CEO Allan Thygesen hailed the firm’s suite of new AI integrations as key revenue drivers
Shares of electronic signature technology firm DocuSign (NASDAQ:DOCU) spiked 14% in after-hours trading Thursday as investors weighed the company’s moderately better-than-expected third-quarter sales and earnings.
In addition, traders bid up DOCU stock even though DocuSign’s full-year revenue guidance range was similar to what analysts had anticipated.
However, the market seemed to be on board with DocuSign CEO Allan Thygesen’s confident tone. According to Thygesen, the company “delivered powerful new innovation for customers highlighted by new capabilities to its Intelligent Agreement Management (“IAM”) platform” in 2024’s third quarter.
DocuSign enlists AI technology
DocuSign emphasized that its third-quarter IAM platform highlights include adding the capabilities of Lexion, a leading provider of AI-powered agreement management software. Lexion’s capabilities include the “ability to surface insights from a more extensive array of agreement types”.
Another example is DocuSign’s addition of “AI-assisted review” features to its Contract Lifecycle Management product offerings. The new features, which are currently available in Microsoft Word, allow for “AI-generated markups, language recommendations, and generative Q&A”.
Analysis: DocuSign may have some proving to do
Does DocuSign’s AI-infused IAM platform represent “powerful new innovation” and, just as importantly, a powerful revenue generator for the company? Going forward, proving IAM’s value and growth potential to investors may be easier said than done.
For what it’s worth, DocuSign stock did surpass Wall Street’s expectations in the fiscal third quarter. Specifically, the company reported revenue of $754.8 million and adjusted earnings of $0.90 per share, thereby exceeding the analysts’ consensus revenue estimate of $744.3 million and earnings estimate of $0.86 per share.
These weren’t extremely wide beats, though, and DOCU stock’s post-earnings pop may seem exaggerated. Again, the market might have reacted to Thygesen’s confidence as well as to DocuSign’s emphasis on AI technology integration.
Stock traders could also celebrate DocuSign’s full-year revenue guidance range, which the company upward-revised to $758 million to $762 million. The midpoint of that range is $760 million, which comes in 0.5% higher than the analysts’ consensus estimate.
Again, there isn’t a huge “beat” here. Now effectively an AI stock, Thygesen and DocuSign must prove to shareholders in the year’s final quarter that its AI-embedded products will significantly contribute to expected-beating sales and profits.
