DOCU - Earnings call transcript Q3 2020

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Operator

Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's Third Quarter Fiscal 2020 Earnings Conference Call.

As a reminder, this call is being recorded and will be available for replay from the Investor Relations section of the website following the call.

At this time, all participants are in a listen-only mode. A brief 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, operator. third quarter Good afternoon everyone. XXXX conference Welcome earnings call. fiscal to DocuSign's

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

December Global will I'd in on we let we New in in to and started, York January Needham X that like Conference be get TMT the the UBS Before know everyone participating York. on Conference also New Growth XX

As additional make other announcements. up, events come we'll

Now, let different. cause are our they and to are believe of we our may statements me assumptions and performance be uncertainties materially subject and that to reasonable, on but known to some unknown statements our today's expectations risks actual call forward-looking forward-looking, everyone remind or are related results that these

factors Please information. the risk read statements based filings with by these to statements assumptions forward-looking call. on and of no together light date, events content are future our with assume as to and obligation SEC consider of law, required new except Any in update expectations this the in and or our we the

as debt During and Non-GAAP GAAP compensation of our this intangible issuance call, stock-based and we costs will measures. other measures discount and financial acquired notes amortization present applicable items. assets, exclude non-GAAP financial expenses, of from special amortization

for our We in to isolation all and analyzing In to considered not These or measures are count you information substitute non-GAAP intended performance. we and regarding free addition, non-GAAP billings. encourage or cash GAAP flows weighted our provide consider share to average be when results. superior from measures

found non-GAAP of figures, be information information and release, on quantitative investors.docusign.com. comparable refer a most our reconciliation measures which at please to those can press again website and regarding directly today's GAAP our For

over turn now to the to Dan. call like Dan? I'd

Dan Springer

a going year on vision positive for we've one, for the that of everyone our quarter our for Agreement today for updates two, Cloud results DocuSign to by public core to afternoon offering; I the business, hand to start call. brief quick which I'd good demand two with and last are execute open and since our continued a up to and it discussion strategy Mike and for some financial eSignature can we our driving QX. the deeper how our Anne Thanks, on will then of financials, after we like how led over recap third areas Q&A. against

with So third first, some quarter. let me start our comments on

help adoption systems growth that within factors. reflect many ongoing the progress acquisition modernize those As solutions by use the primary our of development of know, believe and all QX of expansion of you across factors, three new existing increased We agreement. customer and driven customers DocuSign's base, of is new their our case companies results

of of income to eighth with basis this quarter is nearly non-GAAP $XX are direct. and again customers our which on positive worldwide, X,XXX a of revenue billings approximately direct, With demand our to $XXX acquired for which we Cloud and year-over-year Agreement were year-over-year $XXX million million. were paying of of number We XXX,XXX the XX,XXX operating new EPS. non-GAAP roughly total million We to by profitable grew by strong XX% XX% DocuSign XX,XXX customers, bringing consecutive

into quarter our the retention our to showcase rate largest also results these a we cloud head strong suite uptick positive our demand for solid dollar We of remains as net XXX%, saw year. in the agreement

our helps when It continue we leadership year went familiar Agreement global our now, I'd and vision. QX. top you're and to laid share companies the takes penetrated. $XX in Next, how vision time, reinforced our processes, which we and articulated execute last And probably is are still of how first billion We we this opportunity Cloud connect strategy we the business during we progressing By and like and X% only at signature and with IPO. on eSignature agreement both before to about core the public builds out, place. automate discussed that on importance after their clearly our eSignature of

showed also the for expanded potentially how We rest TAM could the that double of Cloud. the opportunity with Agreement

we've have We the that September acquired months, to past XX several operations. on we technology vision. last talent line year and into and SpringCM our integrated steps Over in deliver its taken product and

specialist products and product then own to together solutions Our expand team all cloud additional partnered brought resell our new with companies cloud agreement agreement We this on under we that built development umbrella. select several the and delivered offering.

than more XXX automate products prebuilt Our helps and organizations integration processes. over and that dozen a of suite agreement their now connect

And of of that out our amid eSignature collaborate with device We systems integrators like is all responsive adapts the we Agreement signer and where Simplest the to Spalding enhance building functionality and this to Cloud core the Agreement ability size also customers. and continued joint to of who our have with type like the practices signing, formatting ATG, drive Rich, offering, success for automatically the features our are it’s using. broadening

that and cloud products, the companies and In CLM November blown it is first yet optimized negotiate, announcing redlining we in this agreements, accelerate just initial and for full new is continued generating, specifically the momentum the QX ecosystem. two of by don't version launched the need negotiating simplify we DocuSign process salesforce to helps agreement

builder, enterprise an repository customers. and CLM. upper targeted negotiate DocuSign Spring and mid-market CM end-to-end next library, of an is second of workflow The flagship generation all clause it includes is contract a is the centralized it DocuSign product, capabilities a This plus the

Agreement journey. still the early in stages our of Cloud we're But

QX. our in their had to agreement some virtuous We expansions by are progress eSignature. pleased with even date. more of customers motivating turn This cycle By which is expanding customer our to automate more processes in portfolio drive interesting illustrated we we're

in operations emerging for on global size business departments and commercial Building sales, base years. expanded This for its and success, DocuSign in of significantly the our company legal. CLM in relationship. technology the leaders coverage QX many the of of both to transactions, their the and that used increased HR has commercial use CLM ridesharing One eSignature

U.S. its commitment other year made union eSignature by year use and in This company our Additionally, API to systems. to also its eSignature this QX increased units large also integrate a into we'll business credit evaluate and usage expand additional a for XXX% This potential to next plans drives departmental to XX integration is A usage. in from Cloud drives provider our into which great CLM company expense, analytics greenhouse. a revenue use of recruiting Agreement the expanded leveraging mobile DocuSign turn software using with how example the HR, its eSignature implementation. greater integration of eSignature

when I agreement have bring business we close, public, a the as process, I strong eSignature to went our want a to a So reiterate, we we and for vision entire to had my remarks response in on offerings on be the platform customer has strong. and next the unique category progress, are vision to been we create Agreement our a executed I and believe that Cloud. a big leader Based position expand in

But quick team Mike, just executive over also two to wanted share I before updates. to I hand

we talked us this issue that see six-year DocuSign. mid-career leave, him year. of appreciate of break middle in Ron impact we our though next continue The to decision, his a to have incredibly during he's about And the we're the we're sad he's at the really Hirson, focus health going be transition length innovation and taking I first a great to his his proud Even on team Officer, tenure. stay support Chief family. with through and incredible Ron will Product is his built to at

new a she join security, role. Airlines security, Trust out and Emily us industry our thrilled on. in is San someone and for CISO Heath former the update of of role, the and have creation has information Security which Francisco application is and Officer Emily's Chief office. pedigree incredible Second oversee an InfoSec physical in Emily this vital taking will services to of our We're trust company pedigree United

So you QX And now walk us through will for joining Mike today. me. that's it the for financials. Thanks

Mike Sheridan

good and Dan everyone. Thanks, afternoon

amortization last first debt that financial include a compensation, and ago. As having this periods transactions. a payroll in the exclude of SpringCM stock year, on stock-based discount quarter from employer tax intangibles, Also will acquired year SpringCM of comparable results our in September employee is reminder, amortization non-GAAP

growth quarter execution, solid strong Third reflect continuing delivering results while profitability to line and top Our success. customer drive

million Strong billings million, to revenue XX% Agreement Total of four-quarter demand from solutions subscription average growing international rolling year-over-year continued grew year-over-year $XXX on to XX% and eSignature increased $XX $XXX portfolio million. XX%. of core our XX% coupled Total adoption this revenue revenue million. Total quarter. to rose broader Cloud was our growth products with a $XXX XX% to grew over billings year-over-year basis

drove XX,XXX This customers this We strong American quarter, business. our base added base. base which increase total enterprise and our of a our year-over-year in particularly contribution brings our from were direct We customers. approximately commercial in strength new installed XXX,XXX to X,XXX XX% North customers notable with upsells with into installed roughly saw This customer direct worldwide. XX,XXX

range progress to our combination to our these CLM in installed DocuSign XXX% of factors net upsells historical see of this also our within continue XXX% of retention XXX%. quarter, The dollar We into increased base. to

XX% ACVs XX% with margin greater of expenses Subscription operating ago. quarter total the customers. for XXX XX% a for XX% than quarter last compared consistent of ago. million with with the year year. gross or quarter total year was or was with were of a a revenue Non-GAAP for Customers XX% total XX% grew $XXX,XXX margin million non-GAAP of $XXX Total the to third third year-over-year gross compared revenue $XXX

levels returned With quarter. normalized G&A to the in of the settlement litigation RPost the more third

of cash $X $X million profit compares prior to flow increase non-GAAP a or a in fiscal XX%. Operating third out as RPost operating compared QX in million X,XXX compares last of negative Free a in to operating loss negative a million the QX. the at margin QX in margin in in settlement million cash XXXX. this quarter X% negative year. with with $XX Non-GAAP paid positive employees, year-over-year quarter, X% We we flow was came was negative million, This or year. million of $X $X operating the $XX ended operating the

As estate cash litigation anticipated, impacted including our quarter. investments, flow the the real Fed Dublin with datacenter RPost in our planned together in payment and our office

fiscal XXXX. we guidance $XXX million revenue $XXX our to $XXXmillion million to of for to Turning QX in and first, million $XXX estimate

million expect million $XXX XXXX. addition, billings to $X.XXX for billion In to of billion QX and $X.XXX we fiscal in $XXX

for margin in to XX% are of fiscal XXXX. QX XX% maintaining We for guidance our gross non-GAAP

XXXX guidance to in and XX% the of of to of of in range be and range XX% our non-GAAP range expenses, XX% revenues the – QX maintaining revenues. the fiscal of we the G&A XX% of marketing For XX% and or in in XX% are operating revenues of sales to

interest non-GAAP our of the other including And $XX For million expense we and expect of we to fourth for associated $X milllion million and convertible non-operating with to income interest million. income non-operating expect quarter, non-GAAP debt. $XX XXXX, income $X interest in fiscal

provision of $X We expect XXXX. the approximately $X the million for $X million and tax million to $X quarter million to fiscal fourth for

expect XXX of XXX and fully outstanding million fiscal for weighted average shares QX shares to XXXX. We diluted million

off and our strategic XXXX summary, half Thanks Q&A. a in fiscal great joining second to for are and In we to to today on can now again of financial and look-forward we turn goals. start us the executing

Operator

Securities. [Operator Instructions] Our Please comes JMP with from Walravens go first ahead. question Pat

Pat Walravens

you forgive internationally. much what delivered to how saw also to And the start anywhere point and do of Hey, commenting or love a Okay, is this hear then any very thoughts channels during out macro congratulations. noise you the Dan, there great, and your I'd mind from just on sort domestically quarter? weakness on you thank of view, background

Dan Springer

Pat. Absolutely

different haven't very macro anything standpoint, we a the from really So seen geographies. across

we lot high things a of are that One be I'm DocuSign ROI our it customers economic about we sure for talk understanding best not initial with the change product, with continue bellwether the products services. we – any not the versus I the spending this think our our a will sort few tax and that haven't is a last play be of theaters would quarter in seen such anything to across which for market quarters think really cut, strong it's would of the different be but and we

requires Spring’s more to I systems more product, going have sort it's strong Cloud of where that's in market think partner on work very integrators good opportunity original of of and of we've And IFC and and the then DocuSign strength lot CLM and of players more side sort we've indication particularly systems, become in really particularly an relationships with the much integrators the overall the interesting, broadening of from standpoint, channel focused with in of on we of we and have a the side terms both, Agreement the sort a statement there. [indiscernible] seen also progress integration channel

about So excited there. we're super progress the

Pat Walravens

Awesome. Thank you.

Operator

from with Dan next comes Securities. Wedbush Our Ives question ahead. Please go

Dan Ives

Can starting to of you growth in international what what there, like it's mean Thanks. I of terms seeing you're in thanks. Yes, the of field? terms seeing you're feel about there's inflect talk type really in

Mike Sheridan

Hi. grew XX% saw over I'll again quarter. growth start. we globally Yes, internationally good this

you where of I say we lot course, most as of compared contribution logos, can of the that customer but a that of to is imagine, So most, higher emerging as new shouldn't a had upsell U.S. the well. portion it’s markets

U.S. good CLM growth the of in seeing terms we're CLM. In on

as as are much traction have haven't internationally domestically. We also we internationally, we focusing made but

Dan Ives

we strategically be, months. does three, six, you the terms from feel more going terms the nine having of upselling, the compared customers just of of cycle see just you changing, and it's just talk Thanks. so last a it can obviously, how changing how could And are the may conversations Great. are maybe to talk let’s maybe enterprises, conversations then with with over numbers, things say and sales just perspective, in of now in more type you type about just you're

Dan Springer

broader question asking dollar larger at beginning uptick those about majority seen of Yes, eSignature still nice we've And areas are I in elongate the and deals. that to the about that the would, talked changes, expected the we and there. think a continue overall really has vast for people this heavy is don't to our and have particularly opportunity some the think remember and to sales that Cloud and I mid-market overall and vast have we upsell going conversation back I because of seeing Agreement to And a as that so think business I retention in as enterprise seen changed, to think majority. in your but nature where year, some cases like conversations lead cycle that broaden we're net but we're

were conversations had quarter to a we each In it's some some out We out. roll the is also had a pushed other longer the that to but pushed very when terms phenomenon the were quarter, of thing we is sales this pushed and one beginning next interesting into we're get sort get into some that from now get that then from next quarters few the out. deals quarter and this, we netting and one to of cycles this

that like So forecast move we our we has as through feel understand ability year. improved, accurately the to and

Dan Ives

Awesome. Thanks.

Operator

from J.P. Please comes question Morgan. Next go ahead. Sterling Auty with

Sterling Auty

quick the opportunity you did you and the and how how is do question, that in given Thanks, Yes. track see there? federal

Dan Springer

a big a that think lot time on, So focused think be last of dramatic continues very federal exciting areas one time I win. because of a the we spend very we it's ticket we to big had opportunity,

like always relationships. quarter-out had core the more It's really those will quarter-in about our past. As that time-to-time, growing business come those in lot a core solid but we said, from we've

see we're we that thing about investment it's and still have One close its think that we using we're platform, early, to in in active. progress customer is is we the our but continue see that to it's talked now excited vertical. first I IL-X the a Mike lot fact potential, think going not that the And indicative, quite it's there, we that progress full have about to the

Sterling Auty

Thank you.

Operator

Zukin Please comes question ahead. go Next RBC Capital Alex from with Markets.

Alex Zukin

Hey guys, for taking thanks my question.

sell customer similar your and SAP big to you opportunity at to the if follow-up. got quick one, the just base, product Dreamforce, I've there the is that first what's of within that opportunity Negotiate announced some how opportunity an and be then, at announce I your with Negotiate like maybe something maybe to So other set look a partners

Dan Springer

Yes.

So my the we need customer nature solution about don't think is just Negotiate, necessarily the position of complexity you I scale, for doesn't says, just it, those that capabilities Negotiate that think CLM or if built customers. that from full it we entire need so business I

we initial reception for Dreamforce, they they DocuSign to with announcing piece to take needs. significant leverage demand love broader pleased at I of it, how a a cloud agreement side, we're very amount when people the had we was could there of just the partner from that really And think on with eSignature were working understand their

So we demand primary we see feel as necessarily kind focused good and that’s smaller, of there. on about will said, that, mid-market where that I be the that

large negotiate number but customers, our not I see think we’ll are largest So successful. what there primarily customers. be of If

across mind continue really properties, answer places of develop helpful. where of your and we negotiate capability managing sort other people to and the the then processes question, to sales one yes, specifically in absolutely, partners. their and that’s portion to important is want their CRM that obvious most salesforce Keep SFA that And are where very

those to to think do Agreement where overall DocuSign it’s we capability want Cloud add So their really be as Solution. common into people the a to most are going partnerships,

Alex Zukin

consider and Perfect. then factors next And from different tailwind dynamics then you you’d the question about that the or quarter impacting kind comment as durations. guidance, look different pushes prior periods with and Anything billings we in quarters at favorite on as Mike, of both how the just billings, of headwind pulls of think as a on should that for there quarter we of any well? deals should a obviously, kind with topic either or

Mike Sheridan

quarter are There isn’t next tell changes and underlying I the Yes, business. would dynamics same. billings quarter I in any this say you, would the for Alex that the

the we’ve as a talked better really I you look XX to consistent quarter our XX about go guidance, it’s and QX over QX, at with you to if QX view that. you at to you average during think and rolling time look fourth to If gives XX

So subject more that kinds look those QX, that of was we’ll timing can fluctuations growth at continue it’s have have I terms pretty do if And think of nothing to where of to do to impact factors. to I statistic timing. it quarter have with consistent with in a

Alex Zukin

Thank you, guys. Perfect.

Operator

Zlotsky from with Stan comes Morgan question Next go Please Stanley. ahead.

Stan Zlotsky

for good guys impressive most of which come are guys, a to I have the for back results because Hey and Within you there. to afternoon, very question. my you traction geographies taking seeing international, Mike. and thank international follow-up quick Wanted

Dan Springer

definitely coming across are you in to of perspective think in strong Yes. areas to see see see, internationally most want you’re investments countries talk going in about Canada. had countries, is our as set which in year success areas enthusiasm. what of the past same UK, There the of sort our focus strategy board. core My focus law common I been more sort But us see it’s U.S., the where like the know, we actually the had you’ll where on we a our will the we where that is initially we’ve of you Australia,

seeing the – law actually on now we’re in Now, but civil top of common that. the

and So market and traction. that Japan sort Brazil same that like France and Germany places of

think board the think how consistent the at and Mike if we international. that’s across you I different don’t know it, So our perspective on I I is it’s view any but have look

Stan Zlotsky

billings. check a And more then Mike, one Got topic it. on quick sanity of just favorite

about How into revenue billings up result Following and impact should Alex’s on was you. and in on retention net an heading revenue the there. nice net QX Thank retention, think quarter XXX% very a on beyond? we question, FX,

Mike Sheridan

Yes, Stan.

change and that also to perform quarters this as starting it that business proof or in is strong impact I for We that than to a being quarters with mentioned a traction where is in able at gain in But material range it’s I up, feel those it’s a any really quarters, broader contributing not somewhere mid-teens, us. overall, to that. point takes a of we think that our it very offer couple now, is on think very factors. prior we’re of can less I’ve about have for FX bit little that. the us some bit XXX%, on to we’re said where products – and right going right portfolio range. continue good I mentioned The trending the So I’ve happy

Stan Zlotsky

Thank Perfect. you.

Operator

from Davidson. Please Next question with comes D.A. ahead. Rishi Jaluria go

Rishi Jaluria

Hey, guys. taking my questions. Thank for you so much

proof-of-concept maybe terms the being and to verticalization in lot side, mortgage on higher I idea obviously just massive your level a of in the First, than revenue. of you’ve vertical estate terms more wanted solutions, a real of gotten ask of is

get that thinking future a to wanted follow-up. have then you’re about not your kind a sense footprint you how verticalization to Just potential may increase a and got massive of in verticals for today for and I’ve footprint

Dan Springer

Yes.

So is specific to for core Rishi, a example verticals, going to us. across platform CFR have software certain XX of to applies and first right. the Cloud. But looked and be which really not you’re great sciences around said, foremost, at come. business. absolutely sort DocuSign of for side very had and Agreement horizontal think certain development that specific verticals We’ve life is specific been additional its We platform software is drug develop successful think that’s a for very to that Part horizontal this software it done have software cases years healthcare where development, we’ve where we use And opportunities actually is I the had at overall a That eSignature. I just

are build, so with could integrators us I with in additional much see all to you’re working to to verticals separate But and how going solutions systems the bring other we around general be broader go-to-market think components really we continue to our the verticals. on software, what services, and but how focus that not go-to-market

vertical in of which a us one not terms that was pretty about pre in large opportunity ILX. of question the your about sort We placed today. and verticals, a FedRAMP particularly for broadly market the little government is talked a federal, call additional earlier in as new on prior And we’re

the how piece in and opportunity would of would that’s be we think additional we But a a of, construct want we platform on relative to I focus forward. might be example this really built to to an I the really business that’s going growth vertical again, you have horizontal where it’s So be see that substantial today.

Rishi Jaluria

side, season length been wanted helpful. during seen about wondering That’s disclosed then average this Pat’s to more on in We’ve the I up earlier you on shifting it. macro it’s months earnings a couple just of contract terms basis. behavior. annual. follow Got customer buying companies XX And weighted they’ve SaaS in question highlight and months just maybe to on that dollar typically monthly know past XX customers versus to I heard a

So that more a no we on can anything like the seeing of or Thanks. on sense numbers but outside, changes advance customers the preferring prepay I is to just that get wanted you’re to in anything that. that not

Dan Springer

We really haven’t.

we your to me, our pulse. it’s with believe try if that to about. different. meet don’t the We I As it’s earlier on marketplace, the macro hope we have not our finger point sales it’s see understand talk we in to question, we something leaders, something the

in at you any think specifically way. you significant period contract and we’re as we’re said, haven’t I of look changed we not when seeing do, anything just, significance the any that but

at this seeing else to anything macro business So and my have you point, view we’re add our to really environment. anything not impactful in is the Mike if

Mike Sheridan

have do We billings. in really as multi-year bill for out deals cases. quarterly or annually. monthly the allow to we would still to the business rare today, a the underlying if billing think changed. model just like I look where those think customers forward do for push we are that but at I that And that Yes, haven’t patterns in don’t you that reminder, just they summarize, there

So the business duration been stable. in the has pretty

Rishi Jaluria

Thank helpful. you, that’s Great, guys.

Operator

comes go Deutsche Please question Keirstead from Karl Next Bank. ahead. with

Karl Keirstead

traditional to billion Hi, more SaaS point When the to this you the seeing ask little SKU, a for a of for the uncommon of you put XQ percentage about past year start XX.X% XQ. bit Mike. question like as billings to in of your start guide companies. same, I’d a you billings, billings. exactly it’s a moving for like I last up It’s at look decimal $X total when seasonality not year revs as

similar give any bit going next know billings SKU fiscal I the this comment, when of Mike. when for a to us more curious just I’m on guidance different we you’re year, XQ seasonality call. not model XXXX But So slightly

Mike Sheridan

an look say would that I would – Karl, change. inflection like if nothing

you’re have probably growing think underlying business to time I natural I going what year. a you influence and of of this SaaS dramatic see from of changes forward, the sort that wouldn’t saw right, the is seasonality, we make the over any tenancy but will

Karl Keirstead

And you’ve through Mike could it a I to that’s number and to factors the little follow-up. XXX% attention indicator Do went repeating that that quickly, mind highest you went significant public. just posted I’m I you mind going but that retention should Got ask since be it. contributed the you and sorry, that a that you paying net because think be why we wouldn’t a back do number, leading to?

Mike Sheridan

That’s good the business just this in our fair that strong think it. for – was said Well. upsells time really something to contributors in us. What not in were very I quarter I North was And strong biggest particularly a spend do quarter commercial amount pay very in discussing that to think to. a strength we you America, to particularly attention it’s our is why a was strong want indicator. and America. wouldn’t it’s we I of North

U.S. In addition to the in we as base. CLM continued upsells traction that, I mentioned into primarily, also increasing with the good installed of saw

tick those had So combined a up.

seen several and range to those all XXX%. norm. what that can kind that as strong quarters somewhere continue from we just and it consider we And in should you’ve mid-teen of expectation be My you reiterate strong business fall the and believe XXX% as quarters, quarters, now that what last ranges within continue an have stabilize standpoint is not view the of think to we is right in to within the we that. of performance into have visibility I

Karl Keirstead

on Okay, upsell congrats performance. And that’s helpful. good the

Operator

Evercore. go with Next from question ahead. Please Kirk comes Materne

Kirk Materne

opportunities. willing congrats thanks that product I’ll the just meaning very kind I’d the take to opportunities across taking in at discussions be point Yes, or where the sort least when any on sales customer in the versus that’s sell more And may today. that this level at you discussions add much within within those are CLM a time, quarter. any upsell verticals also there those frankly had my commonalities originally. of product may interested going Dan, in just meaning you product interest or on look that higher to Thanks. of or more were base and be eSignature business customer maybe be more the that seed you level Are the become

Dan Springer

Yes.

wouldn’t say demand a We of it see a there the different across services, be really have about it's maybe place earlier, broader that the it's, we their verticals, one tend our to in But and focused it's sort CLM CRM. process, big something the the sales negotiate business that that we and for than of most demand the less vertical does on strength So broad-based standpoint. I ecosystem of in I mix, area the thoughts. couple eSignature areas telecom, build of yes about which people with our some is is capabilities, do we that either process. probably see process, some for a vertical because first mentioned see financial did, as of very more from government common Salesforce dramatic out

sell to about in. we how your where go-to-market and second then And we question

would can I be senior traditional the involve more with signature that work insight think maybe get there sometimes systems a we could to so CIO, with kind about about the CIO you have more FFW, our engaged few product. because an being groups. it's talked think a or because there multiple a similar a little aspect like get additional your case to might – be service standpoint, the very of to But that and that broader people. before because We've and legal I set biggest about customer oftentimes reviewing this of more component little to bigger integration integration that talk or professional is effort from to be a we a speak

but slightly different. higher sense push that you us I to wouldn't might I think significantly give it's that a the want organization, in

that's and System to talking leaders their those is really it they're of DocuSign. Agreement, or are why think looking business functions I units core that modernize to businesses, of

Kirk Materne

quick between the maybe anything, That's sort sort we forward. And don't sort I cash should consider gap in mimic of be that I I on to should year too right you yield guess think year-over-year and – cash cash this had going just think would the for want anything next a most helpful. flow margins of this year, forward, part, longer-term there on quarter, that Mike the next and we that essentially sort then create should about about Thanks. basis specific yield realize on now for was but I as about of next don't of should about but flow cash flow progress you we one going we a think year? operating flow one how for settlement over it and really

Mike Sheridan

Yes, I would in on say on long-term that you we're past, target of track XX% reiterate know what think the stated to margin. just we XX% operating model to we the

should are it about time, is a flow business cash about think over SaaS-subscription and to way bills the that we were just do precede because as upfront. before that talking we we think I

there above would margin revenue should overall a cash percentage in operating on the come legacy would be and of So that expect indicator lag which flow that. is the then yes, you the

Kirk Materne

Okay, that's much. very helpful. Thanks

Operator

from Blair. Next go question Please Bhavan Suri with William ahead. comes

Bhavan Suri

this Hey, wanted I And first job taking thank congrats you also and question. product. my there. everyone fantastic on to the analytics for quarter like on touch my echo

understand think So opportunity using there a do and about the follow-up. to TAM? timeline have. does you couple the a what and to use know actually, to do of that love for got talked questions SaaS of I cases. more and of and lots I about offer importantly, You've quick the companies you your that potential How data analytics sort just

Dan Springer

usage, start me the multiple there's Yes, these people understand that we operational so the DocuSign let very reporting, have use an clear, indicated a using understand organization their question analytics, in not the component. components I that's when off really advanced on administrators people we as are and around your say really analytics would it, and are what offerings where talk about so analysis effectively are DocuSign of helping be that to

extract agreements say analytics and valuable have really contained to for I we to people and type agreements core would product. better information my about their getting that's running now. people business we're information opportunity business and our we my opportunities where in for what them start the is run is help potentially have better this Then their again call What

them sort they Where we examples the about then agreements, about to bank that's significant very of would if our had now we And like to think that agreements do go can agreements to to this they're done and access of Intelligent prevalent away, going get we've I capability partner and then made and more go efficiently information some as a those to the analytics. now people of again what about business and that, their find we they Seal, effectively System find on that to labor the search advanced ability, or that the an really for very company back do was Cloud with the LIBOR Agreement have and they the manage they ability DocuSign got and and my use in them recast gives search been advanced overall them an realize all would quickly say, Agreement investment were that call capability. one with trying gives of my customers to ability be

is will, of our that value look out at to there for us. we So, we I an a components those are think continue information different getting think saying it tremendous increasingly agreement, area our about all of growth and knowledge customers across in and that be

Bhavan Suri

maybe pull you're Hellosign of of seeing Are One powerful. the contracts, side or the of [indiscernible] docs thinking them, seeing deal, there together, to more different it’s Thank after that's your here, Dropbox think quick to Got there side in competition contract to environment? legal and the over but about management it. you The the ability maybe contract you a that's of what very manufacturing critical. competitive in of you're seeing that you. the one, in credit understanding on write last on it. number sort changes it’s I obviously, anything these with over environment? have changed do of any sort what's guys The one and sort Got documents acquisition? Just

Dan Springer

Mike and all I but on don't have we time get with particularly we thoughtful the Yes, this review before new anything do call. you for uncompetitive

So we as can but across be marketplace, thoughtful the and giving to you seen change sellers, year. guys different our the talk we haven't any we indication or really any something in

we for trying willing pressure much we doing competitors lower not it's on cost lower general, having We what competitive folks it's find coming dramatically better focused and that to to trying or a about someone continue in about might be when see very to people at solution a to cost. it's flip be DocuSign, see understand offering a than in

So that the the they competitive whole and dynamics are that's I would say unchanged have been similar throughout very year. to

Bhavan Suri

Awesome. and Helpful guys. Thank you much congrats. so

Dan Springer

you. Thank

Operator

comes question go Please Next Kash with from Bank ahead. America. Rangan of

Jacqueline Cheong

significantly over improved And Hi, Cheong $X.X been on quarter. measured taking you efficiency this the million. for congratulations quarter range as incremental sales to that and this noticed revenues million is on marketing $X.X Jacqueline have and Kash. Thanks million $X.X by actually for some to actually the the guys time. in question I for sales

a bit So the can talk caused what about you improvement?

Mike Sheridan

talking to to DocuSign leverage I other some been when in better course, the our business. improves all new force of the think over we've these Jack, some know driving and is organization. you down which Hi, example is learning curve sales of be time, like sales the about of CLM it it's, for the elements factors as time, We're Yes. for going things

that mentioned mix If are be various long the markets our we'll of markets, you in those a we've than that product. look upon markets weighted a because or I towards have at newer of how to a depending particular space newer in been particular customers our just earlier we're going fact some more contributors, before, upsells statistics like

offering want I that So it little statistic mature away thinking a to to down that statistic the applies bit of will a salesforce that. is better wouldn't overall, on a earlier sort through like U.S., in for is can market to in it technologies But it they you curve. moving bit markets country a that like of little our of look look then focus Brazil monolithic more bring like, continuing that or example learning improve everything new come this productivity the equally our in,

revenue of model. think that type we improve what that All the – model combined long-term a of to to think those leverage is all target XX% I over those elements towards time XX%

Jacqueline Cheong

so Thanks much. Awesome.

Operator

comes ahead. next Please Wells go Our from Instructions] [Operator Matthew Citi. question with

Matthew Wells

question. my taking for Thanks

like rate Was smaller in – year-over-year average the of X,XXX the a the follow-up. in quick So all retention I look XXX% on change on both new customers deal Are a backdrop the you these and quarter there highs. commercial enterprise size added of quarter ACVs landing net in basis? customers which time at of have any a

Dan Springer

significant I sizes. think in anything don't at there's deal all

grow the think the the expectation, QX, think also is I continue and and the business to our performance. guidance as of I to reason think you will records as we we're grow – we hitting continue about have that for kind that

different anything there. think up that's there's I to make So don't

Mike Sheridan

one on in But you performance commercial. of a other bit think anecdotally have can stronger quarter a stronger quarters performance quarter I bit a particular enterprises, Yes, larger a in have any our little in you overall we and if with totally to customers, Dan customer have be I blend, that so a don't diversification agree at among that up look revenue, continues true. makes of even our have X%

Matthew Wells

this in helpful. And Or figure? That's e-sign SpringCM the Thanks. was expansion included expansion? year-over-year is pure

Mike Sheridan

in because XXXX this we QX. XXXX in numbers included first for fiscal quarter had fiscal both well numbers is It's this as quarter where it the as

Matthew Wells

you. Thank helpful. That's

Operator

management I call comments. to turn will final over for the now

Dan Springer

to the you. you forward on and to us. you you all quarter. Thank road very Thank for seeing talking next much out look joining We'll

Operator

today's concludes This conference.

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

DocuSign (DOCU) 5 Dec 192020 Q3 Earnings call transcript