DOCU - Earnings call transcript Q2 2022

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Operator

Good afternoon, ladies and gentlemen. Thank you for joining the DocuSign Second Quarter Fiscal year '22 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. will of the Investor I Annie over Instructions] Head Leschin, Relations. Operator now call pass to [ Please, go ahead.

Annie Leschin

Call. Thank you, Fiscal Conference Quarter to DocuSign Operator. Good afternoon, Year everyone. 'XX Welcome Second Earnings

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

Inaugural participate events. like Piper get to on know on Wolfe to started, These Software plan Jefferies upcoming few I'd Conference everyone XXth, on Conference September Xth, virtually we Sandler's September a September Before we in Technology Conference on XXXX XXth. TMT include that Conference and Global Global Technology XX. September

our Investor website. find more Relations about can in information on the events You section these Press Release

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

we in light information. therefore and events obligation pace update to of factors new These assumptions with by And on subject that everyone known as and filings unknown Now, no and are our believe some are the our at change. reasonable, are uncertainties let transformation forward-looking. risk statements our our this effect the of potential expectations on actual the time but the of to are are law, date. digital to this statements of based assumptions consider the Any performance in on regarding expectations In are except businesses, or call on forward-looking and or of content and materially effects remind the with our results different. of they based COVID-XX statements call. business, be the estimates that risks to including on our particular, SEC, pandemic best to me required readings and today's We together expectations pandemic these the our the to cause related customers' our future evolving may statements subject forward-looking our assume

stock of present and, notes. amortization stock-based debt and Non-GAAP assets, intangible payroll amortization transactions, GAAP financial impairment strategic Acquisition-related other lease-related will as call, this employee our non-GAAP to discount, measures special applicable, costs fair-value measures. adjustments of items. expenses, exclude assets, employer acquired from expense, on compensation we During investments, issuance financial and of tax

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

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

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

Dan Springer

focus areas. afternoon, I'd XXXX. to key our call Good second-quarter fiscal like for comments welcome X Today, on everyone. earnings And to my

scale. billings Revenue Our continued delivered how cementing are strong as their strong profitability a million, DocuSign's grew $XXX of results, into performance DocuSign financials, how growth Jumping year-over-year grew QX increasingly our at we're a year-over-year million. and companies of $XXX digitizing agreement the second-quarter to straight as XX% processes, pillar economy. anywhere balance to we and XX% and critical

large including very significant strong international million some expanded wins and of customers. our X customer its customers We the up direct beyond Our year-over-year. XX% new the growth, continued business XX,XXX marks, CLM base with addition

of upsell team continued how dollar Agreement broader and strong our for motion business Finally, driving our stay evolving in XXX%. Cloud Overall, I the to am eSignature see expansion front proud has we retention suite, of and COVID to continue of net a the environment.

to vital the Agreement only foundation to process. from business, doing COVID, does new become seen customer that a we a DocuSign believe the have of power digitize leverage but to Cloud way of business the sizes many Not see all anywhere. the response And their better the as their of organizations helping doing are will also normal. of We of agreement part

hit One us of beyond an have business digital and had to In our COVID told physical signature, fully they last get to ability DocuSign do quote, Downeast on. close " electronic to half I of for new Having customers, embracing Stacy their this them. doors, Johansen, it did who's from wouldn't year. and of here business saved tools, we Downeast the the written resolved we when the weren't other by President succeeded that words, "If way expectations Insurance,

DocuSign Another digital to example transactions program DocuSign adopted it to remote the dealer so response across initiative is one was and COVID, Company Canada's In larger offer sales successful, entire The Payments their spawned dealers. support network. and automotive to eSignature a largest of service.

executive one full it, what Plus, business expect. as business. part DocuSign's a time, money, we're become cement As pillar Company seeing are themes are of has experiences. put again of DocuSign again. now people and as remote facilitating a operate critical trees. few breadth just To what of economy, a the examples position anywhere able on do of is Being saves to core anywhere and X These it we from executing and

reactive is first to enterprise-wide programs processes. agreement and to to automate digitize proactive, their partners We're The helping end-to-end shift focused customers perspective stay our success. to and customer on and their from enacting

of our of of Let allow substantial administration me to and the a scale the eSignature government our the a to handle their examples. HR were able X accessing saw We highlight employees load. remotely. state U.S. to systems customers the largest teams couple solution in increase just thousands increased

of entertainment world's companies over agencies private paper-based growing longstanding in XXX us, agencies, by XXX% workflows of And simplify resulting and the user only in has the DocuSign has and In out rolled state helping the federal U.S. DocuSign serves sector. sector, In one been contracts the significantly media largest adoption of with time. completed being year-over-year. workflows, a today we're addition, complex less majority three the not to the XX% in all agency cabinet digitized CLM DocuSign

integrations seen cloud platform multiple on They in investment process. the and areas has keep and with deployed can Management, then They Contract our into The the DocuSign applications return comprehensive in into. its we eSignature, capabilities our agreement and verticals, an With into Xnd giving has Agreement platform. Lifecycle a start offering the other Agreement is Company solutions mortgage specialized set our life can cases DocuSign and grow available most like every differentiating theme customers in That means and Cloud of agreement expand release, multi-million-dollar sciences. Cloud. use for adding to the like Now, and

our Let highlights. me latest some of note

Click. completed experience and identity capabilities customers sender to valid both also million alike. DocuSign management review our solution. dramatically security be one popular new new than identity for envelope It's check add-in into we transactions provided debut Monitor introduced allow verification for senders. that most of once an embedding by of and the improved until We've the For integration now then signer clickwrap improving using eSignature, ID done possible tools. enterprise the by one DocuSign and recently insights complete, more largest the bringing and automatic manual is for and the our X remain a And retail We of Splunk, monitoring

online on grow We supports states, more U.S. of our in DocuSign with notaries the future. continue notarized in today, completed to remote coming platform. transactions XX the number Notary And

out me. Turning for key stand to CLM, two areas

is CLM capabilities. buy-side our build-out continued first The of

is key management, Ariba. shipped for earlier which obligation have other adds buy-side huge, This partner year. and an to We a our connector connectors released

dates for and The and automatic enhancement allows It within CLM+. platform. to And is contract our then, but days. also search save the not the of by DocuSign renewal by highlight manual time extraction the features within security and as enhancement second and AI-based which term there's CLM agreements trust next such huge for keywords AI-driven only amount offering, searching a of the concepts capabilities reporting XX we call of effort.

like features continue suite bring Monitor, I our to earlier. We mentioned solutions enhanced to which DocuSign product security with

also trust deepening security and relationship our with are our customers. We

For us advancements a security closer is unified customer in we're and And of where trust these we platform base demand. of agreement a summits. recently topics, closely record Together, example, for processes. in and our our held to tremendous number agreements there products move across collaborating [Indiscernible]

a the US. teams. is customers CLM, volumes. project, a procurement the customers, increase Commonwealth streamline seen we've substantial contracts here time XX% other fastest-growing delivering our noted downstream. a dramatic to And of Europe's in XX-day planned countless been these workflow Further our And And inefficiencies, revenue. of in faster drivers as any the quarter for international through one the experience the is saw the This the by the in saw largest on than number and the that legal cases that business. processed, the our team us of and way a outside X in for saving needed theme embarking of DocuSign's increase HR expansion increase automation up DocuSign. another its by and EMEA, APJ, a contracts into saw XXX% an Celonis, now contributed transaction generated, services example, implementing in had than documents largely financial key QX process already today. hours The and of expanded revenue highlight one those Finally, to But date. that and enterprise-focused further more teams use US Australia, in reviewed, mirror, a team faster third of to The before. Bank integrate LATAM, addressed remains Company be APJ volume and manual startups, and

experience with business is factors, speed, user and by As us the we're that cost our how pleased these domestically. efficiency, have propelled indicate, same international driven examples accelerating,

hand I walk impact. been it central I DocuSign, another to environmental our always Okay, it Cynthia to to financials, through factor, has mention before to over the want

a to eSignature paper. of along carbon, are the and and solution billions of of make significant paper, has wood amount that pieces required replaced with water, waste, transport alone Our their

to neutrality has global committed addition, also achieving to fight XXXX. DocuSign by warming, In help carbon

multi-functional an of part portion website sustainability of we strategy. organized have ESG launched have a and our coordinate team effort, overall to our this As

ESG customers We look our you shortly. with deliver board has in and and the with help so to a incredibly be Second goals business. will performance positive their we continued in to DocuSign's talking example Q&A I the of our a customer pleased while on has in the our success. Quarter, to running own work continue to forward done I'm team realize partner focus the to real across

For now, over Cynthia. to

Cynthia Gaylor

base. solid XX% demand, customer strong time everyone. year-over-year early growth Total revenue on Dan, consumption and once was top expanding to for $XXX accelerated profitability balance we solid first marketing and $X.X our outperformed results quarter driven to revenue We year-over-year the ability with Subscription again, billion and both revenue thanks to renewals, crossed operating another million. And from QX the demonstrated cash and bottom by our the lines. afternoon, quarter. to XX% million good we this as [Indiscernible] increased and strong grew flow. $XXX [Indiscernible] Thanks,

Our revenue strong Total customers, international new QX strength customers XX of total, an year expansions bringing revenue. million, compared customers added XXX,XXX, performance renewals with XX% $XXX In by worldwide, continue year-over-year international our total outstanding million Billings to the of added in in of increase of to increase an X count total year-over-year year-over-year. board business to see across $XXX XX,XXX XX% to XXX than grew a the We direct XX% crossed existing we customers. ago. had million the brought almost with total XX% marks more to a another to representing X,XXX,XXX XX% the This grew record led as and EMEA. our early customer quarter.

grow a also customers. year-over-year total annual an of We customers $XXX,XXX greater XX% spend XXX than saw with to

Xth for total historical our The XX% of coming non-GAAP high the quarter XX% in range a XXX%. retention ago. margin year compared For the the in net dollar row, second was exceeded quarter end gross a at with

margin XX% ago. gross XX% a with subscription compared While year was

marketing revenue of or priority the the million last second with operating year, We last quarter year. products, the see of of our programs, processes. strong remains Investing last drive million for XX% systems market million increasing outpaced nearly capacity year. X,XXX QX employees, $XXX with in of sales the compared in ended income a the XX%, in quarter. again, of we Non-GAAP million scaling back-office increase to opportunity spending innovating Our quarter for the us high with phase was as and second year. the including growth and adding net develop next or skills our was people for and $XX internally Non-GAAP over We our $XX second up-level this half growth $XX tight margin talent an quarter compared growth. while and complementary an as XX% top-line

in Free the QX. to outperformance. a ago. quarter robust continued $XXX our QX top-line due in the flow This year and We flow or investments. $XXX cash compared same $XXX Our in margin, with cash XX% million cash compares prior Operating at cash, quarter or flow client XX% million, or -- XXX million cash remained or to a came year. in exited cash, million million $XXX in reached margin the with equivalents, XX% in restricted XX%

purchases turn me as impressive XXXX, their last it, a nearly half used exceptional reached accounts, retention look more we way our up you year and net guidance. Halfway our been seen X In consumption and earlier the the envelopes for dollar than let renewing in nearly last year the doubled this more quarters, have doubled at Now at is every nearly we have levels catch and customers scaled business our levels. highest customer Anyway, fiscal two-fold, our through with to Clearly, yet. operating they've profitability, DocuSign. have growth scale. in

the we them do don't expect the see paper. of seen whether to to While back people go the proposition value going regardless our levels of the we height at not growth and pen office, maintain of strong, is to back pandemic, peak

the $X.XXX numbers, growth in 'XX, of 'XX, XX% quarter million $X.XXX billion growth and for Fiscal or year-over-year. billion of XX% year year-over-year. to we to in revenue Turning million $XXX expect for Fiscal for revenue and or Of XX% $XXX year-over-year, growth we to $X.XXX to for million million of XX% of Fiscal to to or total XX% of to XX% of and to third the billion to this, year-over-year, growth $X.XXX QX, 'XX XX% QX subscription anticipate XX% $XXX $XXX

growth $XXX to $XXX of $X.XXX year-over-year. million XX% QX or billion we to XX% or billings, of Fiscal billion in 'XX for $X.XXX XX% growth to to year-over-year expect million For XX% and

QX be to for to expect XX% margin We the Fiscal non-GAAP XX% gross 'XX. both and

XX% We to to for Fiscal XX% XX% expect and QX the for to be non-GAAP operating 'XX. margin XX%

expect amount and for of 'XX. see of tax a de million income, we provision $X We to and approximately Fiscal minimis million $X other a interest expect to

ended both shares year We of expect closing, the average fully to weighted position. million half XXX financial we the and 'XX. a In in XXX QX fiscal outstanding diluted first for strong of

We pillar and for especially team We today. are our successful in year. a on scaling quarter. work second to the anywhere in for would another our focused growth, joining Thanks forward like and investing as of business, thank again to DocuSign and critical future to look cementing customers deliver their economy. DocuSign helping hard partnership continuing We us us the execute the half of our for

now for call will the Q&A. open Operator? up We

Operator

Thank conducting you. Instruction] We'll session. question-and-answer be Thank you. [Operator a now

with Bhavani your from proceed with question. comes question first Suri Our Blair. William Please

Bhavani Suri

Thank you. okay? Can guys you hear me,

Dan Springer

hear Yeah, fine. you

Bhavani Suri

fundamental so at It's It's And a question. quarter not quarter, even was especially to but number. That trends lot. Great. or big, usually Congrats that. on solid NDR rare year, a that about a we've the X about it's talked down, a a fantastic. see this Company NDR It's data. question. have about really congrats improving, scale I on not

amounts you the you we've long As data the have contract about talked think how of term, access leverage about to. you mass

How XX talked you. or How about, things I'd You just a is X of XX not through talk even or I'd but again, for even you've remote XX, a talked going Thank that to that months, we've monetization loading, to talked to bunch stickiness, -- about you about love CO but the you that love talk quarter also monetize of to about but, are X years. drive process. platform? data? data

Dan Springer

are break I do. really about we it, we it particularly lot deeper intelligence And customers just we topic. frame tools to on think two about the again, the existing you time well and the I example we that acquisition a think performance in into to business and of about won't understand have and can of a this artificial enhance, going what there, we What interesting And their think Yeah, in do as skillset. what them analytics how will they the have go me think pieces; that what do how we agreements when prepared past to do. investment to let our great to that it's in folks which able described. to have, an And data find in. run business gave reporting did leveraging focus We data, is to I we example was a leverage a their help we're and increasing opportunity the to intelligence, been better. their going to more huge improve Software be engineering invest case, Seal our artificial against help an done aggressively in quickly to they've information they learn able search the remarks to as

lot of DocuSign they're they used that. and of our of to agreements drive to not us more make thing not incomplete people run are going really ways certain success, at data that grow can help to the run figure more up, themselves them look might you're we more business in parts with information help customer them their science responsive think able doing because I as can Xnd to the using more and segments our see as a when using be products, their out help a mine business others we better products, so not world us how is, better. help because pinpoint our how they're cases, to Company and availing customers take have products which

give probably I that's about. a excited couple think the -- we're flavors of So

leverage to to able offer One of our We're figure would software this the about about of things At that. kinds lot a a point be people. we to different out the BXB in super-sensitive ask across time, customers, to are a services way agreements Company. of is, all we different people

data models, in say thank agree customers, you about the specific is is going off is way you sort our use Last fact our on way. But on in that intelligence. the job roadmap do to things customers. customer get we that ourselves, I you our our to Taking customers course, tell at think But over for be to do people when information is other another to customers, a with Our now, data, and business, benefit, the there's we use have train like to allow to any that way. our direct of to all not models, they learning helping to opportunity The across much, make this data use million using very some Quarter, lucrative-sounding us extract purposes. living talk going serve good we're successful that and that not to of those for and of to particularly we're our customers the will there. which in be customer's exception alone will, their model like around more lots better of artificial not of XX,XXX our we for a it us like new our course, this take I had purpose one we'd you we point, when a our going set. data more you other

Bhavani Suri

little I to back unless bit. think push I they same helpful. it's a the you question are mean but

especially about had say, others take monetize help across, benefiting, don't customers should how and drives I a whenever think best again, So, data customers. have they how think are talking cross selling and perspective, I about is you they else's with can and through Help someone show understand want concur competitive And I think today, that? to else, data it bed long time, not, from you -- I the data benchmarks benchmarking someone earnings in we to but from is a to time. monetization stickiness, but us guess DocuSign you where have revenue But for that my us AI you, expenses, them? with and data whatever how totally and always ends bug back up interesting over we share question agree

Dan Springer

give to out. Yeah. I the is we going examples first business have here back let more going of a quality to business. And about, think that allowing it of things. the drive we to they couple get further us you how couple those be we strong have off good customers, them a It of what we and that of monetizing be of core there for -- But data Well, not talked we just but our the at first, effective only if really have. play me are customer to clear, ROI, and the for it's do, success, a are seen about but bucket they view just -- adoption and drive that we again, the of of increase I should bulk point

we our isn't people thinking a service with more it's about offerings, about so put of the what So, with already us. do set will new to want enhancing Agreement Cloud

us them. of about that set where opposed we it want question turn might how to benefits comes is to business with eSignature them, And think, have of example people really of more one new grow the win of extract to to haven't Now, should related That's that's information core their with to to realizes and across once is their so showing CLM solution how get all very, DocuSign, agreements adopted a across operate really they're go means data it by effectively to and the and allow believe we that they to integrate footprint offerings leverage to service us. think going Agreement when our their can the with agreements and where help to out way their other in that it all we understands of as the information and that to and DocuSign, consolidate comes we across your back all that data, they the efficiently. they X as payout our the sell Company that repository that repository. in at And that because Cloud us an the parts more we expand then someone we I yet that them effectively into

Bhavani Suri

I appreciate you. really job. Thank nice to for and that. candor, that. appreciate you the Congrats thanks I Very

Operator

Thank you.

from question next JP Morgan. Proceed question. from with comes Our Sterling your Auty

Sterling Auty

And by one starting Yeah, the investors high-growth pandemic, have especially regarding to growth one as my this that about having levels no showing question of really number on well. Cynthia's question moderation high of in pace companies how highlighted thanks. Zoom, of international show Hi, at we that comments the one move particular, of post-pandemic guys. deceleration. front. week, about But your seen is which of it's as in we've think in the I just peak growth growth And you're not a sustainable the expects. forward, the should light

Cynthia Gaylor

the for Sterling. thanks Sure, for question, -- the thanks

a think levels I height the we've saw at several of maintain the last peak expect kind been about quarters. we So, of talking that during it wouldn't the growth That to the we pandemic. our

and have still second strong had we Now growth and half the strong guiding a first that's that a not year say to of We won't growth. strong half. very we're very solid

one So, model. beauties it model of subscription-based a is of I think the is our

that to these we at expect did But levels would pandemic, so, see and to the scale we tend gradual. during peak things of height of continue. And the be growth

seeing growth were So, saying before there's in different now of kind what it's I our we terms before rate. in think seeing of don't and anything what very really versus we're consistent.

Sterling Auty

you. Thank Understood.

Operator

you. Thank

America. with Please of proceed with comes your Our question. Sills Brad next from Bank question

Brad Sills

for you real the deliverables Great. the customers lot of and I starting to some traction there's CLM here, go know the terms typically work where the start a is Thanks, My it Agreement or nice it like congratulations or in are hard Analyzer? is, that Obviously, They're with Cloud? Analyzer? and Congratulations they Cloud. that. Agreement guys, product running ask that this entry Thank and a wanted I and there. path look early conditions eSignature with seen about the of into are they -- some repository typical there. does you've question typically then What already on on is you. the Quarter. side insights cited on for

Dan Springer

Brad. absolutely. Yeah,

make let is as I'm The question, of first it. The tip absolutely but for the your us spear answer me sure e-Signature. in clear the you about is implied

majority vast, the of and customers fashion. do So, figure for way the remaining out an of vast have online the them until vast, to agreements simple It's your in right? reason our digital Cloud, really capture with a to and start a You the don't that hard you aspects Signature digitize agreement. Agreement

in where that opportunity the really full Cloud for a see thinking to start we your So question, What about construct they the move second referred that that signatures that's Agreement where to build they be agreement. start. of their thinking clearly want we're seeing CLM to it's to to tends feature them out across start own and is once people about a repository of you system

things move where where one we customers see as right heard next So traction And CLM you see mention in the now. see me ourselves, we we a that signature, referring to, lot when of keep remarks, signature. that's had at was to had peak and just in to is of the eSignature pushing the is where prepared signature, mind of in our go we surge that the COVID, really demand we Cynthia last year us

Of the employees core, because to rallied But focus had brought that's this natural slow of said on our of us right? we some that we was the sort what for dance, parts to course, us, to in our success to a at Agreement and demand. other meet DocuSign just customer Company, are, customer we meet because the surge Cloud demand, that down of

back beyond opportunity let's out of and as really to ago say people that opportunity we the most we're think really rest to to companies, the Agreement big Cloud. Now were now years where to starting foundation the this in signature. on year go we two CLM see focus they for how Cloud really be the the build Agreement expand will And that into next

Brad Sills

look great What to That's like given a What implementation involved to much in help just the eSignature from is is just a partner to follow-up community here? and cycle go on with go CLM? that. SI so Is here developed effort CLM? does to thanks Thank much. there that maybe there's to and you've complicated this repository, eSignature Maybe is that seamless? data from not Dan or that that resides it's work, more an you so it the

Dan Springer

you'd the if we to fact hard an And build the at but that didn't have to, XXX,XXX hope But web of me want than DocuSign product at fantastic talk to have that We're a very is guess, make start you the customers to. and come you absolutely over indicative anyone never service. becoming online, they let we've seamless don't we're people us it our They a to. different customer. core And to talk that possible. customer wonderful working that's sign be signature as to one up done amazingly becoming someone to can that as through and if have CLM an eSignature as they software. things to the of our clear -- of they have Well, understand, job easy-to-use construct I look hope in using award-winning

blossoms smaller ecosystem part point but trainers. have a we CLM, professional smaller that a you that the want really We train SI do. you of to fantastic use of goal, to team, a and that absolutely do So, are We'd see that partners. statement one what time, when to of of work. really when the our get we love probably we have get to services it's over it going the to organization SI And

But focus is ecosystem have fairly part we of than hope services, have something team less excited in the the Network, right as resources, And do If really network themselves our our vast for like can, which of strong internally really be a us business. the we SI it's to they is it not about X% the can they we have and ubiquitous the and to and progress. IT then whether a be or really they available a of believe outcome Now, we're years build strong for they preserve it's a feel for been as there, way the We've that that's they become building big but so super-strong customers, leverage will revenue the there. come. it'll if our majority it's unusual. is that's to the

Brad Sills

to Great Thanks, Dan. hear.

Operator

you. Thank

Our comes next with from Scott your question. Needham. question with proceed Please Berg

John Godin

departments? is as higher behalf as I additional guys John mix go of use on cases taking the or of anything Quarter coming appreciate This from versus different Berg. adding question. you across use Are guys. existing seeing far consumption and growth, cases different levels trends as you moving my Hey, Scott as this the past Godin of over far

Dan Springer

anything of terms course going in customers. to we're different, be to responsive our of we're So, doing

and have is a likely be them. use success so fantastic suggesting might standpoint, customer for our answer we're The And out both. cases of think to do from respond well, where again; applications needs next customers what their customer we most seeing make we organization their a sense growth that's there to I more the might across business

my use in examples said, working But expanding we volumes, have examples that the is we the of a of initial land more in, the also Land across DocuSign lot departments of to people who a upon Company gave people ROI and it's in fantastic some seeing one that other good an group Bank and cases. I more do to then Remember is the and but are fact number Commonwealth of Company. of our example want really well only seen a within that of based and that. Expand case opening fantastic also expand with with, customers not cases, remarks more used case, deliver we get model have for use divisions that we use we we We expanding

the use prior I there, of over nothing of in different noticed there's things from I increase I've in in say the standpoint that sort an than of that COVID think and the year volumes. peak cases doing, at saw last of And probably years very so, we would expansion were more people terms mix, more

backed new of parts needed critical economy I So, the what's cases we're normal what's and they address existing in done. use hadn't they there mix business increasing use of volumes think increasing they to to cases. anywhere the their realized were probably of the just Today,

John Godin

Great. guys. Thank you,

Operator

you. Thank

Keirstead with Please from your UBS. question. next with Our comes proceed question Karl

Karl Keirstead

operating would about XX outlook. nice the margin XX numbers. guide impact so the you. fourth bit your I'd for on Cynthia, by could quarter, your talk in your driving margin congrats and bit little you, your little maybe a Thank total that and Despite million, of if love revenue you margin second raising it half. outlook the left Thank you step-down target second XX to a assumptions require a could talk you about half what are

Cynthia Gaylor

you question. for thank the Yeah,

last we we're end the the long-term So, in as given seeing opportunity margin, the we've performing we're at of our margin. target market for traction investing make in we business. growth to and have And said we the low looking quarter, are really terms been sure just large of

So, will to look the in that will half product that marketing we into in going built the to to do build and next remember, of it expense continue Also, that, building tends and for we'll to Quarter. into back some next look more QX programs do do in development year, year And through the to particularly hire QX capacity our start into folks have we sales continue and and in other QX, so year. our of as capacity, we teams.

assumption assumptions, that's driving invest looking seen of So half, you top-line to model, the business term, from margin the in we are what's and certainly for into that's the remind margin. the in But some the just leverage in and built a long those our also over the first perspective, half of operating outperformance I'd in right? second terms growth shows

Karl Keirstead

Got it.

for maybe Cynthia. you, then follow-up And again a Okay.

quarter of second saw renewal had look what Are the continuation half? moderate those the expansions. you embedding expecting the in in for of When a early of that provided are and half, guidance trends QX in You into and to what renewal that you mentioned QX? you are terms good expansion you second you -- you another and you early that

Cynthia Gaylor

way lot about a and QX. this that did and was talked a we I the in we would think, into describe I would baked guidance. strong it, renewal moderate early -- continued what see say So, has QX, the to on last I in quarter

and that a expectation similar levels, using which the on are it in expect baked trends the we're moved we consistent are revenue baked with thing, that second customers half about to QX the the at guidance we trends But higher some peak -- how have renewals, quarter it's last as [Indiscernible] always because of into the assumptions product year. and and expect guide quarter that. we consuming into were the to But wouldn't and good before. so we at But our we came wouldn't is are the then levels. early we those looking consumption our shows levels those peak talking As of have and will

Karl Keirstead

That's very congrats again. clear. and it. Thanks, Got

Cynthia Gaylor

you. Thank

Operator

Thank you.

question Rob next Our from comes with Owens Piper Sandler.

Rob Owens

my international down taking question. you're for Was that to the seeing. the drill Thanks hoping on a little Great. front and bit success

understand the of think the success about a year, a Thanks. year what announced the year. we've to I where is like help next ago you're look you going where International us seeing acceleration last over second is so, it obviously, new half over President and seen and maybe

Dan Springer

success we largest numbers having growth presence, was in more we board international. online. the XXs We board for in again where And same, lot up of which strongest EMEA, and and more I on think have core to focused would you're of but a And continue put think look LATAM I in performance online across with I this up where I we strong APJ, expanding a we've say it eight have you or the unless sell quarter geography XXX is -- outside on don't place America. like so for across it's countries talked think see the to business, that board. dedicated us. our I really feet if next we we've bit. going you've little in the year, think at a that the forward, the you're good with the the was, that a of our North countries terms sort the pretty on to countries see focus end think construct we may going over in nine about been to had over performed of pleased this We well I in eight it's I our just want those think ground. where we're operating us getting but to ten not people across

portion Cynthia are the idea building a bullish international have significant sales we the coming the the the it to to we're and we're that we for continue a about big of a revenue going will to have out when of and same record at -- do quarter that's X go in reputation you is is So, outside look think, us. -- our that Keep capacity, referred we also opportunity in branding that big. is be Europe, XX% I our of growth, think into only don't core US. are still the I way and think opportunity. the we in we will But a it's this And hit investing mind, exciting super of I country. of internationally, -- aggressively putting we markets. And home as super have well-known US be

the for so that what is. And opportunity low a is number

So, we ahead have growth of a internationally. lot

Rob Owens

Dan. Thanks,

Operator

we ask themselves X a to participants As to reminder, limit question.

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

Rob Owens

Oh, great. you. Thank

add I'm Let me that congratulations. assuming was for me. my And reminder

[Indiscernible] So

Pat Walravens

Hey, right. international. stick All on we'll Dan,

France, America, think I Australia, North Mexico. are and the Japan, Brazil, X-cores UK, Germany,

And so, -- the largest economy

Dan Springer

XXst independent to to them despite just I friends efforts in like said said north U.S. want I you you, state. people you North their own make are the you America. hate country for say the Canada America. for interrupt North to and

out a separate colleagues yes, of the focus So and Go our important as we absolutely X. with there, consider question. Canadian your them ahead part

Pat Walravens

and Middle on that the list would Okay, not East, China, think largest that Africa. are the economies Italy, so I India, be

to love on thoughts hear I'd So, your those. any of

Dan Springer

that obviously with so complex. I I'll answer China it’s knock the first. is think one Yes, off incredibly

catches work with to I complex really a near-term well. there. perspective know what you economy out figure do. before our and in I also People least can where but and of or you huge see something we see risks as complexity we tell not at probably But big need will investments of of that fraught that one have opportunities our on not market of are to in but and is the the sign piece. do already, to China, with a for asking I really lot future the lot we the XX for have put of little area we an big customers short-term that We a would with the population, options obviously think a is of the future think the India bit and course, more significant expansion growth. done us world year very is years second-largest India for deal largest as up. I it's do, opportunity we in next a another two a

that's the going Spain Italy; hire The more street that larger to to think You talked but area Netherlands Europe on will is North about add perspective we And Italy the to rest about people you can the actually where Mexico of I actually ways We put looking terms do over us I And would we've or that in area year in be another about is for know for countries be there. and that. and started America, have the opportunities already. expansion, of attractive. place a to about feet the recently think where same you so there. thinking see next an

be East probably for I EMEA. that will to be some of the later Spain, the online would North the as one a the obviously, those commercial much we The countries So, both hub Middle we area sells we believe of would demand as last of other it area I be don't there. -- of of the East mix. that Netherlands, X business, the Dublin sort fast think it's as that I mentioned Middle We the Dublin and out out going an is suggest mentioned. seen But get Italy, but come countries all our growth American I for have countries. from into group that you to than Middle us, do but East served

Pat Walravens

Great, thank you.

Dan Springer

you. Thank

Operator

Thank you.

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

Kirk Materne

talk the start quarter. if lap on Thanks very retention you was net I wondering year. from the peak demand rate just periods last about to we as Cynthia, the much and congrats

that rates. ability that rest how is starting as to you up to the the to you feel just I guess wondering influence at talk these I well. SIRAM it's was yet about Agreement just on stay the is My whether of comment Cloud, all? also want at Thanks. And if Just about Analytics, not but

Cynthia Gaylor

Sure. Yeah, XXX% of we high the were really off last quarter, XXX% pleased quarter. the this with coming

into the of going above ranges. expect our historical year back would we So, or half the at to stay

changed really footprint expand continue across so, there. I it products. aren't And as - metric great as It's thing they dedication non includes agree that the is, Dan with to little to metric tip and eSignature products nothing's would for But and does the customer products of is that are signature with contributing said to statement driver. also as really that us -- the and DocuSign well. demonstrate The our the your but our number, that that customers their main spear about bit with success making successful a

Kirk Materne

you. Thank

Operator

Thank you.

Our Radke your question Tyler with proceed Please Citigroup. next from comes with question.

Tyler Radke

over. new the than I there a up customer might what customers you of ask kind that put that you're a pre-pandemic the Hi. year putting last you Clearly, been you question. despite investors now, just guess. customer that regulatory lot use I numbers new still you number Good year, think to I up. landing up could last not for afternoon. guess was ask have last some if are ways, up customers are number this Thanks for they've In you're cases taking multiples these different has understand, saw it signed wanted help I are additions. able us remained my signing -- why about and DocuSign to the get year the year, pretty of healthy big would that hurdles put

now provide new the to Just color of strength for compared Thank kind customer any could impetus you just you. last year.

Dan Springer

people start ask vertical it's cases. customer I of people out vertical, answer in there's starting the accounts. DocuSign those a within in the don't seeing you think particularly by already -- To use of think any used who the We're with significant I look same difference cases. all the started sure, For with, which conundrum hasn't us the when people sort new at time, are

Agreement dramatic is about growing, Just the correlated billion if the of think coming companies. give highly number TAM They XX fact we're about revenue. it's with And you look of market half at market. two at do by and close that, think little you signature you doubling rest is, you is look TAM. share But to is obviously a you a an And far thoughts billion and that leader, Cynthia's over a clue the take this a are Cloud the of one it. about to to if $X The we think the over at the are TAM and One underpenetrated numbers. answer going guidance, space.

if over there U.S. little about customers. XX million alone, excited and fact we pretty we've a just a you million customers, got in businesses. like are passed million to we that the think So, the a mean, got I But say

So, you number, many a multiples that. think of about global

believe that But every the Company just we and surface not DocuSign DocuSign. to by them. we're work that Company everyone, verticals can like penetrated. use are can call, in you if are a imagine we lightly it's all the innings very This and is, scratching time of even -- using there of should and early that this get the reality game, you financial we in So, is you tons on the true are strongly services not

the every to of answer we're to for years so, lot going is come. new customers And adding a be quarter

Tyler Radke

you. Thank

Operator

Thank you.

comes proceed Alex Zukin question Wolfe with with Our from Research. next your question. Please

Alex Zukin

for Hey thanks question. my taking guys,

just go because it's maybe think I want an to back Dan, I to for important one. Sterling's question you, So,

may I than think guidance more in just and at we're the the at magnitude the you've about does past conservative a look if want billings a pipeline, about you look metrics, particularly to all had the incrementally for few from guidance, if the we we retention the quarters. SMB more trying I to rates, deceleration, color be of look in take And category. little understand the hear bit

would So, I or understand, how that a it? of something business in to qualify just want cautiousness is you're seeing sign you that

Dan Springer

I'll Yeah. my the let guidance. expertise, talk Absolutely. and view. give but I'll It's domain just Cynthia about you, her

a strong it's guide. I pretty think

If pretty the were we you about the historical guidance the Company considering has We giving size. half Company look good our was rates, that feel the grown. at time pandemic; last before the it

on at and So, looking is still we're think that. doubled her but guide, what let as Cynthia I particularly a we've on revenue, really give strong you well billings. view I'll on

has a business some I feel In your feel COVID tailwind significant was in the terms I what's of don't think think customer with I about in years seeing revenue demand. happened the there's and numbers you'd X We're of would growth. me the that new perspective I happy how lot the of slowdown. revenue, growth what ask front our us. if good. the big like we We marketplace, we're Again, we're do we feel feel that I'd peak of couple Cynthia happy -- I'd that a rate have pretty about good. a mean, said ads, in of a with for question ago reiterate

the do to us would growth that for to long run. so, to like look And that try work, create

deliver marketplace, be right rates with, up seeing in customer the specifically guide, to that. there we're look you have of rarely the very adoption, meaningful strong on in leave customers had any with talk continue gaps churn if I and be some If job the to having to upsell think would are the let churn. standpoint it and than rates. we're But dramatically we're from do people I think we but so, where the in to dollar net we -- were XXX% of success more we not growth. the But growth don't very whatever us. seeing at do not going might making very, to a I'll have Cynthia the way, able difficult any differences retention,

doing to new our think at they for themselves. add We're think teams continuing fantastic quarter. number each base. And large I the speak then success in job again, the driving growth a So, of I a fantastic additions, new customers are

not the slowing results any it's So, and these significant say at financial I in would of indicative sort the that take look of business.

are strong. I numbers think the

if question. know don't to to on the Alex's guidance Cynthia So, add have I anything you specifically

Cynthia Gaylor

would we're went Maybe Sure. we just That at philosophy the answer. year consistent as edges, to guide said, Dan the Company considerable and public XX the of can been the very off first a mean, months. a back scale And half raising in half we had since what last has over to we was strong the guiding very second I comprehensive I say of guidance on our the XX half, and see.

feeling So, we growth what we beyond that. a we. the about the do don't the we're in and what good We feeling see, But business good we're about guide to speculate rates not guidance.

Alex Zukin

that to of it Understood. of follow-up. quick Is a Thank so the gauge -- kind just guys. you, we get bookings? -- the maybe the a have metric I possible on RPO can

Cynthia Gaylor

We quite number, when and that think just is it, will we quite calculated. rate of contract that so indicative use our year-on-year the that's the -- will strong be our but available will Yes. you on in the the don't queue is given RPO metrics also strong. that way and -- duration We'll in an be be queue, publicly don't that see it but growth it's

Alex Zukin

you, guys. Perfect. Thank

Operator

Thank you.

from question. Our next Jaluria your RBC. with comes with proceed question Rishi Please,

Rishi Jaluria

much. Wonderful. continued Thanks. see here. to Really nice Thanks momentum so

the to and service's because bit a that in But requiring always services more very, wanted line it's going that I remain this uptick. of professional the first you're ask to it's just about be is a relative terms what -- of at I low, seen in you and looking know question to we've expecting year services? to little expecting of guidance, one expect in seeing very is Just it your the bit acceleration what are CLM half. you're of half the particular, maybe back way. services, going it's been, due in Anything, to your bit more mix little on I

maybe services expecting on what in So Thanks. professional the assumptions line. us embedded walk you're through the

Dan Springer

Yeah.

think our small our inching provided love about thinking about We to tell It's would our let customers have one portion lot less Just of the your the P&L are on a as tea. you earlier. our of by services terms a such me spend provided comments we thinking services point. to less the But it and about of you in because of that this areas business. to time not is of

We building invest vast are majority is customers. all services the to what a the what they our an vast, of SI partner first Company. work is We X want we that's vast, do think do, build does we out fantastic software. network in that for and

we we specialization that have. the of the So, for idea like that,

partner there's implementation. more our SI Agreement there fantastic the the you That overall from do Cloud see reinvest thing software, into that service CLM, Agreement drive a it's to positive incremental would statements they probably [Indiscernible] work in like opportunity mix of what be to But our time, going them you and for of Which to built. us. into could a is time, of to want network moved if be more would move take going any we sell. going relative is time to to opportunity be any required That to services that the DocuSign more parts mentioned. that over So, that services that Cloud, to we've is be of indicative hope other platform if continue again, services, where more our the create to for as to that core

Rishi Jaluria

Wonderful. so Thank much. you

Operator

you. Thank

Securities. from Fargo Please question. with comes Wells question Turin Michael with next your Our proceed

Michael Turin

as just into the engage much investment at early that the playing us more help just remind have to gearing afternoon. how Thank I'm underlying just changed dynamics through across back part of have you And Cynthia, if advantage you. gearing, Hey, conversation? there. Cloud. can your opportunity just anything to you is so, as broadly? an going in base? provide renewal does they're that to commentary, changing Thanks. are it spend customer visibility Agreement of the insert Good renewal those you all assuming conversation And there take you does

Cynthia Gaylor

will, them expansion that to doing But an forward and more don't and products customers, could so economics them do to charge if we a Yes. using to the use about what through them thinking have you we're they're renew time But more. how opportunity be reengage with and sometimes the how se. talk the expand on per great question them about or It's we they customer, they're a what purchased us. use to with we've what using as the and than -- I think customers when they've overages seen look is we

incentive visibility seeing. And renewals, the so, you they their and pandemic they're have that it you eSignature Agreement it's using as in high not Cloud. of of see lifecycle it dynamics a through couple both And through consumption as levels. ago, on the how how the characterize about well we're peak are side product, of early we consuming talked as quarters we're into terms we quite contracts. well the those of we broader did and the But customer types do But expecting see to the

but we will contract to that can consumption their levels. how terms reengage we them making be on track. something sometimes them, it doing with that their So with -- what an match new use use customers opportunity that and sure also we develop else also, cases, as But is

Michael Turin

Great. Thank you.

Operator

Thank you.

Shelby FBN Seyrafi Securities. comes with Our question. last Please from with proceed your question

Shelby Seyrafi

you to because Thank Can are to in Yes. much. have very clear, be decline QX especially implicitly Operating guiding for you going on QX half, QX? investments? investments second of the the to margin the And elaborate from in non-GAAP the you're increased in increased you

Cynthia Gaylor

dependent margin, and we're in, line top guidance give dependent part and is a operating that comes making. we So, range revenue I part the of think where is it of of that on the on implicitly, the in, on the where comes investments

development product sales think invest in growth, our then with innovate I takeaway and drive in looking around market to in maintain are for the areas, we team and the particularly we to leading growth is to and our product so, top-line and position as our continue And here customers. the help marketing

main and think given the two we're a also I also catch-up I'd at Company back-office doing areas. the and has with lot of we processes are how scale, things have like note, that. those grown systems that

make a to continuing we're So, at we scale. make back-office our serve customers in investments sure the to can

to So growth year, of we're But our maximum top-line looking has [Indiscernible], we that catch the investment. our operating intention the in the said, year by end exceeded margin. optimize to we and time the those as is are ability -- areas our invest because for this get so versus outperformance I to for for to up

Shelby Seyrafi

Thanks.

Operator

time. further turn management would back Thank you. this the There closing any over are no like comments. for I questions floor at to to

Dan Springer

Well, We virtually, in albeit unfortunately for QX. you thank then months talking forward us. all joining seeing you much after to to look Thanks joining us. much the next and you so coming for

Operator

This concludes today's conference.

participation. wonderful lines your your this you time. disconnect a for may You evening. Have at Thank

DocuSign (DOCU) 3 Sep 212022 Q2 Earnings call transcript