Shares of DocuSign plunged more than 39% Friday morning after the e-signature company’s quarterly revenue forecast
missed analysts’ estimates, stoking concerns about slowing growth after the
COVID-19 pandemic fuelled a surge in demand in 2020.

It was DocuSign’s worst one-day,
post-earnings decline ever, according to data compiled by Bloomberg.

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DocuSign predicted fourth-quarter revenue
would be between $557 million and $563 million, while analysts had expected
revenue of $573.8 million for the quarter, according to Refinitiv.

Several firms, including JPMorgan, Piper
Sandler, UBS and Wedbush lowered their ratings on the stock market following the
earnings report. While Citi analyst Tyler Radke maintained a buy rating, he cut
his price target from $389 a share to $231, calling the report, “one of the
biggest (software as a service) whiffs in recent memory.”

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“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.

DocuSign benefited from remote work

DocuSign has witnessed rapid growth as it
benefited from the rise of remote work during the pandemic. DocuSign reported
its sixth straight period of revenue growth of over 40%, but said in the next
quarter it anticipates growth to come in around 30%.

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CEO Dan Springer acknowledged that the
figure would be a disappointment after such exceptional growth earlier in the
year.

“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,” Springer said on the
earnings call.

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DocuSign’s quarterly adjusted profit and
revenue came in stronger than expected. The company was up just 5.2% this year
through Thursday’s close, valuing the company at $46 billion, after tripling in
2020.

The company also said its president of
international Michael Sheridan, who was previously CFO, left the company on
November 30.