DocuSign Delivers Solid Results; CFO Is Departing; Guidance Is Constructive; FVE Stable at $72

For the third consecutive quarter DocuSign reported good results, with fourth-quarter revenue and non-GAAP operating margin both exceeding the high end of guidance as well as our expectations. First-quarter guidance was constructive, albeit with better profitability compared with our expectations as a result of recent headcount reductions, and slightly lower revenue growth. DocuSign continues to see macroeconomic pressures resulting in deal compression and elongated sales cycles. In fact, management noted a slight deterioration in the demand environment. CFO Cynthia Gaylor is leaving, but will remain on board through next quarter’s earnings announcement. Her departure comes on the heels of a CEO transition just five months ago, which while not alarming, is certainly not a positive development. We tweaked our growth estimates down slightly and moved our profitability up slightly and are therefore maintaining our fair value estimate for narrow-moat DocuSign at $72 per share. With shares selling off in the aftermarket, we see upside to shares, but continue to prefer wide-moat stocks during this period of economic turmoil.