Q4 2024 DocuSign Inc Earnings Call

Speaker Change: [music].

Operator: The Bulletproof Executive 2013 Good afternoon, ladies. Thank you for joining DocuSign's fourth quarter and full fiscal year 2024. At this time, all participants may disconnect.

Good afternoon, ladies and gentlemen, thank you for joining <unk> fourth quarter and full year fiscal year 'twenty 'twenty four earnings conference call.

At this time all participants are in a listen only mode.

Operator: 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 Center, site following. If anyone should require options..., star zero on your. I will now pass the call over to Roger Martin. Okay.

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.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

I will now pass the call over to Roger Martin Vice President of Finance. Please go ahead.

Roger Martin: Thank you, operator. Good afternoon, and welcome to DocuSign's Q4 and fiscal year 2024 earnings call. I'm Roger Martin, DocuSign's Vice President of Finance. Joining me on today's call are DocuSign CEO Allan Thygesen and CFO Blake Grayson.

Roger Martin: Thank you operator, good afternoon, and welcome to <unk> Q4, and fiscal year 'twenty 'twenty four earnings call I'm brought you much in Tokyo signs Vice President of finance.

Joining me on today's call are docs, you're saying CEO Allen <unk> and CFO Blake Grayson.

Roger Martin: The press release announcing our fourth quarter and fiscal year 2024 results was issued earlier today and is posted on our investor relations website. Before we begin, let me remind everyone that some of our statements on today's call are forward-looking. We believe our assumptions and expectations related to these forward-looking statements are reasonable, but 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 pace of product innovation and factors affecting customer demand are based on our best estimates at this time and are therefore subject to change. Please read and consider the 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, except as required by law. We assume no obligation to update these statements in light of future events or new information.

Roger Martin: The press release announcing our fourth quarter and fiscal year 'twenty 'twenty. Four results was issued earlier today and is posted on our Investor Relations website.

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

Roger Martin: Yeah.

Roger Martin: In particular, our expectations regarding the pace of product innovation and factors affecting customer demand and based on our best estimates at this time and are therefore subject to change.

Roger Martin: Please read and consider the risk factors in our filings with the SEC together with the content of this call.

Roger Martin: 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 update these statements in light of future events or new information.

Roger Martin: During this call, we will present GAAP and non-GAAP financial measures. In addition, we provide non-GAAP weighted average share counts and information regarding free cash flow and billings. These non-GAAP measures are not intended to be considered in isolation from, a substitute for, or superior to our GAAP results.

Roger Martin: During this call, we will present, GAAP and non-GAAP financial measures and.

Roger Martin: In addition, we provide non-GAAP weighted average share count and information regarding free cash flow and billings.

These non-GAAP measures are not intended to be considered in isolation from a substitute for or superior to I've got preserves we encourage you to consider all measures when analyzing our performance.

Roger Martin: We encourage you to consider all measures when analyzing our performance. For information regarding our non-GAAP financial information, the most directly comparable GAAP measures, and a quantitative reconciliation of these figures, please refer to today's earnings press release, which can be found on our website at investor.docuSign.com. I'd now like to turn the call over to Allan.

Roger Martin: For information regarding our non-GAAP financial information the most directly comparable GAAP measures and a quantitative reconciliation of these figures. Please refer to today's earnings press release, which can be found on our website at investor <unk> signed Dot com.

Roger Martin: I'd now like to turn the call over to Alan.

Allan C. Thygesen: Thanks, Roger, and good afternoon, everyone. DocuSign's fourth-quarter operating results reflect strong progress across the three pillars of our strategic vision. Accelerating Product Innovation; improving the reach and effectiveness of our omnichannel go-to-market initiatives and strengthening operating and financial efficiency. Before discussing the pillars, I'll briefly highlight Q4's strong business. Q4 revenue was $712 million, up 8% year-over-year, while full-year revenue was $2.8 billion, up 10% year-over-year. Both outperformed our expectations.

Roger Martin: Alan.

Alan: Thanks, Roger and good afternoon, everyone.

Alan: Besides fourth quarter operating results reflect strong progress across the three pillars of our strategic vision.

Alan: Accelerating product innovation, improving the reach and effectiveness of our Omnichannel go to market initiatives and strengthening operating and financial efficiency.

Alan: Before discussing the pillars I'll briefly highlight Q4 strong business results.

Alan: Q4 revenue was $712 million up 8% year over year, while full year revenue was $2 8 billion up 10% year over year.

Alan: Both outperformed our expectations.

Allan C. Thygesen: I'll continue to focus on the fish, while still investing for long-term growth, drove significantly improved profitability. Q4 non-GAAP operating margin rose to 25%, up one point versus last, while full-year non-GAAP operating margin improved by more than five points. 26% from 21% in fiscal year 2020.

Alan: Our continued focus on efficiency.

Alan: While still investing for long term growth drove significantly improved profitability.

Alan: Q4, non-GAAP operating margin rose to 25%.

Alan: Up one point versus last year, while full year non-GAAP operating margin improved by more than five points to 26% from 21% in fiscal 'twenty three.

Allan C. Thygesen: In addition, free cash flow more than doubled in fiscal 24 to nearly 900 million dollars. Similar to Q3, we're encouraged by momentum across, http://www.docsign.com.au, Strong New Customer Growth, Organizations Large and Small continue to invest in DocuSign's value proposition. Let's turn to our strategic pillars, starting with continued improvement in our omni-channel go-to-market initiative. In Q4, we were encouraged by improving performance with customers managed by DocuSign.com. Including Fortune 500 global leaders in energy, industrials, consumer goods, and insurance. Also, several federal and state governments.

Alan: In addition, free cash flow more than doubled in fiscal 'twenty four to nearly $900 million.

Alan: Similar to Q3, we're encouraged by momentum across the business from.

Alan: From solid retention and improving usage with existing customers to strong new customer growth organizations large and small continue to invest in data science value proposition.

Alan: Let's turn to our strategic pillars, starting with continued improvement in our Omnichannel go to market initiatives.

In Q4, we were encouraged by improving performance with customers managed by the direct sales force.

Alan: We substantially increased the amount of business from customers, signing and renewing multiyear multimillion dollar contracts with Doctor site.

Alan: <unk> Fortune 500 global leaders in energy Industrials consumer goods insurance and several federal and state government agencies.

Allan C. Thygesen: Our partner channel has been instrumental in driving large customer momentum. We continue to deepen relationships with Strategic Enterprise-Focused Organizations, including SAP, Microsoft, and Deloitte. These organizations are helping to accelerate our customers' digital transformation journeys. They also represent progress in building a vibrant partner ecosystem to extend DocuSign's reach into new markets and customer sectors. To that end, we recently launched global participation in Microsoft Azure. We can now co-sell our entire suite of products to Microsoft's enterprise customers, who control them on their existing Azure. Purchase a DocuSign license.

Alan: Our partner channel has been instrumental in driving large customer momentum.

Alan: We continue to deepen relationships with strategic enterprise focused organizations, including S. A P Microsoft and Deloitte.

These organizations are helping to accelerate our customers' digital transformation journeys.

Alan: They also represent progress in building a vibrant partner ecosystem to extend darkey sides reach into new markets and customer segments.

Alan: To that end, we recently launched global participation in Microsoft Azure marketplace.

Alan: We can now co sell our entire suite of products to Microsoft enterprise customers, who can draw on their existing absorbed commitments to purchase stock signed licenses.

Allan C. Thygesen: We're encouraged to already have our first $1 million customer from that channel. These partners, and many more, help us accelerate our customers' digital transformation journey. We also continue to deliver more efficient customer growth, even as we scale. In Fiscal 24, we invested to improve our digital and self-serve operations. Leading to sustained new customer acquisition growth. In Q4, we surpassed 1.5 million total customers across our digital and direct channels. Our breadth, scale, and customer affinity is unique in the broader SaaS landscape and speaks to the continued large opportunity in front of DocuSign.

Alan: We're encouraged to already have our first 1 million dollar customer from that channel.

Alan: These partners and many more help us accelerate our customers' digital transformation journeys.

We also continued to deliver more efficient customer growth, even as we scale.

Alan: In fiscal 'twenty, four we invested to improve our digital and self serve motions, leading to sustained new customer acquisition growth.

Alan: In Q4, we surpassed one 5 million total customers across our digital and direct channels.

Alan: Our breadth scale and customer affinity is unique in the broader SaaS landscape and speaks to the continued large opportunity.

Alan: What I'm talking about.

Alan: Across our digital direct and partner channels International continues to be a strong underlying growth driver.

Allan C. Thygesen: Across our digital, direct, and partner channels, international revenue grew more than twice as fast as total revenue and now represents more than 27% of the business, up from 25% last year. The international opportunity remains substantial and is one of our key long-term growth drivers. Crystal, which is a financial cooperative in Brazil, recently adopted the new WhatsApp. Adding WhatsApp signing to existing e-signature email usage has reduced delays and increased response times. And Help Crystal generate more revenue and broaden its reach. Much of Credill's business is with farmers and the agriculture industry, which has limited rural connectivity.

Alan: In Q4 International revenue grew more than twice as fast as total revenue and now represents more than 27% of the business up from 25% last year.

Alan: The international opportunity remains substantial and is one of our key long term growth drivers.

Speaker Change: Okay. So it's just a financial cooperative in Brazil recently adopted the new Whatsapp integration.

Speaker Change: Adding whatsapp siding to existing esignature email usage has reduced delays increase response times and help crystal generate more revenue and broaden its reach lots of Kratos credit business is with farmers and the agricultural industry with limited rural connectivity.

Allan C. Thygesen: The DocuSign WhatsApp integration allows Crestle to bridge that connectivity gap. Sorry, it's my credit card. Page 1, Let's turn to product innovation. Recall, all aspects of go-to-market product investment are driving customer adoption. The WhatsApp integration I just mentioned led to significant envelope usage in recent customer wins in Latin America. Additionally, over 1,000 customers in the UK and Europe have used and now benefit from stronger identity verification products like AI-enabled IDV Premier and our recently launched QES-compliant Identity Wallet. The recent pre-launch of our premium DocuSign monitor created 1,500 new... Just. First Financial Bank, a financial services company headquartered in Indiana, is using ID verification to increase the speed of consumer lending and home equity line of credit offerings.

Speaker Change: Doctor sign Whatsapp integration lots crystal to bridge that connectivity gap and accelerates credit process from days to hours.

Speaker Change: Let's turn to product innovation.

Speaker Change: All aspects of go to market product investment is driving customer adoption Whatsapp integration I, just mentioned led to significant envelope usage and recent customer wins in Latin America.

Speaker Change: Over a thousand customers in UK and Europe have used to now benefit from stronger identity verification products like AI enabled ITV premier and our recently launched Qef's compliant identity wallet.

Speaker Change: Free launch of our premium dog sign monitor created 500, new accounts just this quarter.

Speaker Change: First financial Bank financial services company headquartered in Indiana is using Icke verification to increase the speed of consumer lending and home equity line of credit offerings.

Allan C. Thygesen: This improves security for bank staff and moves manual workflows for underwriters, and creates a stronger customer experience. First Financial is expanding ID verification to other use cases like credit cards and online accounting.

Speaker Change: This improved security for bank staff.

Speaker Change: It moves manual workflows for underwriters and creates a stronger customer experience.

Speaker Change: First financial is expanding argue verification to other use cases like credit cards and online account openings.

Allan C. Thygesen: Looking ahead, as we exit Q4, we have several hundred customers in beta for new platform services that will transform DocuSign into a more powerful platform. We'll have much more to share, and we're excited to have you join us virtually to hear about our evolving platform at this year's Momentum Customer Conference in New York on April 11th.

Speaker Change: Looking ahead as we exited Q4, we have several hundred customers in beta in new platform services that will transform doctor sign into a more powerful solution.

Speaker Change: We will have much more to share and we're excited to have you join us virtually to hear about our evolving platform at this year's momentum customer conference in New York on April 11th.

Allan C. Thygesen: Product momentum is clearly creating value for our customers. In Fiscal 24, that momentum was validated by third parties like IDC, who named us the e-signature industry leader versus 17 other vendors in its annual worldwide assessment. Also, Gartner named DocuSign as a leader in its Magic Quadrant for Contract Lifecycle Management for the fourth year running.

Speaker Change: Product momentum is clearly creating value for our customers in fiscal 'twenty four that momentum was validated by third parties like IDC, who named US the esignature industry leader versus 17, other vendors and its annual worldwide assessment also Gartner named <unk> as a leader in.

Speaker Change: Its magic quadrant for contract lifecycle management for the fourth year running.

Allan C. Thygesen: To that end, DocuSign CLM customers continue to be at the front line of embracing a broader agreement management use case. In Q4, DocuSign's CLM growth once again significantly outpaced overall revenue. This is a positive sign as we see CLM product demand as a precursor to the value we can create across all 1.5 million DocuSign customers. Today, DocuSign CLM helps users automate and manage complex workflows. And we see the future as taking those capabilities to a broader set of users, the CLM Region.

Speaker Change: To that end Darkies science CRM customers continued to be at the frontline of embracing a broader agreement management use case in Q4, Dr Science CRM growth once again significantly outpaced overall revenue.

Speaker Change: This is a positive sign as we see CRM product demand is there.

A precursor to the value we can create across all 1.5 million signed customers today.

Speaker Change: Today jockey signed seal them helps users automate and manage complex workflows and we see the future is taking those capabilities to a broader set of users and see how languages today.

Allan C. Thygesen: We're seeing strong adoption of our CLM product among enterprise customers. Just this quarter, a luxury automaker used our CLM to create an elegant sales experience to match its brand value proposition. A multi-billion dollar global manufacturer sped up its legal and supply chain operations with a company-wide implementation of DocuSign CLM, and a global energy company.

Speaker Change: We're seeing strong adoption of our CRM product.

Speaker Change: Enterprise customers.

Speaker Change: This quarter, our luxury automaker used our C O M to create an elegant sales experience to match its brand value proposition.

Speaker Change: That billion dollar global manufacturers sped up its legal and supply chain operations with a company wide implementation of Doctor Science Hill EM.

In a global energy company accelerated its sales processes and streamline procurement with ceiling.

Allan C. Thygesen: Accelerated its sales process. Streamlined procurement. Our third strategic pillar is strengthening DocuSign's operating and financial efficiency. In February, we announced further cost management initiatives, including a reduction in force.

Speaker Change: Our third strategic pillar is strengthening darkies signs operating and financial efficiency.

Speaker Change: In February we announced further cost management initiatives, including a reduction in force.

Allan C. Thygesen: This decision streamlined our business and focused investments on initiatives that provide the strongest foundation for long-term growth. Blake will share more details on the financial impact and its impact on improving profitability in fiscal 2025. We will continue focusing on efficiency while investing to reinvigorate the long term. In conclusion, Fiscal 24 is critical to strengthening DocuSign's foundation. We've re-accelerated product innovation. Inc. www.thevenusproject.com These are all critical steps to realize the multi-year journey to transform agreement management. And we're just getting started. The opportunity in front of DocuSign remains massive. Today's World runs on green.

Speaker Change: This decision streamlined our business and focused investments on initiatives that provide the strongest foundation for long term growth.

Speaker Change: Blake will share more details on the financial impact and its impact on improving profitability in fiscal 'twenty to 'twenty five.

Blake: We will continue focusing on efficiency, while investing to reinvigorate long term growth.

Blake: In conclusion fiscal.

Blake: Fiscal 'twenty four it was critical to strengthening Doctor Science Foundation.

Blake: Reaccelerate it product innovation investing in our leadership talent and right sized our organization.

Blake: These are all critical steps.

Blake: To realize the multi year journey to transform agreement management.

Speaker Change: And we're just getting started.

Speaker Change: The opportunity in front of doctors sign remains massive.

Speaker Change: Today's world runs on agreements, but agreement processes Havent changed in the last 100 years.

Allan C. Thygesen: For the agreement process..., changed in the last 100 years. Even with the evolution to digital documents... Agreements and How We Use Their Insights remain relics of antiquated paper-based... Find a document. Store it as a flat file.

Speaker Change: Even with the evolution to digital documents agreements and how we use their insights remained relics of antiquated paper based systems.

Speaker Change: Sign the document stored as a flat file preserved, but disconnected from the systems that run your operations.

Allan C. Thygesen: Preserve. Disconnected from the... that run your operations. Our sole focus. For more information, please visit www.cdc.gov, is to make agreements more valuable for enterprises and S&Bs alike. As organizations transition to a visual world, customers tend to docu- That's the world's most trusted agreement. We are excited for Fiscal 25 and the continued We will have on our. Thank you to our incredible team, for your passion and dedication, to our vision. Thank you. With that said, let me turn it over to you.

Our sole focus is transforming those systems for a $1 5 million existing customers.

Speaker Change: To make agreements more valuable for enterprises and Smbs alike.

Speaker Change: As organizations transitioned to a digital World Cup.

Speaker Change: Customers tend to Doctor sign as the world's most trusted agreement company.

Speaker Change: We are excited for fiscal 'twenty five and the continued impact we will have on our customers. Thank.

Speaker Change: Thank you to our incredible team for your passion and dedication to our vision and culture.

Speaker Change: With that let me turn it over to Blake.

Blake Jeffrey Grayson: Thanks, Allan, and good afternoon, everyone. Throughout Fiscal 2024, we will continue to build a solid foundation on the three pillars of our strategic vision, accelerating product innovation, enhancing our omnichannel go-to-market initiatives, and strengthening our operating and financial efficiency. As a result, in Q4, we delivered strong operating and financial results. Q4's financial performance exceeded the high end of guidance across every metric with material improvements in operating income, operating margin, and free cash. Total revenue in Q4 increased 8% year-over-year to $712 million, and subscription revenue also grew 8% year-over-year to $696 million. Billings of $833 million grew 13% year-over-year, accelerating from 5% year-over-year in Q3.

Blake: Thanks, Alan and good afternoon, everyone.

Blake: Throughout fiscal 2024, we continue to build a solid foundation on the three pillars of our strategic vision accelerating product innovation enhancing our omni channel go to market initiatives and strengthening our operating and financial efficiency. As a result in Q4, we delivered strong operating and financial results Q4.

Blake: This financial performance exceeded the high end of guidance across every metric with material improvements in operating income operating margin and free cash flow.

Blake: Total revenue in Q4 increased 8% year over year to $712 million and subscription revenue also grew 8% year over year to $696 million.

Blake: Billings of $833 million grew 13% year over year accelerating from 5% year over year in Q3, Q4 represented our highest year over year billings growth performance in over a year.

Blake Jeffrey Grayson: Q4 represented our highest year-over-year billings growth performance in over a year. With respect to billing, approximately half of the 8-point acceleration versus Q3 came from solid execution around renewals, especially with large customers. This includes spillovers from the prior quarter and better early renewal strength from contracts that would have otherwise been billed in fiscal year 25. The remaining half came from a strong close to Q4 and net new growth, which will support the business in future quarters. Similar to Q3 results, we are encouraged by continuing signs of stabilization in the business. First, customer usage continues to improve. Total envelope scent increased moderately year over year.

Blake: With respect to billings approximately half of the eight point acceleration versus Q3 came from solid execution around renewals, especially with large customers. This includes spillover from the prior quarter and better early renewal strength from contracts that would've otherwise been build in fiscal year 'twenty five.

Blake: The remaining half came from a strong close to Q4, and net new growth, which will support the business in future quarters.

Blake: Similar to Q3 results, we are encouraged by continuing signs of stabilization in the business.

Blake: First customer usage continues to improve total envelope sent increased moderately year over year similar to last quarter, we saw improving year over year usage trends in key verticals with technology insurance business services financial services and health care, all growing faster than the total bill.

Blake Jeffrey Grayson: Similar to last quarter, we saw improving year-over-year usage trends in key verticals with technology, insurance, business services, financial services, and healthcare, all growing faster than the total business basis. Also, consumption with direct customers, our contract utilization measure increased slightly year-over-year. Second, customer retention is stable with positive large customer momentum. Gross retention was flat year-over-year in Q4 across the direct book of business.

Blake: This baseline.

Blake: Also consumption with direct customers are contract utilization measure increased slightly year over year.

Blake: Second customer retention is stable with positive large customer momentum.

Blake: Gross retention was flat year over year in Q4 across the direct book of business as expected dollar net retention trended downward in Q4 to 98% and we're encouraged that the pace of year over year decline slowed substantially in fiscal year 'twenty four versus fiscal year 'twenty three we anticipate the moderating trend to continue.

Blake Jeffrey Grayson: As expected, dollar net retention trended downward in Q4 to 98%, and we're encouraged that the pace of year-over-year decline slowed substantially in fiscal year 24 versus fiscal year 23. We anticipate the moderating trend to continue in fiscal year 25, and we expect dollar net retention to be flat to down slightly in Q1. While overall net new expansion continues to be impacted by software optimization and macro-related customer purchasing costs, we are encouraged by large customer spending behavior. The number of customers spending over $300,000 annually rose to 1,060 in Q4, increasing sequentially for the second quarter in a row.

Blake: In fiscal year, 'twenty, five and we expect dollar net retention to be flat to down slightly in Q1 25.

Blake: Overall net new expansion continues to be impacted by software optimization and macro related customer purchasing Kaufman. We are encouraged by large customer spending behavior. The number of customers spending over $300000 annually rose to 1060 in Q4, increasing sequentially for the second quarter in a row.

Blake Jeffrey Grayson: Also, Q4 bookings for customers with total contract values over $1 million increased by more than 50% year-over-year. Third, new customer acquisition volume remains strong in Q4, partly due to improvement in go-to-market initiatives. DocuSign ended the year with over 1.5 million customers, up 11% year-over-year and consistent with growth in Q3.

Blake: Also Q4 bookings for customers the total contract value over $1 million increased by more than 50% year over year.

Blake: Third new customer acquisition volume remained strong in Q4, partly due to improvement in go to market initiatives Darkey signed ended the year with over $1 5 million customers up 11% year over year and consistent with growth in Q3 direct customers grew 15% year over year also consistent with Q3.

Blake Jeffrey Grayson: Direct customers grew 15% year-over-year, also consistent with Q3, bringing total direct customers to 242,000. International revenue grew at more than double the overall revenue growth rate and is now 27% of total revenue. We believe the international growth opportunity remains large. Also, the scale and breadth of our customer base is unique across the software landscape and an asset we can leverage as we expand our product offerings in the future. Turning to our financials, operating and financial efficiency initiatives drove strong performance in fiscal year 24. Improved execution led to a significant expansion in operating margin and a more than doubling of free cash flow versus fiscal year 23. Non-GAAP gross margin for the fourth quarter was 82.5%, in line with the prior year.

Blake: Bringing total direct customers to 242000 international revenue a key long term growth driver grew at more than double the overall revenue growth rate and is now 27% of total revenue.

Blake: We believe the international growth opportunity remains large also the scale and breadth of our customer base is unique across the software landscape and an asset we can leverage as we expand our product offerings in the future.

Turning to our financials operating and financial efficiency initiatives drove strong performance in fiscal year 'twenty for <unk>.

Improved execution led to a significant expansion in operating margin and a more than doubling of free cash flow versus fiscal year 'twenty three.

Blake: non-GAAP gross margin for the fourth quarter was 82, 5% in line with the prior year.

Blake Jeffrey Grayson: Fourth quarter non-GAAP subscription gross margin was 85 percent, also in line with the prior year. For the full year, non-GAAP gross margin was 83%, up slightly from last year. Q4 non-GAAP operating income was $178 million, up 15% year-over-year with an operating margin of 25%, improving by over 100 basis points year-over-year. We saw more significant improvement in fiscal year 24 with a record non-GAAP operating income of $711 million, up 38% year-over-year, resulting in a 26% operating margin. This is a substantial increase of over 500 basis points versus 21% in fiscal year 23. We will continue to focus on realizing opportunities to achieve greater efficiency as we invest to drive sustainable long-term growth. Free cash flow improvement was even stronger in Q4 and fiscal year 24. In Q4, free cash flow was $249 million, and for the full year, we generated $887 million in free cash flow, with both periods more than doubling year over year, resulting in a 32% free cash flow margin for fiscal year 24.

Blake: Fourth quarter non-GAAP subscription gross margin was 85% also in line with the prior year for the full year non-GAAP gross margin was 83% up slightly from last year.

Blake: Q4, non-GAAP operating income was $178 million up 15% year over year with an operating margin of 25% improving over 100 basis points year over year.

Blake: We saw more significant improvement in fiscal year 'twenty four with a record non-GAAP operating income of $711 million up 38% year over year, resulting in a 26% operating margin.

Blake: This is a substantial increase of over 500 basis points versus 21% in fiscal year 'twenty three.

Blake: We will continue to focus on realizing opportunities to achieve greater efficiency as we invest to drive sustainable long term growth free.

Blake: Free cash flow improvement was even stronger in Q4 in fiscal year 'twenty four in Q4 free cash flow was 249 million and for the full year, we generated 887 million in free cash flow with both periods more than doubling year over year, resulting in a 32% free cash flow margin for fiscal year two.

Blake: 24.

Blake Jeffrey Grayson: Greater operating efficiency led to a substantial working capital improvement that drove free cash flow yield above our operating profit margin. Going forward, we anticipate free cash flow margin to more closely approximate non-GAAP operating income. In fiscal year 24, we used a portion of free cash flow to purchase DocuSign shares.

Blake: Greater operating efficiency led to a substantial working capital improvement that drove free cash flow yield above our operating profit margin.

Blake: Going forward, we anticipate free cash flow margin to more closely approximate non-GAAP operating margin.

Blake: In fiscal year 'twenty four we used a portion of our free cash flow to purchase stock Esign shares we used 146 million towards repurchasing common stock. In addition, we used 144 million to pay taxes due on RSC settlements, reducing the dilutive impact of our equity programs.

Blake Jeffrey Grayson: We used $146 million towards repurchasing common stock. In addition, we used $144 million to pay taxes due on RSU settlements, reducing the dilutive impact of our equity program. Non-GAAP diluted EPS for Q4 was $0.76, an $0.11 per share improvement from $0.65 last year. Non-GAAP diluted EPS for fiscal year 24 was $2.98 per share, a $0.95 improvement from $2.03 per share last year. Fiscal year 24 also represented DocuSign's first full year of producing positive gap netting. For the full year, GAAP diluted EPS was $0.36 versus negative $0.49 in the prior year.

Blake: non-GAAP diluted EPS for Q4 was 76 and 11 cent per share improvement from 65 cents last year.

Blake: non-GAAP diluted EPS for fiscal year 'twenty four was $2 98 per share a 95 improvement from $2 three per share last year.

Blake: Fiscal year 'twenty four also represented Darkey signs first full year of producing positive GAAP net income.

For the full year GAAP diluted EPS was <unk> 36 cents versus negative 49 cents in the prior year.

Blake Jeffrey Grayson: Going forward, we expect continued improvements in gap net income and per share profitability as we work to manage the dilution and cost of our equity program. We currently expect stock-based compensation to be approximately flat year-over-year in fiscal year 25 and expect SBC as a percentage of revenue to decline year-over-year. We ended Q4 with 6,840 employees, a 7% decrease year-over-year from 7,336 at the end of fiscal year 23

Blake: Going forward, we expect continued improvements in GAAP net income and per share profitability as we work to manage the dilution and cost of our equity programs. We currently expect stock based compensation to be approximately flat year over year in fiscal year, 'twenty, five and expect SBC as a percentage of revenue to decline year over year.

Blake: We ended Q4 with 6840 employees, a 7% decrease year over year from 7336 at the end of fiscal year 'twenty three.

Blake Jeffrey Grayson: This results from our ongoing focus on investing efficiently in the business and does not reflect the reduction in force announced on February 6th of this year. We will continue to optimize our hiring plans to align our sales organization with our digital and partner GTM efforts, support long-term growth opportunities in R&D, and realize efficiencies of scale in G&A. With regard to the balance sheet, during the quarter, we used approximately $690 million of cash to settle our remaining outstanding convertible debt. We currently have no debt on the balance sheet.

This results from our ongoing focus on investing efficiently in the business and does not reflect the reduction in force announced on February 6th of this year.

Blake: We will continue to optimize our hiring plans to align our sales organization with our digital and partner G. T. M motions support long term growth opportunities in R&D and realize efficiencies of scale in G&A.

Blake: With regard to the balance sheet during the quarter, we used approximately $690 million of cash to settle our remaining outstanding convertible debt. We currently have no debt on the balance sheet.

Blake Jeffrey Grayson: At the end of fiscal year 24, we had approximately $1.2 billion in cash, cash equivalents, and investments. This strong financial foundation, including a business model that generates significant free cash flow, supports its future investment and increases our ability to opportunistically return excess capital to shareholders. With that, let me turn to guidance. For Q1 2025 and fiscal year 2025, we expect total revenue of $704 to $708 million in Q1, or a 7% year-over-year increase at the midpoint. For fiscal year 25, we expect revenue between $2.915 and $2.927 billion, or a 6% year-over-year increase at the midpoint. Of this, we expect subscription revenue of $686 to $690 million in Q1, or an 8% year-over-year increase at the midpoint, and $2.843 to $2.855 billion for fiscal 25, or a 6% year-over-year increase at the midpoint. For billings, we expect $685 to $695 million in Q1 and $2.970 to $3.024 billion for fiscal 25.

Blake: At the end of fiscal year 'twenty four we had approximately $1 2 billion in cash cash equivalents and investments this strong financial foundation, including a business model that generates significant free cash flow supports as future investment and increases our ability to opportunistically return excess capital to shareholders with that.

Let me turn to guidance for.

Blake: For Q1, 'twenty five in fiscal year 'twenty five we expect total revenue of $704 million to $708 million in Q1, or a 7% year over year increase at the midpoint for.

Blake: For fiscal year 'twenty five we expect revenue between $2 915 to 2.927 billion or a 6% year over year increase at the midpoint of this we expect subscription revenue of $686 million to $690 million in Q1, or an 8% year over year increase at the midpoint and two.

Blake: 0.843 to 2.855 billion for fiscal 'twenty, five or a 6% year over year increase at the midpoint.

Blake: For billings, we expect $685 million to $695 million in Q1, and 2.970 to 3.024 billion for fiscal 'twenty five as continually shown in recent quarters and years billings are heavily impacted by the timing of customer renewals, which can create meaningful variability.

Blake Jeffrey Grayson: As consistently shown in recent quarters and years, billings are heavily impacted by the timing of customer renewals, which can create meaningful variability from period to period. This impacts year-over-year comparisons and is further amplified by the scale of our book of business. We expect non-GAAP gross margin to be 81% to 82% for both Q1 and Fiscal 25.

From period to period this impacts year over year comparisons and is further amplified by the scale of our book of business.

Blake: We expect non-GAAP gross margin to be 81% to 82% for both Q1 and fiscal 'twenty five.

Blake Jeffrey Grayson: We expect non-GAS operating margin to reach 27% to 28% for Q1 and 26.5% to 28% for FY25. Our non-GAAP operating margin guidance includes the impact of the recently announced restructuring of approximately 400 employees, or around 6% of our employee base. While we intend to reinvest a small portion of the restructuring savings into the business, primarily in R&D, the vast majority of savings will drop to the bottom line, as reflected in our expected operating margin expansion in fiscal year 25. We are committed to improving efficiency while still investing in the areas we believe will drive long-term growth. We expect non-GAAP fully diluted weighted average shares outstanding of $208 to $213 million for both Q1 and Fiscal 25.

Blake: We expect non-GAAP operating margin to reach 27% to 28% for Q1, and 26, 5% to 28% for fiscal 'twenty five.

Blake: Our non-GAAP operating margin guidance includes the impact from the recently announced restructuring of approximately 400 employees or around 6% of our employee base, while we intend to reinvest a small portion of the restructuring savings into the business primarily in R&D. The vast majority of savings will drop to the bottom line as well.

Blake: Collected in our expected operating margin expansion in fiscal year 'twenty five we are committed to improving efficiency, while still investing in the areas. We believe will drive long term growth.

Blake: We expect non-GAAP fully diluted weighted average shares outstanding of $208 million to $213 million for both Q1 and fiscal 'twenty five.

Blake Jeffrey Grayson: In closing, we're pleased to report another quarter of progress against our three strategic pillars. Accelerating Product Innovation • Enhancing our Go-To-Market initiatives and strengthening our financial and operational efficiency. Q4 execution was particularly strong as the team delivered accelerating billings growth, double-digit customer growth with improving operating margins and record-free cash flow generation. While we still have work ahead to re-accelerate our top-line growth, I'm proud of this team for its focus on execution as we continue to be the default trusted partner for customers around agreement management. We have over 1.5 million customers, ranging from the largest enterprises in the world to wide-scale adoption by small and medium-sized businesses that power the global economy.

Blake: In closing we're pleased to report another quarter of progress against our three strategic pillars accelerating product innovation.

Blake: Enhancing our go to market initiatives and strengthening our financial and operational efficiency Q4 execution was particularly strong as the team delivered accelerating billings growth double digit customer growth with improving operating margins and record free cash flow generation.

Blake: While we still have work ahead to Reaccelerate, our top line growth I'm proud of this team for its focus on execution as we continue to be the default trusted partner for our customers around agreement management.

Blake: We have over $1 5 million customers ranging from the largest enterprises in the world for wide scale adoption by the small and medium sized businesses that power of the global economy.

Operator: That scale gives us the opportunity to help customers accelerate their business growth, mitigate risk, and enable delightful customer experiences. I'm excited about the opportunity ahead of us and look forward to sharing our progress along the way. With that, Operator, let's open up the call for questions. You will now be conducting a...

Blake: That scale gives us the opportunity to help customers accelerate their business growth mitigate risk and enable delightful customer experiences I'm excited about the opportunity ahead of us and look forward to sharing our progress along the way.

Speaker Change: That concludes our prepared remarks with that operator, let's open up the call for questions.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

Operator: If you would like to ask a question... Press star 1 on your television. The information tone will indicate that. You may press star-2 if you would like. One moment, please, while we... Tyler Radke.

Speaker Change: Information and to keep that your line is in the question queue.

Speaker Change: And you May press star two if you'd like to move your question from the queue.

Speaker Change: All participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Thank you.

Speaker Change: First question comes from the line of Tyler Radke with Citi. Please proceed with your question.

Tyler Maverick Radke: Yeah, thanks for taking the question. A couple for Blake, just to kick things off. So, Blake, I appreciate the comments on kind of unpacking the Q4 billings outperformance. Obviously, the nine-point beat versus the guide was pretty impressive.

Tyler Maverick Radke: Yeah. Thanks for taking the question a couple for Blake just to kick things off so Blake I appreciate the comments on unpacking. The Q4 billings outperformance, obviously, the yeah nine point beat versus the guide, but it was pretty impressive.

Tyler Maverick Radke: As I think about the moving pieces on that, could you just help frame the Q1 guide relative to the full-year guide on billings? I think the full year would imply you need to grow a little bit faster than you're guiding on billings in Q1. So, curious if some of that's related to the pull forward. And then, secondly, how should we think about NRR trends? I think that dipped below 100% at 98%. So, as you just think about the drivers between expansions and new business for next year, just help us understand the trajectory of that and how that all fits into the guide. Thank you.

Tyler Maverick Radke: As I think about the moving pieces on that could you just help frame. The the Q1 guide relative to the full year guide on billings I think the full year would imply you need to grow a little bit faster than you're you're guiding to on billings in Q1. So I'm curious if southern natural related to the pull forward and then secondly, how.

Should we think about and our our trends I think that dip below 100% at 98%. So if you just think about that the the drivers between expansions and new business for for next year, just help us understand the trajectory of that and how that all fits in to the guide. Thank you.

Blake Jeffrey Grayson: Sure, and thanks for the question. So, to address the question on billing, I think it's helpful to kind of cover it in totality. So, starting with Q4 and then going into 2025, because the timing does play a big role as you think about the year-over-year comps. So, just to recap quickly, Q4, really pleased with the execution and the acceleration from Q3. And like you heard in the prepared remarks, half of that acceleration was from renewal timing, and that included early renewals from fiscal year 25. In Q4, our book of renewals had the highest contribution from early renewals for any quarter that we've seen all year long. And that's okay because that was great execution by the team.

Speaker Change: Sure and thanks for the question so to address the question on Billings I think it is helpful to kind of cover it in in totality. So starting with Q4, and then going into 2025, because the timing does play a big role as you.

Speaker Change: As you think about the year over year comps. So just to recap quickly Q4 really pleased with the execution and the acceleration from Q3 and likely heard in the prepared remarks half of that acceleration was from renewals timing and that includes early renewals from fiscal year 'twenty five mm in Q4.

Speaker Change: Our book of renewables had the highest contribution for early renewals for any quarter that we've seen all year long and that's okay. Because that's great execution by the team like we're Super happy about that and then the other half was just from strong net new growth. We had a great close to Q4, and so that was a nice job again by the team there now that timing.

Blake Jeffrey Grayson: We're super happy about that, and then the other half was just from strong net new growth. So, we had a great close to Q4. And so, that was a nice job, again, by the team there. Now, that timing component impacts fiscal 25.

Speaker Change: Component impacts fiscal 'twenty five so with respect to Q1 and this also applies to Q2. There is we've got to heart comps to deal with address in this first half of this year. The first is if you recall, we had really strong on time renewals in the first half of 2024 that came about because we made some.

Blake Jeffrey Grayson: So, with respect to Q1, and this also applies to Q2, we've got two hard comps to deal with, addressed in this first half of this year. The first is, if you recall, we had really strong on-time renewals in the first half of 2024. That came about because we made some adjustments to our sales incentive plans to improve execution there, and we did. And we did a really good job with it, when you go back and look at our billings performance in the first half of last year, or 2024. And then the other hard comp is that Q4 component that I just mentioned that leads to some less spillover into Q1. And so those two hard comps apply, obviously, to the full year as well.

Speaker Change: Adjustments to our sales incentive plans to improve execution, there and we did and we did a really good job with it when you go back and look at our billings performance in the first half of last year or 2024, and then the other card comp is that Q4 component that I just mentioned that leads to some less spillover into Q1, and so those two hard comps.

Speaker Change: Apply obviously, the full year as well so you've got kind of normalize for that a bit and so just to give some direction too as you think about that on a quarterly basis and you mentioned this about how the full year is a little bit higher than the midpoint of guide versus Q1, I expect to see Q2 to Desalivate from Q1, but then reaccelerate into the second half.

Blake Jeffrey Grayson: So, you've got to kind of normalize for that a bit. And so, just to give some direction, too, as you think about that on a quarterly basis, and you mentioned this, about how the full year is a little bit higher in the midpoint guide versus Q1. I expect to see Q2 to decelerate a bit from Q1, but then reaccelerate into the second half of the year. And again, you've got those hard comps that we're dealing with in the first half of this year. And then you see that reacceleration.

Speaker Change: For the year and again, you got those hard comps that we're dealing with in the first half of this year and then you see that Reacceleration and then you just use your fiscal.

Blake Jeffrey Grayson: And then you just use that fiscal 25 guide with regard to the magnitude of the quarters. Overall, I'm really pleased with the fiscal 25 billings guide. It's almost exactly $3 billion at the midpoint, but the timing of these renewals makes the year-over-year comps pretty noisy. And so, one way that, you know, you might think about how to think about or try to normalize it is, like, on a two-year stack view to normalize for some of those period-over-period components to kind of normalize for those effects.

Fiscal 'twenty five guide with regards to the magnitude of the quarters overall I'm really pleased with the fiscal 'twenty five billings guide, it's almost exactly $3 billion at the midpoint, but the timing of these renewals makes the year over year comps pretty noisy and so one way that you might think about how to think about our trial.

Speaker Change: Normalize it is like on a two year stack view to normalize for some of those period over period components to kind of normalize for those effects.

Blake Jeffrey Grayson: But I hope that helps just kind of how you think about billings, you know, for Q4 and then relative to the full year. And then to your dollar net retention question, you know, we did trend down as we expected in line with our expectations into Q4. There's still a tough macro environment out there for us where companies are scrutinizing investments, and it just leads to smaller expansion opportunities. That said, however, I am quite encouraged by the pace of decline in fiscal 24. It slowed substantially versus fiscal 23.

Speaker Change: But I hope that helps just kind of how you think about billings for Q4, and then relative to the full year and then to your.

Speaker Change: Dollar net retention question you know, we did trend down as we expected in line with our expectations into Q4.

There is still a tough macro environment out there for us where companies are scrutinizing investments and it just leads to smaller expansion opportunities now that said, however, I am quite encouraged by the pace of decline in fiscal 'twenty four it slowed substantially versus fiscal 'twenty, three and we're now expecting that the pace of the client is going to slow even further in the.

Blake Jeffrey Grayson: And we're now expecting that the pace of decline is going to slow even further into fiscal 25. And you heard in the prepared remarks, we're actually forecasting for the Q1 dollar net retention rate to be flat to slightly down from Q4. And part of that is, you know, related to the fact that we're coming out of COVID comps from prior quarters. And you've heard me talk about how the share of our book of business that was written during kind of the pandemic periods is really de minimis now. And so I think that's also one of the things where you can see this flattening out.

Speaker Change: Fiscal 'twenty five and you heard in the prepared remarks, we're actually forecasting for Q1 dollar net retention rate to be flat to down slightly from Q4 and part of that is related to the fact that we're coming out of these COVID-19 comps.

Speaker Change: From prior quarters, and you've heard me talk about how the share of our book of business that was written during kind of a pandemic periods is really de Minimis now and so I think that's also one of the things where you can see this flattening out and again, there's a number of encouraging signs for us around renewal rates and consumption and that we've got you know hopefully in these new product launches releasing.

Speaker Change: General availability later in the year and over the long term, we're excited about our ability to pay them back.

Speaker Change: Yeah.

Blake Jeffrey Grayson: And, again, there's, you know, a number of encouraging signs for us around renewal rates and consumption. And then we've got, you know, hopefully these new product launches releasing into, you know, general availability later in the year. And, you know, over the long term, we're excited about our ability to impact that. Our next question comes from the line of Jake Roberge with William Blair.

Speaker Change: Our next question comes from the line of Jacob Bearish with William Blair. Please proceed with your question.

Jacob Roberge: Hey, Thanks for taking my questions and congrats on the great results I'd like just to follow up on that.

Jacob Roberge: And all of our remarks can you help us understand how much of a downtick in that metric was driven by those remaining <unk> contracts that you just called out in your last answer and then Alan It looks like you actually reaccelerate in new customer adds this quarter do you feel like the 40000 quarterly ads is the right way to think about the business moving forward or could that actually can.

Jacob Roberge: Hey, thanks for taking the questions, and congrats on the great results. Blake, just to follow up on that NRR remark, can you help us understand how much of the downtick in that metric was driven by those remaining COVID-era contracts that you just called out in your last answer? And then, Allan, looks like you actually accelerated new customer ads this quarter. Do you feel like the 40,000 quarterly ads are the right way to think about the business moving forward? Or could that actually continue to ramp as the macro normalizes and some of those new product-led growth initiatives take off? I'll just take a stab at the DNR fault, and then I'll take the other one, but, you know, we're not breaking out the level of detail and granularity of DNR from COVID.

Jacob Roberge: Many of ramp as the macro normalizes.

Jacob Roberge: And some of those new product led growth initiatives take hold.

Alan: Well I'll just take a stab at that the DNR fault.

Alan: But you know I'm not we're not breaking out the level of detail and granularity DNR from Covid I think it is just that.

Alan: <unk> salad play, where we have some pretty strong expansion in those prior quarters, but that said we are seeing signs of stabilization in the business and so it's I would say, it's definitely not all related to call, but I don't want to have anybody walk away of that kind of a ballpark sort of perspective, but I think it's one of the things we are seeing stabilizing signs.

Alan: In our business and we think we have means and mechanisms that we're going to continue to pursue where we can work to flatten that out that curve and hopefully improve it overtime, but alan on the accounts on.

Alan: The second question related to customer acquisition.

Yeah, I don't know that we that we are we.

Blake Jeffrey Grayson: I think it's just, you know, an obvious output where we have seen some pretty strong expansion in those prior quarters. But that said, we are seeing signs of stabilization in the business, and so I would say it's definitely not all related to COVID. I don't want to have anybody walk away with that kind of a thought process or perspective.

Alan: We track in <unk>.

Alan: Measure ourselves that directly on that but I I would just say we have a healthy customer acquisition funnel. It is there is still a white space, particularly internationally in acquiring new customers.

Alan: And we're benefiting from that and I think getting our fair share although of course always like even more.

Alan: But I'm not prepared to make any forward looking statements about the exact number of acquisitions will have on a quarterly basis.

Blake Jeffrey Grayson: But I think it's one of these things where we are seeing stabilizing signs in our business, and we think we have means and mechanisms that we're going to continue to pursue. We can work to flatten that out, that curve, and then hopefully, you know, improve it over time. But, Allan, for you on that, it counts.

Alan: Yeah.

Alan: Our next question comes from the line of Josh Baer with Morgan Stanley. Please proceed with your question.

Joshua Phillip Baer: Great. Thanks for the question I want to shift over to margin.

Joshua Phillip Baer: And profitability.

Joshua Phillip Baer: Alan.

Joshua Phillip Baer: For you if you could just talk a little bit about the change in investment philosophy from the top.

Joshua Phillip Baer: And Blake just wondering the comments around commitment to improving efficiency is that translate to continued margin expansion even after FY 'twenty five as we think about 2026 and beyond.

Allan C. Thygesen: On the second question related to customer acquisition, yeah, I don't know that we track and measure ourselves that directly on that. But I would just say we have a healthy customer acquisition funnel. There is still white space, particularly internationally, for acquiring new customers. And we're benefiting from that and, I think, getting our fair share. Although, of course, we'd always like even more. But I'm not prepared to make any forward-looking statements about the exact number of acquisitions we'll have on a quarterly basis. This is Josh Baer with more.

Yeah.

Speaker Change: So first on on on our overall.

Speaker Change: Spence philosophies.

Blake: Look we want to we.

Blake: We want a balance.

Blake: Solid operational execution and efficiency today with being able to invest for the.

Allan C. Thygesen: Great. Thanks for the question. I want to shift over to margins and profitability. Allan, a question for you, if you could just talk a little bit about the change in investment philosophy from the top, and Blake, just wondering, the comments around commitment to improving efficiency, does that translate to continued margin expansion even after FY25 as we think about 2026 and beyond?

Blake: Your medium to long term growth that we think we have in front of us and so we're balancing that all the time as we as we looked at taking the action that they think referred to at the beginning of.

Blake: February.

Blake: We felt we had a we had a little more room to get just a little leaner and be ready and still not impair our ability to grow.

Blake: You know as we launch new products and so on.

Allan C. Thygesen: So first, on our overall investment and expense philosophy, look, we want to balance solid operational execution and efficiency today with being able to invest for the medium to long-term growth that we think we have in front of us. And so we're balancing that all the time. As we looked at taking the action that Blake referred to at the beginning of February, we felt we had a little more room to get just a little leaner and be ready and still not impair our ability to grow as we launch new products and so on. So that's the balance that we're taking. We will keep looking for opportunities, and it's obviously not all about headcount. We have gotten tremendous efficiency out of the organization on many fronts. That's what produced the strong results that you saw in Q4 and really throughout the year and the operating cashflow improvements. So we'll keep looking for those opportunities. But we feel we're the right size for our plan right now.

Blake: So that's the balance that they were taking we will keep looking for opportunities and it's obviously not all about head count me in fact gotten tremendous efficiency out of the organization on many fronts. That's what produced the strong results that you saw in Q4 and really throughout the year.

Blake: Free cash flow improvements.

Blake: So we'll keep looking for those opportunities, but we feel we are right sized for our plan right now and.

Blake: If we start seeing a further investment opportunities then we will invest but we can do that.

Blake: On a cautious and informed basis.

Speaker Change: And then just to follow up on your question on just margins in the future I just want to point out.

Speaker Change: I'm really proud of this team for the efficiencies there.

Speaker Change: We've gained.

Speaker Change: Year, I mean, just specifically in fiscal 'twenty, three our sales and marketing expense was 40% of our revenue this year fiscal 'twenty four it improved to 34% I expect next year to be in the low thirties, and that's not an easy.

Blake Jeffrey Grayson: And if we start seeing further investment opportunities, then we will invest, but we will do that on a cautious and informed basis. And then, just to follow up on your question about margins in the future, I just want to point out that I'm really proud of this team for the efficiencies that we've gained this year. I mean, specifically in fiscal 23, our sales and marketing expense was 40% of our revenue, and this year, fiscal 24, it improved to 34%. I expect next year to be in the low 30s, and, you know, that's not an easy kind of process to go through, but it's important, and I'm really proud of the focus of the team to address those gains.

Speaker Change: Kind of process to go through but it's important and I'm really proud of the focus of the team to address those games I think for us in the future and the future of what I'm talking about is bloodstock long term here now without a timeline on it is that we have opportunities to be able to drive further operating leverage with.

Speaker Change: Scaling growth does that can now can we grow our revenue faster than we do our expense base and that's partly what we're building here and one of the things, we're focusing pretty hard on as a team as you hear about P. L. G motions and self service motions and things like that and.

Over the long term those opportunities do provide us the opportunity to get even better margins into the future, but no specific timeline or anything around that.

Yeah, that's great and maybe just.

Speaker Change: As a reminder to.

Speaker Change: To the point I think just made about ourselves marketing efficiency.

Allan C. Thygesen: I think for us in the future, and in the future, what I'm talking about is, let's talk long-term here now without a timeline on it, we have opportunities to be able to drive further operating leverage with scale growth. Is that, you know, can we grow our revenue faster than we do our expense base, and that's partly what we're building here, and one of the things we're focusing pretty hard on as a team is you hear about PLG motions and self-service motions and things like that, and, you know, I think over the long term, those opportunities do provide us with the opportunity to get even better margins, you know, into the Yeah, that's great. Maybe just as a reminder, to the point that Blake just made about our sales marketing efficiency. The reduction force that we had last February was 95% focused on the sales marketing area.

Speaker Change: The reduction in force that we had last February was 95% focused in the sales marketing area. This time around it was a little bit more balanced, but still over weighted in sales and marketing, reflecting that we felt we had to push out maturities.

Speaker Change: Throughout the company.

Speaker Change: Wanted to make sure we capture goes I think at this point you know.

Speaker Change: To the extent, we make incremental investments will probably be in the first.

Speaker Change: Obviously, as we launch new products.

Speaker Change: We start seeing some leverage there.

Speaker Change: It has to do to invest there as well just want to see that first.

Speaker Change: Our next question comes from the line of Brent Thill with Jefferies. Please proceed with your question.

Brent John Thill: Thank you Blake and haven't per taking my question.

Brent John Thill: So they're on co brand too.

Brent John Thill: Wanted to maybe ask first you know to Allen.

Brent John Thill: If you could just tease out like how much it sounds like most of the improvement this quarter was because of better execution, which is more macro normalizing could you just you know tease that out and which verticals sort of cool improvement that yourself and then it sounds like free free cash flow.

Allan C. Thygesen: This time around, it was a little bit more balanced, but still overweighted in sales and marketing, reflecting that we felt we had efficiency opportunities throughout the company, and we wanted to make sure we captured those. I think at this point, to the extent we make incremental investments, we'll probably be in R&D first. But obviously, as we launch new products, and if we start seeing some leverage there, we'll not hesitate to invest there as well. We just want to see that first.

Brent John Thill: <unk> was really strong this quarter.

Brent John Thill: Just talk a little bit more about how you're planning to use that free cash flow.

Brent John Thill: Specifically for share repurchases.

Allan C. Thygesen: Thank you. Thank you. Thank you. Thank you, Blake and Allan for taking my question. This is Luv Sodha on behalf of Brent Thill.

Brent John Thill: Yes.

Speaker Change: I'll first we really did see strength across the board so.

Across segments, a big highlight anything we had progress both on the enterprise side on the SMB side.

Luv Bimal Sodha: I wanted to maybe ask first, you know, Allan, if you could just tease out how much it sounds like most of the improvement this quarter was because of better execution versus more macro normalizing. Could you just, you know, tease that out and which verticals sort of drove the improvement that you saw? And then for Blake, it sounds like free cash flow was really strong this quarter. I guess I'll just talk a little bit more about that. How you're planning to use that free cash flow specifically for share repayment. Yeah, so I'll go first.

Speaker Change: A geography perspective, yes, we grew faster internationally, but we did.

Growth grow everywhere and on the industry side we.

Speaker Change: We did see.

Speaker Change: Our broad based strength, there as well and some recovery.

Speaker Change: Those mortgages, but we sell to customers in all industries I highlighted during the call.

Speaker Change: New significant deals with manufacturing and energy and health and so on and theirs.

Allan C. Thygesen: We really did see strength across the board. So across segments, Blake highlighted that we had progress both on the enterprise side and the S&B side. From a geography perspective, yes, we grew faster internationally, but we did grow everywhere. And on the industry side, we did see broad-based strength there as well, some recovery in financial services and mortgages. But we sell to customers in all industries, and I highlighted during the poll new significant deals in manufacturing and energy and health and so on. There's hardly an industry that doesn't rely on agreements, and that, therefore, doesn't represent an opportunity for us. So, there really isn't much there, and an overall macro sentiment, I would say, is marginally improved from my standpoint.

Speaker Change: There's hardly any interest rate that doesn't rely on agreements and therefore, it doesn't represent an opportunity for us.

Speaker Change: So there really isn't much there.

Speaker Change: And overall macro sentiment I would say.

Speaker Change: Mark has only improved and from my standpoint.

Speaker Change: Where we're not projecting anything more than that looking ahead as always we.

Speaker Change: Plan on our current macro conditions.

Speaker Change: But I think there was a little bit of help across the breadth of our business, but we were almost an index just given the breadth of verticals segments and countries that we have.

Speaker Change: And then to follow up on the second question about free cash flow and how will we utilize that we're in a great spot.

Allan C. Thygesen: We're not projecting anything more than that looking ahead; as always, we base our plan on current macro conditions, but I think there was a little bit of help across the breadth of our business, but we're almost an index, just given the breadth of verticals, segments, and countries that we have. And then to follow up on the second question about free cash flow and how we'll utilize it, you know, we're in a great spot. You know, we ended the quarter of the year with cash and investments of $1.2 billion. There is no debt now on the balance sheet.

Speaker Change: We ended the quarter of the year with cash and investments of $1 $2 billion.

Speaker Change: No that now on the balance sheet I'm, just last year and also obviously, we have a foundational business now that generates considerable amount of free cash flow. We used some of that to point some of that this year for like you talked about stock buybacks, but we also use that to retire debt. There's obviously M&A opportunities for us and you know were likely.

Speaker Change: More active than you think we are about looking around at what opportunities are available for US and then there is you know we can invest in the business. So you have options for dividends things like that down the road I would say that.

Blake Jeffrey Grayson: This last year, and also, obviously, we have a foundational business now that generates a considerable amount of free cash flow. You know, we used some of that, deployed some of that this year for, like you talked about, stock buybacks, but we also used it to retire debt. There are obviously M&A opportunities for us, and, you know, we're probably more active than you think we are about looking around at what opportunities are available for us. And then there are, you know, we can invest in the business, or you have options for dividends, things like that down the road.

Speaker Change: With that kind of stabilizing results and the operating efficiency improvements we way. We we feel we can increase our ability to opportunistically return capital to shareholders, while still investing in the business and it's just we're committed to increasing the rate with which we return excess capital opportunistically to shareholders and we will see how that develops out over the year.

Speaker Change: Our next question comes from the line of Rishi Galeria with RBC capital markets. Please proceed with your question.

Rishi Nitya Jaluria: Hi, This is Chris found on Hershey, Larry Thanks for taking my question I wanted to first ask about the large customer cohort.

Chris Fountain: I would say that, you know, with that kind of stabilizing results and the operating efficiency improvements we made, we feel we can increase our ability to opportunistically return capital to shareholders while still investing in the business. And it's just, you know, we're committed to increasing the rate with which we return excess capital opportunistically to shareholders, and we'll see how that develops over the year. The Bulletproof Executive 2013, Hi, this is Chris Fountain on behalf of Rishi Jaluria.

Chris: <unk> strength that you saw in the quarter it sounds like better volume and consumption trends or is C. L. M capabilities kind of starting to push the customers over that 300, K ACB cohort and then also I was wondering if you could just dig in a little bit more to the R&D investment priorities you mentioned for the coming year. Thanks.

Chris:

Speaker Change: How about I'll take I'll take that.

I'll take that so yeah, I would say definitely saw him criminal enterprise customers again, the 300000 dollar accounts growing sequentially quarter over quarter, I'll say that from a renewal rate perspective enterprise still has room to improve but I will say that our renewal rates will improve sequentially Q3, Q4 in the enterprise space more than.

Chris Fountain: Thanks for taking my question. I wanted to first ask about the large customer cohort strength that you saw in the quarter. Is that like better volume and consumption trends, or is CLM capabilities kind of starting to push some customers over that $300K ACV cohort? And then also, I was wondering if you could just dig in a little bit more to the R&D investment priorities you mentioned for the coming year.

Speaker Change: Any other kind of large customer segment that we had but still room to improve there admittedly and so we're excited about the opportunities in mostly in R&D right give us those opportunities to provide additional solutions and products to customers, but I'll, let Helen yeah on the R&D investment fund.

Speaker Change: Say.

Blake Jeffrey Grayson: So, yeah, I would say definitely saw improvement in enterprise customers, again, the $300,000 accounts growing sequentially quarter over quarter. I'll say that from a renewal rate perspective, enterprise still has room to improve, but I will say that our renewal rates improved sequentially, Q3 to Q4 in the enterprise space more than any other kind of large customer segment that we had, but still room to improve there, admittedly. And so we're excited about the opportunities in, you know, mostly in R&D, right, that give us those opportunities to provide additional solutions and products to customers, but I'll let Allan. Yeah, on the R&D investment front, I'd say, look, we've long felt there was an opportunity to reimagine the agreement journey for companies large and small, and we've... At solutions for at various stages of that journey in the past, I would say most exemplified by our signature product in about a month, we will we will release a broader suite of solutions there and and that there's been a significant investment in that effort during the course of the last fiscal year.

Helen: We've long felt there was an opportunity to re imagine the agreements journey or companies large and small and we.

Helen: AD solutions for them at various stages of that journey in the past so I would say most exemplified by our signature products.

Helen: In about a month, we will we will release, a broad suite of solutions, there and and that Theres been a significant investment in that effort. During the course of the last fiscal year.

Helen: That will continue because we feel we have a multiyear road map.

Helen: Value creation ahead of US there so that is the.

Helen: Biggest investment area.

Helen: In addition to that one other area, that's getting a meaningful amount of investment as we are.

Helen: Moving to our platforms to the public cloud Microsoft Azure.

Helen: Underway and that's a significant effort as well from an infrastructure perspective, so two things I would highlight.

Helen: Our next question comes from the line of Brad Sills with Bank of America. Please proceed with your question.

Helen: Hey, this is Michelle on for Brad I guess I'd like to start what are some of the initiatives you are making in terms of like the product, but they're self serve machines and what changes have you made so far on there and what changes do you still want to make.

Blake Jeffrey Grayson: And that will continue because we feel we have a multi-year roadmap of value creation ahead of us there. So that is our biggest investment area. In addition to that, one other area that's getting a meaningful amount of investment is that we are moving our platforms to the public cloud, to Microsoft Azure. That's underway, and that's a significant effort as well from an infrastructure perspective. Those are the two things I would highlight on the line with Brad Thill. Hey, this is Adam Boucher for Brad.

Helen: Yeah.

Helen: Yeah.

Speaker Change: Take that one so I think during the course of the fiscal year that would be just finished here a lot of our effort was on making the process of buying doctor sign directly about beside our website and in our products much more seamless and.

Speaker Change: And we made substantial improvements there so much better flows to allow you to easily upgrade solutions.

Allan C. Thygesen: I guess I'd like to start by asking you about some of the initiatives you are making in terms of like product-led growth or self-serve motions? And what changes have you made so far there? And what changes do you still want to make? Yeah, let me take that one.

Speaker Change: Focus on a better use of a variety of payment solutions et.

Speaker Change: Et cetera.

Speaker Change: Say this year that will expand beyond that.

Allan C. Thygesen: So I think during the course of the fiscal year that we just finished here, a lot of our effort was on making the process of buying DocuSign directly from DocuSign on our website and in our products much more seamless, and we made substantial improvements there. So much better flows to allow you to easily upgrade solutions to focus on, you know, better use of a variety of payment solutions, etc. I'd say this year, that will expand beyond the Cori signature products to some of the newer products that we'll be launching and to supporting other channels, most notably our direct sales channel.

Speaker Change: The core esignature product to some of the new products that we'll be launching and to supporting other channels, most notably our direct sales channel.

Speaker Change: We want to offer those customers the ability to self serve to the greatest extent possible and there'll be significant capabilities added there throughout the year and also for our partners, where we have I think opportunities for meaningful improvement and how easy it is to do business with us and that's another area. We're investing in so this is a cross.

Speaker Change: Every pillar of our go to market.

Speaker Change: Evidence already borne fruit as you've seen in our digital sales growth and it'll.

Speaker Change: Really <unk>.

Allan C. Thygesen: We want to offer those customers the ability to self-serve to the greatest extent possible, and there'll be significant capabilities added there throughout the year. And also for our partners, where we have, I think, opportunities for meaningful improvement in how easy it is to do business with us. And that's another area we're investing in. So this is across every pillar of our go-to-market effort. It's already borne fruit, as you've seen in our digital sales growth, and it'll really impact across the business this year. So very excited about that. Production, Thanks for taking my question. This is Austin Cole on for Pat.

Speaker Change: Impact across the business I think this year, so very excited about that.

Speaker Change: Our next question comes from the line of Patrick Wall Ravens with citizens JMP. Please proceed with your question.

Speaker Change: Oh, Hey, Thanks for taking my question this is Austin.

Pat: <unk> on for Pat.

Speaker Change: So last quarter. It seemed like you mentioned that there was kind of uptick and interest in <unk> and C. L M and now.

Austin: You're saying strong adoption of C O M. Among enterprise customers as they're kind of an incremental improvement in tone, there or can you just talk broadly about just the CRM opportunity and how you guys are situated.

Austin: Yeah.

Austin Cole: So, last quarter, it seemed like you mentioned that there was kind of an uptick in interest in CLM, and now you're saying strong adoption of CLM among enterprise customers. Is there kind of an incremental improvement in tone there, or can you just talk broadly about just the CLM opportunity and how you guys are situated? Yeah.

Austin: Yep.

Speaker Change: Yes, so I do think the CRM market overall is improving and I do think we're executing better in the CLO market.

Speaker Change: So I think CRM overall, I think more and more companies are realizing that.

Speaker Change: Managing your agreements better and getting more value out of them is a is a very strategic opportunity.

Allan C. Thygesen: Yeah, so I do think the CLM market overall is improving, and I do think we're executing better in the CLM market. So I think CLM overall, I think more and more companies are realizing that managing their agreements better and getting more value out of them is a very strategic opportunity. It's definitely rising on the priority list.

Speaker Change: It's definitely a rising in the priority list.

Speaker Change: And so CRM ours and others.

Speaker Change: Is it is an increasingly strategic and interesting solutions. So we're seeing more rfps and so on in terms of our competitive position I think we're in a very strong position.

Allan C. Thygesen: And so CLM, ours and others, is an increasingly strategic and interesting solution. So we're seeing more RFPs and so on. In terms of our competitive position, I think we're in a very strong position, as illustrated in the Gartner survey and other measures of our position in the market. I think we probably have the largest number of accounts and are very well rated by customers for our experience.

Speaker Change: And the Gartner survey and other measures of of our position in the market. I think we are all we have the largest number of accounts.

Speaker Change: They're very well rated by customers for our experience.

And we think there's more opportunity there to shall we say popularize.

Blake Jeffrey Grayson: And we think there's more opportunity there to, shall we say, popularize CLM to a broader audience, both within companies that are going to adopt it, as well as smaller companies where the weight of the current solutions might not be appropriate. So it's a very positive and strategic opportunity for us. And yes, I would summarize that to say on both fronts, some improvement. Yeah, and just to follow up, and or maybe to add on to what Allan said, you know, you heard in our prepared remarks, CLM grew faster than the total business. It also accelerated on a year-over-year basis from Q3 to Q4. Obviously, it's still a smaller share of our business, but I'm still encouraged by that acceleration for that product. I'm Alaina Scott Berg. Hi, this is Rob Morelli. I'm for Scott.

Speaker Change: <unk> two <unk>.

Speaker Change: Our audience both within companies that are what kind of adopt it as well as two smaller companies where the weight of the.

Speaker Change: The current solutions by dot be appropriate so.

Speaker Change: It's a very positive event strategic opportunity for us and yes, I do want to summarize that to say on both fronts. So some improvement, yes, and just a follow up better and maybe to add on to what Alan said.

Speaker Change: No.

Speaker Change: You heard in our prepared remarks, Sian grew faster than our total business and also accelerated from on a year over year basis from Q3 to Q4, obviously, it's still a smaller share of our business, but still encouraged by that acceleration.

Speaker Change: For that product.

Speaker Change: Our next question comes from the line of Scott Berg with Needham. Please proceed with your question.

Speaker Change: Hi, This is Rob Reilly on for Scott. Thanks for taking my question.

Rob Reilly: Helping to execute upon our margin year with non-GAAP operating margins expanded 500 basis points. However, G&A was actually up as a percentage of revenue two questions. Here first why are we not able to drive leverage here throughout the year and then.

Rob Morelli: Thank you for taking my question. Helping us on the margin here with non-gap operating. Slide.

Rob Morelli: However, G&A was actually off by a percentage of revenue. You know, two questions here. First, you know, why were we not able to drive leverage here throughout the year? How do we think about spending? Sure, let me take a stab at that. So yeah, G&A expense, non-GAAP G&A was up 14% year-on-year. There are two unique items that are kind of contributing to that. One is we are used to, I mean, immaterial dollar amounts. When you look at a relatively small kind of SEC, you know, split-up bucket, it has a bit of an effect. So a couple million dollars we used to allocate out in the prior year, and we're not doing that now, but it's an immaterial kind of dollar amount overall, and then also a little bit higher litigation cost for us this year versus last year.

How do we think about 2025.

Rob Reilly: Thanks.

Third let me take a stab at that so yes, G&A expense non-GAAP G&A was up.

Speaker Change: 14% year on year, there's two unique items that are kind of contributing to that one is we used to have an immaterial dollar amounts, but when you look at a relatively small.

Speaker Change: FCC split up bucket.

Speaker Change: It has a bit of an effect. So a couple of million dollars, we used to allocate out in the prior year and we're not doing that now, but it's an immaterial kind of dollar amount overall and then also a little bit higher litigation cost for us this year versus last year. If you exclude those two what I'll call. It unique items G&A would have grown in the low single.

Rob Morelli: If you exclude those two, what I'll call unique items, G&A would have grown in the low single digits year-over-year. So, what I would say is, based on the efforts we've taken over the past few months and recently, not only do I expect that sales and marketing expense decline year-on-year as a percentage of revenue, but I also expect to see some efficiencies and improvements in G&A as well. So, you know, I think we're focused across this business to drive efficiencies where needed, and I expect to see that next year. The next question comes from the line of George Iwanyc with...

Speaker Change: That's year over year, so what I would say is from the efforts we've taken over the past few months and recently you know not only do I expect that sales and marketing expense declines year on year as a percentage of revenue, but I also expect to see some efficiencies and improvements in G&A as well. So I think we're we're focus.

Speaker Change: Across this business to drive efficiencies, where needed and I expect to see that next year.

Speaker Change: The next question comes from the line of George <unk> with Oppenheimer. Please proceed with your question.

George: Thank you for taking my question.

George Michael Iwanyc: Thank you for taking my question. Allan, maybe you could dig in a little bit deeper on the international strength you're seeing, you know, how much of that is partner-led? You know, what are you seeing from your digital initiatives there? And maybe give us some color on the regional breakthroughs.

George: Alan maybe you could dig in a little bit deeper on the international strength Youre seeing how much of that is being our lag what are you seeing from your.

George: Digital initiatives, there and maybe give us some color on the regional breakdown.

George: Yeah.

Allan C. Thygesen: Our international growth is led more by our direct channel today. I think we have a very substantial opportunity on the digital front and on the partner side, which is relatively immature right now. I think there's a lot of headroom.

George: Our international growth has led more by our direct channel today, I think we have very substantial opportunity on the on the digital front and on the partner side, which is relatively immature right now where the things a lot of headroom.

Allan C. Thygesen: So lots of growth opportunity there, but most of the growth today is coming from our direct sales efforts, principally in the larger focused countries. So the top 10 markets outside the U.S. that you would expect. As you know, we've been investing in Japan and Germany, but today, the UK, Australia, Canada, and France are a little larger than both of those. All of those markets are a priority. This question comes from the line of Rob Owens.

George: So lots of growth opportunity there, but most of the growth today is coming from our direct sales efforts principally into larger focus countries. So.

George: The top 10 markets outside the U S that you would expect.

George: You know, we've been investing in Japan, and Germany, but today.

George: Hey, Australia, Canada, France or are a little larger than both of those so oh.

George: All of those markets are priorities.

George: Our next question comes from the line of Rob Owens with Piper Sandler. Please proceed with your question.

George: Yeah.

Robbie David Owens: Hi. Thanks for taking my question. Just a quick one around your LLM training. I know there was some stuff in the media just regarding privacy.

George: Hi.

Robbie David Owens: Thanks for taking my question just a quick one around your LLM training I know there were some stuff in the media just regarding privacy kind of curious from your perspective, what our internal policies and how are you treating those L. O EMS. Thanks.

Allan C. Thygesen: Kind of curious, from your perspective, what are your internal policies, and how are you training those LLMs? Thanks. Yeah, I'll take that one.

Robbie David Owens: Yeah, I'll take that one yeah, that'd be very clear, we do not use any customer data for training any of our AI models without specific contractual concern from customers.

Allan C. Thygesen: Yeah, I want to be very clear. We do not use any customer data for training any of our AI models without specific contractual consent from customers. End of story. So we have a high trust position with customers; they trust us with their most sensitive documents, and we don't want to do anything to violate that trust. There are probably some companies who will be more willing to move aggressively here, but I think we're moving responsibly and cautiously on that. We are, with all that said, very excited about what AI can bring. And our customers are asking us how we can extract more value from our experience using more modern AI technology. And so you'll hear a lot more about that in a month at Momentum. But to the point about trust being the starting position. Maybe one other point I'd make is... Assuming you give us consent, we then anonymize and aggregate that data so that there's no opportunity for anyone to extract any confidential issues or data from it.

Robbie David Owens: Sure.

Speaker Change: So we have a high trust position with customers They trust us with their most sensitive documents.

Speaker Change: We don't want to do anything about it right that trust there'll probably some companies who are you people are willing to to move aggressively here, but I think we're moving responsibly and cautiously on that we are with all of that said we are very excited about what AI can bring and our customers are asking us for how can we extract more value from our students use.

<unk> modern App and technology, and so you'll hear a lot more about that.

Up at momentum, but two.

Speaker Change: The point about the trust as a starting position.

Speaker Change: Maybe one other point that majors.

Speaker Change: Assuming you gave US consent, we then anonymised in aggregate that data so that there is.

Speaker Change: No opportunity for anybody to extract any confidential issues Oh data out there.

Allan C. Thygesen: Thank you very much and congratulations on a nice finish to the year. Thinking back to last quarter, you had mentioned the introduction of some new enterprise licensing structures, and there was some comparison, I believe, to ELAs. I'm wondering if you could shed a bit more light on any changes made there and when they were implemented.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Mark Murphy with J P. Morgan. Please proceed with your question.

Mark Ronald Murphy: Thank you very much and congrats on a nice finish to the year.

Mark Ronald Murphy: Thinking back to last quarter, you had mentioned the introduction of some new enterprise licensing structures and there was some comparison I believe to Elas I'm wondering if you can shed a bit more light on any changes made there and when.

When they were implemented and Blake did it have any effect on Q.

Unnamed Speaker: And, Blake, did it have any effect on Q4 financial results, for instance, would it change any of the ratios between bookings and billings and recognized revenues or any type of impact to think about for those changes going forward? Yeah. Yes, we have done a few deals like that, and I think it will continue to grow with some of our very largest clients. And as we offer a broader set of products, obviously, an enterprise license also becomes more interesting as you can mix and match across products. But it still remains a very small part of the business. Even some of our very largest customers, some of the contract renewals remain on an envelope basis.

Mark Ronald Murphy: Q4 financial results for instance would it would it change any of the ratios between bookings and billings and our recognized revenues or any any type of impact to think about for those changes going forward.

Mark Ronald Murphy: Yeah.

Speaker Change: Yes, we have done a few deals like that and that I think it'll continue to grow with small farmer and largest clients and as we offer a broader set of products. Obviously, an enterprise license also becomes more interesting as you can mix and match across our products, but.

Is still remains.

Speaker Change: Very small part of the business.

Speaker Change: Even some of our very largest customers some of the contract renewals remain on a on an envelope basis, yes, and just to add on top of that it's while we're super excited about the opportunity in very specific cases to consider those its not a huge number for us today. It grows it's continuing to grow and again I think to directly answer your question no.

Blake Jeffrey Grayson: Yeah. And just to add on top of that, while we're super excited about the opportunity and very specific cases to consider those, it's not a huge number for us today. It will grow.

Blake Jeffrey Grayson: It's continuing to grow. And again, I think, you know, and to directly answer your question, no material impact on our results for Q4. But it's also one of these things I think in this business; we have a very, very broad and diverse customer base. And so we don't have single customers that I would say vastly impact us like there might be other companies, which I think is a strength for us. And so, but anyways, just to directly answer your question, no material impact. But, I would make one other point.

Speaker Change: Material impact on our results for Q4, but it's also one of these things I think in this business, we have a very very broad and diverse customer base and so there's nothing that we don't have single customers that I would say vastly impact us like there might be other companies, which I think is a strength for us and so but anyways just to directly answer your question.

Speaker Change: No material impact to Q I would make one other point E. L. A has a very specific connotation of sort of unlimited consumption and being able to you know.

Allan C. Thygesen: ELA has a very specific connotation of unlimited consumption and being able to combine products across. We have leaned in significantly harder to make sure that we are competitive in large enterprise deals. And we did some very large and very nice renewals with some large customers, I think, in part as a result of that improved motion. So we have senior people on it.

Speaker Change: Combining our products across.

Speaker Change: We have been significantly harder to make sure that we are competitive in large enterprise deals.

And we had we did some some very large a very nice renewals with some large customers I think in part as a result of that improve ocean. So we we have senior people out at me about long steel desk, we have all the things that you would expect to to make sure that.

Allan C. Thygesen: We have a large deal desk. We have all the things that you would expect to make sure that we are as competitive as possible, from the line of Michael Turrin with Wells Fargo. Hi, thanks for taking my question. This is Michael Berg on behalf of Michael Turrin.

Speaker Change: We are as competitive as possible.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Michael <unk> with Wells Fargo Securities. Please proceed with your question.

Speaker Change: Hi, Thanks for taking my question. This is Michael Berg on for Michael I, just wanted to touch on free cash flow you had a very very.

Scott Randolph Berg: I just wanted to touch on free cash flow. You had a very strong free cash flow generating quarter and year. Maybe you could just shed some light on what drove that.

Scott Randolph Berg: Strong free cash flow generating quarter and year.

Scott Randolph Berg: Maybe just shed some light on what drove that was it some of the renewal timing you discussed on your.

Blake Jeffrey Grayson: Was it some of the renewal timing you discussed in terms of billings for the quarter? And how can we think about the relationship between operating margin and free cash flow moving forward? Thanks.

Scott Randolph Berg: In terms of billings on the quarter and how can we think about the relationship between operating margin and free cash flow moving forward. Thanks.

Speaker Change: Sure and so yeah, we did have a very strong quarter and year with regards to free cash flow, we had a 32% free cash flow yield for fiscal 'twenty four and the reason why it's it's materially higher than our operating margin is frankly, just a working capital.

Blake Jeffrey Grayson: And so, yeah, we did have a very strong quarter and year as regards free cash flow. We had a 32 percent free cash flow yield for fiscal 24. And the reason why it's, you know, materially higher than our operating margin is, frankly, just a working capital tailwind that we had. And it's really driven by two components.

Speaker Change: Tailwind that we had and it's really driven by.

Blake Jeffrey Grayson: One is, if you recall, about a year ago, we had an ERP implementation that caused a delay in our ability to do some collections. So earlier this year, we got a tailwind from that. But on top of that, we've also improved our collections process, I would say, extremely well, reduced aging, and so kind of, I would say, just really brought some operational efficiency to our working capital that showed that improvement. Now, going forward, as you all know, like being able to repeat working capital improvements on top of each other year over year, while we're going to strive to be able to continue to improve and gain efficiencies, it's not something you usually can just get pretty easily. And so that's why, in the prepared remarks, you'll find that I would expect, longer term, to assume a free cash flow yield more closely to that operating margin. Aleksandr Zukin with... Hi, this is Arseny on behalf of Aleksandr Zukin.

Speaker Change: Two components. One is if you recall about a year ago, we had an ERP implementation that caused the delay in our ability to do some collection. So earlier this year, we got a tailwind from that but on top of that we've also improved our collections process I would say extremely well reduced agings and so kind of I would say just really brought some op.

Operational efficiency working capital that show that improvement now going forward as you all know like being able to repeat working capital improvements on top of each other year over year, while we're going to strive to be able to continue to improve and gain efficiencies.

Speaker Change: That's something that usually you can just get pretty easily and so that's why in the prepared remarks youll find that I would expect longer term to assume a free cash flow yield more closer to that operating margin.

Speaker Change: Yeah.

Our next question comes from our final question comes from the line of Alex Zukin with Wolfe Research. Please proceed with your question.

Speaker Change: Hi, This is <unk> on for Alex Zukin, Congrats on results with the international strength, you've seen this year I think it has contributed close to 45% of total revenue growth in fiscal 'twenty. Four do you expect this to be an even greater contribution to growth in fiscal 'twenty. Five does this make stay the same whereas you roll through the drag from the pandemic cohorts early in fiscal 'twenty five.

Arseny: Congratulations on the results. With the international strength you have seen this year, I think it contributed close to 45% of total revenue growth in fiscal 24. Do you expect this to be an even greater contribution to growth in fiscal 25? Or does this make it stay the same?

Blake Jeffrey Grayson: Or, as you roll through the drag from the pandemic cohorts early in fiscal 25, do you think that there is strong renewal expansion domestically if macro stays the same that leads to more US contribution to top line growth in fiscal 25? Thank you. Yeah, thanks for the question. Well, first off again, I'm really happy with how our international growth has progressed this year, growing much faster than the overall business. All of our major regions grew by double digits in Q4. So the question about whether we think it accelerates more or less, I'm not going to provide any guidance on that. But what I will say is, just to reiterate, the international opportunity for us is quite sizable. Only 27% of our revenue in Q4 came from our international business. And if you think of GDP or something as a proxy, it should be much higher than that.

You think that there is strong renewal expansion domestically if macro stays the same that leads to more U S contribution to topline growth in fiscal 'twenty five thank you.

Speaker Change: Yeah. Thanks for the question well first off again really happy with how our international growth has progressed through the year growing much faster than the overall business all of our major regions grew into the double digits. In Q4. So the question about whether we think it accelerates more or less at that I'm not.

Speaker Change: Can you provide any guidance out to that but what I will say is the just to reiterate the international opportunity for US I think is quite sizable only 27% of our revenue in Q4 came from our international business and if you think of <unk>.

Speaker Change: GDP or something as a proxy it should be much higher than that and so I think I'm really excited for that longer term opportunity, but not not any place to say Oh, I think it will accelerate faster or slower than.

Blake Jeffrey Grayson: And so I think I'm really excited for that longer-term opportunity, but this isn't any place to say, oh, I think it'll accelerate faster or slower than any other market. Yep. Okay, with that, thank you all for joining us and for your support as we continue to build a solid foundation for DocuSign. We are proud of the strong results in Q4 and of the progress that we're making to reinvigorate innovation and add value for our customers, our employees, and shareholders. I look forward to what will be a very exciting fiscal year 2025. Thank you. See you next quarter. Inc. Thank you for your time. Good-bye.

Speaker Change: Any other.

Speaker Change: Market.

Speaker Change: Yeah.

Speaker Change: Yep.

Speaker Change: Okay with that thank you all for joining and for your support as we continue to build a solid foundation and the Doctor side.

Speaker Change: We are proud of the strong results in Q4 and up the progress that we're making to reinvigorate innovation and add value for our customers our employees and shareholders.

Speaker Change: Forward to what will be a very exciting physical 2025. Thank you see you next quarter.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you.

Speaker Change: You for your participation.

Speaker Change: Goodbye.

Speaker Change: Hum.

Uh-huh.

Operator: .. The Bulletproof Executive 2013,... BF-WATCH TV 2021, The Bulletproof Executive 2013, The Ultimate Parody Site! The Bulletproof Executive 2013, BF-WATCH TV 2021, The Bulletproof Executive 2013

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