Dan Springer, DocuSign's (DOCU) CEO took responsibility for some Q3 execution mistakes. Those mistakes sent shares down more than 40% in November.
However, Springer said he would buy shares next week as the one-day fall doesn't make sense in light of DocuSign's leadership position and future growth possibilities.
"I am surprised, I'll be straightforward with you. I do not see the reaction in the stock price to be commensurate with what I think is a much less dramatic business performance change," Springer said.
"I've made two phone calls since I saw the reaction, first was to [my general] counsel, and I asked him, if there is anything that stops me from buying stock. He said as long as you wait until the window opens on Tuesday, and you haven't been selling shares, so therefore you can you can buy all you want. And the second one was to my financial manager, and lined up the first $5 million of purchases. So if the stock doesn't dramatically increase, I'll be continuing to buy shares."
The harsh bearish reaction comes as DocuSign's Q3 billings growth came in short of expectations, with employees coming back to the workplace and customers delaying purchases.
Springer says the firm should have built its customer base by focusing on picking up new clients. He plans to correct that by replacing the management team.
DocuSign's performance, compared to Wall Street forecasts for Q3:
- Net Sales: $545.5 MM compared to $532.6 MM forecast
- Billings: $565 MM compared to $594 MM forecast
- Diluted EPS: $0.58 compared to $0.46 forecast
For Q4, DocuSign sees billings growth of about 20% compared to 28% in the third quarter.
Wall Street forecasters downgraded assessments and price targets for DocuSign, including JPMorgan and UBS. Dan Ives, a DocuSign bull from Wedbush Securities, said the quarter was a disaster in a note.
"While DocuSign was a clear benefit from the work-from-home theme and was one of our favorite growth plays over the past few years, we believe the company is seeing a much more difficult selling environment as the company expands into broader CLM deals with e-signature going through a major growth transition in the field. DocuSign remains in firm position to massively expand this moat into broader strategic deals, however it appears this transition will be rocky and the risk/reward at current levels is not favorable to stay bullish with the clock hitting midnight on the DocuSign hyper-growth story in our view," Ives said.
He downgraded the company's rating to Neutral from Outperform.