DocuSign (DocuSign (DOCU)) had a pretty good quarter. Revenue beat expectations, earnings came in ten cents above the consensus, and the company raised its full-year guidance. So why did the stock fall nearly 5% in premarket trading on Friday?

Because sometimes, in the world of Wall Street, good isn't good enough.

The Numbers

For the first quarter of fiscal 2027, DocuSign reported revenue of $830.2 million, up 9% from a year ago and above the $824.8 million analysts were looking for. Adjusted earnings came in at $1.09 per share, beating the consensus estimate of $0.99. The company also posted an operating margin of 32% and a free cash flow margin of 35%, generating $289.4 million in free cash flow. And it bought back $318 million of its own stock — the largest quarterly buyback in its history.

That's a lot of good news. But the market is forward-looking, and the forward-looking part of the report was a bit more mixed.

Guidance: In Line, Not Above

For the second quarter, DocuSign expects revenue between $865 million and $869 million. That's roughly in line with the $866.1 million analysts had penciled in. For the full fiscal year, the company raised its revenue guidance to a range of $3.49 billion to $3.502 billion, up from its prior outlook of $3.484 billion to $3.496 billion. That's a modest raise, and it's basically in line with what the Street was already expecting.

When a company beats and raises but the raise is only to the level of existing expectations, investors sometimes shrug. Or, in this case, sell.

The AI Story Is Real, But Still Early

DocuSign is trying to reposition itself as more than just an e-signature company. Its Intelligent Agreement Management (IAM) platform, powered by AI, is now used by about 40,000 customers and accounts for 12.6% of annual recurring revenue. The company has partnered with AI firms like Anthropic and OpenAI to integrate third-party AI into agreement workflows. Management says IAM should represent about 18% of ARR by the end of fiscal 2027, and that overall ARR growth should accelerate during the year.

That's a nice story, and it's gaining traction with big customers like Experian and HSBC. But it's still a relatively small piece of the pie, and the market may want to see faster adoption before getting more excited.

Analysts: Cautious Despite the Beat

Even with the beat-and-raise quarter, several analysts trimmed their price targets. Wells Fargo kept its Equal Weight rating but cut its target to $55 from $60. BTIG reiterated a Buy but lowered its target to $60 from $70. Needham held at Hold. The average analyst price target is now $58.58, and the consensus rating is Hold.

That's not exactly a vote of confidence, and it helps explain why the stock is down. DocuSign shares were trading at $48.48 in premarket, down 4.83%.

So, to sum it up: DocuSign is doing fine. It's profitable, growing, and investing in AI. But the market wants to see more — more acceleration, more IAM adoption, more upside. Until then, the stock may stay in a holding pattern.