DOCU - Earnings call transcript Q1 2023

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Operator

Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's First Quarter Fiscal Year 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session.

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. now of call Finance. will Martin, to I President Vice Instructions] pass over the Roger [Operator Please ahead. go

Roger Martin

Thank you, DocuSign's operator. DocuSign QX Good afternoon, and earnings I'm welcome call. Roger Martin, VP Finance. XXXX of to the

on is our Cynthia first posted Investor and quarter on me Dan announcing issued was website. press CFO, the DocuSign's our Gaylor. are Joining CEO, today earlier Springer; results release The our call today Relations and

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

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

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

non-GAAP to figures, financial press GAAP quantitative Dan earnings website comparable directly can release, a refer our call these please now reconciliation the found which our information, to investor.docusign.com. the regarding Dan? today's over of measures at to on like information For most I'd Springer. turn and be

Dan Springer

important around Good quarter's of to afternoon, want Roger. some enhancing joining building QX and products. highlighting begin then call the begun Agreement Thanks, everyone, results scaled for today. the solid thanks a organization year has DocuSign made DocuSign our results. announcements by we suite into some and and delivering earnings go I of Cloud our

representing growth in revenue of quarter of year. year-over-year. XX% XX% was up First last revenue versus $XXX grew making total International XX% year-over-year, XX% million, revenue QX

XX% in we historical billings net is and which Our the quarter, within our delivered range. grew dollar XXX%, retention of

as we Lastly, results customers the our QX, total commitment the our post-pandemic and million have to world. are we our of strategy bringing around adapting added required team's increase flexibility, nearly new customers paying XX% year-over-year, X.XX world. in an to unwavering These go-to-market XX,XXX

in challenges and Our dynamic momentum many general our results advance about only our our workflows Agreement defining peers that The signature ahead. and the electronic journeys. continues revenue But Agreement growth leadership a globe. inflationary DocuSign Cloud we are for transformation our of go-to-market strengthening market instability, for to are as environment highlights clear volatile like environment company. global continued We're team and execution space, also businesses workforce to as concerns, a well we leader path across seeing, capabilities for the the with are excited in DocuSign, highlight ramping macro the investments our in well. category as to opportunities in billion are progress the and and to transformation broader be $X we their the our confident the we strategy digital digital becoming with the of need experiencing macro continue partner our will digital customers

investments Our high-caliber leading to dedication to talent share. innovation our and in us market upon our build attracting position

underway, Our plan to are are early encouraged scale is by the well we and we seeing. traction

is So in of level prior growth expectations. our the areas certain lower than

next note made Last leader share Let for SMB hire shared in and growth; building a QX, their In number have segments I of we would height sales progress we quarter. transition go-to-market of a now foundation specifics pleased to from important last for quarters me seats as and who in President of strengthening Shute, American success of made we've Field challenges further with mentioned with the that in Operations. been onboarded we as scale quarter, and bringing be I'm pandemic. sales the quarter, our Also, you. as tackling the our some the phase in an North very Worldwide seen recent we the in for world-class of we I our commercial new a leaders Steve and that outstanding

the $X hired new leader, recruiting, training American and and go-to-market ground enablement, running, with revenue focus on North in Finally, enterprise our a billion beyond. scale laser rounding leadership. This to team team DocuSign to seasoned initiative has and focused driving just out we our a hit on

the gives We of agreement within the have formerly key a President and to Legal headwinds Christie, accelerating a focused us Twitter. Workday; current of Shaughnessy, member a customers Suh in for as at team will and team product to solution and being a half products. us announcement upgrade is going callouts. work organizations our automate role launch some who process to key built noteworthy storage transition seamless a these plan of secure creating, I Chief turn that our a and XXXX. easily CLM contract centralize board and will family specifically deep and we Jim allows successful CLM+ the foundation areas People expanding CHRO despite life appointment big or to that Essentials light In IBM, on to on the as growing the announced faster as our Product other in from in Officer, instrumental of addition are and previously integration we Salesforce. into accelerate hires growth our just of It's some predictable products. sustainable Technology, also to grow, contracts. streamlined with a with CLM Jennifer QX fiscal cycle place, in Officer, negotiating to she of via Chief growth CLM of also there's their path be our was The second Essentials, cloud; becoming contract macro new in And want and DocuSign quote-to-cash now from of year now innovation Cho bolstered the needs focused in where Inhi be and customers' management to allows to value full time

in area further other where of last steady release quarter a to workflows. continue secure was of The we eSignature, big Signature to simplify innovation pace and features

in example their eSignature. leading innovation that And feature, Bank Wells via This financial to our a and continuing category of and reflected of customer Our great lead how America, where institutions is pace name of verify signers trusted steady metrics. enables Fargo. we're our Chase accounts latest our in like is ID as verification identity the

the than we a across in our XX% as well by example, progress during ago, demonstrate, as as growth the the Cloud customers For a with our leadership grew ACV to see year we Agreement greater eSignature, rest suite. both $XXX,XXX successes from quarter continue and of

lands in high-growth quite the to or but with whether So Fortune the The international see expansions US. our land here the expand SMBs start feature, Germany and the customers are or the opportunities. like markets Digital XXX same are varied. We tend in

me brief a of Let examples. share couple

have use eSignature policy, system One XX,XXX work-from-home a steadily flexible customer multinational a who corporations, significantly their quarter, request of to new quarters. company over few the an eSignature This their which over largest aligned Last their with has work for predates employees. been the is with a pandemic. and last global deployed of the expanded remote the payments over decade

US streamlined continued DocuSign Additionally, this employee opened clinic also within forms the of within we their have health recently adoption. locations deeper Agreement turned customer a using QX, trend main office of the saw when each they In to for process operations. new clinics where Cloud

and well now repository processes, to have risk global firms as For prestigious leverage being the consulting to largest world's customer executed, execute metadata most and levels end-to-end with as move, identify CLM+ the AI jump they in standardized from example, a previously globally. With agreements. document implementing one agreement build and centralized of our made long-time eSignature in-flight comprehensive this can

for summarize, fiscal a we posted So quarter year first to XXXX. solid

our in to beginning new we and the scale, pandemic are go-to-market from post leadership. from making see our and sales benefits motions are success optimizations We

continue in are moderating to base of outstanding profitability. balance strategy in the we and to our we the capitalize billion invest and appropriately in ahead, on TAM, place. importantly, $XX plans With tempo employee we growth our to considerable hiring a confidence have our we business While, opportunities the team have

amidst we're relationships. partner interest build of from wins increased work ecosystem we As a our to and macro to build deeper headwinds, momentum seeing stream steady

solution strategic Microsoft reinforce a Just Cloud this call expanding week, accelerate the we announced partnership Agreement what that Microsoft DocuSign with preferred our global and anywhere we are the work to we AppSource. as within

of DocuSign. We've Microsoft. customer long-standing been with partner relationship deep a have a a and We

to applications. dynamics solutions, expect number office, these of across broaden integrations including new the business continue a power times and to capabilities deliver We and Microsoft's and platform

both margin industry-leading and expansion team a So the a driving excellence. we vast with world-class on have growing and product and growth market, discipline that focused operational is portfolio

growth to plan progressing. and underway enviable Our is reignite

plainly over that, objectives the our detail. I'd With results optimistic outlook in to greater as future like been. hand to Cynthia and I've these about it With insight, Cynthia? through ever to walk I'm

Cynthia Gaylor

long-term QX We amid Dan, good expanded delivering we a customers and and on goals to continue Thanks, as operating execution added financial Overall, Great. everyone. more challenging solid our made pace environment. our on our steady at and macro footprint. healthy we a and a strategy delivered towards international focus progress afternoon,

revenue QX highlights million Total Let me to subscription million. to and within review results. $XXX grew key year-over-year revenue some $XXX year-over-year XX% increased XX% our

$XXX revenue the quarter increase to and growth, XX% XX% total Our continued revenue. domestic international to first outpace million with our reach in a to contributing year-over-year

year. their DocuSign, last last. the dollar compared XX% greater and our to than net customers to spend we includes retention million quarter, first expanding Non-GAAP relative impact reached total of some our a bringing FX growth tax annual for installed expand the increase million million a prior a our have as quarter, XX% they XXX% to approximately QX bringing XX% Non-GAAP with X.XX was ago. XX% XXX% results for total million of a the a last While range peak to $XX operating remained to years, operating reflected light customer Customer US was $XX This with while ago. within customers, dollar three $XXX material. slower tempo to quarter XX% end QX our levels. And in net year was usage compared gross in compared year last additional non-GAAP XXXX, customers. in added non-GAAP calculation. QX, total an base nearly with profit non-GAAP XX% increase compared strengthening we year. strong, net the a non-GAAP historic the customers Total rate at with for margin to income rate $XX subscription XX% with XX,XXX of not our quarter new QX gross of the $XXX,XXX consistent of fiscal customers first during XX,XXX continue XXX,XXX, profits base income worldwide XX% headwinds compared quarter, direct are the year-over-year. including is their a line the they for in a caused direct the We saw at year, margin was million In while steady grew of which customers XXX margin We to achieved are at to year-over-year XXX%. was in of non-GAAP

ago. drive at over to same XX% year, million using in which $X year cash projected of tax XX% We QX equivalents, million investments. moved reflects cash reached in $XXX million free margin recently in infrastructure year. Both intensive cash cash margin. in-year an or with our well We the in quarter flow and available currently a flow quarter ended For cash as came last $XXX last XX% the a more we cash strong XX% capital information physical migration at $XXX to XX% and over continue will employees, move increase factors building first flow This over the highs cash XX% QX in all-time grew operating to quarter flow or prior financial million other strong impact away a model efficiency. cash, cloud, a or and flexible we with fiscal compared or model minimal $XXX long-term compared the QX assumptions. business increase to centers XXXX, and our a with collections, year. This Operating XX%, in a with compares as accelerate exited billion to Free scale. scale our will restricted the our year-over-year on have and finish. the to data We from and rate time as sustainable of are quarter X,XXX non-GAAP to in XX% shift

me let to Now guidance. turn

are our Cloud and power transformation across confident long-term opportunity digital add indicated, our new As DocuSign. and in the Agreement we've in customers to their we ability with

to However, and challenges our not peer are we space. immune with macro the customers

discussed, that, Dan we As our control, improving within our are product innovation and execution. portfolio focused go-to-market which our is across on

important bringing considerable scale, progress leaders significant at better and visibility that it's meaningful we will take traction with recognize in quarters. to have While multiple made experience

We operating leverage operating reach committed have margins. profitability, expense with while and exercising business to We remain growth our in discipline. model our target also long-term to track on are balancing

time. which continue to with drive and focus a growth across and We on highest our the success our over thoughtful priorities, will company, particular investments disciplined make will

are appropriately the in we pace, in expenses our fiscal current moderating the growth. elements XXXX, a and have climate current hiring at more aligning plans our our managing investments measured with been outlook. our These incorporated Specifically, and

billion to in million quarter to of in fiscal revenue billion second million XX% the for XXXX XX% in million to QX fiscal a year-over-year. $XXX XXXX, and revenue $X.XX total growth XX% of to $XXX XX% growth to year-over-year. year we XXXX of or to billion Of or to subscription XX% year-over-year billion For X.XXX of or and this, for we growth $X.XXX fiscal expect of or QX year-over-year XX% $XXX million XX% of $X.XXX anticipate growth $XXX

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

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

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

are diluted outstanding with we performance, In for work $XXX The $XXX fully while QX both we ahead reaccelerate expect market of to We fiscal opportunity million million growth. XXXX. acknowledge to weighted average pleased QX also closing, and compelling. our the our is shares

growth at product We portfolio driving have sustainable on leading unwavering the scale. and an focus

to Cloud. them our transform their We our commitments across will to Agreement that on are while our in customers the strategy a businesses strong go-to-market execute position deliver on helping

steps, customers to up Operator? are upon around Thank now you transform we With acted us open taking focused as and in by on with and energized partner we have the joining with profitability signed, will execution place. we are agreements confident the questions. necessary We're it today. We and the we and balancing prepared, on are how plan managed for growth for that, world.

Operator

you. Thank

you. now a be will Instructions] conducting question-and-answer [Operator session. Thank We

comes with first from Stanley. question Please Our Morgan proceed with question. your Josh Baer

Josh Baer

as revised and question. what better like guess. outlook, you. normalization far macro might that thank I competition be as kind impacting just sense Great, and to get the the Appreciate Wanted demand of between a post-COVID just

you. win any pricing? you pushed to change in could post in need pandemic? given and because wondering or So first change discount Thank gap characterize then, was COVID it if getting or weaker macro, healthy any demand is the the Is you've pipeline hoping demand pipeline. just picked macro normalizes it competition, and the normalization, deals a of to And up in related the are as rates on was

Dan Springer

So, of couple questions there. a different in

sort of deal-by-deal start you do and you basis piece disaggregation. that the to with sort DocuSign. very difficult, on versus the of pandemic as would to me macroeconomic global impact trying imagine, Let to if post will, a It's your disaggregate, first

we But sort that off think buying coming I the of COVID. other is impact very companies, for see, Europe, had we software there peer there. us some also that as the impact maybe in and aggressive reiterating, larger believe during of particularly we sort do to talk we they're

very quantitatively substantial really it’s coming but macroeconomic component. to the the off COVID high say to disaggregate piece So I opposed it, difficult as the is would most

and of that on In dive of I say seen and sit and call, And I'd the before down with the and but our things. of have change anything Cynthia team have about from markets. changes. an in single we would the because But in analysis of rates, a every primarily not that into. team, change seeing of terms eSignature of piece reasonable price competitive are thinking that of we earnings our I business any bit average a standpoint thinking talking our a we win the do achieving. pipeline, competitive general, different where set, In churn organization. we different here, couple that are field largest we're core I'm not substantially, in assessment that's we sort pricing the little standpoint substantial Things it's a had amount say our about

the at to And industry seeing very, with single-digit in attrition And absolutely companies. sort had the in low software we're years. attributable great in couple our consistent averages, of to so-called of that we're We last company more think. other we impact of now very traditionally I is resignation. what Some think it's

the with proposition, ROI us. have again, testimony CSMs in DocuSign, the is strength great, field, good our And or that's you strong when doesn't with one. which the much as our NewCo. with change for big team, And seeing that pipeline. of for I one I our whether think the value as in in that be And on So of very of next not say, the use right? given business a be period, challenges most of in And pipeline, of is would questions And where billings 'Hey, sort the strength and say the think to you cases of NewCo since build that good building turnover to what field, come our more the I you that's Hopefully, that to factor from upsell. a revenue the of about think got change been tougher your it's articulated is a has brand let's really change that and Cindy expand articulated. into any focus our need the out on your each covered. guidance got is you've in first AEs, customers we're been would from If

Josh Baer

leave three for the since already. I'll there, it was answers. thanks questions Thanks. Yes, that

Operator

Thank you.

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

Brad Sills

Great. the Thanks ask outlined you my challenges earlier the wanted I of of some that for execution taking in call. guys. to question kind about

like activity, than embarked more material perhaps on is place being of as you working? that. initially. this I expansion are on What's turning that on there you quarters or some thought it a you path the what be that learnings back this feel quarters already three pivoted able with when I some And to think on looks my We're the these towards into continue activity? do some expansion? be to ago, like two to to refocus outlined now expansion and bit kind in leadership. taken guess you now leadership out question And effort stuff in three have of changes changes you refocus is, you

Dan Springer

Yes.

size post-COVID like So and we doubled of how initially of of practically I doubled, that quarters. in impact assessment underestimated company growth the six demand the seven acceleration was. sort dramatic business Clearly, saw that first rate off, sort maybe that in would I and we with agree the to underestimated, of the the the sort probably

wasn't of dramatic aware we it that So the of were not economics it.

cases think people what understand I an things just acceleration, be bought fulsome didn't like of one-time we portion would way. in more where a or use that

very, that strong the very effectively of a headwind. that So like tailwind felt removal

misunderstanding So articulation of I dramatic absolutely was. think that's a that fair how my of

well forward. in the the on talked we, piece, to new the as need more augment wasn't model about we go-to-market about bring -- sales this enhance quarter recently that in that sort new the think now I while really to so we've going the fact, for leadership scale as both started the of in leadership It and we Second the had talked leadership for earlier call. we and until achieved last

early most days in. for those a So American I'd probably North about SMB associate it's in are commercial of leaders. fairly quarter just leaders The

course, and is Of hired just just Steve new weeks leader yet. enterprise the begun we a hasn't -- of number hasn't been

really to -- always think would the do. the still are would in it had of and pre-pandemic success, -- that organization things learned, that's lessons thing the purchased DocuSign I core core is fairly consumption say sort focused early lastly, driving the people driving is we need it's customer of on have that I in But adoption leadership. tenure what terms that So say, there of an I being augmented of done about

back the probably onboarding to said last a we'd number drive mentioned I makes longer to take which growth and means why on As a of our that fill onboarding get single it of And have of annual have reasonable to need are those spent in rates be way. like people has the it's I growth those slots DocuSign -- turnover higher we activity did to question, the QX going think, to rate the than see. we to lot we enablement that, the in to biggest at would contributor sort to folks the is of we field, in of now which initially

Brad Sills

And more, please. if I one that. may, Thanks for

to just Europe little particular? alluded in perhaps the regard a just in articulate early again. you're the macro. demand, seeing given regions, you all in Asia some If America, Europe, to could of you what bit North different parts signs moving of the slowdown Thanks, think on with I

Dan Springer

and Well, would has share, international Sure. continued you, now take to overall, up I to XX%. tell right,

we're the is So there. people international Europe largest across But where move substantially and of delayed as rate more said, to the probably piece little I quite a stalled what's say happening growth be relative some bit east and pleased not sort we're would want we've of further Europe, sure seen and deals with you to prudent. our economy maybe

really that's is we about where the of Ukraine. think the I in most an we their don't And about ability So other probably where unrest Europe. the looming from APJ. We or we've see war to and impacted recession that's of to maybe being the just I the across A saying terms huge they're would economy thinking companies a Western global more cautious buying in see macro, regions. board inflation, across us in sense I all we say LatAm places like global regions going have that give the from thinking base. seen economy potential think sort hit of on than the are generally substantial the anything And insight -- be has probably wouldn't after German most the unrest other

Brad Sills

Thanks much, Dan. so

Operator

Thank you.

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

Karl Keirstead

think to is. a half arrive it as I test stress just just billings conservative how everybody viewpoint to at guidance, wants to Cynthia, you, Thank

Dan of what the that and So you're billion assumptions what you're you're I $XXX we half flagged, think guidance? or the in guidance roughly love understanding get that I'd terms improvements that of million to can XQ sales Appreciate baking in assuming an terms assuming quarter, $X.XX continuation in call it it, any second XQ. of productivity quarter, fourth of the your billings per how so Thanks. into just customer and you is. color. ask What conservative billings just implies in hesitation just third

Cynthia Gaylor

question, the Karl. Thanks Yes. for

level our mean guidance visibility like. philosophy we I that guide changed. see We have would don't So and of hasn't and what we we to the visibility we have, the

into say and we're business. would the philosophy opportunities I However, in risks the the bakes seeing

that is use the Dan new teams, the baked in within outlook in that then field bringing of the year. customers, into things our and back the environment up at cases ramping macro upon the some so leaders, customer current that touched and demand half And we're terms and looking in the of product opportunities seeing, of

Karl Keirstead

Okay. Thank you, Cynthia.

Operator

Thank you.

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

Pat Walravens

are of Thank I'll I may, analyzed you. many of are Dan, that. sure each I'm you. Great. If quitting? you've reps of why one for so the do What sort the revenue reasons? two top that And X% next doesn't X% X% year? suggest year, of if growth growth would billings sort to this then, Cynthia, to you X% you have that have

Dan Springer

difficult feel to big like, the want us there's I that there tired software the and live I hey, is the a reassessment the see be. this in then I'll multiples. think much And world change. growth, equity with the I'm also with it DocuSign -- not work and where we talked One you that to to of the go the And for tough. tired. been component lot the hard down I it's and love everyone been through pretty values that concept culture, what clearly in years people board much to that just people but it two two was people COVID I say think lot a opportunity and in I'd substantial Pat. years I of do some used most the of the was the felt like order love that place. have change. put are to it who want them I out things. is there, tough DocuSigners, left people in And have construct they're have the longer-term across the And pretty

probably conversations. those that's so And

a was, heck We those had telling else. no DocuSign, two people definitely, COVID And had opportunity. of one which compensation frankly, can guaranteed knew of than for a also And we I'm easier achieving been is they some dramatic I it lot that market And previously. a brand years get since number the that lot I added easier And have said, of very growth. is sales was now. than quite folks, that of the longer kind the a don't I only me significant DocuSign, success during at those someplace of new

they least we'll compensation. at so start-ups, lot think of until trying off And said, recently be your better saying, place I'd new, some compensation of have standpoint, the particularly year from a I a first up guarantee

two probably those biggest sales role. the So, people would I want I are see different drivers for to a that think why the in field, try say we

Cynthia Gaylor

And question year. then back the on half the of the

not we're So, guiding--

Pat Walravens

back half not of wasn’t the the if I the the clear. year, back of Not year, sorry, half

it's be growth fiscal does X% mean XXXX growth X% that XXXX, billings of is fiscal to X%? going revenue something X% if to for all So, like to

Cynthia Gaylor

Yes.

to not have We're mean at we're I mean, leaders said, in Dan So, new year next point. this we guiding as I the place. go-to-market. ramping

what Pat. this We guiding are year to we're seeing, for

things are about, grow team back through the And our And steps innovation, those be beyond year, to those with, the members, We're very the across so along a move to dimensions. what's we platform those but We're encouraged we're they half things right? as say and continue headwinds we're taken. focused we've the with can expand And are us the on whether of of, investments, control, customers really very the on and for importantly, new more on that's facing few kind prudent the the we'll we're go certainly that so prioritizing to it year. pieces wouldn't us, successful have I so we've talked of making in different bringing on. this on think focused go-to-market by focused the

Pat Walravens

now. the how figured well get of just I bad we might Okay. of as that news the kind business out Isn't mechanics works? the

Cynthia Gaylor

I go-to-market. make Yes. day the to grow that's the we're say I quarter, every the mean, looking every or wouldn't across the line we're investments top mechanics. right -- to

of how to take at to making the going reflected developed results. half what see looked move is longer guide XX saw little we year, as on headwinds a some actually business. the I and in have And to anticipating our the so are the And back changes said, the through as we relative we've what seeing markets go-to-market days financial bit as the we're that currently in ago, we're we're

Pat Walravens

Thank Okay. All right. you.

Operator

you. Thank

with from Blair. Our question. comes next your proceed William Roberge with question Please Jake

Jake Roberge

that taking for cross-sell of launches. to just could is I Wondering growth the experiencing right know But on Signature if the starting in exciting the you same business? now, talked about better has how are is CLM product headwinds solution seeing that my or touch you new Thanks some solution Hi. segment questions. some been that see tracking? you

Dan Springer

for over for of Yes. there. a growth in were see XXX% CLM, spot we thanks bright QX. of was to in terms asking, We what wanted our goal

like before across pandemic and space of really to had providers. CLM look started recall, entire that then the may other you CLM As it up picking was

during During the pandemic. the pandemic, shorter-term tried it as in of you which got something Signature, much really wins people tougher ROI see sort focus off those like took right, to that on

deals execute software. time, in you systems to some cycle on to longer implementation And of requirement of need some CLM that sort sort integration as those work, more where have installing a you a of take

Now that saying, CLM. way CLM there I we says particularly and is Essentials, democratize dozens would of is seeing we have people wins just are bright that. there's you, for we that we're launched already lot enthusiasm say, with spot this a that of And the tell

momentum we're that's on there. So bullish quite the going

Jake Roberge

And again. Great. about just then thinking international

a four be like or be international, And moderating sounds Eastern of mainly the as some little or about the investments might curious it has launched how of the moderation tracking that in Mexico, you sales will three about, will So expected? EMEA, that investments talking you're But geography States? softer. think quarters, we you just in Europe be when been

Dan Springer

of international, first the piece from reasons terms the be So I would impact impacted. Europe be that most for assessment yes, that in would instability, obvious Eastern global area think the your from

sort or so as in our have I this taking And had no for we direct Ukraine. very significant of then digital, as we've have Russia. our Russia business you customers in -- And we small business of the support Ukraine move -- don't we amount a mean, in through part stopped business of

suppose impact way. the probably move So for say into not further that's happen. most I meaningful Europe, as we'd any to in But you likely that that's

there. very, number Mexico In early employees us, Mexico is very course, of other markets, and is a terms of like of for small which

in have meaningful in overall the wouldn't it business short sort even of any be -- So impact international run. the

to So an insight for And wouldn't there. that look I last piece, probably I I'm the and sorry, apologize.

You have one last…

Jake Roberge

Yeah.

Just your about you investments. some talking were of in terms of -- the moderating

would be so And that international? primarily

Dan Springer

quite think and as faster internationally. see frankly. has -- plan share the international is our grow have growing less impact, yeah, Yeah, to continuing would as take answer that We to grow No, probably been I absolutely.

them I spending So make. the We're headcount. going little sure And, profitability of to want there be And think to get the not we're doing may reduction growth, talked a that number amount line growth are We're goals pulling tapering challenges would America. make of will very difficult about when One, to item would successfully committed a set attrition, point, We're any hiring we moderation a and one fact think other the our top we pending that the to be we just rate of the the have as to that And again, vast of things earlier people to we've our bit concern little, community we in of to largest that the company. think on the which say two starting into But see the the to the been onboard North that that try was I thoughtful so just the not hiring, to forward. was The new if we're were in deliver starts layoffs. about about. was we level. that we is that particular that workforce. course, may being have easier. our hires majority heightened about thing those start-up of reducing you back -- drive rate growth

aspect that is ensure in the to the them America, and bring in is for North moderating primarily the again, growth make hiring successful them the So on of other company. and we can long-term DocuSigners make

So I those factors. about that's how think

Jake Roberge

for my Thanks taking Great. questions.

Dan Springer

Of course.

Operator

you. Thank

proceed is your with question Please with from Radke next Our question. Citi. Tyler

Tyler Radke

curious Thank past, And assuming talked guidance. your I for I'm retention. some talked you've what that Cynthia, the the underestimating you're net one-time in renewal rates about lower you you. in cases. use about and visibility know

So think relative back And picks for your are just historical just as the cases there's retention up half? that the churn the you platform? about should rate expecting assumptions how revenue range on maybe to more use net on one-time we

Cynthia Gaylor

Yeah. sure. Sure,

is within we historic So range. XXX, which the reported

QX, how historic taken more around we're new to leading expecting the on of who last how it they end indicator and year has For indicator, year, customers, time. dollar were net given court lagging low measurements the be last of of a range. Remember, and the is the a expanded retention snapped off than customers over

that does were that it low So churn. to as be year, include I And would historic XXX. around the but not one you cases, factored be out give into on range there we to noted, that can of as guiding tell if does metric. factor that we metric one-time it end XXX color you, We're of quarter anticipating are usually use the in it to

Tyler Radke

you. looking as sound $X target go-to-market like Thank some you about you to And at still you're growth. you a the Dan, changes just of reaccelerate point. billion some talked obviously, believe And, in Okay.

So, I for rate just And drive level aspire to that where will growth you take back to the long post-pandemic that be -- growth a it DocuSign? you how quarters guess, think do you're do how targeting? to many

Dan Springer

post-pandemic continue had that of half than the We a absolute ever thought. sort the we're to see from we're where progress. changes date And that a were probably to is up picking the we out initially kind from to going just say be of growth that we've if this from 'Hey, question talked is that that dollars, dramatic or probably impact we quarters through rate those growth we we don't to in you post I where impact as think work want perspective. published to long-term tell second look first the come will you impact rather changes sort your making not start of of a lap we've tailwind the this as I out it to guidance those But want kind we're in to of of provided Yes. see put be would in half. of most we field the part we your core that a have but second there, says, that prudent at making would specific about the we today set we quickly. have And take a We term standpoint. think say getting longer

us getting back. I excited more see more coming think to you'll about start growth the and

Tyler Radke

Thank you.

Operator

Thank you.

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

Alex Zukin

business, we mean think but increases digital I rate or I goes your down I are it's that companies are are that appreciate you trouble deals companies macro-oriented. -- Yeah. small the in prior appreciate is assuming US, definitely a you that Europe, your guys the moderating but that clarity Hey, everybody you I more issues, goes talking I'm domestic seeing guess talking about, bit little you retention just little today, most I you But understanding. assuming particularly -- down? to or for churn talking think guess guidance, portion domestic about lengthen? year. -- pushing me. as talked having and the execution-driven still your most I than in the margin -- And the then It would just you assuming point, rather think reaffirmed of two of follow-up, then like for there's the Are a sounds I sales hiring, are cycles targets about that impact. are a bit Dan, about are

think flow, of the on lot cash So the there And -- comfortable for bottom perspective? kind of where margin playbook a that, to you volatile more with for planning you're where going of investors from where that and is for a free if are anticipating the we is that a -- for which year? focus a about you'd stock, end be your macro

Cynthia Gaylor

Yeah.

then take let in. of Dan the first chime me some So, can guidelines and

elongated necessarily sales cycle. we seen sales So, on cycle, haven't

land the expansion of prepared That was around small. expansion expand which expand and expansion in talked of customers, we about that you remarks rate time. the know, we have start factor that really customers, They as the coming and is off and over peak Alex, Customers I model. rate think rate a the biggest levels.

that or that there some big expansion whether the and so -- the -- that at it's dollar are rate then rates is driver the slower the expansions of -- a smaller are is on is smaller a and metrics, the rate. the customers growth retention And expanding of net on

around And an cases, so making And customers we're like well different field our to adds. of future the as talking terms products, net be -- focused into in different rate sure enabling talking functionalities, continues as selling new use new enabling our on departments landing customers. we're different things and that customer to strong

So we're that with quite pleased metric.

be of have you in other it in half some but I we're end think of that specifically, talk dollar able that say want part. rates get be that's that back to we're visibility about tell of on what kind we'll it the Dan, is but like more and about you next when where bottom hopefully, to at the better would of not guiding we the the looks quarter, maybe And to and of kind net think you historical that. the fair now then on we we'll it's to when range. reflected year, to expect it retention, around QX growth

Dan Springer

finer deals. one, just point just other of two pieces, on in take I’d a about e the talked Well, Cynthia terms what

You question execution. thinking and field around asked our a about

business, more. growth see, put sell that One lot need of early a come Again, achieving focus NewCo. we not said we the did are in, to our it? at existing dollars not fact we of and when that field, of see from the sort of things we to of initially why not on think hey, most come the the the I growth of And to we our I wanted sort that on, looked the think

deals, going Europe are with about doing I'm We NewCo, dramatic But deal there. continue a you we're America, at book twice not I which we of expectation initially we look we They're deliver smaller And saying, in deals that. again, question, it probably could people holding pandemic pandemic. in lot said, have whether we our the smaller incremental I saying, growing same not we're of not business, the unreasonable North the deeper to standpoint, opposed very to of seeing see From before was seen but just we transact leaving. change, the bought it. that before. during going field lot now see base. execution an grow what number deal because had thought would one-off done. was numbers the And getting we I'm off or had our pushing deals your as growth actually so of we're was time We're And customers the to said, getting the or And macro on assumed margins. percentage we're strong But twice had And sizes the to we're 'I don't haven't years, saying, to two, fulsomely that just to couple we're as of the is a DocuSign. forecast. grow customers rate your a then this us. and same larger as customers that same with standpoint, it's big size business bought a with now. before margin a of rate a dollar did as last into question, to not we book want And and grown we not

an some saying, despite and really We believe, operating software commenting also that's that headwinds seeing continue companies other on macro as to are strong have we and broader you deliver those other coming or we're said, on. margins a people model can we So, with are income.

unbelievably If strong it have we a cash an we're a from a we flow, we cash in attractive model. going to free strong because flow. a look And business cash to generation continue expect you business at quarter really free have take had

Alex Zukin

are it contemplating you're From in extent and taking to the just occurring, you answer. period expand done, they're it. land time, what following double an saying, need just those that up deals. we for literally to order that pipeline deals for of Got need up of get customers that, indefinite we on these Maybe make have expansion they're you or that the still have to volume now not perspective, the – longer to new is in you and

Dan Springer

answer try no direct So, million bit saying, X.XX a through taking but simple couple because year I think or I'm opposed people as more I or a to Across I XXX-odd dramatically have customers, longer which customers, saying, need of of to more, thousand to to a we last if a on deals needed pushing range only quite course, even customers it's average, it as more of are thoughts. the lot little opposed close. there's people

I wanted increases of saying, but haven't is anything I've before. dimension. got a on just people sort it. We lot, love seen It same want significant that more, I the not percentage I

Alex Zukin

Got Thank it. you.

Operator

Thank you.

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

Rishi Jaluria

mechanics QX happen that there historically help understand new to but QX, you're better my X% for from QX, that. Cynthia, I I've I that pull-forward here. that DR. guidance, your is talking question. I of that? what's into we understand in it landed effectively on year-over-year, got Dan guess, net QX at or seen at right? in you're about follow-up. want only And disappointing really $X Was I in guidance? like look to some business a I us what adding if baked ever where not from are Maybe from thanks got mean, I've two going Hey think Because One, the of QX. and revenue optically the adding assumptions $X a really And in QX billings it, QX then taking just to don't deferred business

Cynthia Gaylor

Yeah.

So a observation. good it's

QX, I QX quarters quarter-on-quarter. it's yes, had unusual So would as for flattish other have characterize to but we that

unusual QX to So understand, QX. for it's

the puts when what's out quarter However, there felt the out in QX, versus felt QX. on in takes expecting, and that remember out much with net-net billings, the we there but was or and came fall are deals timing where of impacts of were the quarter quarter. were definitely pretty

those just rates. point, half, kind half. of So I do billings but you at would said, I your fluctuate first we understand averages remind quarter on can quarter-to-quarter. And four we as that at also look trailing second look We growth the

So half, and I'd but averages that to about of second remind particularly what understand you But can first it we implies rates of why kind question, and timing half billings, that's deals, the look you well. there. look growth as just comes to at when tend at

Rishi Jaluria

Okay.

not because X% Is grew in cases opportunity. because from that from to can slowed the that that we're I'll to say to And to not use X.X% at starting struggling but the guess, better. just I macro around. alone. to sequentially, – right? things the away here, is only business growth turn indicator that then down the that of So geographies, of to effectively the leading QX look point I actually taken, right? pull or of QX, you're – there a And sequentially and We're that, revenue sorry, on a decline get number yet a I is to actual you're an Is it guidance QX – is being us, giving we like not edge billings get market underpenetrated US far side right? happened It's especially QX forward it. The off? this right, that's moved one-time But from revenue talking a is unless was QX. right. business going I what's worse turning but international US from is that, disappointing, want understand about still leave So itself lagging if I'm

and should you. Just that help me I understand reading on going be number? what's how Thank

Dan Springer

that I driver, I the the and take don't some on, significant growth occurred. think first sort large is had that And is want say, of that Let it's about gave deals absolutely add cases examples an the biggest loans. government one-time contributor. the answer loans some we prior talked you in me our was before but Cynthia. can of QX, around sense you would piece, year I the be we want – PPP I We the substantially don't Yeah, loans, give use the to very in some around to

now, we going would services are environment, and So other, loans And that is would interest us. big on vertical particularly interest we that a quarter, was right would other was as the financial say quite higher end, to rates a mortgage where which to rate that obviously, rates go And is this that expect come up, I an in loans, side. knew for substantial. people fewer do interest particularly

a phenomenon from So I the aggregate, but issue of, describing. significant those we our But quickly QX, want one-time more where think disappearing bigger broader QX, think, in think is grew than saying, forward hey, be buy would fulsome expectation is use smaller use macro cases, in for you're truly is And pieces, customers would drivers meaningful us, demand those of component much wasn't really cases pulled pushing say so customer actual DocuSign than our one-time over those way. we case, in we that, to a as I two are that the a really years. well. use that we 'Hey, sort one-time the And amount I of,

Rishi Jaluria

you. Thank it. Got

Operator

you. Thank

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

Shebly Seyrafi

Yes. Thank very much. you

what actions describe Shute areas Steve is you improvement? accordingly? And think field can going sales needed what undertake to do you So, in most

Dan Springer

quarters. or the sales a discipline area. enhance of the the we to to -- to biggest we than we strong overall some at of six much over many, just augment sort I then had but and think the been, level planning And was, scale we a there, as doubled growth, again, we we couple had and probably that had, say got needed is of around try smaller around that that business. and many I look Well, and probably seven years forecasting we is things. again, a capabilities different at there's single And if of have we leadership it One strong

a we terms enable they and I actual growth them post it during time. the that not challenge only was have in very talked and about, the the here had we mindset, for field, we of pandemic, of the did were period a in pandemic where that execution lot of because environment easier believe do to In of a hectic which opportunity the have in people brought in

job but lot is now on piece our bring all the DocuSign. a the that's he's I So sudden it's we more of we way. And not fields a did already is And that fantastic focused is traditional the it worked we think that on stronger about, going I Steve core DocuSign do leadership model incapable, for land-and-expand new sort of enabling in environment talent brought core there. in with people had that of basics. a was And became a the who of current that sales delivery that to in, working buying we to back the augment talk in that to hadn't the force think

Operator

turn floor no Dan are closing back the to Springer There you. to comments. any time. for Thank further questions like over at this I'd

Dan Springer

much. very you Thank

and really to we what on the in had, just QX strong to with said, deliver pleased we in to but focused are summary, we're locked we As that need delivery talk profitability we do speak continue today. and reigniting call you about joining much us. having we very the to so with to the all forward soon, thank for We that opportunity the look on growth and much you

Operator

conference. today's concludes This

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

DocuSign (DOCU) 9 Jun 222023 Q1 Earnings call transcript