To The Moon

$Docusign(DOCU)$ is expected to release earnings on 07 Dec 2023 after the market closes (AMC)., it rose 3.76% on 06 Dec (Wednesday) ahead of its third-quarter results.

DocuSign's competitive position, robust free cash flow generation, and a growing market for E-Signatures could lead to a potential re-acceleration of growth going forward

Investors are looking for another quarter of revenue growth as it would point to the ongoing success of DocuSign's turnaround efforts, which have included changes in leadership and job cuts. Demonstration of resilient business spending despite headwinds in the economy would be expected as well.

I will be looking at DocuSign top priority of steady rollout of products and features. Introduction of e-signature capabilities through WhatsApp would help in its growth in international markets.

Also look forward to see what the company has to say about adoption and its initial reception since being introduced in November.

Technical has indicate a bullish crossover.

DocuSign (DOCU) Earnings Historical

DocuSign shares declined -3.7% the day following the earnings announcement on 07 Sep to close at 50.21. Following its earnings release, 90 days ago, DOCU stock has drifted -5.7% lower.

From the time it announced earnings, DOCU traded in a range between 38.11 and 50.74. The last price (47.36) is closer to the higher end of range.

The last earnings report have managed to provide a surprise but price effect remain in negative zone. So I would stay cautious on how DocuSign would perform and also their fiscal 2024 outlook.

DocuSign (DOCU) Upcoming Earnings Guidance

DOCU has issued earnings guidance for Q3 2024. Revenue estimate in the range of 687.0 M to 691.0 M, which would be a 7% increase from the same period last year.

Gross Margin estimate in the range of81.0% to 82.0%.Operating Margin estimate in the range of22.0% to 23.0%.

DocuSign (DOCU) Post Earnings Announcement Drift

DOCU share price has drifted down -5.7% post earnings announcement. Using the last 12 quarters data, the average drift between earnings announcements is -2.0%. The current drift represents a negative -0.3 standard deviation move.

• Current post earnings announcement drift: -5.7%

• Historical average post earnings announcement drift: -2.0%

• Historical post earnings drift standard deviation move: ±21.5%

Docusign (DOCU) Historical Moves Ahead of Earnings

DOCU historically moved higher heading into earnings more often than not. On average, the stock gained 0.0% for the 2 week period before earnings (based on the last 12 quarters of data).

Docusign Historical Stock Price Reaction to Earnings

DOCU shares have moved lower in the immediate aftermath of earnings 7 out of 12 previous reports. On average the stock moved down -5.8% in the first day of trading after the company reported earnings.

Docusign (DOCU) Stock Behavior After Earnings

Based on the previous 12 earnings releases, DOCU is more likely to trade higher 1 day after earnings for an average gain of 0.1%

Docusign (DOCU) Seasonal Volatility by Day of Year

Historically, implied volatility for DOCU tended to rise the most in March with a median IV Of 61.4, while April tended to be when implied volatility declined To its lowest levels With median IV Of 43.0.

Historically, the median IV for the current month of December was 57.5 compared to the current IV of 56.9. The IV level in January following December tended to be lower, with a median IV of 50.5

Docusign (DOCU) Post Earnings Movement

The options market overestimated DOCU stocks earnings move 58% of the time in the last 12 quarters. The predicted move after earnings announcement was ±11.5% on average vs an average of the actual earnings moves of 14.6% (in absolute terms).

This shows you that DOCU tended to be more volatile than the options market predicted for the earnings stock price reaction.

Docusign (DOCU) Earnings Implied Volatility Crush

DOCU's last earnings implied volatility (IV30) going into earnings was 60.2. The last time DOCU released earnings, the implied volatility dropped to 31.5, resulting in an implied volatility crush of 48%. 5 days after earnings, the 30 day IV was 30.8.

• Average Implied Volatility Crush For DOCU Earnings: 22%

• Average 30 Day Implied Volatility 1 Day Before Earnings: 74.9

• Average DOCU 30 Day IV for the Day of Earnings: 57.0

• Average 30 Day Implied Volatility 5 Days After Earnings: 52.3

Docusign (DOCU) IV Percentile Rank

DOCU implied volatility (IV) is 56.9, which is in the 56% percentile rank. This means that 56% of the time the IV was lower in the last year than the current level. The current IV (56.9) is -3.2% below its 20 day moving average (58.7) indicating implied volatility is trending lower.

Docusign (DOCU) IV vs 20-Day HV

The current IV (56.9) in DOCU is 59.6% above its 20 day HV (35.6) suggesting that options markets are predicting future volatility to trade above the most recent 20 day realized volatility.

Docusign (DOCU) Volatility Skew

The implied volatility skew shows the market's bias for pricing in volatility risk to the option premium of downside puts and upside calls.

The current skew indicator has shown a bullish signal, but the implied volatility for downside puts is increasing relative to upside calls, then that suggests the market is pricing in a larger fear to a downside move.

Summary

Based on the data I have gathered, it seem like DocuSign would need to post another quarter of revenue growth to show that DocuSign’s turnaround efforts (changes in leadership and job cuts) is working.

This could also show that DocuSign business spending is resilient despite headwinds in the economy.

I will stay cautious to see if DocuSign is able to post a result to set the path to swing to profit and revenue growth.

Appreciate if you could share your thoughts in the comment section whether you think DocuSign would be able to post a stellar revenue and sales growth?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.