Q1 2022 DocuSign Inc Earnings Call
Good afternoon, ladies and gentlemen, thank you for joining Darkies times first quarter fiscal 'twenty 2 earnings Conference call. Other reminder of this call is being recorded and will be available for replay from the Investor Relations section of the website. Following the call. A brief question and answer session will follow the formal presentation the fan.
Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad I will now pass the call over to any lesson head of Investor Relations. Please go ahead.
Thank you operator and afternoon, everyone and welcome to Doctor side of the first quarter fiscal 'twenty 2 earnings conference call.
On the call today with Dr. <unk>, CEO, Dan Springer and CFO Cynthia of Gaslog.
The press release announcing our first quarter results of issued earlier today and it says it on our Investor Relations website, along with our quarterly slide we plan that those prepared remarks on the Thanksgiving next quarter.
Before we get started and I'd like to let everyone know, we thought everything virtually and a few upcoming of that.
These include Evercore TMT conference on June 7th Bank of America's 'twenty 'twenty, 1 Global Tech conference on June 19th and <unk> 'twenty 'twenty, 1 of level consumer Tech and services conference on June 10.
Other events come up we'll make additional announcements.
Now, let me remind everyone that some of our statements on today's call and forward looking.
We believe our assumptions and expectations related to these forward looking statements are reasonable they are subject to known and unknown risks and uncertainties that may cause our actual results or performance to be materially different.
In particular, our expectations regarding the effects of the COVID-19 pandemic on our business.
Including the potential effects of the pandemic subsided.
Just on our best estimate at this time and are therefore subject to change.
Please read and consider risk factors in our filings with the SEC together with the content of this call.
Any forward looking statements are based on our assumptions and expectations to date and except as required by law, we assume no obligation to update these statements in light of future events or new information.
During this call, we will present, GAAP and non-GAAP financial measures non-GAAP financial measures X. The stock based compensation employer payroll tax on employee stock transactions and amortization of acquired intangible assets amortization of debt discount and issuance costs from our notes acquisition related expenses and as applicable other special items.
In addition, we provide non-GAAP weighted average share count and information regarding free cash flow and billings.
Non-GAAP measures are not intended to be considered and isolation from and substitute for or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance.
For information regarding our non-GAAP financial information and that's directly comparable GAAP measures and the quantitative reconciliation of the figures. Please refer to today's earnings press release, which can be found on our website at investor day to occupy and dotcom.
And now I'd like to turn the call over to Dan Dan.
Thanks, Annie good afternoon, everyone and welcome to our first quarter earnings call for fiscal 2022.
We have lots of covered today and I'd like to focus my comments of 4 key areas.
Our strong Q1 fiscal year 'twenty to resolve.
More insight into the breadth of our customer journey.
The international business landscape, and how we see that evolving and <unk>.
Finally.
Key investments, we made and technology and people.
But before I get to the financials I wanted to share some observations on our market overall.
At the start of the pandemic Darkies line has helped accelerate access health care government education, and small business lending and many other services around the world.
But again, that's an urgent need has now transformed into.
From a strategic priority and as a result document has become an indispensable part of.
Many organizations and fraud.
Put another way.
And what businesses easily transform their agreement processes.
They simply don't go back.
We believe this trend will only accelerate.
Anywhere economy continues to emerge and.
In fact, just a few weeks ago.
And we were excited to well got to signs of 1 million.
Yes.
And it moved the digital has manifested itself and of great start to the year for that.
We saw strong performance on all fronts delivering of balanced growth and profitability at scale.
Our revenue grew 58% year over year $416 million.
International reached the milestone with over $100 million of revenue.
Non-GAAP operating margin reached an all time high at 20%.
Top line growth outpaced our investing.
The strong expansion across our existing customer base.
The record high dollar net retention of 125%.
From any vantage point the sorry.
Exceptional results that reflect the continued demand and engaged we are seeing from our customers across all industry and <unk>.
Okay.
I am, particularly proud of the data science team really the X.
Despite the vast majority of our 6000 strong workforce.
Will working.
As we've said consistently esignature onramp to dock design from the company.
This quarter was no exception as we saw new and existing customers adopt and expand at record rates.
The use cases and envelope volume increasing significantly.
Let me give you just a few examples.
The large delivery service provider needed to capture monitor and report on new benefit structures for its work.
We helped the team leveraged E signature powerful and.
And Darkies line insight analytics to create an entirely new and streamline process.
The state the hundreds of hours of manual processes.
Created accurate and efficient management reporting.
And it provided and extensible solutions for future growth.
1 of our restaurants service customer needs of the way to streamline and automate their remit generation and signing profit.
We worked with them to improve turnaround time and <unk>.
<unk> sales productivity.
And importantly, this dramatically decrease the time to complete agreement from 2 weeks yes.
And 3 days.
And 1 of our leading grocery production cuts with.
With printing over a million pieces of paper a month.
And as part of their manufacturing process.
We started using esignature template.
And quickly took more than 100000 sheet paper out of circulation.
That will only growth.
The other business units and leverage the technology.
And this expansion was not just domestic and <unk>.
Well.
The Q1, our business outside the U S contributed 21% and total revenue and.
And it continues to be the biggest future growth driver for us and the largest part of our Tam.
Today this much like our north American business several years ago.
Customers growing and expanding the similar way.
Take 1 of our multinational telecom customer and an example.
We're looking for a way to digitally transform their internal and external contracting processes and reduce the environmental impact.
Using the data science API. The company now has the find workflows for verification.
Validation.
And the automatic archive of the contract.
And <unk> deployed the solution and countries across Europe, and sub Saharan Africa.
And.
And response to the tenure and international pharmaceutical cost.
It's a huge increase and new users.
Regulated industry, where standard advance and qualified signatures are required.
Our teams work together and.
And the results speak for themselves.
Amid of 270% decrease and <unk>.
<unk>, 650% more envelope.
And completed the.
And 50% of SaaS and.
And the time to onboard new users drop from 3 weeks.
We are also driving a variety of strategic and internationally and Lee.
In April we officially opened our virtual tours and Mexico to increase our ability to service customers and span.
And the sticky.
And we're excited by the early traction we're seeing there.
Yes.
We also upping our focus on regional product offering and then.
Darkies line products are grounded and high availability and reliability security and.
Data privacy and regulatory compliance and trust.
But we can now take that 1 step further with products like <unk>.
And the UK.
This product makes it possible to electronically identify witnesses and.
When they are signing an agreement.
This is increasingly important in the U K as the country's land registration of authority just began accepting witness electronic signatures for the property transaction.
<unk> executed the first ever <unk>.
And registry D submitted electronically and.
And now we're enabling of new class of high volume high value agreement.
The only be done on paper.
So looking ahead to the rest of fiscal year 'twenty, 2 and beyond we remain committed to our vision for the <unk> agreement cloud.
Both of the key pillar and the software platform 1 of the anywhere economy.
Heat of that spectrum of important investments and our product platform and company at the hole cut.
Couple of which I want to highlight for you today.
The first is our acquisition of the technology and the team from Clos.
The innovative smart agreement technology.
While this has been of close partner of ours and has built the platform that enables the clauses and the green to run as computer code.
Mark clauses and connect the third party systems and drive a host of action.
Sending notification running compliance check and send the contract status update.
They're experienced developing specific solution and financial services insurance and healthcare companies.
Also complements the we've gotten many of the ARCUS.
And how we want to architect the agreement cloud for the future.
We're really excited to welcome Peter Dan and the whole team.
Second highlight is our continued expansion of the executive leadership of Dr.
And.
And we grow and scale.
The optimize our systems processes and technology infrastructure to support the needs of today.
And the rapidly evolving.
Equally important that we have the right leaders in place to oversee and drive that evolution.
That's why I'm thrilled to welcome chassis of year.
The new CIA as the former Chief data officer at Cisco.
Sandy will ensure the dock and time World class and all of those areas.
And we're thrilled to have her on board.
Also we continue our international growth, we're expanding our local and regional leadership and ship.
And Q1, we appointed former regional sales force.
And Bob to help lead our regional effort and a P.
P J.
Before I hand, it over to Cynthia I want to reiterate the I am optimistic about the year ahead.
We offer our transformation of the agreement process.
And everything our team is doing to help our customers and our partners.
Around the world.
Look forward to talking with you all during Q&A now.
And.
Thanks, Dan and good afternoon, everyone, we followed up and exceptional here in fiscal 'twenty, 1 with an impressive start to fiscal 'twenty, 2 driven by strong execution.
Continued customer demand for E signature offerings led to notable topline growth at scale.
We demonstrated significant leverage and our business model with record operating margin and cash flow and the first quarter.
Total revenue increased 58% year over year to $469 million.
And subscription revenue grew 61% year over year to $452 million.
Elevated consumption levels by existing customers continuing to drive the trend of early renewals and expansions and the quarter aided by secular trail of wins at customers digitize their businesses.
We saw exceptional growth outside of the U S with particular strength in EMEA this quarter as our investments continue to gain traction.
And Q1 international revenue crossed the $100 million threshold for the first time.
In total international revenue grew 84% year over year 2 of $101 million.
Billings also benefited from the strength and customer demand, finding 54% year over year to reach $527 million.
Our second quarter about half of $1 billion.
Customer growth remained healthy with the addition of more than 96000, new customers in the quarter.
This brings our total installed base to over 988000 customers worldwide as of the end of Q1 and increase of 50% compared to a year ago.
This includes another 11000 direct customers, bringing our total direct customer base to 136000, and an increase of 53% year over year.
We saw customers with an annual spend greater than $300000 growth, 42% year over year 2 of total of 673 customers, adding a record 74 customers in Q1.
Continued expansion and our sales led to a strong dollar net retention rate of 125% for Q1, highlighting the expansion of economics, we've seen over the past year since the pandemic began.
Total non-GAAP gross margin for the quarter with 81% compared with 79% of year ago, while subscription gross margin was 85% compared with 84% of year ago.
As a result of the outperformance on our top line, we saw demonstrated operating leverage.
Non-GAAP operating margin reached our target model range for the first time at 20% or $93 million.
<unk> was 8% or $23 million in the first quarter of last year.
We are still and the early inning of a large market opportunity. We plan to continue investing for long term growth, particularly and sales capacity marketing R&D and the scaling of our operations.
Non-GAAP net income for Q1 was $92 million compared with $24 million and the first quarter of last year.
We ended the quarter with 6080 employees and increase of 42% over last year.
Cash flow also outperformed.
Operating cash flow was $136 million or 29% margin due to top line performance and strong collection.
This compares with $59 million or 20% in the same quarter a year ago.
Free cash flow came in at $123 million or 26% margin in the quarter compared to $33 million or 11% and the prior year.
We exited Q1 with $876 million and cash cash equivalents restricted cash and investments.
Now, let me turn to guidance.
For the second quarter and fiscal year 'twenty, 2 we anticipate total revenue of $479 million to $485 million and Q2.
<unk> of 40% to 42% year over year.
And to <unk> 7 to $2 <unk> 9 billion for fiscal 'twenty, 2 or growth of 40% year over year.
And that we expect subscription revenue of $459 million to $465 million and Q2.
Our growth of 42% to 44% year over year and.
And 195, 3 to $1.96 5 billion.
For fiscal 'twenty, 2 or growth of 41% of 42% year over year.
And for billings, we expect $549 million to $561 million and Q2.
Our growth of 35% to 38% year over year and.
And Q3 and 3.8 to 2.3 of 6.2 billion for fiscal 'twenty, 2 or growth of 36% to 37% year over year.
We expect non-GAAP gross margin to be 79% to 81% for both Q2 and fiscal 'twenty 2.
We expect non-GAAP operating margin to be 16% to 18% for Q2 and fiscal 'twenty 2.
We expect to see a de minimis amount of interest and other income.
We also expect the tax provision of approximately $10 million to $12 million for fiscal 'twenty 2.
We expect fully diluted weighted average shares outstanding of $205 million to $210 million for both Q2 and fiscal 'twenty 2.
In closing we are incredibly pleased with our Q1 performance more than ever we are enabling businesses around the world.
As the anywhere economy continues to develop and grow jockey signed we will remain an integral part of our customers' digital evolution.
Thanks for joining us today, we will now open up the call for Q&A operator.
Thank you we will now be conducting a question and answer session. If you would like to ask the question on your <unk>. If you would like to ask the question. Please press star 1 on your telephone keypad the comp.
<unk> total indicate that Youre line is and the question queue. You May press Star 2 of you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star of keys, 1 moment. Please while we poll for questions.
Thank you. Our first question comes from Sterling Auty with Jpmorgan. Please proceed with your question.
Yes, thanks, guys.
And so on the international front.
What are some of the takeaways that you learn and you rollout and.
And the U S that <unk> been able to apply under Mike's leadership, and Europe, Thats, helping you accelerate the growth there.
And we talked about the fact that and if you go back a few years to.
When the U S business is the size of the international business.
And they look quite of bit of line Sterling all sorts of dimensions scale of the growth rates have been amazingly.
Similar.
I think the core things that I would point to is the focus on customer success for sure is the first piece and we think we've really done a good job at upping the quality of our success organization internationally at the foundation and really drive adoption and as we've talked about before and you get adoption right and a SaaS model.
It really key teed up the the land and expand and.
And so I would say the second piece is just that the way we talked about we allocated our sales resources between those that are doing newco versus those that are selling to our installed base expansion sales.
All of that same model and I think those 2 pieces.
Really what has driven that.
The tremendous success and you talk about those numbers and the the eighties.
The growth.
I don't recall ever having that and the U S. So I guess in some ways and we taught ourselves so well international stores and we've exceeded the.
And the student has exceeded the master over that the analysis goes.
Point, but those would be the those of you the theme that I would focus on.
Yes, exactly that makes sense and 1 quick follow up the call broke up on me a little bit during your prepared remarks, and I didn't hear any update kind of on the <unk>.
Rollout of the notary solution can you give us just an update there absolutely.
Absolutely, yes, we're really excited that we've been able to rollout and a member of the first party notary, which is the the piece that we're primarily focused on because our existing customers large financial institutions et cetera that have a notary.
And sort of embedded in their business and the use their own notary.
Bigger opportunity and that's when we're going after first and Thats now the leaf and we've had our first transactions occur and we.
We're really thrilled to see that.
So very early we just just sort of had that availability.
Now for the for the market and then the second piece that we'll be working on over the rest of this year is third party notary and Thats the.
Model, where someone has an individual.
And the only come through to people that need to know the rise of transaction, but neither of the the large institution that would have thereof.
That's the progress we're really pleased.
Got it thank you.
Thank you. Our next question comes from Karl Keirstead with UBS. Please proceed with your question and well. Thank you Cynthia maybe this 1 for you I just wanted to ask you about the <unk>.
The billings seasonality this fiscal 'twenty 2 you did mention early renewals and expansions as a result of elevated consumption, which.
At first blush sounds a little bit like a pull forward into Q1, but then on the other hand. Your <unk> guide is Super strong you raised the full year by way of more than the Q1. So it sounds like youre signaling strength throughout the year. So I'm just wondering if you could comment on on the seasonality and whether it changed as the results of the Q1 performance.
Sure. Thanks for the question, Yes, I think on seasonality, we haven't seen a big shift in seasonality and.
We did see.
Stronger than expected Q1, and due to the.
And that you mentioned, mainly around and cutter customer consumption and how they're using the product and we're really encouraged by both the consumption metrics that we're looking at as well as the use cases and customers are using our product for and so thats reflected in the in both the performance for the quarter, but also of the.
The forward guide got.
Got it okay, great. Congrats on these numbers by the way.
Thank you.
Thank you. Our next question comes from Alex Zukin with Wolfe Research. Please proceed with your question.
Hey, guys. Thanks for that.
And 1 of the fears I think people who have had historically on dock you sign and Thats just the Covid stock Youre going to start decelerating as you as you start seeing these tough comps, but I think some people forget that your capacity based model and therefore, if youre seeing these cohorts that you added last year grow at or above previous rates, which it seems like you.
With the expanding dollar base net expansion youre very well positioned to actually.
<unk> through this and be even better positioned on the other side. So just just talk through that what you saw this quarter around the growth rate of those cohorts and.
And kind of how you're positioned going forward.
Yes, Alex to your point I don't know how people are missing it you write about it and every report I see you make that point, which I appreciate by the way the.
The way people will start to listen more to your insight, but I think you nailed it I think that's exactly what we're seeing we're seeing that the.
The phenomenon of that strong customer growth is why you see the net retention rate so high.
Why.
The last question from Karl and his team was able to talk about such a strong guide at rates, we had not achieved previously.
For Covid from from a billing standpoint, and the revenue standpoint, because we have seen that underlying demand is so strong and customers and I.
And really think the key to it is what we talked about at the beginning of Paul which is a phenomenon of the people once they see the benefits of the digital transformation, particularly around the agreement cloud from.
Having opportunities and grow their business with us They don't go back and back they look for additional opportunities to expand and so I don't think we don't talk about the Q1 pull forward like it was the <unk>.
Fixed amount the pull forward that pays Peter it takes the Paul we look at it is just the increasing demand and it really goes back as you and I have talked about and the path of the Tam and we are still in the early days even of just the signature business and our penetration is so low that is of very very large.
<unk> from which we're pulling forward.
And that continued strong customer demand.
That's how we look at it and I think it's fairly straightforward.
That's helpful. And then maybe just 1 quick 1 for Cynthia the dollar based and that expansion ticked up again, the 125% I know in the past you guys have been hesitant to call for a new range or a new normal, but any puts and takes on that figure and how we should think about it and is any of that starting to be driven by <unk> adoption or is it still mostly the <unk>.
Core the core use case.
Yes, so I would say the.
It's mainly around the core use case right and remember the agreement cloud, we're very excited about the opportunity there, but it's still very small from a dollar contribution perspective, so a lot of that on the strength and the net retention number is really around kind of the.
And what I call retention economics, and many ways right of the extent of the expansion economics of the customer base and the cohort of how they're expanding and not just the cohort contained came over the last 12 months, but the existing cohorts who have continued to.
And their usage of the product.
Over over time.
Okay.
And then on the.
The first part of that question was around just the range.
So we would expect as we said last quarter.
2 throughout this year maintain at the high and or above the historical range, which had been 112.2019, historically, so we would expect to the team.
Or to maintain high net retention rate kind of going through 3 of the year, but we're not going to be guiding to that metric specifically.
Perfect Congrats guys on the great print.
Thank you.
Yes.
Thank you. Our next question comes from Tyler Radke with Citi. Please proceed with your question.
Hey, Thanks for taking my question.
I'm curious just at a high level as you're starting to see.
Things get back to normal here and the U S and and.
And hopefully shortly of overseas what are you seeing just in terms of the evolution of the pipeline and specifically do you find that customers are.
Looking at pursuing larger transactions and maybe more strategic transactions now that.
Most of the Covid impacts are behind them and just curious how you're seeing the pipeline of ball. Thank you.
Yes, I'd say, it's sort of a tale of 2 products Tyler if you think about the core signature business versus the rest of the agreement cloud primarily CRM.
So the first part of of that no change I don't think we've seen anything fundamentally different and quite frankly, if you think about during COVID-19, we didn't see the nature of the signature transactions different. They just were fast rate and so we saw again that acceleration of occurred and.
And Cynthia pointed out.
We're kind of rounding those quarters and in many ways I think starting to move into whatever the new normal will be we're still seeing.
And the accelerated rate of.
And that customer demand, but I wouldn't say, it's the size of the transactions are bigger I think was the land at about the same size and I think our incrementals of expansions of the businesses. They happened and the same increments, maybe just more of them.
And our occurring across each time periods and that's I think about it.
<unk> <unk> and of course, it was dramatically different right.
So it was some really nice demand and started to build right before the pandemic and those what I would say are more strategic and more substantive transaction. They require of usually a statement of work and sort of systems and the greater work with and we do the services 1 of our wonderful and Si partners.
Those are again by definition I think a little more complex and the end of it.
Order size the bigger.
And those slowed weighed out right people said during the pandemic, we need to focus.
And on really fast ROI and enabling people to deal with working remotely now we see those starting to come back and.
And so we see the pipeline starting to build as.
And as we did actually starting in Q4.
More and more aggressively there so those are.
Demonstrably.
Come back and I think those would be larger deal sizes, and you'll see but they don't crossover between 6 Cherokee to look into 2 separate site.
Thanks, and just a quick follow up for Cynthia So.
Operating margins were really strong here and the quarter obviously.
Quite a bit of revenue upside, but curious just on the hiring front or any other expense related things. If there is kind of some 1 offs driving driving the strength.
And just kind of how youre thinking about the pace of hiring throughout the rest of the year. Thank you.
Yes, the <unk>.
Operating margin was pretty phenomenal at 20%.
And in some ways and we would've liked to be able to invest more quickly into that growth.
And bring down that number it's just very difficult to do and quarter. So we're really looking through the year.
And to continue to invest for growth and.
And that's embedded in the guide as well so I would say there was nothing particular, 1 off other than the outperformance of the top line, which pretty immediately drops to operating margin and quarter, but we will look to aggressively invest and for the continued growth and the large opportunity ahead of us.
Thanks.
Thank you. Our next question comes from Stan Lawsky with Morgan Stanley. Please proceed with your question.
Hey, guys. Good afternoon, and thank you for taking my question I wanted to follow up on the on something that you guys mentioned, a little bit ago, which is the.
And the broader agreement cloud and spring cm right, it's still small numbers and it's not really material as far as driving the growth and maybe even into the net revenue retention that you guys are seeing picking up nicely.
How are you thinking about when that could become big enough and material enough.
2.2.
And really drive the.
The recording now.
Yes, so I would say.
And we're in the early innings as Dan was talking about across the agreement cloud and it's.
It's a pretty nascent market, but there's also just of kind of greenfield opportunities and we're investing heavily both in our go to market strategy around that and in customer success, but also just on the product innovation. So I would expect it to be a few years before it is really a meaningful contributor and when you think about kind of the results that we posted.
And the last few quarters. They are primarily driven by E signature and just given the scale and the growth rate kind of on the core piece and it's going to take a while for.
Agreement cloud, even if it's growing quickly within.
And to really have the a meaningful contributor from a top line perspective.
Got it got it and then also wanted to follow up on Alex's question earlier.
Which is on net revenue retention and I understand you guys or not.
Yeah.
Yes, we're really moving up the the range that you normally talk about but yes, similar fashion what would it take for you to move up the range of that just yet the consistency of seeing this 100, twentyish plus for X number of quarters.
What would you what would we have to think about is the milestone for you to start moving up that range.
It's a metric that we watch very closely just given the consumption trends and as we talked about the last few quarters and.
Looking at kind of these new cohorts and how they're consuming and how theyre expanding and existing customers and kind of of the more historical cohorts and we're watching that closely I wouldn't anticipate guiding to net retention range.
As I said, we would expect for the remainder of the year for it to remain above the historical.
Historical range, which the top and with 2019, just given the consumption trends, we're seeing and is expected to be above that high end of the range.
Got it thank you so much.
Thank you. Our next question comes from Scott Berg with Needham <unk> Company. Please proceed with your question.
Hi, everyone and congrats on the fantastic quarter and thanks for taking my questions I guess I have 2 the first 1 is as you look back over the last year and and obviously you've seen out of.
I'll call the rush of new business based on pandemic and has that brought you into any new types of the businesses are use cases that is probably maybe not as well known I mean, I think we all know what esignature split the obviously from the generic standpoint, just to know if youre seeing activity somewhat new.
Yes, I don't think Theres anything substantial there are a couple of things that were new like if you think about the PPP loans as of.
And while a little part of industry that got built and supporting the banks. So by definition that that didn't exist before that was new.
But that really small small piece of.
Of what we would do I think you have to think of it I just talked about start to hit our 1 millionth customer of we've done a lot of customers and we've got a lot of industry of coverage coverage, there and I actually look at it this way and we sometimes day, we believe that every business eventually should use dock design.
And that's the kind of of the way, we think about the breadth, but I don't look at sort of a particular industries, where we've not started that journey I don't think theres, a big area of that you've mapped it out from.
The state, we just haven't been able to find the way to serve the because we do the front office and the back office use cases, and every company sort of as employees and internal operation and every company as customers right.
And I guess, the few silicon valley companies and the other than that pretty much everyone of customers and so from that standpoint, I think we really look at it.
We are everywhere and we're going to be everywhere and the anywhere economy and.
Haven't been the phenomenon that Covid I think anything else would change the sort of open up and introduce new areas, There's international expansion into new geographies for sure but from a vertical standpoint.
And I haven't seen anything the fields and fundamentally new deal flow.
And the 1 thing I would just add to that is we have seen.
Again, it's spot on there and that kind of industries and verticals and that is 1 of the strength of our business is that it's so diversified across verticals and customer sizes, there hasnt been income.
Covid specific use cases that throughout the year. We've also seen translate into other new use cases, whether it's and verticals are of different market. A good example of that would be <unk>.
P loans, both last year and this year, we saw quite a few loans some of that will be turning into loan forgiveness or other fintech and sort of use cases, and so we have seen some of that but we're also seeing consumption into new use cases off the back of that as of as an example.
Got it very helpful. And then I guess from a brief follow up perspective and perspective.
The customer metrics and the quarter, obviously very good and the show and a level of Thats still elevated versus the pre pandemic level, even as we anniversary Ed, but how are sales cycles today compared to a year ago year ago, Obviously, a year ago. There was a rush to sign up and use your product, but as today's or the most recent sales cycles more normalized.
And what Youre used to seeing or are you still see and customers maybe youll speed through this process of low thank you.
Yes, it's a great question is actually some funny and before each earnings call since the and I spent time with the team talking about pricing and talking about just sort of of tender and the market and we view that sort of it when we get questions like this and people.
Like you we were able to give you the latest and greatest.
And the pricing has been and a good way boring as it has been.
Pretty much every quarter through the public, but we haven't seen a lot of change there in terms of the deal cycle time.
We definitely saw some shortened cycle time at the height of the pandemic.
And there were people, who were kind of calling us up especially on the on the newco side. So people we didn't have a previous relationship and they were really in a hurry to get going and dock sites and Thats definitely.
The reduced some cycle time as Wilson of implementation time, and I'd say thats, probably reverted back to more normal at this point, we don't have that the sense of urgency to be deployed.
Light of had I wouldn't say that was the significant portion of our business. The played out that way and remember and any given quarter. The amount of revenue that comes from new companies versus come from the pace of Newco is obviously very small and we didn't see that dramatic change and the existing customers because they were relatively quick and the cycle time for new use cases, you don't have contracts.
And just sort.
The MSA kind of requirements. There. So I think that there's something there I wouldn't say it was significant but it has reverted to sort.
And what it would have been before from a second line.
Congrats and thanks again.
Thank you. Our next question comes from Rajeev <unk> with RBC. Please proceed with your question.
Hey, Dan Cynthia and thanks, so much for taking my questions I wanted to go back to the previous question on customer ads, because I think of lot of us are pleasantly surprised to see customer adds continuing to hit a record even as we head into a post pandemic future, but it looks like.
Especially on the mobile side, you had a really impressive record this quarter, maybe could you give us a little bit of a sense of what is it that is.
Driving that despite the fact that a lot of us would assume that urgency is maybe dive down.
Before and is that a function of certain investments youre, making and the software of motion and the mobile channels or something else and then I've got a follow up on the large customers.
Yes, I think I think you hit it really well, yes, there has been their wisdom, perhaps unexpected strength as you said on.
And as I mentioned, we're obviously pleased.
And by that strength on the web and mobile side.
I think that Theres, 2 things that we've done well that's allowed us to grow and and reached the goal that we set several years ago, hitting 1 million customers and primarily driven by that and so thats, where the largest number of our estimates of.
The first thing is I think we're getting better and better at our online advertising I think we've built that is the key discipline to our long term success.
And I think thats been a huge huge part of driving the second thing is we're continuing to innovate around our overall digital experience and that process by which people come through the trial after they've put down and online at generally the most commonly and we've taken 2 of trial process. They see the quality of our software we make it easy.
And your and easier for them to come of customer and that digital flow.
Ton of work that we can be better at that but we have made a lot of effort and the last 18 months, there and I think some of that is starting to pay off that has driven that and 1 last thing I'll. Just add is important to understand is really shout out for the web and mobile team.
And we look at their net add.
Part of it nets out of that as people upgrade to come direct and so.
And some of their most successful actually almost all of their most successful customers. We take from it we've taken we put them into our direct business and so that's the group that constantly have to replenish and grow at a faster rate to make up from the fact that we have what we said that the positive churn we turned it out of web and mobile and tournament and the business has expanded.
On more fulsome use of our of our platform with the more advanced.
And so from that standpoint, I do think that growth glad you pointed it out.
Really been the starplex.
Got it that's really helpful. And then just going to the 3 undertake customer adds again really impressive to see it hit a record this quarter as well can you give us some color on what's driving that and generally is this.
Existing direct customers that just expand usage of the entire agreement cloud or are you actually landing new logos at that level. Thanks.
Yes as is the case prior the vast vast majority of of the posted 300 K F. R growth customers as opposed to net new it's not that we've never had some of them start there, but our land and expand model. We're not really trying to go out and find that because of our customer success orientation University and we really believe the bed.
<unk> built the long term value.
Go out and start small and find some great use cases deliver a fantastic customer success tremendous ROI and grow the business and Julia out trying to get giant lands that are complex and just don't.
And think that's the model that really fits for the agreement cloud.
And so that's definitely the case and in terms of the strength there.
It's highly correlated with the other key metrics to see Wahid.
And you see a really high net retention rate deems that the companies that were 250, a bunch of them grew and Theyre now 300, so theres not any particular.
Surprise there, it's just the continued land and expand success.
That is the number that has some volatility and the notice to go back and look over the quarters. There are times, when and because of the puts and takes for any individual accounts and the way they might be adding thing sometimes someone does the onetime ads and pop up over 300, and they do that onetime use cases, they might and that might pop down below the next quarter. So so.
We do think it's important to look of that over time.
As opposed to any 1 quarter, but I think youre going to see overtime and while we keep delivering the same fantastic customer success and Youll see that number continue to scale for the reasons the certificate.
Alright wonderful thank you so much.
Yeah.
Thank you. Our next question comes from Kirk <unk> with Evercore ISI. Please proceed with your question.
Alright, thanks, very much and I'll echo the congrats on the quarter, Dan I wanted to circle back on and International obviously, it's a huge Tam for you all are there any technological or regulatory hurdles that you need to clear and certain markets for the sort of adoption rate to kind of.
Get to where you are and the U S are more markets, where you guys are bigger and and then I guess, just as you and Mike thinking about it given that this is something that would be sort of of global opportunity. How are you thinking about placing your bets in terms of making investments and certain regions and are there regions, where you think youre just about the hit sort of a tipping point, perhaps faster than other.
Yes, absolutely. So a couple of thoughts of the first is I believe the at the sort of technological level I don't think theres anything that we would point to there are really important differences and legal frameworks and we.
A lot about the concept of the the Commonwealth vs. The civil law.
Legal framework.
But we feel it and pretty much made the investments to enable the civil law countries, which are of the.
Your mass majority of countries out there. So we made those investments really several years ago and I think we feel good about what we've done there. There is the sort of data residency issue. If you want to consider that sort of of technical of component and it could be of governor to the extent that some geographies certain.
Institutions of day, we don't want to let any data.
The <unk>.
And our national wall, so to speak most of the government clients and feel that way, but sometimes you do see that with large financial institutions are heavily regulated industries and so sometimes there is complexity there and Thats why you know we've been working.
Azure too to have and both of <unk>.
Canada and Australia.
And sort of <unk>.
Bridging the public cloud and.
And maintaining those testing that kind of determines that really enable us to grow faster I think it is an area, we continue to be testing and working on.
Wouldn't say, yet and we found as of <unk>.
Assets turbocharge, there but.
But I think it isn't and area for continued investment and growth. That's the only thing I would sort of point to from either of technological or kind of legal framework I do think there is important things like the market awareness and obviously.
Particularly because of our strength and real estate early on to occupy and became more of a household name and the United States.
We don't have that and.
Most of the countries. So that's the big component, but I think we need to.
Work on and.
I think this and other things that we still have big opportunity for us the sort of get our house.
In order of the way that we operate and certain other countries and we feel more local I think that's another area of what I would say, we've sort of investing 1 of the exact kind of technological but there is sort of just the building the business.
The areas, we're heavily focused on and in terms of second half of your question in terms of the market.
We've talked a lot about our focus 8 most of the original <unk>.
8 countries over the last several years, we said of our primary.
The focus areas in Europe, the UK, Ireland, Paul 1 of that.
France and <unk>.
Germany.
And the Americas U S, Canada, and then the Brazil, which had been.
And focus and then that the Australia, New Zealand and.
Patrick.
And then finally of Japan.
The 8 countries and we talked about and I think now you're going to see us talk about the investment in Mexico and.
Thinking about really think of that as the regional sort of Spanish speaking Latam, Although Mexico itself and we started and a few months later decided to dramatically increase our investment in terms of all of the graph of receipts. So so much positive response, there in and.
Nickel itself.
From the European standpoint, I think we've always seen opportunity nordics and speed and.
The Netherlands.
And we see more and southern Europe, I think there's opportunities and each of those geographies. There I don't know that it will be massive certainty.
And the ground there and you can see us do more and those areas and then in Asia Pac overall.
And we're pleased with what we've got and debt and in Japan.
And.
Very small presence in Singapore, and we're starting to look at southeast Asia as a really key investment areas that Mike and I was literally this morning talking about.
That growth investment, there and leveraging the small small cell and the water. We have to go after what we think could be a really attractive.
The market opportunity and that's across the thinking about Philippines, and thinking about Thailand, and thinking about sort of those kind of core.
The countries in Southeast Asia.
Sure well production and so that's how we're thinking about the geographic range.
That's super helpful. Thank you all.
Thank you and the interest of time, we ask that all participants limit themselves to 1 question.
Thank you. Our next question comes from Brad Sills with Bank of America Securities. Please proceed with your question.
Oh, Great Hey, Thanks, guys and congrats on the nice quarter and why.
Wanted to ask about and earlier comment you made Dan around and site customers and how you feel that those use cases are extensible for future growth is that how we should think about the kind of evolution from customers towards the agreement cloud, maybe starting with C O M or insight.
And you'll get some use cases under their belt, there and then and then graduate if you will into the broader agreement cloud.
And what are those cohort of customers say about the propensity to buy more.
Yes, I mean, the way I look at it is still the tip of the sphere is going to the signature for sure.
And part of it is within the was describing earlier and just have a much larger business there and even though it's still as she said very early any we have such a substantive and the leadership position and.
And we just see so much opportunity to continue to land there that will be our primary.
Entry point I think the most companies then as you indicated and the question.
And it really opened up the rest of the agreement cloud and I do believe the areas today that we see as the natural.
Extension and the second step CSM and advanced analytics will increasingly be.
1.2 punch of 1 of our goals is to growth.
Integrate some of the fuel technology and the AI technology into our <unk> solution, because we feel from a lot, particularly of our mid market and up.
Customers, that's going to be of key buying factories the ideas.
Having embedded fantastic analytic capability onto the CRM solution and we're seeing with analytics on top of just inside of even this fantastic new product vehicles appetite monitor which is really the security product for people to understand what's happening and their network by looking at how people are signing agreements with them, we're seeing huge uptake.
The customers, where they just want to understand more about the business and our whole thesis around the steel acquisitions. The idea of the companies can run their business better with the really thoughtful of reading the classic the smarter about the way they grow and execute the core operation. So that is definitely how we think about it and I think the number of use cases for <unk>.
Question and continue to accelerate as people see the business value and the ROI from using our advanced analytics and particularly the AI assets.
Thanks, so much Dan.
Thank you. Our next question comes from Pavan <unk> with William Blair. Please proceed with your question.
Hi, everyone and this is Jake on for bond just thinking out longer term when we're thinking about some of the recent additions of the agreement cloud like notary seal software of CLR and.
Let me share about what could be the longest term growth drivers and if there is anything that surprised you about initial customer adoption over the last several months and just would love to hear any color on that.
Okay.
And well give you my thoughts and then.
The dive in and do it a different perspective of your own payments, maybe you want to pick.
I think that you gotta look of Tam and we're playing this for the long term and so even though I look at something like notary and I just have a huge amount of enthusiasm for it I think in many ways and the extension of assigning type.
Experience and so I think it's a special and really important opportunity to bring the joy of the Doctor. The times has brought to the signature world to extend that the notary, but I think the total Tam there isn't and allow us to be a pillar of the same with definitely CLO.
I think <unk> is going to be emerging software category within the agreement cloud.
And that several years from now and look back and say Hey, Mike some of the create an esignature solution today.
Today, and we look at it that way now.
Now if the Atlanta, and we get to that the huge on the road, where people would be crazy not to be.
The way.
And they manage the contract.
Across the business, so that's probably what I would kick <expletive>.
Of the.
Big winner, if you will and what will contribute and.
The most stansell way.
Our growth over the long term.
And the pet favorite the different from that.
That was fairly comprehensive.
And I'll leave it at that on that line.
Great. Thanks for taking my question.
Okay.
Thank you. Our next question will come from Pat Walraven with JMP Securities. Please proceed with your question.
Hi, This is Aaron and Kim on for Pat Congrats on the quarter you mentioned the head count grew 42% year over year and a high level can you discuss what percentage of that wood sales and customer success versus the other functions and then how the company is thinking about head count growth going forward.
Yes, I think the simplest way to look at the distribution as you know the head count is by far.
Number 1 cost so if you take a look at how it played out in.
In terms of the percentage of our revenue per.
In terms of our revenue attributed each of the buckets youll see the sales and marketing and product engineering.
We're by far the 2.
The.
We've traditionally.
The supported and that will be the same thing and this quarter and I look forward across the year because of the core groups I'd like to see the most.
Head count growth and.
From a philosophy standpoint, I oftentimes talks about the concept of the kind of.
Line function and then we have functions and support them and the support functions are just as important as the line function, but I really to scale our business needs to scale of the line function. So we need to have a lot of fantastic engineers here building great software because we're a software company and so the net number of engineers that we can grow that.
A huge important driver of our future growth and the same thing is true. If you think about our quota carrying aes or our CSM and center driving customer success those of the functions and we really want to see the head count growth and people like me and Cynthia and were overhead and we like our sales line, but we don't need any more of a.
And 1 CFO of <unk>.
And we want to really focus ourselves and getting more leverage in those line operation.
Very helpful. Thank you.
Thank you.
There are no further questions at this time I would like to turn the floor back over to management for any closing comments.
Thank you all for joining us.
You saw any of the top she mentioned, we're going to be out and the market a little bit of it virtually hopefully soon we'll be out physically but thank you for joining us and we look forward to talking to you on the quarter here.
Okay.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a wonderful evening.