called the market reaction to profits an “overly strong reaction.”

With the rise of remote work during a pandemic, the company has grown rapidly. DocuSign has reported revenue growth of over 40% for the sixth consecutive year, but says it expects growth of about 30% in the next quarter.

Dan Springer, Chief Executive Officer of DocuSign.

David Paul Morris | Bloomberg | Getty Images

Springer admitted Thursday that the numbers would be disappointing after achieving such extraordinary growth earlier this year.

“We expected it to eventually fall from the peak level of growth achieved during the pandemic, but the environment changed faster than expected,” Springer said in a statement.

At TechCheck on Friday, Springer suspects that new pandemic mitigation measures in the face of Omicron variants could lead to a further surge in sales. He said that for now, his focus is “controlling what we can control.”

The company also said Thursday that its former CFO, President of International, left the company on November 30.

-CNBC’s Ari Levy contributed to this report.

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DocuSign’s share price plummeted after the company weakened its guidance in the fourth quarter

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