DOCU - Earnings call transcript Q3 2019

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Operator

Good afternoon ladies and gentlemen. Thank you for joining DocuSign Third Quarter Fiscal 2019 Earnings Conference Call.

As a reminder, this call is being recorded and will be available for replay from the Investor Relations section of the Web site following the call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. now Investor call Relations. will Leschin, to I of Head Instructions] pass over the Anne [Operator Please ahead. go

Anne Leschin

Thank you, call. operator, our DocuSign's and good afternoon quarter XXXX everyone. fiscal earnings conference third Welcome to

CEO, On today, Relations Sheridan. press is issued announcing the release Web posted was and third results today we DocuSign's site. The quarter call our earlier CFO, Dan have on Mike Springer and Investor the

to December that XX started, presenting schedule I'd provide Conference BofA San Bus like we know will There TMT Stanley the get everyone KeyBanc in be the in we and on Before Tour at will Tour late are let on and Bus both update. added Tech January February. further a hosting events to other Morgan Conference the X JMP and Francisco are

that me on us the this remind forward-looking data about independent management other statistical be reasonable by and that parties call as and market other include made estimates by information we growth available and to our date are on data everyone size on let believe statements relating based industry. of this currently and Now made and beliefs including to assumptions and to statements

SEC performance other with XX-Q from the Quarterly statement. and Further factors be to risks implied with information additional statements XXXX, and the forward-looking filed these the and Performance or uncertainties by other Forward-looking actual available of or results. involve results. and unknown different filings previously in in risks, or any may known and achievement cause materially uncertainties SEC. achievements expressed other included Form July prospectus information is on Report XX, our our

reason, Dan. law, forward-looking like update as upon forward-looking predictions over to from to the required the except future to update if statements or obligation these statements. Dan? to actual should results the I materially no in turn those as assume differ call of You anticipated rely we events forward-looking statements not by now

Dan Springer

start, everyone quarter I'll and pleased segments, afternoon SpringCM, today the of growth each effect. that had Good a drove Mike, third number, the quarter. share which in talking strong earnings strong To give growth. those. Anne. detail call. We of joining say be of we and let and you quick DocuSign. geographies breakeven us non-GAAP factors execution all for the quarter, for me had $XXX about thanks full With then were Thanks another for were engine for drive our to today review We more in was million verticals revenues XX% acquisition I'm will shortly. of our year-over-year the QX across

over our from XX,XXX lines Our end of previous growth of customers customers paying growing of continues customers, QX, to XXX,XXX their an come usage and increase business. within At existing new had primarily the acquiring we quarter. across the

this is the said have to growth not limited we U.S. As

a Our revenue continues earlier a and area quarter international continued an to We've great becoming represented lot business XX% particular. see fuel provide talk today's drivers. we about to I'd when call, of on I'll like growth in of this it this public focus And color we driving additional to of us. our momentum. significant our factors at since further year. company make the these growth, three for progress look overall On some be

government signs and agencies First, businesses, every big small planet for organization on the businesses, not agreement profit.

are adopt expand is paper DocuSign transformation chance further expand had common eSignature. U.K., is customer practice. illustrate and each other eSignature. event TAM is department. a In becoming core and worldwide core from available is it QX This the annual it working that within which motion $XX an land eSignature substantial. business usage at usually department to greater we evidence start our largely is in Later, TAM results is estimate the in our to TAM As We departments make as our often when to works see under our to we is for October, This how penetrated. motion billion, a in and It organizations a result our over well. specific organization time at our expansion

great have the world's currently is development of DocuSign expanding since to in talked has either more cases about how of largest pay a and with used goods the company eager a return so One consumer-packaged few single discussion. DocuSign just organization more live be to department a on proven example customer started different in positive. This a then. that across a uses been us of do has customer they or XXX It's their to under because

systems top growth Our of of on the of to organizations when signature. something this can to various organizations system the signature from connecting with is other isolated prepare, sign, major manage agreement it entire and process necessary cost connecting call driver less transformation. faster use business fewer with builds do agreement go and the at that and automating it agreements. the act errors. on It's By We second

surprise pieces the well-positioned to we easy most integration we're and modern energy was of transformation. of to speaking the wins. leading SpringCM a is the about as leader of That's agreement invested That's showcase it customer we've of offer are customers company DocuSign, aspect a the connectivity illustrates put now. are why any already for at that important agreement. we If category. system This in had we for pre-built earlier. This how customer key they company feel a one customers the to event Salesforce.com, how world's there together it's still make to everybody mentioned U.K. connecting chance So that not our a why can I same going our SAP. largest In customer QX,

in progress Now quick a our SpringCM, September. I on company acquired I'd to just like we mentioned update the there. give

new SMB allowed signature. further and to commercialize. a technologies that our their including of strength offering in doing us has product this by fuller SpringCM new flagship and complements intend after provide half We're contract before Bell lower management for and the Gen. This SpringCM to DocuSign based product recall segment, called and our calendar in And a This system for You'll and our technology mid-market generation. document segment. on strength to with release we already lifecycle eSignature of agreement is first product platform mid-market activities the to SpringCMs XXXX enterprise

TAM comprehensive With these We we additional To them of acting customers TAM well of we that agreements billion modernizing remember have offering and preparing partner these agreement. that's our cover for at like activities least the believe the as on offerings out, systems believe eSignature as set read manage. services only. products we $XX for is to and most double

growth important in QX, Finally, our modern launched It this driver our where great a it quote. third our and had announcements. even agreement. stands Salesforce Salesforce at ecosystem. And always FPQ got around more a a few It's than This more announced largest more in we is for Salesforce's that is of systems new Salesforce recent price, FPQ, and Dreamforce, and included the product annual To at before. another leads Dreamforce eSignature we category we with integration of ever a let integration. In world show. have ever becomes which figure, lot in presence illustrate Gen did meetings product year, me a DocuSign we of activity we our to largest partner It's point our conference.

activity lots So positive of there.

to agreement Another partner now possible partner recently extension DocuSign everywhere They products you made and you we example Dropbox. away from done. to using announcement DocuSign send what's Dropbox And Dropbox. Dropbox. work was can another announced as with signed put extend It's philosophy within from our guess, within of might

For beyond usage DocuSign efforts what it makes drives our can a us partner leverage environment Dropbox, for more it valuable. own direct like us sales more achieve. giving their and of And sales

to number recent DocuSign's landing agreement big our driver, up our ecosystem. of growth So and explain were success as Together number leading two, of in three, system which as in eSignature well number our prospects. and transformation; they from sum the future confidence there; category partner much expanding the TAM one,

cement Neil Sales that Customer would updates of the fiscal leadership our We the our year. we like believe quarter of our will be Hudspith, of to Now some and end phase shift growth. I'd operation last the announced for at to retiring that organization Head our on next

we grow the to in said this planning quarter's I last need the going call, something been for have forward. by is As business we investing talent in

in course, a that, the market cultivated Of Having confident us external we've team chance all against announcement the gave to our the built, well. check internally. for more we the are as assumptions done talent

promotions means So to announce to Senior America I'm is Loren sales been Sale the we've XX Chief our become the Loren of and he's over Revenue DocuSign Loren Officer currently enjoying Alhadeff will February is through Moreover, Vice North that effective directly years pillar that here having much numbers reporting been driving all many success. President today. of me. X, of bulk been pleased a

to congratulations of Operations the for came Services Lambert years Loren Walsh DocuSign customer report years Vice And Head Success a well-earned of Adobe's ago after for President operation, as Customer Customer well. opportunity. Senior to Lambert nine directly to our me and organization. So will Global two as

head for was of he seven Worldwide Customer Group Care McAfee's that Before year.

at the for decision made impact was incredible Given DocuSign, since this arriving Lambert has easy me. an

and marketing expanding Lambert, promoted to the will strategy on Chief beyond Operating and field Scott his as enablement Officer. also Olrich, business development thank well. offices be you congratulation. We've and He our take So focus

and Board Moving Lyft. Wilderotter. several and our been board Board our She Board those Boards was XXXX will on effective on years. March In has X, impactful be Hewlett-Packard she on high including Chair has advisory Maggie capacities, productivity. for before number Directors, profile Maggie Costco, Maggie to serves Enterprise now been then of of hugely our since January new our for a

So agreed to her role. she's expand we are thrilled,

to was the She of for and Development a Software. also Pivotal Managing Gaylor, announce, was Corporate Senior have Member also a CFO Twitter and Vice new We Board of group. committee Stanley Cynthia serve President at as well. will to Morgan banking join Cynthia will the in audit Welcome she and the serving woman Board technology Cynthia. fourth be investment on our Director the Head

past to Board be the over So could pleased the assembled more a as of we best chip across the and technology transition I with company not SaaS we've months, company. corporate six experience blue public

opportunity. the for in as are are executing on up effect. factors you growth today, the we the discussed sum to by we full So can see numbers, And

of We driving waves in are multiple to of systems and and some eSignature from partner modern riding agreement. transformation cases

ecosystem. and have an still sales opportunity has especially lot a greenfield market we partner Our scalability with of internationally our excellent

to proud thank So the amongst as XXth XXX,XXX my Glassdoor DocuSigners outlook best I be companies this recognition to is calendar the on approach you as for week a we positive. effort. I XXXX is want work contribution could your to not the a their call colleagues. more to of incredible year, very And place the end testament

like I'd through Mike be over walk Now financial after for to performance Mike? our I'll that. and here to hand to Q&A

Mike Sheridan

Thanks and good afternoon Dan everyone.

the As costs. reflect a results amortization discount the for our periods related historical reminder non-GAAP and financials of of and of all compensation, excludes standards amortization current based acquisition XXX accounting and stock intangibles, adoption debt our of financial

include operations results the close since September on our of Additionally, results X. SpringCM of its

The quarter. both for $XXX busy third the year-over-year third On we Total was a secondary the and to execute acquired top to completed a one XX% and quarter. SpringCM and in rose We expectations for continue offering. million quarter exceeded DocuSign. our the of debt well this, revenue convertible

strong last vertical XX% performance year-over-year XXXX Excluding in Of increase and XX,XXX third XXX,XXX in or added reached to XX% revenue this growth year-on-year. direct total SpringCM, $XXX our enterprise worldwide and We up billings a million the DocuSign quarter at year-over-year Total approximately XX% with XX% customers $XXX customers revenues to grew were the new increased standalone XX% subscription XX% worldwide. to million year-over-year year. customers approximately and new and DocuSign's Billings total of over across XX,XXX markets. commercial geographies growing customers increase year-over-year. revenue XX% bringing were resulting

XX% predominantly to in XXX of This reflected in a use to with International quarter We number customers year-over-year XXXX. offset XX% a their products year-over-year existing total the than upsell QX XX% in of strong and in revenue. ACV the XXX%. the to acquired XXXX over volumes XX% XX% Strong third grew quarter came fiscal growth by sunsetting in also the customers. in margin was of the Non-GAAP for legacy in was continue growth This $XXX,XXX compared combined expand increase gross their DocuSign margin of with was which customers continued net some fiscal total the The by subscription driven to reached part rate third $XX dollar third Non-GAAP of resulting increased gross continuing of of revenue core quarter from fiscal XX% in revenue included growth XX% or a achieve products. in at international in year-over-year quarter greater cases. million quarter of of XXXX. the upselling third retention XX%. rate

QX margins million revenue SpringCMs our to for While increased in the offerings total of year. associated and from increase. from integration as with $XXX of expenses costs with fees gross to support our We contributed revenue XX% primarily third gross $XXX to acquisition or non-GAAP additional and lower QX there million well XX% year-over-year, convertible margins. of of the as Professional the the the associated quarter prior decrease due a secondary investments SpringCM this the operating total or slight impact of increased was to

year. quarter year-over-year positive increase operating quarter last XXXX joined was negative employees X% million with QX employees compared million of on last follow of our quarter investments combined capital SpringCM the us a $X negative free with in operating cash This million and QX or compared cash X% last with XX%. $X in operating with with of during of margin a ended non-GAAP $X million from third increase flow negative operating $X million compared of integration, As our $X Lower associated third who year. approximately cash Operating costs result a included loss of the SpringCM, for quarter additional XXX operating resulted We QX and million with in for flow third from margin primarily loss positive was quarter this a SpringCM. losses the result, This the year. $XX in was offering. flow

We used ended of in cash from million third $X.X issued balance proceeds Finally the in $XXX the includes by quarter. we the with previous offset of $XXX debt million the billion the in with net purchase on the million sheet. end quarter in our September convertible This at compared $XXX SpringCM.

million guidance our $XXX to a fiscal million $X 'XX. the million to for in 'XX. in from fiscal revenue $XXX of non-GAAP $XXX QX million to and $XXX $X contribution million QX QX million and amounts Turning and in million million $X SpringCM billings full year. revenue estimate SpringCM $XXX $X for for quarter from we total XXXX, an $XXX estimate fourth contribution million full million These $XXX to for year and to the We revenue to $XXX to million fiscal million include of

QX We XX% margin are maintaining full and our guidance XXXX. for gross the year at to XX% for both fiscal

expenses, QX to and for operating to 'XX. in for in G&A 'XX. QX of fiscal and range 'XX terms In range in range XX% the in of sales to anticipate and XX% QX the of fiscal XX% the revenues R&D XX% XX% and of of fiscal marketing in we XX%

to million income For the and related $X to non-operating interest of quarter fourth we income expense. other estimate million the $X

We provision of tax $XXX,XXX. approximately expect a

to shares million decrease and fully million QX in outstanding shares our fully weighted million RSU QX call The outstanding our With XXX expect million. average to of fiscal relates the XXX in million XXX for settlement to open shares will which we questions. X weighted now diluted XXXX. November decreased by that, average XXX We approximately diluted in for for shares

Operator

question. your [Operator Justin proceed you. from William of and comes the with Blair Our with Company. Please Thank line Furby Instructions] question first

Justin Furby

hear Oh Hey great. guys okay. me can you

Mike Sheridan

Yes.

Justin Furby

was you what maybe Dan across start to Craig I a sense just hoping just seeing -- verticals. you're for give could

estate. your other but government piece think around on you of know I've of could speak know I some business space. then vertical pretty update up. for today, follow concern some I just early love that's and a Thanks. areas? I to quick there's your real that wondered, saw a in on I'd you federal get then, it's And the what got you an small

Dan Springer

significant are a in and that net of customers real discussed estate you We've Absolutely. it's but in if add, the to an you number look aspect QX lot percent We individual see our total we through of to we portion a see a of we've real XX,XXX of the revenue, is very strength with in relatively customer segment. small past the of But strength have tend been at the realtors as the customers. it's as had pleased articulated estate. of important that most small

people any talked we the So of have about point things not that have seen our a headwinds business in from at overall time. affecting this market in

verticals that referred long-term of than to federal ramp to strong but huge that have in we're of understanding they've had commercial longer terms a government government. point be significant to, to have that opportunity just In we that quite both Mike some government. some growth been the billings services point the a financial look some you're we think other in and We behind government tend fed larger customers to. the absolutely the see that at standpoint, fact we've very I bullish right. feeling, in now generally local certification, But said revenue and even it's numbers and a and though going I we that's very the as From is traditionally that strength would cycle good sales of state the

in that being the after continue that opportunity near-term, longer we We future. Federal an will see the while Government opportunity us the think we go longer in be attractive large term for to

Justin Furby

think commercial but standpoind? Chief year go-to-market, decision motions. for great. business kind like I enterprise that's hire more Okay, you you're of is terms larger one just curious on the area What's those a next what I'm wrong line, internally that selling separate years? last we And between maybe of go-to-market its as seeing or incremental I of that so Officer terms think two, give two role and for in Revenue two in helpful. sort more that to that know for And enterprise the or the in separate from a then sense bucket That's you then, newer over the demand revenue because I Can changes should Thanks. looks several interpret a you of over read? the the

Dan Springer

the split that first of about is the different it's take we the in segment. commercial Commercial and motions business as our and be them that of to of lot interesting best what practices think them of the them have sort think goes and make That's in the excited both So bring perspective similar land sort enterprise difference. build sort actually about direct and being is the core the that our we DocuSign will piece, for case the that expand and across comment and side sure. and for I commercial we're of dramatic think come them very of And actually business built motion, our increasing of some of we we how into don't years have I you a a don't fact enterprise business to well. on of

that's So perspective.

want In sure clarify your to question. I terms I the make of internally,

direction you would business that and indication from more more it Officer of changes versus terms we're to you the changes, pumped and our our we're up is Revenue really to have don't with us changes, direction, about built momentum feeling we dynamic pleased think the of think think statement we're an more and and I a about the be take If so that that is hear it's on see I we to with and in internally momentum point. and Chief pretty role, dramatic don't decision it going dramatic we the any incremental I with leadership point the think have that a but less how

Justin Furby

Okay. it. Appreciate Thanks guys. quarter. Nice

Dan Springer

you. Thank

Operator

the from your of comes proceed line JPMorgan. Please question. with question with next Sterling Auty Our

Sterling Auty

In up the Yes. pricing typical an functionality? got in there are the Web the feature Thanks. I us on what upsell Hi is the can where and you've enterprise opportunity know plans the site, other but you words enterprise, customer remind is on is terms stratification for further coming of guys. in. that commercial

Mike Sheridan

Sterling. Hi, Mike. It's

So a that. couple thoughts on of

are accounts in at significant you upsells majority larger that think said buyers first come are the provide That greater makeup in than that that time well. if terms I $XXX,XXX, that of at you time. of of look there that as there from look if to one some we accumulate statistic ACV those over are

across that of have do a end year-over-year. mix, the increasing So into that provide ever to XX% enterprise And example I larger into that we expansion drive and is commercial ACV. over this that is we but model really point quarter upselling time think the an

So momentum lot we're of seeing around that. a

Sterling Auty

our Okay. one their group Salesforce example et follow is the partnership is cetera. guess and they extending And with in I versus, the usage Spring to of the are gave up the Spring company enterprise with broader And then, eSignature lot going level expanded bring you interested it. the What you basic capability? of interest to like is expand a to that, doing are that's that something the buy maybe question not just gees, just commercial across -- in the

Dan Springer

commercial try go capture Well, enthusiasm customers. we're let in with. base just of to of first the sense I some trends the they of so eSignature have me for customer you enterprise. that it's seen that would piece really say across to agreement want marketplace. and and But the We've simple that's seeing hard people system to give our the answer And one realize XXX,XXX a our is

a written agreement from think we're eSignature, will it start those as well think to RFPs RFP. folks standpoint system we're for And be of the with obviously, for a with but lot positioned continue we a We already deals. that getting the construct of land incredibly seeing

the again, the a appetite into So I enthusiasm of there, lack agreement. say exception, that that's prepare there's as see don't we to that only that I'd that within on to place DocuSign I understand Gen of alluded broader broader will we for and how a talking do to base the think or were you go see continue the specific the think in piece product our on that step customer eSignature. with signature customers then most start probably customers journey and a some as one system the And being the to And buying easy quarters first. numbers side and group. will for land of come broader earlier move we customer quickly then the they'll agreement of from connect with partner to their be first the for that where standpoint, point is to the data system be And we

the And post components probably some will fall. of sign

Sterling Auty

it. Got Thank you.

Operator

Our the your comes Stan next from question. proceed Please of Morgan question line Stanley. with with Zlotsky

Stan Zlotsky

Perfect. for Thank you taking my much so question.

So actually Maybe up what if I the a very count saw bumped wanted look to follow on on rate was XX acceleration -- and impressive. quarter-on-quarter is follow XXXk. at into new logos very are digging dig lands these what dynamics just we're up of We you which new nice basis signings existing versus over year-on-year to you seeing, mentioned it that what with Sterling customers even much very a the are it of as How around with into how much you're logos. seeing large within that these just enterprise of customers? increase customers organic the you could growth is

Dan Springer

Yes. Dan. It's

a going off you're be opposed alluded, that look and motion if Mike of XX those you XXXk. that And the from fast of to the true, land where customers heard is a incremental in mix there things too past to expand an success. at implemented we're and expect And It's describing the case the how same those the excited those sometimes in the and get to driving of not early that expansion not we chunk, world is As thing important you those about clarity are this opportunities. take get majority got of forward. we opportunity when a there that's off as that over And to But really you majority one start start you've to big. an of enterprise you big customer talk with wins that if don't initial us see quickly have starting success.

system the done Get buy ways whole expand start that get say organization, some or eSignature two to larger and a So it's as footprint. we dimensions. initial and start of quickly. with mentality actually win situations of actually a entry I into additional that is signature, thing. I same core going not two agreement where getting prefer system manageable overall want that think some think start may expanding functionality someone point. the for at on to on people land There case but and sort I look adding piece One of them larger then, of different used also within much says used with to the with in expand necessarily and the And see you're piece and be want early to see to with cases a higher faster then system I just likely so but starting the XXX,XXX of I in agreement build upfront vectors, point, to agreement,

Stan Zlotsky

Thank quarter board clarification That's anything mainly organic in maybe me. the one strength billings for you. that side billing it was there for just a hit large very the time within that on the Got it. or that organic was Mike. the it the in of a head then number? maybe just piece Was there And quarter renewal across

Mike Sheridan

Stan. that statistic quarter we No, we variable can saw as strength by in a of quarterly strength. no be what others the than is a talked billings, guide driven it Yes. was about -- like by bit you performance more driven revenue. Definitely But but

Dan Springer

of lot our I sales of is us that of but credit, a ourselves drove the on giving personally. it this went in I the attribute quarter to company a full calls sales involvement really and lot really Mike The number. rest we

Stan Zlotsky

Perfect. Thank you.

Operator

question comes of question. the Zukin with next Alex from Our proceed line Piper your Jaffray. with Please

Alex Zukin

question. my guys. Hey for Thanks

we there of that of think plus in And nature last got accounts about you that increased perspective? maybe one that period now drove particularly some quick saw in least in follow-up. on of in that the So can strength XXX,XXX from in gives that then, preview for year we was then, the point I've you a confidence maybe just in at -- keep the that should growth the how the those guidance mind an quarter, -- And should seasonality anything pipeline? quarter is type that fourth you the -- talk there a acceleration that time the to there think in about sustainability in this is ago

Mike Sheridan

Yes. I comments; would would be will of level deals some over one, the variability upon make there of that ACV. always say of depending I any customers on the exceeding sort time closing of and timing thing. statistic $XXX,XXX statistic like of two

general that more our at we're the you and time though of threshold. customers size with in base think more I when that up getting towards moving look customer are

to over that's help think sorry, time. second I And contribute sustainability bit part? to I'm more So going a the

Dan Springer

The [indiscernible]. QX

Mike Sheridan

really knows I There's off year everybody had strong we obviously a oriented Yes. a half we're and last coming mean second strong QX. onetime as nothing of

So, reflects our I guidance think that.

Alex Zukin

just teens SpringCM. being as little motion the follow a where into system agreement we over upsell cases And about and expect do particularly then that a time, vision about expansion context a think you saying of some dollar we the expand How the Is see or you're of seeing. is the the trend that? to motion that from activity bit the metric how should deal about up net we based given kind size perspective? of written now up, And Great. impacting of metric, talked the current in should the level. think into How should RFP you that upscale that a

Dan Springer

Yes.

asked think two on I that, perspectives you of form trend another it's about So piece, expansion.

sort see the right aggressive XXX% accelerated don't really we'll around that just We've much enough But but rate And agreement. you that have this we're opportunity. i.e., our we swing, is to period. last side year, this the Spring, long-term range, haven't net the And increases on in same And focused be to I an started if but X say per our that retention sort future. months we really history development in foreseeable will at as then larger sort the substantially. is I to stay that a standpoint cross-sell is tell that where is vectors we're sense XXX%, an around point, we new message TAM the about just aggressively. it the growth rate back those really of I'd -- rate in the get to get initial accelerating guidance. to is the company to with yet. system selling and think bigger. fact that We're lead would really think to going product that's way that think net probably to full history still [indiscernible] TAM of enough that be getting dramatically DocuSign we give integrating come of higher that additional at our TAM in two about of whether we point My for you have don't really as I I started the from think core been of mean February really retention six So

grow different So be we've got more into a have don't to my I That'll you over know perspective. view. time. Mike

Alex Zukin

Thank guys. Great. you,

Operator

your comes question. next question from with proceed Deutsche with Please Karl Bank. Our of the line Keirstead

Karl Keirstead

for two Mike. Maybe you. Thank

for and and you and billings it I've a missed touch billings be that I on assume you X Maybe to should then I for you to we on number. X what contribution mentioned million. follow Q the heard That's would to be for congrats and will it, Spring be the it Mike, that of mentioned terrific. similar The expect First all, did expect revenue you you contribution up. now but that got two would

Mike Sheridan

visibility but into Yes. and for the it QX. just No, a visibility with time spring talked actuals -- contribution this billings to quarter you variable, revenue we one we break into We mentioned of generally I about you sort have last it some think don't out for give track more should I quarter, wanted the billings. this bit as

need give So sense you break looking if for QX to that as to, do you good to at should so. up how that

Karl Keirstead

Got it.

Okay. exception maybe flow, and free were the cash solid you quarter disappointed Thanks. Mike the think growth numbers And this which last. unusual and all given up billings of then strong the with I put

you quote from pressures what onetime Spring flow the integration like? cost, If the Thanks margins to normalized wondering roughly free percent X% the of the a free on lot. X% follow you strip cash flagged, in XQ, flow proximity just just cash level costs contribution might get I'm flow cash you to look out would of to were offering

Mike Sheridan

give a could Yes. don't I you percentage. that know Sure. I

employees talked well all is The with as other thing onetime when XXX relate that to flow their capital like to I things some have that think you out about consider feeding cash investments laptops of free you it.

So in I free changes going think trends those with at forward. developed any all core told, look our how see has and we flow we when business were satisfied we cash don't very

Karl Keirstead

Mike. lot Okay. Thanks a

Operator

the your with Walter proceed Please question. question next Pritchard of with comes Our from Citi. line

Walter Pritchard

guided happened cash levels following bit was as my questions, quarter, of of you what on quarter. we Couple about developing? question, forward, onetime forward where takeaway just quarter into next the priorities were investment the investment here this given from of thanks. sounded you and on and of we Karl's you're I Hi, pressures going on in for the you some year thinking next especially Can how margins on up about just guess levels flow a have talk look

Mike Sheridan

'XX guide Yes. fiscal next outlook. We're obviously quarter our going to

impact on think with Spring the I time those margins first bringing move direction doesn't those and consistent really margins leverage model. that on to a our to us integrate in more allow investments the for the for example opportunity gross it

fiscal year, in we an business. are the dramatic you've don't be to or investment anticipating fiscal model of think going terms the the other to part change to next we obviously to leveraging as that a ongoing integrated into investments Spring opportunity revenue we're There acquisition, get today OpEx in but requirements of costs. here think I investments of seen. capital don't have huge think it's going to cost do types that the we be coming for always of and That's both the integration I the quarters the sit investments.

Walter Pritchard

then just onboard? of incremental relative you reps segments bringing sales seeing of And wondering you are the Mike. terms sale in to Where Thanks are follow and that business of targeting. you're productivity the those reps, up different side. on types I'm

Dan Springer

One as about investment of growth one would our in sort forward that that will the is, productivity, think really say driven you and sales our I the new the we're the year sales attractive we've marketing better we have just of are which factors. But if the go scale more drive getting we to enhancements Well, at for ensure productivity rates. year hiring continue by of pulled the into process as productivity this sort reps. we're enablement to right get reasons getting to two that onboarding and is we accelerated

right get more with to scale. second allowed we're bigger, that The we get as specialized thing

we get have and so vertical ability that buy those have the level have productivity. customers size in into by and sort of to And therefore them populations people efficient more to at effective we of industry and of onboarding of after bigger go that more each

investment. I particular see the in of I say to where most don't them on So it's to that better excited particular size growth one little one that make that's say better seeing a getting benefit. I board us continue just the We're has or of the we're bit those -- which vertical. across all don't

Walter Pritchard

Thank Great. you.

Operator

JMP line of comes from with Pat Please your question. Walravens with the Securities. question next Our proceed

Pat Walravens

there's vendors electronic more; happening out of talk two, low One, Thank throw versus of Congratulations to in is you with a not. a them signature vectors, when different? cycles you. you bit more couple it are are then, seeing a hear thoughts. it great. bit we driven lot your the them? love And Dan, competition little about API Oh, and How Hey, lastly, that have end I'll a just sales what's Adobe, and space, seems little guys. can like

Dan Springer

Yes.

launched on still the as specific standpoint, you about, effective company in your Adobe and they're discounting there. primarily as us. we And mobile because environment. wonderfully rare. aspect in with through continue of at the compete very, API they take we've this from think opposed when our other to transactions as call to great or are significant are as see an where competitive win not API Mike being of but so walk they're the ones past, now a information we they're an a the in asked them losses successful being they know when very vector, -- as web and previous segments. So all we competitive approach changed being shared logging from From Adobe bundling through XX% business see looked they of someone a as completed you We do into as Nothing's

mind, to in the players developer We on small stronger relative see continue Keep the seeing more if you very focus next players Adobe, great dramatic move it past. we're our been being past the when phenomena sort of other business. the a to anything And that our strength than in there community, and step very, not even in of dimension. has are

Similar our making one strong that something and dramatic the performing So side successful inroad that sort for would to on of a on us of to so us. have front. probably be question. that take we business non-direct think no someone cumulative answer to selling well mobile about web On business, doing standpoint, incredibly your low-end quite particularly of for side. them notice we've seen a There's if is

that individual strength they and if And people the not cloud just sort will those of about other growing there of couple on-prem small But scale last particular to one in convert haven't U.S. when some the legacy brought may vertical. as our, to really in particularly players, tiny of some the quarters some to in attention an us really interesting. countries outside actually the left and have in is out there's their my in idea it view a is talked is DocuSign. players I So players well. past terms you convert the the is the an will Pete be other of question is and for sometimes that only had we

quarter but noteworthy. attention last we threat be was competitive aware through appropriately anything this not So paying and that seeing to to continue really

Pat Walravens

Okay, great. that. Thank for you

Operator

next Our of America line Bank Shankar question Subramanian proceed Merrill Lynch. comes question. from Please the with of your from

Shankar Subramanian

Hi. Kash. This for Shankar Thank you. is

year customer in quarter equation, next the us that, see net a the bottom On was tailwind of how terms could you for of new help the you any this help, Salesforce Dropbox was side customers? at and do much how net of or understand new

Dan Springer

large we in some don't -- the there. the working co-selling power of SAP. they bookings I about like the we volume. that much SAP RSAP in huge as It's with customer there's we've we into in Absolutely. that Both we the same point that for, do for folks growth think couple that product we in important that. as we've is, segment customers think about from of work moving of and account of ways. that down customers have larger you're partners, small And see get mid-market side the the sort not growth of our that and different opportunity. where we're that opportunity those with at hugely SMB, specifically there. talking us see large we of Salesforce. smaller capability a believe I creates and in when see It's that the built we billings built largest momentum well with partnership an account on as CPQ Yes. some side that the commercial to where both a sort partnership we of sort We look revenue in with flip small opportunities very into in a go of partners construct. When want sort like to customer at for for we'll I'd growth driven big out we important, of we to hugely to commercial that Salesforce Shankar, continue the amount I leave side tend mentioned DocuSign Dropbox, we SFA that example with core see I providing now world opportunity to as you like great possibility the primarily And But the the significant a companies see asked integrations go-to-market but the out us. being by And look would

Shankar Subramanian

still you Thank internally. it. you're be M&A on and are [indiscernible] that look and that your add other are forward? where the sticky as And Got platform going investments obviously, to What your when then make of the investments acquiring focused invest you them would the outside? What versus what from are that you given need plan internally then, as spend look we as more some at IP that hiring, see this well to acquiring you. on at doing R&D the but -- features there it front,

Dan Springer

Yes.

development integration So is look I a broader deliver of buy. we that versus at we've we a want sure spend always those overall this from Spring. of and aspect that software value want internally. asked dominant sort build build fantastic development buy ensuring partnering. many R&D the that going that companies how our think we've come will to we that focused delivery on new ecosystem product complete talked buying, today said building as about to both in our bit market that make to customers that's do partnerships we will off when that as And we to like API, built fantastic product of that our to why to We and pipeline we've well think solution and want yes, leveraging of trade marketplace properly the integration agreement of in be strength the got versus to system But the you a a product also part bring overall ourselves key incredible for we're we In about, digest the to specifically market. the and will this very prove for we

way, build the vast on everything your an say prepare of of which will phase. the from in would everything come or majority expect of Sign vast, us terms Sign specific off should portions building increasingly of you internal which I question In

see you'll phase manage the focused built post infrastructure that where when on us be, I and say the we to from different would took get about. functionality we've own think from Gen you DocuSign more applications build from to product places see some the to-date. I'd phases And building sign our some buying and us might the later and talked Spring the that we more you where like

we definitive would build flip. some think have where direct of don't to sort about you we buy. the would of So That's how difference versus I

Shankar Subramanian

Awesome quarter. guys. you, Thank Thank you. Okay.

Operator

line comes question from Please question. Daniel Wedbush Adams of your proceed with next with Our the Securities.

Daniel Adams

growth a two Hey, international. of on and the about just we quarter. next I talk about four over could international there quarters? quote should guys. mean trajectory Great like lot the question, how to Again, just think you

Dan Springer

Yes.

opportunity XX% North is very As in earlier, international. at when our we you we over we just of business on mentioned of look America. our number opportunity, And growth focused overall direct start thinking if and as bigger significantly it are The is today get we on. are that us it that they outside the companies one for and focused be have than laser scale software traditional to is North America larger about bigger

product continue outside but That's once those that we're about go really, and expect of an of taken we Australia in Australia have focus our focus come to to we the to that our focus them, in to Now smaller our is be really scale want into the completely to as come. we know, with web Ireland it our and attention. for mobile additional try feel have not business. That's how countries continue don't DocuSign from Japan, And growth start have to going we Germany, say We're thinking internationally at DocuSign ones true year those obviously on the which and direct business. focused look faster and in you growing success that as to go that's with geographic in France, of have… one. positive focus. is a years new and the then there, we we our fixed customers U.K. to Mike, Once you'd markets America America. North Brazil core for aims and countries to than expectation that base, bought be each XXX about, is we which we'll at nailed and It's off for North gotten is bookings substantially countries are over case significant feel majority everywhere countries terms approach is after. but let's I the

Daniel Adams

building quick position and sort versus things maybe so tuck reiterate obviously like strength of follow-up, you organically about a feel a you ins Great. do are think of how to guys And things how about just into just in you going like, XXXX?

Dan Springer

think buy to build of discussion sort I you're the with the going Well, versus Shankar. back

absolutely be We company we was Appuri. Appuri excited And could a really capability. wanted year called that may to We didn't even we about bought a ago how the a have business and recall at knew was was functionality we a just customers over to build. learning machine company on would they it that you build. We incremental probably I think expertise from probably the the our that we type But and be tuck-in overall components with integration a that we because platform likely important. has focus the believe so uncover reason company to four something the customers that is development and small actually if team for whatever is some functionality developed more really we will and time time, fantastic subscale the and that bring time. in might expectation our capability work clear

Now sort opportunity of we phase is learning realizing system today, machine expertise their in tuck-in after of which big Appuri, that the a manage we're our was of agreement.

portion capability definitely do we around that talent tuck-ins sort or I us of as what So acquisition could did. hire being of see a

Daniel Adams

Thanks. Okay.

Operator

we And have gentlemen, to closing end turn call management and back the session. remarks. Ladies like the reached would the of question-and-answer for I to

Dan Springer

forward look again time out at talking We so much. on the the we of you seeing Thank the really road QX. you and and appreciate to you to guys you taking end

Mike Sheridan

you. Thank

Operator

today's conference. concludes This

at You for Thank may this your lines time. your you disconnect participation.

DocuSign (DOCU) 6 Dec 182019 Q3 Earnings call transcript