DocuSign stock surges on earnings beat

Yahoo Finance Live anchors discuss the rise in stock for DocuSign following third-quarter earnings.

Video transcript

[AUDIO LOGO]

BRIAN SOZZI: Lock in on DocuSign. DocuSign shares are trading blows with Lululemon as the hottest ticker on the Yahoo Finance platform. That is after the company flew past analysts' estimates for the third quarter with revenue rising 18% year-over-year, as the esignature company tries to combat slowing demand.

And a lot of enthusiasm for this quarter. Maybe the market should have taken some of this enthusiasm and put it behind Chewy because I think the reason why you're seeing that earnings beat is because DocuSign a couple of quarters ago, canned about 7% of its workforce. So a lot of costs have come out of this business, while the top line continues to slow.

JULIE HYMAN: Yeah, although the company is raising its revenue forecast for the full year. So, you know, it's not exactly like an amazing sales increase but it is better-- you know, at some point with DocuSign, the business is not going away. We're still signing our documents--

BRIAN SOZZI: Good business.

JULIE HYMAN: --electronically, right? So at some point, it was going to have to get bad enough that then things could start to inflect a little bit, right? And maybe, I guess, we're at that point. Maybe. I mean, I think we'll have to see a couple of quarters.

BRIAN SOZZI: You also have to won-- the new CEO, I think it's Allan Thygesen. He's a couple of months into the business. And he made it very clear on the conference call, he's still getting his feet wet. He has to dig a lot deeper into this business.

But key to him planning out the future of DocuSign, what else should this company be doing? Besides esignature, where are the other growth vectors for DocuSign to drive that growth?

Now, they are underpenetrated with their current business overseas. But I think he has to figure out, do-- does he put cash to use and go out there on an acquisition spree for a lot of companies that might fit into this universe at cheaper valuations? Or does he just try to go all-in on expanding overseas?

JULIE HYMAN: I mean, it feels like if you're going to make acquisitions, you have to kind of steady things before you go out and start gobbling things up, so.

BRIAN SOZZI: Well, not everybody does that.