DocuSign earnings top estimates, RH posts unexpected loss

DocuSign (DOCU) posted its third-quarter earnings results, beating Wall Street expectations, with a revenue of $700.4 million, up 9% from a year earlier. The company also posted adjusted earnings of $0.79 per share versus analyst estimates of $0.63. Shares of RH (RH) fell sharply after hours after the retailer posted an unexpected loss of $0.42 per share in the third quarter. Analyst had been expected $0.95.

Yahoo Finance anchors Julie Hyman and Josh Lipton break down the latest development and what it means for the company going forward.

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Video Transcript

JULIE HYMAN: Docusign out with its third-quarter results. Let's dig into the numbers, which are resulting in, what my esteemed colleague to my left called the bupkis in terms of the stock.


JOSH LIPTON: That's a technical term, Julie. Chartists use that I think.

JULIE HYMAN: Yes, I think they do. So if you look at the company's numbers here, first, let's take the third quarter results, which came in beating analyst estimates in terms of the adjusted earnings per share here. Revenue, a little bit ahead of estimates as well, up 8.5%. Obviously, this is a company that's gone through a lot of turmoil. Management changes over the past couple of years after being sort of a pandemic darling and has now been sort of normalizing, if you will.

The company's forecast for the full year, it's raising its numbers very slightly for what it expects for revenue. And the same goes for billings here. So I guess there's just not a lot for investors to get excited about.

JOSH LIPTON: Yeah. It has not been a great year for DocuSign. I mean, heading into this report, stock was already down about 15%. Now, it's, you know, it's up about 4/10 of a percent. So initial reaction is pretty muted. I think on the call for investors, obviously, you'll want to hear more about just the broader demand environment. The competitive landscape as well, that's going to come up. Salesforce, Adobe, you know, what kind of threats those pose? How is DocuSign kind of responding? I think AI investment, product updates, there's a lot here on the call.

The CEO kind of did try to talk It up, solid third quarter, record non-GAAP operating margin and free cash flow, he says. But at least, initially, here, muted response in after-hours.

JULIE HYMAN: Yeah. The stock the stock has fallen in the past three or after the past three earnings reports. Let's get to RH here. This is an interesting one. And here, we're seeing more movement. The stock is down 7.5%. It looks like here that the company reported a loss. That was unexpected on the part of analysts here. And the net revenue fell by 14%. That was worse than anticipated.

They are delaying the mailing of their big catalog, which they call their RH modern sourcebook. Basically, they're saying there's been a lot of sales in the industry. They've seen pressure on gross margins because of those sales throughout the industry. And as always, the investor letter for RH is interesting reading. Really, they're trying to position themselves as a luxury home furnishings brand here. And they talk about that effort still being underway.

JOSH LIPTON: Yeah. And the CEO, interesting comments here as well, just talking about some what they call increasing headwinds in early October calls. That two things, Julie. One, mortgage rates. He's known to peak in above 8%. That was a challenge. And also calls out geopolitics, by the way, the Israel-Hamas war as another challenge.

JULIE HYMAN: Yeah. At the same time, the company is going ahead with its purchase of the New York guesthouse property for $58 million, which they say is going to close in the fourth quarter. They made the agreement to buy that property when interest rates were a lot lower.

JOSH LIPTON: We'll be watching.