DocuSign (NASDAQ: DOCU) shares fell over 39% Friday morning following the announcement of its disappointing fourth-quarter guidance. Nevertheless, the company beat analyst expectations for the third quarter as demand for its products surged throughout the coronavirus pandemic.
The e-signature software maker reported earnings of USD0.58 per share, compared to the expected USD0.46 a share. Revenue amounted to USD545.5 Million, higher than analysts anticipated USD531 Million.
Furthermore, DocuSign forecasted fourth-quarter revenue would range between USD557 Million and USD563 Million, though analysts had expected revenue of USD573.8 Million for the quarter, according to Refinitiv. Following the report, firms such as JPMorgan, Piper Sandler, UBS, and Wedbush, lowered their ratings on the stock.
“The pandemic tailwinds came to a much faster than expected halt for DocuSign, catching the company off guard,” JPMorgan analyst Sterling Auty wrote in a note to clients.
The company had experienced increasing growth amid remote work throughout the pandemic, with revenue climbing 40%. However, it expects growth to come in around 30% within the next quarter.
“While we had expected an eventual step down from the peak levels of growth achieved during the height of the pandemic, the environment shifted more quickly than we anticipated,” CEO Dan Springer acknowledged on the earnings call.