- DocuSign, Inc (NASDAQ:DOCU) announced a Board-approved reduction-in-force of roughly 9% of its workforce yesterday.
- Needham analyst Scott Berg reiterated a Hold on the stock.
- He believes the move right-sizes Docusign’s operations for near-term growth he expects to remain materially below pandemic levels.
- However, he found the timing a bit interesting, given that newly announced CEO Allan Thygesen has yet to start.
- The analyst assumed the new CEO fully consulted and signed off on the plan since he would be critical of its execution.
- While management provided few details, he expects most of the reduction will not impact client-facing or client-success functions.
- The analyst did not update his model at this time but believes the RIF will reduce operating expenses by 4% – 5%, equating to $80 million – $100 million in annual savings or $0.39 – $0.48 per share in EPS once fully implemented.
- RBC Capital analyst Rishi Jaluria cut the price target on DocuSign to $55 from $65 and maintained a Sector Perform.
- DocuSign’s restructuring plan is “slightly negative,” even though it gives investors comfort on margins and supports the management’s earnings call commentary that DocuSign overhired during the pandemic.
- However, he is “more cautious” about DocuSign’s near-term as the cost-cutting comes despite its sales organization’s high rate of churn.
- Price Action: DOCU shares traded lower by 0.99% at $54.76 on the last check Thursday.
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