DocuSign Stock Craters After Weak Forecast—Another Tech Darling Stumbles

Wall Street's love affair with DocuSign hits a snag as shares plunge on disappointing guidance. The e-signature pioneer—once a pandemic darling—now faces the brutal reality of post-hypergrowth reckoning.

Guidance gut punch:
Management's outlook fell short of analyst expectations, triggering a selloff. Turns out 'digital transformation' isn't an infinite money glitch after all.

Cynical take:
Another case of tech valuations outpacing actual business fundamentals—but hey, at least the VC exit liquidity was good while it lasted.

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In addition, sales increased by 7.6% year-over-year, with revenue hitting $763.65 million. This also beat analysts’ expectations of $748.14 million. Subscription revenue was the main driver of growth, as it made up $746.2 million of total sales and grew by 8%. On the other hand, Professional services and other revenue increased by 4% to $17.5 million. This continues the company’s long-term trend of steadily increasing its revenue, as per the image below.

Guidance for FY 2026

Looking forward, management has provided the following guidance for FY 2026:

• Revenue of between $3,151 million and $3,163 million versus analysts’ estimates of $3,136 million
• Non-GAAP operating margin in the range of 27.8% to 28.8% versus expectations of 28.3%

As we can see, the company’s outlook for revenue was better than expected, while the profitability margin was in line, which should have helped the stock rally when considering the current quarter’s results came in above estimates as well. However, investors did not like that Docusin lowered its billings guidance from $3,300 million to $3,354 million to between $3,285 million and $3,339 million.

Is DocuSign a Buy, Sell, or Hold?

Turning to Wall Street, analysts have a Hold consensus rating on DOCU stock based on four Buys, 12 Holds, and one Sell assigned in the past three months. Furthermore, the average DOCU price target of $92.71 per share implies 0.2% downside risk. However, it’s worth noting that estimates will likely change following today’s earnings report.