DOCU - Earnings call transcript Q1 2021

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Operator

Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's First Quarter Fiscal 2021 Earnings Conference Call.

As a reminder, this conference 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 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 DocuSign's first and good afternoon fiscal XXXX everyone. year earnings conference quarter Welcome to

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

Growth that get William we like everyone Conference Annual will Blair participating I’d to Before started, XX. know we June the be in XXth Stock on let

As make other events additional announcements. come up, we will

Now, of law, this to filings of with results are new unknown are different. obligation future as let to our reasonable, together COVID-XX We are the our with call the In and date, and and subject SEC cause light may assumptions update Any in risks materially no by in and our read to of forward-looking our statements me results believe remind around content impact on forward-looking. of change. and financial statements and of forward-looking but everyone the uncertainties performance required based that statements they factors the we operation related that expectations are condition assume call. information. consider risk to on actual expectations to be these except statements particular, our Please some are our these subject in or expectations and assumptions our or known today's to business, events

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

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

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

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

Dan Springer

Thanks Anne. earnings fiscal Good quarter our XXXX call. to and first everyone, afternoon, welcome

today's I primary three share topics. context For and updates will call, around

First, and results the ways best COVID-XX data the today. on the digital quarter; initiatives to for for company's on led based business our the agreements; accelerate third, performance financial have customers and second, transformation that has future their views we the

COVID-XX since I step to adapt public to get local call. the all lives healthcare last up like think to the up personally to many. this and seen around of acknowledge The fundamentally we the world. researchers, all impacted We've to this shifted to continue want nonprofit and opportunity the who workers, macroeconomic countless global first so our life done of just I pandemic and response to the we've have a that we our impact. lives all private step pandemic has medical can leaders made manner what such to initial and to as Before though, in take both to, has and changed how DocuSign, responders, to help, evolving I'd much difference organizations environment At

further. to to programs environment. Then additional offered transition. and transitioned in X,XXX our XX process We employees even services safety work to early countries tools across assistance help to For remote $X,XXX we streamline for that offered ease reasons, March, more than assistance the employees and in we

that to while and government it front organizations remote a resources to business suffice agencies, work. surge processes keep in to customers. on to helping some later, urgent our mobilize handle examples their healthcare the it I'll In running their responses directly meant needs give In but you those workforce organizations, others, this COVID-XX onboarding transition supporting a has I'd transitioned all customer’s from while short demand also cases, line. unprecedented specific meant by our make We levels this nothing lot while had of to facing of maintaining extraordinary like us remote their team to this coming the customer to the of for at time, agility platform we availability, customer and truly success. efforts over commitment of service, the is DocuSign say highest exceptional. salute levels and

in effort our collective this QX is results. reflected Now

to margins to operating made customers Typically, strong QX the added way than a agreements adoption of customers. strong were. as expansion remained direct well XX,XXX broader broad XX% of Our And heightened a step by from Billings a flow total base, growth we more million needed with from paying driven by their is customers to first suddenly self our on bringing our XXX,XXX. they as revenue grew year-over-year driven wherever new XX,XXX This almost across eSignature even take address the many cash was global investments net transformation increased journey and used by to as installed XX% $XXX cross and customers and for us. demand strong, $XXX that our case We and manage Much that new demand. signature key this was grew nearly sign digital million. performance of organizations customers, service section

future believe we surge So, well bodes in expansion. adoption for from Cloud a Agreement this financial eSignature point-of-view,

pattern were $XXX more business financial than to those accept efficiently. national already largest the and of for over benefits a engaged less banks, quarter. pandemic of public we countries. new million XX% process We which running million XX distributed signed in of greatly for by XX analytics applications and previously XXX,XXX loans telecom how keep Supported share accelerated expand times pandemic. lengthy benefits. potential loan thousands supplier large of provider We At with and our a with less more a had unemployment tool examples Now, contracts. hours. administration of closely eSignature global U.S. agreement accelerate a half company in and the to A This residents we've pharmaceutical regional up work COVID-XX DocuSign their me helped let a hundreds its the in Department sector help Insights that enabled of it. is We cases to respond handling hundreds one complex transform worked emergency involved small our many customer in Labor to than contract their institutions amid week. DocuSign in eSignature, one to customers COVID-XX customer, than applications. expansion plan to were the to We analyze and U.S. through department one over states over across its prophecies a with of related we risks of some different saw to used the using regional Intelligent

telemedicine the provider identity. few These are just online issue e-prescriptions our help a we leave to by sick using and certificates video identification Finally, European examples. patient's the confirm capability

on find page. can our COVID-XX many dedicated more You web

about work look business me speak on will and Remote is agreements to digital, ways almost XXX% It's anywhere doing we is Let be like. world clear will sure any no the things that become from to see only going any more briefly time processes changing. are need device. the stay, where will at completed core here from what Well, here. one of business

the embraced manual COVID-XX and happen when happening transformation for has COVID-XX is cases. digital a been steps this their for That digital just be for The customers agreements We organizations where benefits the go a that few they As rarely processes. processes. based us end-to-end take platform eSignature, anticipate already pandemic don't transformation we even for using cost, that paper unifying transformation they and faster. a select catalyst a greater they experience will or their situation with they to agreement always back. hadn't said, only will time, use result, customer believed us, of DocuSign Once the behind us, needed. for were is realize first and returning

we adoption of So, and of as This acts for our ones eSignature the adoption to core the new offering on the continue. used the by also other by customers, expect products. agreement cloud of in existing ramp cases expansion short,

as and follow-ons. same time, the it's Sometimes sometimes

Mike Of course, economic to will play. broader you, immune we not forces at tell as are the

will will our request more our quarter as and to through second more continue on view and in continue in wherever of as to whatever Q&A. to digital greater Even like I'd work In of transformation have the you even digital built the business help remains through can, we we that, With even start deliver optimistic. We're of businesses priority. hands to Mike with a to the some world talk meantime, I'll more off contract, remote. a and some succeed. customers this do walk We solutions can crisis, to continue financials customers to over may require our high expand, industries these we deferral fortunate will remains we assistance. the good becomes some and where to accommodations, transition detail to to carry on the time us Some a and help that truly when support again to can we and get hand customers to to payment Mike? more and dynamics, will value feel

Mike Sheridan

and everyone. afternoon, Dan, good Thanks,

strength eSignature worldwide us in transformations first drove $XXX of in sudden believe levels in to products. We to remote the but prioritization that customers We $XX year-over-year installed led billings revenue for accelerated that our products, as grew new by $XXX XX% has solutions in any remain environment. within million year-over-year with realizing increase and demand year-over-year in to solutions increased quarter revenue total this a growth expansion our working U.S., and accelerated sales to these also because they across are outside driven million. work million. XX% has year-over-year by first the customers over digital the shift a a deliver increase will Subscription saw base XX% to growth value This unprecedented Strong quarter. the As resulted our believe million. international Dan XX% drove was revenue of total in we similar our mentioned, $XXX DocuSign also organizations

revenue to services a year our to of XX% to or for the hosted marketing total compared by in new efforts, revenue and total of Of of XX% base dollar customer XXX% data related XXX quarter the were forward total hires total customers. up last ago. with XX,XXX current a and total XX% higher Margins retention in year-over-year. gross operating our led ensure of an address direct margin of XX% This direct compared our existing prior prepare and made X,XXX Subscription for customer year-over-year, sales totals Total million, Customers volumes. almost net capacity, grew meet ability adjustment include of to This we $XXX added Non-GAAP sales with year to a year was upsells were reconciliation our than greater consistent To non-GAAP customers XX% in in we quarter, $XXX,XXX XX,XXX pulled expenses future of customers, in our with our quarter, expansions nearly quarter. approximately year. first ago. roughly we transaction XX,XXX customers. XXX,XXX expanded marketing in or to with with to those, QX review demand significantly was impacted acquisitions. higher particularly increase brings the customers. base a worldwide, gross the expenses ACVs center growth, of customer XX%, direct $XXX into eSignature margin catch investments Strong leading These capacity for XX%, and some of million, quarter.

due transition the recent with of We March, million in compares decrease an employees, cash quarter margin flow first closing ended first We same the year. XX% X,XXX virtual generated Operating pandemic. remote offices data to offset by expansions ease during a quarter a quarter the expenses. profit for ago. as as CapEx the in $XX year flow cash margin first compared existing COVID million, an partially quarter. last we've were non-GAAP in help net These to of and million to $XX scaling the with year million work with over at quarter and in $XX of last the in $XX related $XX Non-GAAP Additionally, offices, federal $XX to or in employee our and year-over-year last million quarter our well came early first the first a was improvements compared other XX% the leasehold in increased due increase X% $XX the in Free quarter the to income quarter, increased travel compared center. quarter million stipends workspaces of provided X% year. million, almost with year. costs in This the ago. of $XX with to operating expenses million the our or entertainment operating in operating after

guidance. that billion $XXX billion million total, billion total Now, turn fiscal We million subscription million QX, between this of fiscal in billion in range and $X.XXX Of me $X.XXX to and to $XXX revenue let million anticipate will XXXX. revenue we $X.XXX $X.XXX expect for to $XXX for to XXXX. QX, and $XXX

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

non-GAAP to We XX% expect and for fiscal gross to XXXX. XX% margin both be QX

For operating to XX% XXXX. range and and sales QX, XX% we XX% the expenses, for to expect for XX% of expense in revenues marketing fiscal of

XX% and XXXX. both of we XX% for XXXX. expect We range to XX% range expense X% for XX% the to expect And R&D G&A expense and in QX, QX to fiscal in fiscal for XX% the of

million other to million $X for expect XXXX, $X non-GAAP of And million $XX $X expect income. income. fiscal we non-operating to interest quarter, second non-operating non-GAAP the interest and million and of we For

$X.X a provision and million for of We to fiscal for million to expect $X QX tax million approximately $X.X XXXX. $XX million

Finally, QX fiscal and we shares XXXX. up million weighted outstanding fully XXX average shares to expect million XXX for diluted

a May acquisition Seal reminder, X. As closed the on we

of that small provided X% and So, expenses business just don't Since than top growth near-term Seal. the it the the anticipate impact less to Seal Costs a of expect of I we our also rates. expenses. includes our will total performance, line anticipated related guidance add we impact to to are part all our operating Seal

us they small effect a dilutive expect will open joining will growth And margins. and up in term have near operating on our for that now we Q&A. today. the for we Thanks However,

Operator

with question. Instructions] is proceed [Operator Sterling your Our from question from Please first Auty JPMorgan.

Sterling Auty

glad Yeah, thanks. safe and healthy. everybody's guys, Hi

like Just this maybe us is industry or percentage vertical Are know, wondering spread if of increase a can broad on you industries you a focused few revenue, give adoption? seeing finance? you volumes sense primarily of key in

Dan Springer

broad. fairly it’s think I

that we a is, any have industry significant one don't know, You you portion. know,

have and services loans, some lot specific like of strong SBA financial did the the We a those example Sterling. industries gave I like well of particularly around

in saw and strength a also Sciences. We of Life Healthcare lot

phenomenon some We that digital very lot has COVID-XX were of business folks also government accelerated had the we a strong at and have They do they more transformation being as saw it. going point, described. their to sector to knew to

travel business think see some been that to some we continue particularly know, on see industries, that about, broad. have, we Obviously, very So, being you and weakened there's need so industries of to and DocuSign. hospitality that to those, running their run

know, but you kind seen, sort and across of harder, that haven't we're seeing in or of see how we the collapse those segments hit that are So, would some we anything, growth that's board. less

Sterling Auty

up. Great. follow And then quick one

with might capacity investment mentioned DocuSign up a increasing the perhaps you what capacity. keep the is system platform You in us Can additional sense volume? and give investments what of necessary utilization to be

Mike Sheridan

Sterling. Yes,

I of think it's couple capacity when we're about a things. talking

to ensuring capacity of our spikes We've even seeing. were well ahead that headroom. with volumes that volumes, of safely that we and always of remained have data is of the demonstrates in we terms the all, we're ahead And we that our when constraints. curve had of manage capacity COVID, any plenty above we very capacity First have

deal example our come organization our You capacity, an at that is our we customer when customer could up issues to to there. impact like support organization, with example, look expanding is margins, things gross that an know, – success

I volumes to we You where deal Canada an transaction in with QX, impact proprietary centers, of there. comfortable don't for our put a going to can But we materialize. other very have our whatever ourselves volumes data that we hosted entered know, are position some for and overall, think have bandwidth own transaction Australia,

Sterling Auty

Great. Thank you.

Operator

question next William from is proceed from Bhavan Our Suri Please your question. Blair. with

Bhavan Suri

phenomenal guys, thanks billings question acceleration my congrats. and for taking in and a NDRR. Hey, was number That

who find sticky about sort And – ones, understand, the is that is So, about cottage that, having you lot the most I when think you the and but are really mortgage building driven around or concepts, that touch but a, has product guess, workflow. will you real of sort congrats over notary the exciting what the it guess, are you're that, to quarter. notary question, you workflows straightforward great, continue about of DocuSign? of structurally the complex think time? eSignature when ones ones, think as a you, like a when want love was sort more not estate like in people think person more then do developed by I'd on seeing to I some by about the complex parts, I industry for workflows, driven you fairly complex complex a and great a on of something the a

Dan Springer

Well, I'll couple give you a thoughts.

in they've integrations businesses to framework, other be systems most building and great that that can You going with matter, know, integrations when mobile first someone almost think the have workflows integrate a that, and integrated CLM are people could from our leverage our be interface and are that actually be not on transactions for our around we the two-thirds document and with and themselves people build and managed. or routed and SaaS It's or, to document occur we Salesforce.com it get into on Workday, a piece is, and developer SAP web I software the signed using platform who that pre-built a from APIs of tools. excited be creating our API's their to

excited run as their sort really the people we said, as the of, indicated dimension would about, is, DocuSign. ones on about the where, rather they think I business that are about And second that excited So, I those you the are most it get because situations we stickiest. get

and processes cases great. something players back managing when also estate, PO our financial digital you to integrated like see the on get into processes their involved. be back where that's those But might those a mentioned office situations, if rooms particularly, and and real front or office product, So, product, tools and use DocuSign, all they multiple their there's those of are you mortgage office

and not calls, and to routed office sometimes need functionality the there's cases be that to them then So, quite can agreement whether those and but have multiple around API use or have we've net they're companies leverage score front high a they the capability high all built, using complex, our our the an individuals because that is great important customers' very get promoter ROI why which customer using sticky we such customers for so is with so because DocuSign experience, like a customers.

those when So on two that integrated would use those we're be think I the we would building I dimensions to talk about focused most point deeper cases.

Bhavan Suri

you. helpful, that. things Obviously, one and the follow was PPP That program then quick was very thank there And like up here.

to of alluded events. You these sort some one-time of

there one-time is Now obviously, applications, environment, rate by right, grow to color that. business understand because trying to offset give the offset of sort one-time around part again by lower but, decline But what way how business? a toward some this just us a much have that aspect, a of feel with you billings that maybe color you've and been, of of if the sort any regular bump got might like mortgage that of

Mike Sheridan

saw minority. to had scale not that cases Yeah, the there gotten hierarchy existing of of project-oriented on are What also definitely priority used some that and begun were that or scale some wasn't or companies were one-time that events had pushed priorities. largely and the other DocuSign, list in us are but our experiencing. extreme that was up recent either us customers nature. really to accelerated the moving more as see that And as on We will it with we be the of thinking these list high examples

events us. effect to So of maybe of the brought that some was the and coronavirus there that recent demand

like to remote us and from I extend value my script, apply also strongly the what we're going in whatever or the proposition believe our will future. realizing proposition we working looks As selling work-from-home mentioned working that to in value in-office same they're stay it's with the that going environment, it that is is to but because to

Bhavan Suri

you, congrats and Awesome. again. guys, Thank

Operator

next Our proceed Rob question Sandler. your from Piper from question. Owens Please is with

Rob Owens

the which and a federal afternoon good was Yeah, the I could thanks really now this it building data a sector you've ranks bit couple expand cost hoping verticals in next CapEx, the terms little taking you for up been know go is and and terms where of over years. quarters, opportunity I in center around question. of could but for where my couple of of

Dan Springer

technologies. side of And this Federal folks, of as slowly the federal I some you well important serve couple, and vertical, for examples getting I that we bit and quarter more revenue data in if see government a even doing also now than federal folks, of see is still will Yeah, that before unemployment although, agencies. segments to, moves in COVID-XX example opportunities that terms and little a I no we mentioned a dramatic needs it's aspects think government, I health around an overall and but of human and was have some emergency portion the don't But to mentioned set the required private also processing with saw government of strong referred see we an growing around gave us our of in sector people certification I for we different is vertical adoption a the of a unlock lot the of as very to which as us other the the the situation, in lot have – segment digital may gave part of dedicated that there. momentum was is of another before, center absolutely. we're the and important overall been we've newer FedRAMP for because for of building get it us and one state think us, top and you had we benefits nonetheless. mentioned government that state and local as a services about of some

term as we will provider be them growth I a And perspective, opportunity. dramatic see this a as patient customer. long from a to to think a continue we So,

Rob Owens

then And Mike. second for Great.

billings day’s over a Your I higher guess prior. three outstanding the running has last quarters of couple the little than been

curious are terms relative given quarter, was deal sizes getting customers this to there for pandemic? if getting the Just payment is larger, the Thanks. anything extended, just concessions so in

Mike Sheridan

Yeah.

were less bit around when So, is, actually anecdotal, changing larger internally, you we it healthy DBO's think and organization can room. think not extending disciplined our it, That What and it little underlying were more payment we back collections contract or terms track we to the which tried our off around are slower and remain stable. Rob, through maintain terms, then for do good we more we dynamics more give requests we when I Did but that. but as responsive that weren't align been pretty to have companies go was wouldn't said, deal latitude payment? especially get and needed to we get smaller we allowing when that it inbound some a in, we did, We be we if have businesses to cash-strapped, came responsive a that. I

really the some similar think trends was in some major materialize quarters, our there a of we So, we'll in see cash of respond in I if in flows, It way. coming the that quarter. but didn't that change

Rob Owens

you. thank Great,

Operator

from Walravens Pat Please is Our next your question from proceed question. with JMP.

Pat Walravens

went wondering much the how – you actually Oh, give concern each out, of flat I'm QX this I quarter having up. of Zoom's customers Mike, because as channel? much listened great. and revenue sure from from the of you, we from I of first, if XX,XXX And, is context off to this growth that's the would growth to to How X,XXX who guidance context sort XX,XXX number last QX, up for for yesterday self-service for I'm great. that, open back Zoom from Thank look of of the some don't smaller One but is the you because as XX,XXX their massive QX just direct at signed there, your churn might be but that to know you. those that okay. customers I mean if pretty went versus comes you self-service

that. hear So, perspective I'd on just to your love

Mike Sheridan

that don't let is and volumes Zoom's Yeah, perspective. the forth. We churn me situation so our think start analogous on to

believe We or sustainable, has we're of whether the value previously, I think it's like it's a not. because are course, to think we As business, environment mentioned pretty churn. propositions, stable again, our remain we work-from-home that, delivering any, going that

terms business they of in contribution has important up with been a to our a products. two But brand which of driver it's then critical e-commerce real what and with our Verticals us really our a our and or In our for it Remember serviced graduate engaged to dynamics to of was there. is e-commerce, that consistent like self-service through customers majority that us for about also small some relationship there's of direct us. with the There’s major platform, of our are a estate. XX% albeit revenue. that. from QX verticals first move And to out. It's come source in pretty they many significant awareness that XX%, in represent relatively percentage of customers when

of of percentage the overall critical smaller relatively a element it's model. a our it's while So, top-line,

Pat Walravens

very helpful. it then, house takes mask and for why at in handed to sort where long super for end with so That using a for we in it something? us this and the own of your signed on we just and Dan, but nice that of a our gloves whatever And so process, one was had just around it And gloves, So, masks with mortgage came parts, using XX some to incredibly us reason, the refinanced notary pages is you, backyards, the and bank they're our mortgages, the you adopt aren't pens. met mentioned customers. on and of they mortgages. we Right? And our

isn't like an It Why case. why the Thanks. mortgage? seems everyone obvious So, DocuSign using not for their there? challenge such lift used

Dan Springer

the I banks well. ask day, to Pat. that question every we something them That's, imagine, pose you as as

high. so stop point the I that think reality the there's is two where things to I would adoption proposition that is, consumer

you As remote come and for an the they model just example, buckets. for I two really need think a notary in said with

about have side back-office that end the management whether that's of changing is the the on We to where, that the needs doing without see employees, COVID-XX when lot legal of perceived filling in change, – or we consumer one contracts consumer that's is, times is it second who The not sending have will situations used we do attorneys use we department offer and say, – doing would for a the allowed, and show Often an first the the do of behavior I and agreements with company of something things that. and that's person your thing not this and using the is a they course, great out on-boarding I-X's it time. people by one organization we trivial. say, occurs this yeah, regulation it's don't they're it's see And types it's don't in sort then and is probably practice and in understand these but oh just to realized a on-board love legal companies if profession lot people and here, employees in that people of letters the of We incorrect. can't long is they'll like not they're the see some done for of you're that. and mail, times, lot – DocuSign, HR contracts. to think we that change in yeah, a as just but up, They and is, example,

offer the with so now can going the remotely. I-X be letters And done and DocuSign are out

it's face meet reality each a I be, how to just people, real kind hurdles a talking make that and lot those I'll And customers' perceived last expand not think the as – we're the from have side, for we just across that's the the to barriers going in one. hit but on usually to things one we to notary see us on We area we want our more an a variety And easier of give driving quarters, of to standpoint. are a you think for about we of to a growth those legality are so, capability big that's notary I of by the mean, adoption. I believe comment. area as coming needs that that solutions

Pat Walravens

you. Okay, great. Thank

Operator

question Rishi next proceed your from with question. Jaluria our And D.A. Please from is Davidson.

Rishi Jaluria

QX? what pull that looks the into And got any bit got then of kind expected a little that be in I've QX that everyone's QX of year. a taking and drove billings of out you then for bridging in half bit forward a billings impressive bit for the us Wanted I be could and acceleration. a decel an the these on of much helpful. Was there of start give just guidance, staying and really there. I my given so by Thanks drilling number down more kind to hope Just more little Obviously, what wonder questions a a billings. guys. little to if safe color in any of calls back on acceleration and from a nice the bit that, you together color Hey, would little follow-up.

Mike Sheridan

Yeah.

So, things. a couple of

of you a We to growth. in exciting of was new parts lot direct quarter. large things that We as heard, had had, we One the of customers. XX,XXX growth contributing the QX had in

base. inside the had installed We expansion really also strong

Our dollar end hit range high net our to retention XXX%. of the

really saw growth we those across strength So, primary all areas.

I've about, quarter a as statistic look particular you cadence look billings as talked data average the at if a think always I to rolling the at opposed between four quarters, point.

at it look you you lower. last year's was if bit QX, recall, think as little I a

QX year's pretty last it at was strong. look you If

of some underlying business. the of that it again, in think course pretty the percentage. the growers to correlated dynamic is at year, average Overall, the I an you over the the growth see you'll basis if on So, impact look

contributing point are to draw we good the in having really QX, continuing what's to their that single people those want aggressively, through but of is wouldn't habits trend suddenness single Obviously, it. start. too change a line data entering to a point that we So, work see are to QX, a data

guidance the you. into So, gave we're of I that all that incorporating

Rishi Jaluria

lasting And kind agreements negotiations but you're and would one a It kind trends Great, companies than longer that's work-from-home. one longer having benefiting helpful. probably kind seems of follow-up. that being and like bans bit a not travel done more other then of and be among just them little lasting the contract of of virtually that's from, of work-from-home, of

a viewing and that to wanted is long sticky on temporary something I as that maybe process a big that as as eSignature? benefit major that Thanks. So, A, so travel as broader And more you're irreversible, get seeing the as away a to so little this is that B, in solely versus it change driver more more seeing dissipate of a you're lasting? some nature you're bans is more the that Agreement maybe and being or something sense, then, Cloud and starts go you're seeing bit

Dan Springer

Yeah, the a it think way. I think is. and travel work-from-home in very actually restriction similar about we

is start employees quite back going it, lot we think the safely believe of and thinking that's our a the about back. change office there coming by I way, to into to want bring We in We occur. our how companies. see that we own

at from X,XXX-plus mentioned our we office And talk employees of home among this we sort As executive that about about we think or be meet and changed beginning rethinking are that all to working rethinking the in and our about now. an I think of forever we an staff of things the call, have we're believe now travel office. need always jobs when how we're in which we

to But to overall increased. but time, said, we're ability see is offices,’ to manage it to I remote the we way for do for as do they're to, real run way.’ about And to the savings, impetus the savings their need processes of might of will, So, like not is, going to from I it'll to digital need to manual completely this to processes be think going The then cost experience, in I the signatures, travel and the settings be I as agreements, don't are ‘This the think just just the when say, first restrictions of my going they it'll at think they say, the as old people process don't people better be those will is that back see services paper-based the have be look the the believe mitigates, all business somewhat. my for which ‘I work-from-home but some the business today; be but you have want and the need do going agreement think and to I I those and think normal, and they that usage. time maintain it to that mitigate, I strong even if some

how So, that we developing. see of kind that's

Rishi Jaluria

Great, so really Thank helpful. you that's much.

Operator

Our next proceed from question. Stanley. Zlotsky Please Stan question from is Morgan with your

Stan Zlotsky

and us first Thank on from of you questions saw A – in eSignature much thinking a the what follow-up. you core through the just within quarter. Agreement congratulations and SpringCM so strength Cloud. bifurcate And strength help my quarter Perfect. that the between one solution and couple you the end, broader within of are versus the then on maybe And very then rest CLM have strong moving to that a year? the about forward how I quick the

Dan Springer

for ROI we seen so couple XX the of saw one acceleration was reasons. of was think we have is and pre-COVID- a One, that wouldn't the that's the on incredibly signature-centric things high. dramatic eSignature I portion of so Well, the that

they that answer So it's meet, that great people opportunity a have to when folks. that have can always found for find solutions

think great run to about you be I And smart for lot saw of we people my say, so a opportunity I a business. this is where

about when point. The work, to Agreement the eSignature you Cloud be second thing overall entry think your is tends

we a the hard digital point reasons signatures if And broadened it's managing such a solution to if for about your with the don't the CLM other of you of starting and think on scale, contracts broader before have them, as business fact, agreement. in just capability, to built agreements Agreement signature we people. digital digital we think Cloud, most One for it's about

So, you first. really go way the other

cycle. are little we as well So, and up less are of sales a when face projects to a able external get to systems home, work enough, complex scope, customers, entry usually a expand, more going there of and as are ones transactions, world, And and involved. longer the that a that one interestingly And people slightly little because eSignature that ones, was, running lot across remote people services absolutely the and bigger these we're or delays. the for working statement seeing be are be managed It's some – larger land phenomenon more second need and internal will I CLM, involved, that to think integration think to we initial ones for then the is an get pushback point, in happen. work those professional software sort that saw to both tends projects again, from of a is the with urgency and

those And a times those so time a standpoint bit. from of extend little close the would to deals,

will over particularly being we So, out several that's why that next we in eSignature saw the When time. quarters, phenomenon look quarter. we strong dissipate see over the

of they're is, deals and us these give will see those the but some then a all importantly into QX some those ahead, most fertile significant quarters, our Some in wins, forward from with eSignature a quarters XX,XXX Cloud there, might most portion you'll if Agreement to be that continue came elongate QX, which a direct came into that customers expand QX tailwinds of those pushing and into their in, new the later you cross-sell going those in to about to eSignature think opportunity and solution. overall of

Stan Zlotsky

that an year initially of the started across with the about opportunity Thank more back that expected entered up? the you. Perfect. business Is year? are outlining really as government purchasing the makes coming momentum and vertical me. you for you you you you than federal close federal as business, to get That's that into fiscal – half perhaps the it across How you mentioned. year the one sense seeing call That of and federal is thinking the your with industries the the the you're ones

Dan Springer

I think as bullish call. the earlier we're Stan, Yeah. in pretty about we talked

whether have our the might to don't and land your software a about expand get the a see year, and a very you bullish for what We around more I government, and the splash core happening that of it end remember, other end the it's tend maybe where government the some of of is big the companies think of big contract we're year. to And across more vertical. all sales trying significant phenomenon see years specific about timing We business to getting cycle goes the couple at year of to the in same still the model. biggest because eSignature year. part evenly is then we done, a that question bring of it's that

and saw VA a So around where sort where sometimes budget we CLM discussion small we remember we for there's deal a the that, of us a year like had something had cycle opportunity from last but federal deal, and model over expand occur and with work, lots the land really specifically the time. government expansions does of of very in large that our build here, most we

Stan Zlotsky

Perfect, thank great a you congrats and quarter. on

Dan Springer

you. Thank

Operator

is from question. question Materne Kirk next Evercore. from proceed your Please Our with

Kirk Materne

more on sure more around months? it that Meaning, for I'm the you Cloud? most does have the start start, do CLM Thanks long big when in of some sort the just How least to suggest obviously on before of bigger Agreement see of relationship terms obviously, that you that maybe that] it Dan, this a on sophistication, is of or general in complicated the come can to earlier that's the [that eSignature the comes landing about of – CLM in. last following trended or at of opportunity? their on sort your companies way very is over cohort quarter, them that you in if year nine in but to any And question talking much. mentioned and up this side, spot how in maybe I'm services the you customers a terms just upsell way, differs six, thoughts start

Dan Springer

Yeah.

things small the the the less shared expand land had had the at we offerings, broad So Kirk, but talked of of Cloud we we and set phenomena when interesting, of one and IPO, really of time and Agreement an some about it's our we of but adds. started very we large an had necessarily small grown a six over of, of into point. that additional customer years There there very series wasn't, stories, some lot where of businesses, had customers inflection sort was and a off us with

Now what that's would I in signature-only expect. world, the

get going likely the where about think we Cloud, to you scenarios broader have question, we As a signature to your do Agreement land. are

that and that the think and Cloud. add make cycle we where I time signature, DocuSign continue but very of the with in can and used a eSignature, that period, it also sort working and of longer do gets a customer. to large and happen organization the excited Agreement win quarters Agreement some early get We that success have sales back about chance on those And splash expansion mind three, to implement additional four have cases Cloud really start in Keep implementation. other come a of components to

with even two one quarters got probably sale or and if it would done, then a up CLM eSignature, a before to of So, quarters let's of you the the we DocuSign showing as land within several solution, in see be that a revenue. broader, place if a of got say, statement expressed someone lot work from interest

– cross-sell those about, our really Agreement is think other elongated expansion. I add, the thing don't generally think of as opportunity is do the growth point us should just well think that Cloud, look for the when I think about of go that quick XXX,XXX are path kick. would a majority That's would us as clear opportunity. you the about signature-only. should talked So, to over about how revenue that The opportunity That's the to I around though, as to, nice sort at Mike I We customers. into. to it And thing obvious for only over

it's about opportunity of opportunity last where thinking we that people talk the saying, sort the bring of well, than to we're really CLM today. signature can't are for quarter that's pent-up to We've we're someone the go customers focus other joined sale Cloud not CLM and Agreement like that So, years got eSignature. us and for a

Kirk Materne

on helpful. the And color really thanks that. That's for

not It's team of Were a – many that earlier? give just you new have your lot that was direct already of It job pipeline they a was, process? just that about quarter. relationships lot The other your question obviously Were really able the kind how there even you're been accelerated those direct when of with to but nice to had those your on? came some how many us kind a being that XX,XXX a quick kudos on process that in by this I I Can they had color incremental sales curious customers jumped that, the you're early of, it, kind versus of, to obviously, to deals, deals was that sort number, talked field think sales never before sales of out kind team, just you again, able customers maybe that? of stage came in really you were of maybe accomplish left seems frankly. might

Dan Springer

Yeah.

an the verticals, geographies, we across with me across of the couple of XXX to well. thoughts a perspective of company variety But of customers additional answer, the have things from that and all case customers Let give smallest unusual as absolute above. as the selling Mike up over is a the countries. the We're you such serve largest might some in lot all is DocuSign, at

that for of in process quarter have are that us a solid business would had of with that's here. QX had we deals So, across up pipeline do those and solid good happened and exactly and what to set would a to executed sales nothing team that very we and expect COVID-XX broad those. a lot We our happened have

going of the us much us people just cycle said, had that, always some done on to to said, help the came whole "You get get doing and to "I to going us with where gotten with need question, where within people and nature around but really I and someone some quickly". quarter those called conversations known were had, need to was also to additional of and I've accelerated, deals speed up timeline So your faster those We DocuSign, that haven't it." some in me who

healthcare the opportunities of Some were big.

did COVID-XX But doing of to an testing solution were had and think that that matter never before, that that now of they you're explained we don't out want information need in a don't came want in that way or also sales figure to testing we to you to I that situation need get get them, touch up got kind running to digital happened trying where anything us, – that." and had, If organization been that business Oh! cycles had say, I I you've used and and And touched, a a people where touch they fill to get you now that trying need they've to for able the "I forms, that them do days, about case. you're out to and healthcare to people's

was range those across of So a there really each pieces. quite

Mike Sheridan

other we talked a had on if March that people earlier I at is we question time, think you the Rev mentioned they're not the that the to same ops process in there's location Yeah, that very our we team demand transactions our quantity process to to increased that dramatic is when piece very working. one to that offices you imagine send that and our increase had brought close important about you in sales used has back had that up if that home, suddenly we infrastructure, teams, a X,XXX from and

happy All about to have to some of things and us we resilient tested were one was of is, very it put change our even of our came how environment it QX, really those a environment the out doing that of very pressures the upon together, with things business.

Kirk Materne

Thanks helpful. very much. really That's

Operator

question. Walter next is from Pritchard Our with proceed question your from Citi. Please

Walter Pritchard

Two thanks. Hi, questions.

things curious the in the factor quarter see around people Just to in terms this safe an sort that you first to expansion that expectations calibrating is try as new the what seeing you is the reverse it people running and expansion, on just of opportunity as those one our next contracts say do saw more the quarters? on few this in leaves to of are Just versus you way get understood smaller or headed? of and how new expansion up were business

Mike Sheridan

things. Yeah. so of a Hi, Walter. Yeah, couple

is self-service mids world, I in direct of talked and have very commercial. through businesses the we've lot the and the e-commerce we selling a about majors smallest we we that the small great the think to sell sell DocuSign Fortune our with strength businesses into strengths the one XX and to

there of spread it had across those of we sort the cases, project touched broad growth the bit or look of So, of that will as direct, if at beyond a other before the spread things a growth, that really course PPP was the quarter, some the based overall if we and upon new we be across anecdotal use Dan nice little looked you well. at talked that over but as expansion installed well scale verticals. how segments base. It combination as did, within it's It's around

it So, broad. was

as the to the when complexion common it Within nice pocket, might growth, travel that sciences healthcare, be there, at more was there and strength But might went than quarter. the going showed at one be a looked and some you is strong, pockets, back life and I it broad-based. bit of look entertainment wasn't

Dan Springer

segments nature you we buying of in was the just suggest and our of when within look terms at two deals are review, your average and walking question, what's different there we larger on in very to wasn't days we of and do Mike from people that then what that specific And size, deal pricing Mike ago, quarter would look the a in how just deal sizes anything us terms through. did this look those at like, even I which quarter-to-quarter,

I So, notable. was anything there don't think

hard big dramatic multiple change in upsell me expand keep expansion of think land our because in our imagine, it's that when mind initial of that is talk the land. Walter, other about to would such opportunity, I that initial for change some to so be it's but our that long term we opportunity land the typical thing to a it's could there significant kind

great opportunity So, that forward. from growth our expect different going than wouldn't I anything typical

Walter Pritchard

how awareness year, cycles, lot If in obviously a adjusted got curious about or Okay, for – cycles. forth. and of been more thinking segment. then, just terms change of permanently larger forecasting Curious the maybe your longer-term, you've the your it. in of customer sales brand there's so created you're in the all enterprise, this sales And they sort if the market

Dan Springer

that we a anything see call we from significant change think don't I that standpoint. would

there phenomenon cycles earlier, the think in alluded sales for some in deals used urgency that we increase was I were cases. QX of that of some to because the those

your would this can point clearly Mike we but as not expectations different each different this point that cycles don't tell cycles. our have you we're for said, our And DocuSign I point over yet does about get then by become we around you going forward. or point something. we don't I the point anything we segment, to will say within revert have would more the be have to plans we to sell changing prominent for a observed be anything there to Again, I probably think and easier as something tell to at suppose could incrementally. time. the And segment, at segment brand, I could that mean I our the there think sales

Walter Pritchard

Okay, great. Thank you.

Operator

from Our next your Securities. with question Please from Wedbush Daniel Ives is question. proceed

Daniel Ives

Can you versus and international the of lot strength international some dynamics, on of domestic quarter when what different in in think Yeah, the thanks. you're maybe terms obviously, you terms this of opportunities of hit there, seeing?

Mike Sheridan

hi, Daniel. Yeah,

couple a So, things. of

mentioned year-over-year. As in I my International XX% script, grew

see business. to strong really a contribution continue part we So, that from of our

Australia expand, but we be markets as how our and like they a Canada, built address some like a quarter, overall, each markets forth those domestically, think I also structure at what those we a earlier. so stage that those markets. civil see into the And markets, of improvements forth, centers have countries are some we're that bit around significant going look those, than bit past, markets, like of those in large major the infrastructure TAM. we've may like infrastructure earlier of We're an we've we've France that talked but so to a are data and it's as markets before Azure part a law mentioned Germany, in of to I to in continuing so leverage seen and we

we're are that servicing continues a that of regions U.S. those the customers that aggressively we're are opportunity seeing needs in. for in investing the the in We that same evidence drive and huge us as needs the to

Daniel Ives

enterprise from on just And environment Great. eSignature eSignature, Is of departments going specifically maybe relative in acceleration two just and enterprise-wide? are within could just departments maybe drill the I the now on mean going you department finding you trend to enterprise-wide? an to that are that in the this and that – you terms COVID the into

Dan Springer

everything going bit to phenomenon don't or phenomenon COVID just been enterprise-wide of of same where an don't than us other enterprise COVID I I a growth point, a would that solution think two I we've it's that and solutions, now more but we piece go for need that's forward, is the us macro from accelerating. same I accelerate as are for transformation and big those Yeah, that that which work digital we we the think, making big digital think projects or think at particularly to but other anything It the that would move same opportunity with see companies we'd seen going faster. drive going, divisions It's is divisional increasingly is, broader one than from say, at get the talked the transformation, we accelerate to expansions opportunity which that little always change rate growth about, occurring. at acceleration seeing rate, probably, this

Daniel Ives

Great, thanks.

Operator

is next Seyrafi your Shebly FBN proceed from Securities. question. Our with Please question from

Shebly Seyrafi

Yes, thank you very much.

by So, your it sub gross like margins, they X declined year-to-year. about looks points

I script, margins hosting had talk Can you said see in about costs. that in you your sub you gross you forward? recovery going increased the think

Mike Sheridan

Yeah.

as associated business the to that leveraged eSignature of CLM of our to as that contributor with business and the scaled is aren't that business. the the biggest costs addition probably So, some

professional increase model, and in I the both to in to going stayed If XX% overall, us you the to to allow in look services, what at at target remain it continued our long-term range will think that range, same XX%. and of really is scale. be terms subscriptions And just that that

gross the that won't effect Seal, minor as those gross near XX% and as term XX% over to part I mentioned fairly contribution small their at comments, just model. margins margins going in for look another if bringing because example. my acquisition, as match term are have they're a So, top-line we're our guiding infrastructure is of on you near and long-term dilutive Seal, remain for I is that but well to

Shebly Seyrafi

forward One XXX%. the of XXX%, is going do your is your Okay. more, to rate? retention net now What dollar in you targeted high-end which rate XXX% see at that

Mike Sheridan

Yes.

changing at of side anywhere foresee range. being point, not range. us lower really So, near that I'm the don't this the I

we remain something look in range continue that, over time, healthy sustainable business. keeping the if but the we we'll and reconsider that at drive always If to now a for we're range, we in outcome same. it think I see more the

Shebly Seyrafi

Okay. Thank you.

Operator

from Taylor Our next from Deutsche with question. question Bank. is Please McGinnis your proceed

Taylor McGinnis

you more quarter thanks I implied it and the number. question. about if on reflected before the the saw you taking mid-XXs. second fully in feel mean, guidance customer low-XXs just is curious process of the what billings talk and of maybe my when that quarter, that, for billings level half envelopes, of congrats in because a super usage strong, needs rate, could implies and DocuSign in but And the is and by Hi, happens overages I and would The the growth be now course, true-ups you platform

if the is just potentially usage into of well. renewals that quarter some I'm So, in wondering as we saw the embedded

Mike Sheridan

time has of have for couple billings is an do them things, to a and of look Taylor, we or exceeded lot opportunities not customers the who So, thing back very that their first, of, renewal. a in early one upsell go is of, don't capacity where their we're overages. subscription much at model little that We

and opportunity retention, back of near the term, that the they billings in correlate but by much capacity going near-term very that Then lot and it's to that of customers overages, them expansion the of opportunity net in aren't looking a business. to it dollar So, their the if QX future, drives customers becomes to part affected necessarily going you'll billings adopt was and their transactions talked to who've are see billing at about over however, volume small. trends, for as very, which up-sell how you're that our time,

Taylor McGinnis

maybe just second selling Apttus to impact be landscape Conga curious that in CLM talk merger Got could a could the the any that the has feel efforts that or SpringCM. in question, it. about competitive have and – your And that, then I'd you maybe space? if you

Dan Springer

in I and Yeah, software, win in us. don't strong we're will and for the players of what it's way we the We in space significant and have we're mean, view particularly at all pleased. that that of a big we've built any CLM, look really think believe we built particularly point we've the proud

on see that at that didn't we the – impact report, is an out but their they the there's a that obviously to are look there's special and be get activity and able very guess ever-changing we If and that sale, it. that think closely, upper in saw business going as they'll was hoping be that see you people of there to assessment, I we something about something as we having any combination something didn't for of or at nothing thought our And particular we lot to of like get asset this hopefully to look we significant definitely but recent our we go-to-market landscape a brought Apttus DocuSign. that Gartner the at chance had being we think top us Conga had were what to really pleased at when that quadrant,

Taylor McGinnis

Great, thanks.

Operator

Kennedy Sachs. question. your Goldman Please question Sean is from next Our from proceed with

Sean Kennedy

challenged post-pandemic Hi. doesn't few seem many, although of in most recover business I next home job and quarters? Good and challenged I'm your it over buying. And some travel, that a sectors was guys. afternoon quarter, potentially like were hospitality could great thinking on of wondering environment, areas like the also what the

Dan Springer

Yeah. I interesting. And it's think

I If you great is actually estate a example a think your from standpoint, think about one. vertical real

this we've – lot company. been to of big seen a accommodate. It to. we've was we've done close actually initial success the of So, an industry It's a that part

Realtors volumes. of have enough be give trials to if able afford smaller DocuSign, not And XX-day to so They we've are transaction who Association don't sort programs might free created the with to they National realtors of users.

bounce and things recovers, of opportunity of so that. Now like we be from as business and a are to hit to time, there'll and their business that could industries travel hospitality products to upgrade get there other products DocuSign harder. those think be folks over sort paid to are our them And the some love good

are to the back is, they bounce business. of that One when going see challenge big their in

we probably I when will don't increased of us demand. see that more happens, opportunity growth But verticals. some pent-up think so like it's in much for a I think those

model more, not transactions. of case, that I a in think they're it's just business – doing

packages example, as not if your and So, some an for DocuSign travel agent, of use a now. you're packages, you travel sending right you're

come to as When renew us, to back about business grows. volume. then, think to with when believe of volumes So, it time, and you recovers, some hopefully to don't those us we That's how grow I they'll that their continue you old do need opportunities. go higher as their over

Sean Kennedy

it and the compared And opportunity? work company I one is skew cross-sell just customer complex then processes much toward CLM, it larger to like a that wondering quick since eSignature. deals higher affect And does mix Great. doesn't on with the more what how was

Dan Springer

Yeah.

question. great a it's think I

contracts number of the contracts number you say, CLM-like very tend a or – small in that if don't think those even of to I complex a but contracts, have system. small and small to and effectively a contracts is different need I of terms volume a what that, you of have, CLM then have you a of manage you'll you all have find need some company their are the to a extent, small companies you contracts,

the case last into the more we more functionality, – the product. that then year Gen for we enterprise. released commercial So, the the segment see mid-market you fuller our upper a – smaller Dreamforce in they and to of CLM want we our to customers, we'll opposed and like the I they that's is into might and see as years which have very skewing want think, And that's Gen think At in we come. last what which small customers, at the to what find product, sub-segment, end Negotiate sold CLM year, being the at that

Sean Kennedy

Great, you. of the Good thank rest year. the for luck

Dan Springer

Thanks.

Operator

turn the of call I end the management will And question-and-answer reached remarks. for have closing now the session. over We to

Dan Springer

you you I opportunity of got out We'd us. quarter. out next to again all We like lot next Thank the seeing we'll on all up see we you to guys joining you the on for road. you virtually guess look the much. quarter. forward see Thank road, so say, seeing we'd set a like and to you over

Operator

participation. lines conference today’s concludes and this at your Thank you your This you time. may for disconnect

DocuSign (DOCU) 4 Jun 202021 Q1 Earnings call transcript