What happened
Shares of e-signature company DocuSign (DOCU 0.78%) popped on Wednesday after the company announced a plan to restructure its business. As of 10:30 a.m. ET, DocuSign stock was up almost 5%.
So what
According to a filing with the Securities and Exchange Commission (SEC) this morning, DocuSign is restructuring its business by laying off about 9% of its workers. This move is expected to cost between $30 million and $40 million before savings kick in. And it's expected to be completed by the end of this fiscal year.
Investors appear encouraged that DocuSign is focusing on its operating margins. And that's why the stock is up today.
Now what
DocuSign's management alluded to today's news on its conference call to discuss financial results for the second quarter of its fiscal 2023. For the fiscal year, management is guiding for an operating margin of 16% to 18%. And on the conference call, management said it was cutting expenses to achieve its goal.
Management also said that it was automating certain things, and that "These enhanced capabilities will enable us to eliminate current manual processes."
DocuSign stock is down more than 80% from its all-time high. Investors do need to pay attention to revenue growth in coming quarters, but improving profitability could help it get back on track. However, the potentially positive impact from today's announcement will take time to become apparent. DocuSign investors will need to patiently wait for its improved cost structure to yield results.
