Q2 2025 DocuSign Inc Earnings Call

[inaudible]

Unknown Executive: Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's second-quarter fiscal year 25 earnings conference call. At this time, I would like to thank you for joining DocuSign's second quarter fiscal year 25 earnings conference call.

Speaker Change: Good afternoon ladies and gentlemen, thank you for joining DocuSign's second quarter fiscal year, 25 earnings conference call.

Speaker Change: At this time, all participants are an A-list in only mode. After these speakers 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-relation section of the website following the call.

Speaker Change: If you require operator assistance at any time, please press R0. I will now pass the call over to Heather Harwood, Head of Investor Relations. Please go ahead.

Unknown Executive: So, afternoon and welcome to DocuSign's Q2 Fiscal 2025 earnings call.

Operator: [inaudible] At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. As a reminder, this call is being recorded and will be available for replay from the Investor Relations section of the website following the call. If you require operator assistance at any time, please press star zero.

Heather Harwood: Thank you, Operator. Good afternoon and welcome to Dr. Stein's Q2 fiscal 2025 earnings call. Joining me on today's call, our Dr. Stein CEO, Alan Tegesen and CFO, Blake Grayson.

Heather Harwood: Joining me on today's call are DocuSign's CEO, Alan Tegasin, and CFO, Blake Grayson. The press release announcing our second quarter fiscal 2025 results was issued earlier today and is posted on our Investor Relations website as well as the published version of our prepared remarks. Before we begin, let me remind everyone that some of the statements on today's call. 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.

Speaker Change: The press released announcing our second quarter fiscal 2025 results with issued earlier today and is posted on our investor relations website, as well as a published version of our prepared remarks.

Speaker Change: Before we begin, let me remind everyone that some of the statements on today's call are forward-looking.

Heather Harwood: I will now pass the call over to Heather Harwood, Head of Investor Relations. Please go ahead. Thank you operator.

Speaker Change: 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.

Heather Harwood: Good afternoon and welcome to DocuSign's Q2 fiscal 2025 earnings call. Joining me on today's call are DocuSign's CEO, Alan Tegasin and CFO, Blake Grayson. The press release announcing our second quarter fiscal 2025 results with issued earlier today and is posted on our Investor Relations website as well as the published version of our prepared remarks. Before we begin, let me remind everyone that some of the 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.

Speaker Change: 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.

Heather Harwood: 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, and except as required by law, we assume no obligation to update these statements in light of future events or new information.

Speaker Change: Please read and consider the risk factors in our filing with the SEC together with the content of this call.

Heather Harwood: 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 filing with the SEC together with the content of this call. Any forward-looking statements are based on our assumptions and expectations to date and except as required by law, we assume no obligation to update these statements in light of future events or new information.

Speaker Change: Any forward-looking statements are based on our assumptions and expectations to date. An acceptance required by law, we assume no obligation to update these statements in light of future events or new information.

Heather Harwood: During this call, we will present gap and non-GAAP financial measures. In addition, we provide non-GAAP weighted average share counts and information regarding free cash flows and billing. These non-GAAP measures are not intended to be considered in isolation from, a substitute for, or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance.

Speaker Change: During this call, we will present Gap and Non Gap Financial Measures. In addition, we provide non-gap-weighted average chair counts and information regarding free cash flows and billing.

Speaker Change: These non-gap measures are not intended to be considered in isolation from a substitute for or superior to our gap results. We encourage you to consider all measures when analyzing our performance.

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

Speaker Change: For information regarding our non-gap financial information, the most directly comparable gap measures and a quantitative reconciliation of those figures. Please refer to today's earnings prepped release.

Heather Harwood: I'd now like to turn the call over to Alan.

Heather Harwood: During this call, we will present gap and non-gap financial measures. In addition, we provide non-gap weighted average share counts and information regarding free cash flows and billing. These non-gap measures are not intended to be considered in isolation from a substitute for or superior to our gap results. We encourage you to consider all measures when analyzing our performance. For information regarding our non-gap financial information, the most directly comparable gap measures and a quantitative reconciliation of those figures, please refer to today's earnings press release. Which can be found on our website at investor.document.com.

Speaker Change: which can be found on our website at investor.docyscience.com. I'd now like to turn the call over to Allan. Allan.

Allan Thygesen: Thank you, Heather, and good afternoon, everyone. Dr. Signd wrote another quarter of improved stability and greater efficiency while introducing the new IAM platform that we believe will be the foundation for a few growth. During Q2, revenue was $736 million, up 7% year over year for the second and second quarter. Gollumate retention was consisted versus Q1 at 99%. Continued improvements in customer usage and utilization for the support of stability, which Blake will describe in more detail. Non-GAP operating margins increased to 32% at all-time high and significant improvement versus Q2 fiscal 24 at 25%. Free cash flow generation remains strong, approaching $200 million, resulting in a 27% yield for the quarter.

Allan: Thank you, Heather and good afternoon, everyone.

Allan: Dr. Sandrove, another quarter of improved stability and greater efficiency while introducing the new IM platform that we believe will be the foundation of future growth.

Speaker Change: During Q2 revenue was $736 million, up to 7% year over year for the second executive quarter. Gallinate retention was consisted versus Q1 at 99%.

Speaker Change: Continued improvements in customer usage and utilization for the support of stability with Blake with described more detail.

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

Alan Thygesen: Thank you, Heather, and good afternoon, everyone. Dr. Signed wrote another quarter of improved stability and greater efficiency while introducing the new IAM platform that we believe will be the foundation for a few quick growth. During Q2, revenue was $736 million, up 7% year over year for the second and second quarter. The dollar rate retention was consistent versus Q1 at 99%. Continued improvements in customer usage and utilization for the support of stability, which Blake will describe in more detail.

Speaker Change: Non-gap operating margins increased to 32%, and all-time high and significant improvement versus Q2 Fiscal 24 at 25%.

Speaker Change: Free cash flow generation remains strong approaching $200 million resulting in the 27% yield for the quarter. This efficiency allowed us to opportunistically allocate capital by repurchasing $200 million worth of shares during Q2.

Allan Thygesen: This efficiency allowed us to opportunistically allocate capital by repurchasing $200 million worth of shares during Q2. Our strong results reflect continued progress across our three strategic pillars: accelerating product innovation, evolving on the channel, go to market capabilities, and improving operating efficiency.

Speaker Change: Our strong results reflect continued progress across our three strategic pillars, accelerating product innovation, evolving on the channel through the market capabilities and improving operating efficiency.

Alan Thygesen: Non-GAP operating margins increased to 32% at all time high and significant improvement versus Q2 fiscal 24 at 25%. Free cash flow generation remains strong approaching $200 million, resulting in a 27% yield for the quarter. This efficiency allowed us to opportunistically allocate capital by repurchasing $200 million worth of shares during Q2.

Allan Thygesen: Let's turn to product innovation. In Q2, we shift the first version of our Intelligent Agreed Management for IAM platform. This is the most important launch in DocuSign's recent history because of the value we believe IAM will create for our customers. IAM addresses the massive $2 trillion in lost economic value each year experienced by organizations from managing agreements. In Q2, I am launched to small and mid-sized commercial customers in the United States, Canada, and Australia. It's very early days, but the initial results and customer feedback are promising. So far, IAM customer win rates are higher, average deal sizes are larger, and time to close with customers is faster.

Speaker Change: Let's turn to pro-unnovation. Thank you to the shift of first version of our Intelligent Agreed Management for IAM Platform.

Speaker Change: This is the most important launch in DocuScience recent history because of the value we believe I am will create for our customers.

Speaker Change: I am addresses the massive $2 trillion in lost economic value each year experienced by organizations from managing agreements.

Alan Thygesen: Our strong results reflect continued progress across our three strategic pillars, accelerating product innovation, evolving on the channel, go to market capabilities, and improving operating efficiency.

Speaker Change: Thank you to, I am launch to small and mid-sized commercial customers in the United States, Canada and Australia.

Alan Thygesen: Let's turn to product innovation. In Q2, we shift the first version of our Intelligent Agreed Management for IAM platform. This is the most important launch in DocuSign's recent history because of the value we believe IAM will create for our customers. IAM addresses the massive $2 trillion in lost economic value each year experienced by organizations from managing agreements. In Q2, I am launched to small and mid-sized commercial customers in the United States, Canada, and Australia.

Speaker Change: It's very early days, but the initial results and customer feedback are promising.

Speaker Change: So far, I am customer win rates, a higher average deal prices, a larger and time to close with customers, it's faster. Customer deal count and bookings are increasing month over month with August being larger than June and July combined.

Allan Thygesen: Customer deal count and bookings are increasing month over month, with August being larger than June and July combined. Overall, preliminary IAM adoption momentum is tracking as planned, and we look forward to the continued rollout to additional segments and geographies throughout the rest of the fiscal year. Customer feedback captures the value IAM is already delivering to the customers, focused on strong use and fast time to value. Legal service provider, MassTort Strategies, tells us that with IAM they anticipate saving thousands annually now that their completed agreements are organized and easily searchable. And Mid-western healthcare provider, Relia Health, said that they were impressed by how quickly they put IAM to use.

Speaker Change: Overall, preliminary eye-in-badoptional menom is tracking as plant. And we look forward to the continued roll-out to additional segments and geographies throughout the rest of the fiscal year.

Alan Thygesen: It's very early days, but the initial results in customer feedback are promising. So far, IAM customer win rates are higher, average deal sizes are larger, and time to close with customers is faster. Customer deal count and bookings are increasing month over month with August being larger than June and July combined. Overall, preliminary IAM adoption momentum is tracking as planned, and we look forward to the continued rollout to additional segments and geographies throughout the rest of fiscal year.

Speaker Change: Customer feedback captures the value I am, is already delivering the customers focused on strong use of use and fast time to value.

Speaker Change: The U-Service Provider Masterforce Strategies tells us that with IAM, they anticipate saving thousands annually now that their completed agreements are organized and easily searchable.

William Held: and Midwestern healthcare provider, William Held, said that they were impressed by how quickly they put I into use. And within a few days they were using Dr. San Navigator as the organization's central agreement repository.

Allan Thygesen: And within a few days, they were using Dr. Sinavigator as the organization's central agreement repository. We're focused on continuously introducing and enhancing IAM's value to more customers. Before the end of this fiscal year, we will make IAM available for departmental use within large enterprise organizations in multiple languages and additional geographies, and for purchase the self service channels. In 2025, we're on-lock moving from departmental adoption to organization-wide deployments in large enterprises, add more languages, and introduce more features to escape the agreement traps. Our rollout timeline allows us to use customer feedback to refine our product and go-to-market strategy.

Alan Thygesen: Customer feedback captures the value IAM is already delivering. The customers focused on strong use and fast time to value. Legal service provider, MassTort Strategies, tells us that with IAM they anticipate saving thousands annually now that their completed agreements are organized and easily searchable. And Midwestern healthcare provider, Relia Health, said that they were impressed by how quickly they put IAM to use. And within a few days they were using Dr. Sinavigator as the organization's central agreement repository.

Speaker Change: We're focused on continuously introducing and enhancing Thyems value to more customers.

Speaker Change: Before the end of this fiscal year, you will make I am available for departmental use within large enterprise organizations, in multiple languages, and additional geographies, and for purchase the ASL service channels.

Speaker Change: In 2025, we'll unlock moving from departmental of adoption to organization-wide deployments in large enterprises, add more languages, and introduce more features to escape the agreement traps.

Speaker Change: Our rollout timeline allows us to use customer feedback to refine our product and go to market strategies ensuring we meet customer needs with a long-term sustainable approach.

Alan Thygesen: We're focused on continuously introducing and enhancing IAM's value to more customers. Before the end of this fiscal year, we will make IAM available for departmental use within large enterprise organizations in multiple languages and additional geographies and for purchase the self service channels. In 2025, we're on-lock moving from departmental adoption to organization-wide deployments in large enterprises, add more languages, and introduce more features to escape the agreement traps. Our rollout timeline allows us to use customer feedback to refine our product and go to the market strategy.

Allan Thygesen: , Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc, Iwanyc. Our goal is to continuously improve the ability for customers to discover, try, use, and buy our products visually, further enabling greater scale and efficiency across our business. Today, new and existing customers worldwide can use our digital platform to more easily move from free trials to paid accounts, upgrade their plans, and expand to additional products such as ID verification and SMS delivery, all without engaging in a sales rep. We've introduced improved personalization of DocuSign.com and integrated new payment options in the national markets to improve conversion rates.

Speaker Change: Let's turn to the second strategic pillar on the channel Go to Market.

Speaker Change: In Q2, we drove further stabilization in our core business.

Speaker Change: Overall customer growth remains consistent at 11% year of a year for the fourth consecutive quarter, for omelette sense and contract utilization models they proved compared to last year.

Speaker Change: Digital and International Revenue continue to outpace over all growth and remain large long-term opportunities.

Speaker Change: In addition, we're focused on continuing to upgrade and enable our sales, partner, and self-serve strategies to sell IAM.

Speaker Change: The direct sales force continued to show improved execution. Brett customer growth remains strong with a 12% year-old year increase.

Alan Thygesen: ,[inaudible] Our goal is to continuously improve the ability for customers to discover, try, use, and buy our products digitally, further enabling greater scale and efficiency across our business. Today, new and existing customers worldwide can use our digital platform to more easily move from free trials to paid accounts, upgrade their plans and expand to additional products such as ID verification and SMS delivery. All without engaging in sales rep. We've introduced improved personalization of DocuSign.com and integrated new payment options in international markets to improve conversion rates. We expect continued strong e-commerce execution and delivery as we expand our digital growth and prepare for self-service. I am purchasing.

Speaker Change: and large value customers, we're $300,000 in ACV, so our modest acceleration, benefiting from the impact of our retention efforts.

Speaker Change: CLM also continued to outpace overall revenue growth.

Speaker Change: Lastly, I am a navalman across ourselves for us with a key priority in key tubes.

Speaker Change: and Q3, the remaining teams in our Salesforce will complete IAM training and certification, including our enterprise focus teams and teams outside the initial launch markets.

Speaker Change: Turning to our other rafs to market, this quarter we're providing more context on the partner and self-serve channels, where we've increased focus and investments.

Speaker Change: In the Carter Channel, we've strengthened our strategic relationship with Microsoft, SAP and Salesforce.

Speaker Change: on Microsoft Collaboration, now includes dedicated co-selling through the Azure Marketplace and co-private integrations, driving increased customer volume.

Speaker Change: We need to build similar success with SAP, especially with the newly launched CLM Arriva Integration announced at SAP Sapphire Events.

Speaker Change: Also, we continue to partner deeply with Salesforce, which remains our largest go-to-market partnership with tens of thousands of joining deployed customers.

Speaker Change: We'll have more to share about this partnership at their Dream Force event in a few weeks.

Speaker Change: In proving our partner in sales channels, has led to enterprise customers adopting DocuSign across a growing set of use cases.

Speaker Change: A prime example of its camera, the leading online design and visual communications platform, which are deeply integrated to doctors and work flows to support its rapid growth.

Speaker Change: This quarter, the Microsoft integration and co-selling agreements led to deeper agreements with global banking and insurance customers, as well as with the Fortune 100 each-eller.

Speaker Change: and a leading human capital management provider is integrated e-signature functionality directly into its core product offering, allowing its customers to drive faster onboarding with new employees.

Speaker Change: We anticipate continued partnering able to use such a revolution as I am, little so.

Speaker Change: He's all being our self-service capability, has also been an important priority. Over the last 12 months, we've invested in building this infrastructure.

Speaker Change: Digital revenue growth has outpaced the overall growth, demonstrating continued positive impact from our focus on newcomers and execution.

Speaker Change: Our goal is to continuously improve the ability for customers to discover, try, use and buy our products digitally for the neighboring greater scale and efficiency across our business.

Speaker Change: Today, new annexes and customers worldwide can use our digital platform to more easily move free trials to pay accounts, upgrade their plans and expand to additional products, such as ID verification and SMS delivery, all without engaging in sales rep.

Speaker Change: We've introduced improved personalization of docsign.com and you need to create a new payment options in international markets to improve conversion rates.

Allan Thygesen: We expect continued strong e-commerce execution and delivery as we expand our digital growth and prepare for self-service. I am very, very proud to have you here today. We're excited to welcome new Chief Revenue Officer Paula Hansen and Chief Technology Officer Shacknick Nendi, who both hit the ground running after starting in early August. Paula and Shacknick bring large scale experience, selling and building enterprise customer solutions and complete an already strong leadership team. We're excited to continue our transformation journey. I am represents a massive opportunity to leverage our market leadership and unlock incredible value for our customers as the system of record for Greens.

Speaker Change: We expect continuous, strong, e-commerce execution of delivery as we expand our digital growth and prepare of the self-service I am purchasing.

Speaker Change: We're excited to welcome new Chief Revenue Officer Paula Hanson and Chief Technology Officer, Chuck Nick Nandi, who both hit the ground running after starting in early August.

Speaker Change: Paul Anchard, Nick Spring, large scale experience, selling and building enterprise customer solutions, and complete an already strong leadership team.

Speaker Change: We're excited to continue our transformation journey. I am represents a massive opportunity to leverage our market leadership and unlocking credible value for our customers at the system of record for agreements.

Allan Thygesen: We will continue to evolve, remain efficient, and invest for the future.

Alan Thygesen: We're excited to welcome new Chief Revenue Officer Paula Hanson and Chief Technology Officer Shacknick Nendi who both hit the ground running after starting in early August. Paula and Shacknick bring large-scale experience selling and building enterprise customer solutions and complete and already strong leadership team. We're excited to continue our transformation journey.

Speaker Change: We will continue to evolve, remain efficient and invest for the future.

Allan Thygesen: Thank you to our entire team for bringing the I am vision to life with our customers. We're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're proud of what we've accomplished and we're Our global expansion strategy is an important component of our long-term vision and we are optimistic about the continued growth opportunities in our international markets.

Speaker Change: Thank you to our entire team for bringing the IAM vision to life with our customers.

Speaker Change: We're proud of what we've accomplished, and we're just getting started. With that, the maternal would have like.

Speaker Change: Thanks, Allan, and good afternoon, everyone. Our Q2 results continue to show stabilization in our core business.

Alan Thygesen: I am represents a massive opportunity to leverage our market leadership and unlock incredible value for our customers as the system of record. We will continue to evolve, remain efficient, and invest for the future. Thank you to our entire team for bringing the IAM vision to life with our customers. We're proud of what we've accomplished and we're just getting started.

Speaker Change: Besides the resiliency demonstrated by a number of key metrics, we continue to focus on balancing efficiency gains with investment and long-term growth.

Speaker Change: We achieved that balance in Q2. When we began the launch of our new IAM platform to general availability, while producing the highest operating margin in our company's history.

Speaker Change: With regards to I am, we've engaged with the portion of customers over the past three months, and we're encouraged by early traction and customer feedback.

Blake Grayson: With that, let me turn it over to Blake. Thanks Alan and good afternoon everyone. Our few two results continue to show stabilization in our core business. Besides the resiliency demonstrated by a number of key metrics, we continue to focus on balancing efficiency gains with investment in long-term growth. We achieved that balance in Q2 when we began the launch of our new IAM platform to general availability while producing the highest operating margin in our company's history.

Speaker Change: We're in the very early days of both our multi-year transitions I am and in realizing our aspiration of re-excelerating our long-term growth. I'm excited to partner with our team to execute against this strategy.

Speaker Change: Q2 total revenue of 736 million and subscription revenue of 717 million, both grew 7% year over year. Billings were 725 million, up 2% year over year.

Blake Grayson: With regards to IAM, we've engaged with the portion of customers over the past three months and we're encouraged by early traction and customer feedback. We're in the very early days of both our multi-year transitions IAM and in realizing our aspiration of re-accelerating our long-term growth. I'm excited to partner with our team to execute against this strategy. Q2 total revenue of 736 million and subscription revenue of 717 million both grew 7% year-over-year.

Speaker Change: As mentioned on last quarter's call, the growth rate of Q2 billing the year over year was impacted by last year's strong on-time renewal performance and the timing impacts of various customer contracts this year.

Speaker Change: Also, as mentioned previously, we expect Q2 Billings wrote to be our lowest quarterly growth rate in fiscal year 2020.

Speaker Change: International revenue represented 28% of total revenue and grew to approximately double the rate of our overall revenue. Our global expansion strategy is an important component of our long-term vision, and we are optimistic about the continued growth opportunities in our international markets.

Blake Grayson: Billings were 725 million, up 2% year-over-year. As mentioned on last quarter's call, the growth rate of Q2 Billings year-over-year was impacted by last year's strong on-time renewal performance and the timing impacts of various customer contracts this year. Also, as mentioned previously, we expect Q2 Billings growth to be our lowest quarterly growth rate in fiscal year 2025. International revenue represented 28% of total revenue and grew to approximately double the rate of our overall growth.

Allan Thygesen: This includes IAM, which will launch in the majority of our direct international markets by the end of this fiscal year. In addition, investments in our PLG motion continue to deliver results. And in Q2, digital revenue grew more than double the rate of direct revenue. Specifically concerning PLG, we are improving mechanisms to allow self-service plan upgrades, and our mix of billing to this quarter was slightly more weighted to digital than in the prior year. Stabilizing trends continued from Q1 into Q2, as we saw year-over-year improvements in usage, utilization, and customer growth. That momentum underscores the resiliency of our business despite continued macro uncertainty.

Speaker Change: This includes IAM, which will launch in the majority of our direct international markets by the end of this fiscal year.

Speaker Change: In addition, investments in our PLG motion continue to deliver results, and in T2, digital revenue grew more than double the rate of direct revenue.

Speaker Change: Specifically concerning PLG, we are improving mechanisms to allow self-service planup rates, and our mix of buildings this quarter was slightly more weighted to digital pit in the prior year.

Blake Grayson: Our Global Expansion Strategy is an important component of our long-term vision, and we are optimistic about the continued growth opportunities in our international markets. This includes IAM, which will launch in the majority of our direct international markets by the end of this fiscal year. In addition, investments in our PLG motion continue to deliver results, and in Q2, digital revenue grew more than double the rate of direct revenue, specifically concerning PLG, we are improving mechanisms to allow self-service plan upgrades, and our mix of billing to this quarter was slightly more weighted to digital than in the prior year.

Speaker Change: Stabilizing trends continued from 21 into Q2 as we saw year over year improvements in usage, utilization, and customer growth. That momentum underscores the resiliency of our business despite continued macro uncertainty.

Blake Grayson: Dollar network tension rate was 99% in Q2, consistent with Q1. We expect that these recent stabilization trends will continue, and we anticipate our dollar network tension rate to remain consistent through the remainder of fiscal year 2025. Usage trends continue to show modest improvement. The volume of envelope sent increased year over year for the third consecutive quarter, while consumption, a measure of utilization, also continue to improve year over year, particularly in verticals like healthcare, insurance, and technology. We continue to see strong growth and stability in new customer acquisition. In Q2, total customers again grew by 11% year over year to approximately 1.6 million.

Speaker Change: Dollar Net retention rate with 99% in Q2 consistent with Q1. We expect that these recent stabilization trends will continue. And we anticipate our dollar net retention rate journey inconsistent to the remainder of fiscal year 2020.

Speaker Change: Usage Trends continue to show modest improvements. The volume of envelope sent increased year over year for the third consecutive quarter, law consumption, a measure of utilization, also continued to improve the year over year, particularly in vertical like healthcare, insurance and technology.

Blake Grayson: Stabilizing trends continued from Q1 into Q2, as we saw year-over-year improvements in usage, utilization, and customer growth. That momentum underscores the resiliency of our business despite continued macro uncertainty. Dollar network tension rate was 99% in Q2, consistent with Q1. We expect that these recent stabilization trends will continue, and we anticipate our dollar network tension rate to remain consistent to the remainder of fiscal year 2025. Usage trends continue to show modest improvements.

Speaker Change: We continue to see strong growth and stability in New Customer Acquisition. In Q2, total customers, again, grew by 11% year over year to approximately 1.6 million.

Blake Grayson: The continued momentum in overall customer growth gives us confidence that our strategy of both self-service and direct sales options is resonating across segments and geography. The unique scale and breadth of our customer base provides a strong foundation for the measured rollout of the IAM platform. The number of large customers spending over $300,000 annually increased year over year and quarter over quarter for 1066 in Q2. Additionally, bookings from customers with total contract value over $1 million continue to grow at a double-digit pace year over year.

Speaker Change: The continuing momentum at overall customer growth gives us confidence, but our strategy of both self-service and direct sales options is resonating across segments and geography.

Blake Grayson: The volume of envelope sent increased year-over-year for the third consecutive quarter, while consumption, a measure of utilization, also continue to improve year-over-year, particularly in vertical, like healthcare, insurance, and technology. We continue to see strong growth and stability in new customer acquisition. In Q2, total customers, again, grew by 11% year-over-year, to approximately 1.6 million. The continued momentum in overall customer growth gives us confidence, but our strategy of both self-service and direct sales options is resonating across segments and geography.

Speaker Change: The unique scale and breadth of our customer base, so that I just strong foundation for the measure rollout of the IAM platform.

Speaker Change: The number of large customers spending over $300,000 annually increased year over year and quarter of a quarter for $1,66 in Q2.

Speaker Change: Additionally, looking from customers with total contract value over $1 million, continue to grow at a double digit pace year over year.

Blake Grayson: Turning to the financials, our focus on operating efficiency continues to yield strong results this quarter. Non-GAP gross margin for Q2 with 82.2% relatively in line with the prior year. We delivered record high non-GAAP operating income in Q2 with 237 million of 40% year over year, resulting in a 32.2% operating margin. Of which approximately 150 basis points was attributable to one-time items associated with professional themes, which primarily consisted of insurance reimbursements and the release of a litigation reserve. Q2 operating margin was up 750 basis points versus last year and a significant improvement over the 18.0% operating margin generated two years ago.

Speaker Change: Turning to the financials, our focus on operating efficiency continued to yield strong results this quarter.

Speaker Change: and non-capped rose margin for Q2 with 82.2% relatively in line with the prior year.

Blake Grayson: The unique scale and breadth of our customer base provides a strong foundation for the measured rollout of the IAM platform. The number of large customers spending over $300,000 annually increased year-over-year and quarter-over-quarter for 1,066 in Q2. Additionally, bookings from customers with total contract value over $1 million continue to grow at a double-digit pace year-over-year. Turning to the financials, our focus on operating efficiency continue to yield strong results this quarter. Non-GAP gross margin for Q2 with 82.2% relatively in line with the prior year.

Speaker Change: We deliver record high, non-gap operating income in Q2 with 237 million of 40% your year resulting in a 32.2% operating margin.

Speaker Change: which approximately 150 basis points was attributable to one-time items associated with professional teams, which primarily consisted of insurance reimbursement and the release of a litigation reserve.

Speaker Change: Q2 operating margin was up 750 basis points versus last year and a significant improvement over the 18.0% operating margin generated two years ago.

Blake Grayson: Our improvement over the previous year underscores our ability to grow efficiently while continuing to invest in critical areas like R&D. We do expect operating margin to decline slightly in the second half of the year as we invest to support our IAM launch and continue rollout. Although we still expect to exit the year with improving operating margins on a year-over-year basis.

Speaker Change: Our improvement over the previous year, underscores our ability to grow efficiently, while continuing to invest in critical areas like R&D, we do expect operating margin to decline slightly in the second half of the year, as we invest to support our IAM launch and continue grow out.

Blake Grayson: We delivered record-high non-GAP operating income in Q2 with 237 million of 40% year-over-year resulting in a 32.2% operating margin, which approximately 150 basis points was attributable to one-time items associated with professional themes, which primarily consisted of insurance reimbursements and the release of a litigation reserve. Q2 operating margin was up 750 basis points versus last year, and a significant improvement over the 18.0% operating margin generated two years ago. Our improvement over the previous year underscores our ability to grow efficiently while continuing to invest in critical areas like R&D.

Blake Grayson: Francis. We ended Q2 with 6,612 employees versus 6,748 at this time last year, approximately 2% lower, reflecting our disciplined approach to hiring and resource allocation. A measured approach to hiring to support our strategic initiatives, including R&D, NPLG, as well as a Lexion acquisition, throw the quarter over quarter increase in headcount. In terms of cashflow, Q2 was another strong quarter. We delivered 198 million of free cashflow, a 27% margin, which was in line with Q2 last year. As expected, our free cashflow yield moderated from Q1, as we compare against the significant working capital improvements from prior quarters.

Speaker Change: Although we still expect to exit the year with improving operating margins on a year over year basis.

Speaker Change: We ended Q2 with 6,612 employees versus 6,748 at this time last year, approximately 2% lower, reflecting our discipline approach to hiring and resource allocation.

Speaker Change: A measure to approach the hiring to support our strategic initiatives, including R&D, NPLG, as well as a Lexion acquisition, through the Coral reporter increase in headcount.

Blake Grayson: We do expect operating margin to decline slightly in the second half of the year, as we invest to support our IM launch and continue rollout. Although we still expect to exit the year with improving operating margins on a year-over-year basis.

Speaker Change: In terms of cash flow, Q2 was another strong quarter. We delivered 190 million of free cash flow, a 27% margin, which is in line with Q2 last year.

Blake Grayson: Alexis. We ended Q2 with 6,612 employees versus 6,748 at this time last year, approximately 2% lower, reflecting our discipline approach to hiring and resource allocation. A measured approach to hiring to support our strategic initiatives, including R&D, NPLG, as well as a lexion acquisition, throw the quarter over quarter increase in headcount. In terms of cashflow, Q2 was another strong quarter. We delivered 198 million of free cashflow, a 27% margin, which was in line with Q2 last year.

Speaker Change: As expected, our free cash flow yield moderated from T1, as we compare against the significant working capital improvements from prior quarters. That said, our collection of efficiency remains strong, with less than 1% of our accounts receivable over 90 days past due.

Blake Grayson: That said, our collection efficiency remains strong, with less than 1% of our accounts receivable over 90 days past due. We expect that the Q3 cashflow yield will decrease versus Q2 due to the timing of cost payment and investments we're making in the second half of this year. We continue to expect that our fiscal year 2025 free cash flow yield will more closely match our full year non-GAAP operating margin. Our balance sheet showed continued strength, ending the quarter with 1 billion of cash, cash equivalence, and investments. We have no debt on the balance sheet. Because of the stability in our balance sheet and consistency and free cash flow generation, we can continue investing in the business and opportunistically return cash to shareholders.

Speaker Change: We expect that the Q3 Casual yield will be increased versus Q2 due to the timing of calling to payment and investments we're making in the second half of this year.

Speaker Change: We continue to expect that our fiscal year 2025 free cash flow yield will more closely match our full year non-gab operating margin.

Speaker Change: Our balance sheet should continue to strengthen ending the quarter with 1 billion of cash, cash equivalent and investments. We have no death on the balance sheet.

Blake Grayson: As expected, our free cashflow yield moderated from Q1, as we compare against the significant working capital improvements from prior quarters. That said, our collection efficiency remains strong, with less than 1% of our accounts receivable over 90 days past due. We expect that the Q3 cashflow yield will decrease versus Q2 due to the timing of cost of payment and investments we're making in the second half of this year. We continue to expect that our fiscal year, 2025 free cashflow yield, will more closely match our full year non-gab operating margin.

Speaker Change: Because of the stability in our balance sheet and consistency in free cash flow generation, we can continue investing in the business and opportunity thisically return cash to shareholders.

Blake Grayson: In Q2, we accelerated the pace of our buyback activity and repurchased a record 200 million in share value, effectively redeploying 100% of our quarterly free cash flow generation back to shareholders. While this rate will fluctuate as we pursue an opportunistic strategy balanced against investment initiatives and the operating environment, we believe this activity further demonstrates our commitment to delivering value to shareholders. We also use 39 million in cash to pay taxes due on RSU settlements, reducing the diluted impact of our equity program. Non-GAB diluted EPS for Q2 was 97 cents, a 25 cents per share improvement from 72 cents last year.

Speaker Change: In Q2, we accelerated the pace of our buyback activity and repurchase a record 200 million in shared value, effectively redeploying 100% of our polo-free cash flow generation back to shareholders.

Speaker Change: While this rate will fluctuate as we pursue an opportunistic strategy balanced against investment initiatives and the operating environment, we believe this activity further demonstrates our commitment to delivering value to shareholders.

Blake Grayson: Our balance sheet showed continued strength, ending the quarter with 1 billion of cash, cash equivalence, and investments. We have no debt on the balance sheet. Because of the stability in our balance sheet and consistency and free cashflow generation, we can continue investing in the business and opportunistically return cash to shareholders. In Q2, we accelerated the pace of our buyback activity and repurchased a record 200 million in share value, effectively redeploying 100% of our quarterly free cashflow generation back to shareholders.

Speaker Change: We also use 39 million in cash to pay taxes to do on RSU settlements, producing the deluded impact of our equity program.

Speaker Change: Nolan Gap diluted EPS for Q2 was 97 cents, a 25-cent per share improvement from 72 cents last year.

Blake Grayson: The GAB diluted EPS was $4.26 versus 4 cents last year. Related to our GAB financials, as discussed last quarter, we released the valuation allowance on certain existing deferred tax assets. We had a GAB-only financial impact of decreasing our non-cash tax expense by approximately $838 million. Diluted weighted average shares were flat year over year, at 208 million shares, as our repurchase activity was weighted towards the latter portion of Q2. We are pleased with the improvements in both non-GAB and GAB profitability, and we are actively managing the impact of dilution and cost of our equity program.

Speaker Change: The Gap Deluded EPS was $4.26 versus $4.30 last year.

Blake Grayson: While this rate will fluctuate as we pursue an opportunistic strategy balanced against investment initiatives and the operating environment, we believe this activity further demonstrates our commitment to delivering value to shareholders. We also use 39 million in cash to pay taxes due on RSU settlements, reducing the diluted impact of our equity program. Non-gab diluted EPS for Q2 was 97 cents, a 25 cents per share improvement from 72 cents last year. Gab diluted EPS was $4.26 versus 4 cents last year.

Speaker Change: Related to our gap financials, as discussed last quarter, we released a valuation allowance on certain existing deferred tax assets.

Speaker Change: With how the gap only financial impact of decreasing our non-cast active spent by approximately $838 million.

Speaker Change: Delooted weighted average shares were flat year over year at 208 million shares as our repurchase activity was weighted towards the latter portion of Q2. We are pleased with the improvements in both non-gap and gap profitability and we are actively managing the impact of delusion and cost of our equity program.

Blake Grayson: With that, let me turn to guidance. For Q325 and fiscal year 25, we expect total revenue of 743 to 747 million in Q3, or a 6% year of year increase at the midpoint. For fiscal year 2025, we expect revenue between 2.940 to 2.952 billion, or a 7% year-over-year increase at the midpoint. of this. We expect subscription revenue of 722 to 726 million in Q3, or a 6% year-over-year increase at the midpoint, and 2.864 to 2.876 billion for fiscal 2025, or a 7% year-over-year increase at the midpoint. For billing, we expect 710 to 720 million in Q3 and 2.990 to 3.3 million for fiscal 2025.

Speaker Change: With that, let me turn the guidance.

Blake Grayson: Related to our GAB financials, as discussed last quarter, we released a valuation allowance on certain existing deferred tax assets. We had a GAB only financial impact of decreasing our non-cash tax expense by approximately $838 million. Diluted weighted average shares were flat year over year at 208 million shares, as our repurchase activity was weighted towards the latter portion of Q2. We are pleased with the improvements in both non-gab and GAB profitability, and we are actively managing the impact of dilution and cost of our equity program.

Speaker Change: for Q325 in fiscal year 25. We expect total revenue of 743 to 747,000,000 and Q3 or a 6% year of year increase at the midpoint.

Speaker Change: For fiscal year 2025, we expect revenue between 2.940 to 2.952 billion or a 7% year of your increase at the midpoint.

Speaker Change: of this.

Speaker Change: We expect subscription revenue of 722-726 million in Q3 or a 6% year over your increase at the midpoint.

Blake Grayson: With that, let me turn to guidance. For Q325 and fiscal year 25, we expect total revenue of 743 to 747 million in Q3, or a 6% year of year increase at the midpoint. For fiscal year 2025, we expect revenue between 2.940 to 2.952 billion, or a 7% year of year increase at the midpoint, of this. We expect subscription revenue of 722 to 726 million in Q3 or a 6% year-over-year increase at the midpoint and 2.864 to 2.876 billion for fiscal 2025 or a 7% year-over-year increase at the midpoint.

Speaker Change: and 2.864.

Speaker Change: The 2.876 billion for fiscal 2025 or a 7% year of year increase at the midpoint.

Speaker Change: For Billings, we expect 710 to 720 million in Q3 and 2.990 to 3.030 billion, purposeful 2025.

Blake Grayson: As continually shown in recent quarters and years, billings are heavily impacted by the timing of customer renewals, leading to meaningful variability from period to period. This affects both year-over-year and sequential pull-over pull-over comparisons, with the impact further amplified by the scale of our book of business. We expect non-GAAP growth margins to be 81.0 to 82.0% for Q3 and for fiscal 2025. We expect non-GAAP operating margin of 28.5% to 29.5% for Q3 and 29.0% to 29.5% for fiscal 2025. We will continue to focus on driving efficiencies while investing in long-term growth areas like product innovation. We are revising our guidance to reflect the anticipated impact of our buyback activities on the non-GAAP fully diluted weighted average shares outstanding.

Speaker Change: As continually shown in recent quarters and years, Billings are heavily impacted by the timing of customer renewals.

Speaker Change: Leading to meaningful variability from period to period.

Speaker Change: This impacts your over year and sequential portal reporter comparisons with the impact further amplified by the scale of our book of business.

Speaker Change: We expect non-gapsed Joe's margin to be 81.0 to 82.0% for Q3 and for fiscal 2020.5.

Blake Grayson: For billing, we expect 710 to 720 million in Q3 and 2.990 to 3.030 billion for fiscal 2025. As continually shown in recent quarters and years, billings are heavily impacted by the timing of customer renewals, leading to meaningful variability from period to period. This affects both year-over-year and sequential pull-over-quarter comparisons with the impact further amplified by the scale of our book of business. We expect non-gap gross margin to be 81.0 to 82.0% for Q3 and for fiscal 2025.

Speaker Change: We expect non-gap operating margin of 28.5% to 29.5% for Q3 and 29.0% to 29.5% for fiscal 2025. We will continue to focus on driving efficiencies while investing in long-term growth areas like product innovation.

Speaker Change: We are revising our guidance to reflect the anticipated impact of our bi-back activities on the non-gapsful, re-deluded, weighted, average, share-as-off standing. As a result, the range is now 216-211 million for both Q3 and Pistural 2025.

Blake Grayson: As a result, the range is now 206 to 211 million for both Q3 and fiscal 2025.

Blake Grayson: In closing, Q2 marks an important step toward our future. With the initial launch of our AI-powered IAM platform into general availability, while delivering record non-GAAP operating profit and margins. We delivered another solid quarter of execution against our three strategic pillars: accelerating product innovation, enhancing our go-to-market initiatives, and strengthening our financial and operational efficiency. We remain pleased with our overall performance, particularly the progress we made stabilizing our business, deepening customer relationships, driving profitability, and generating consistent and meaningful free cash flow. As we look ahead, we are excited about the opportunities in front of us, particularly with our IAM platform and the roll out to more customer segments and international regions during the remainder of this fiscal year.

Blake Grayson: We expect non-gap operating margin of 28.5% to 29.5% for Q3 and 29.0% to 29.5% for fiscal 2025. We will continue to focus on driving efficiencies while investing in long-term growth areas like product innovation. We are revising our guidance to reflect the anticipated impact of our buyback activities on the non-gap fully diluted weighted average shares outstanding. As a result, the range is now 206 to 211 million for both Q3 and fiscal 2025.

Speaker Change: In closing, Q2 Martin important step for our future. With the initial launch of our AI powered IAM platform into general availability while delivering record non-gap operating profit and margin.

Speaker Change: We delivered another solid quarter of execution against our three strategic pillars, accelerating product innovation, enhancing our good market initiatives, and strengthening our financial and operational efficiency.

Speaker Change: We remain pleased with our overall performance, particularly the progress we make stabilizing our business, deepening customer relationships, driving profitability and generating consistent and meaningful free cash flow.

Blake Grayson: In closing, Q2 marks an important step toward our future with the initial launch of our AI-powered IAM platform into general availability while delivering record non-gap operating profit and margins. We delivered another solid quarter of execution against our three strategic pillars, accelerating product innovation, enhancing our go-to-market initiatives, and strengthening our financial and operational efficiency. We remain pleased with our overall performance, particularly the progress we made stabilizing our business, deepening customer relationships, driving profitability, and generating consistent and meaningful free cash flow.

Speaker Change: As we look ahead, we are excited about the opportunities in front of us, particularly with our IAM platform and the rollout to more customer segments and international regions during the remainder of this fiscal year.

Blake Grayson: We believe the future is bright for DocuSign, and we remain committed to delivering value to our customers, shareholders, and employees as we continue executing our long-term vision.

Speaker Change: We believe the future is bright for docking time, and we remain committed to delivering value to our customers, shareholders, and employees as we continue executing our long-term vision.

Unknown Executive: That concludes our prepared remarks.

Unknown Executive: 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. A confirmation to indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you.

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

Speaker Change: Thank you. We will now be conducting a question and answer session.

Blake Grayson: As we look ahead, we are excited about the opportunities in front of us, particularly with our IAM platform and the rollout to more customer segments and international regions during the remainder of this fiscal year. We believe the future is bright for DocuSign and we remain committed to delivering value to our customers, shareholders, and employees as we continue executing our long-term vision.

Speaker Change: If you would like to ask a question, please press the R1 on your telephone keypad.

Speaker Change: A confirmation to indicate your line is in the question queue. You may press R2, if you would like to remove your question from the queue.

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

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

Unknown Executive: That concludes up the pair of remarks.

Brent Thill: The first question comes from the line of Brent Thill with Jeff Reese. Please proceed with your question. I mean, Allan, you raised your full year guide to 7% growth, but still guiding billions for three and a half.

Operator: 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. A confirmation to indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your hand set before pressing the star keys. One moment please while we pull for questions. Thank you.

Speaker Change: Thank you. Our first question comes from the line of bread till with Jeffries. Please proceed with your question.

Allan E-rays: and Allan E-rays your full-year guide to 7% growth, but still guiding buildings for three and a half.

Brent Thill: I think many are asking, thinking about your growth aspirations over the medium term and what are the main reasons that are giving you confidence in sustaining that growth. And just for Blake, you know, you mentioned the record margin at 32%.

Speaker Change: I think many are asking thinking about your growth aspirations or the median term and what are the main reasons that are giving you comments and sustaining that growth.

Brent Thill: Everyone kind of loved to hear what you're, your ceiling is over the next year to two in terms of where, where you think you can go versus continuing the vast and can you drive continue higher margins while while driving that revenue growth. Thanks.

Speaker Change: Just for Blake, you know, you mentioned the record margin at 32%.

Speaker Change: Everyone kind of love to hear what you're ceiling is over the next year to two in terms of where you think you can go versus continuing the vast and continue to drive, continue to hire Martin's wall while driving that revenue growth. Thanks.

Brent Thill: Our first question comes from the line of Brent Thill with Jeff Reese. Please proceed with your question. I mean, Allan, you raised your full year guide to 7% growth, but still guiding billions for three and a half. I think many are asking, thinking about your growth aspirations over the medium term, and what are the main reasons that are giving you confidence in sustaining that growth. And just for Blake, you know, you mentioned the record margin at 32%.

Allan Thygesen: Yeah, I'll go in the jumping break on the growth front. Well, first of all, I think we're really proud of the progress we've made. I think we've really fully stabilized current business. You can see the, you know, all right, both looking backwards and and looking ahead. We've gotten to a better place. I think a lot of the operating metrics that we shared on the call are trending in the right direction as well. So I think on, on the core, we still have obviously room for improvement. And we're going to keep working at it. But I think we're, we're, we're feeling we're in a better place.

Speaker Change: I'll go on the jumping break.

Speaker Change: on the growth front.

Speaker Change: Well, first of all, I beg her a really proud part of us with me, and I think we're really fully stable at the current business. You can see that.

Dean Arroyce: Dean Arroyce, both looking backwards and looking ahead, we've gotten to a better place. I think a lot of the operating metrics that we shared on the call are trending in the right direction as well. So I think on the core, he signed business.

Brent Thill: Everyone kind of loved to hear what you're, your ceiling is over the next year to two in terms of where, where you think you can go versus continuing the vast and can you drive continue higher margins while while driving that revenue growth. Thanks.

Speaker Change: We're still in our office to run from Permanent, we're going to keep working at it, but I think we're we're still in a better place. It shows a very subtle ring growth, an international, and see a limb will provide some of that in a very short term, and one term, the main growth, we were floods as I am.

Allan Thygesen: In terms of accelerating growth of international and and see a limb will provide some of that in the very short term. In long term, the main growth we were for us as I am. It's super early. We just, we just launched to the commercial segment in North America and Australia, obviously a subset of our business. But the only case is quite encouraging. If you want to kill sizes, after faster closes, higher win rates, you know, accelerating booking momentum, obviously, it's more than double sizes of June, July. And it's just a really very, very positive. With that said, it's still super early.

Alan Thygesen: Yeah, I'll go in the jumping break on the growth front. Well, first of all, I think we're really proud of the progress we've made. I think we've really fully stabilized current business. You can see the, you know, all right, both looking backwards and looking ahead. We've gotten to a better place. I think a lot of the operating metrics that we shared on the call are trending in the right direction as well.

Speaker Change: It's super early. We just launched to the commercial segment in North American Australia.

Speaker Change: Office for Substance Center of Art Business. But the only case I'm quite encouraging, if you're going to be able to articulate sizes, after faster closes, higher wind rates.

Alan Thygesen: So I think on the core, we still have obviously room for improvement, and we're going to keep working at it, but I think we're, we're feeling we're in about a place. In terms of accelerating growth of international and and sea level provide some of that in the very short term, in long term, the main growth we were for us as I am. It's super early. We just, we just launched to the commercial segment in North American Australia, obviously subset of our business.

Speaker Change: The Excellerating Bokingsmanum, Iris' tweet.

Speaker Change: More than...

Speaker Change: and Double-Sizes of June July, and it's just a really merry-very-poster.

Allan Thygesen: We've got more customer segments and regions to roll out to. But we're certainly hopeful that that will show up in a more meaningful way that we can discuss with you, you know, next year and beyond.

Speaker Change: With that said, it's so super early. We've got more customer segments and regions to roll out too. But we're certainly hopeful that that will show up in a more meaningful way that we can discuss with you. You know, next year on Beyond.

Blake Grayson: And then I'll just hop in on the operating market and question. So super proud of the team, you know, for this quarter. Once you know, normalize a bit and I'd reference this in the prepared remarks about 150 basis points. For one-time items still producing over 30% operating margins. It's something where, you know, as a team, we've made a ton of improvement over the last two years, you know, as a company here. And you know, you look at things like sales and marketing expenses, a percentage of revenue for us. Was 41%. I think two years ago is 30%, you know, for this quarter.

Speaker Change: and then I'll just hop in on the operating-marking question so super proud of the team, you know, for this quarter. Once you have, you know, normalized a bit in Niagara FM system that prepared remarks about 150 basis points.

Alan Thygesen: But the only case are quite encouraging. If you want to kill sizes after faster closes, higher win rates, you know, accelerating booking momentum, obviously, it's more than double sizes of June, July, and it's just a really very, very positive with that said, it's still super early. We've got more customer segments and regions to roll out to.

Speaker Change: For one time I didn't still produce an over 30% operating margins, it's something where, you know, as a team, we've made a ton of improvement over the last two years, you know, at the company here and, you know, you look at things like.

Speaker Change: Fields and Martin's fans as a percentage of revenue for us was 31%.

Blake Grayson: But we're certainly hopeful that that that will show up in a more meaningful way that we can discuss with you, you know, next year and beyond.

Blake Grayson: So just a lot of improvement, a lot of focus on productivity and efficiency.

Speaker Change: I think two years ago is 30% you know for this quarter. So just a lot of improvement, a lot of focus on productivity and efficiency. But to your question about how much more opportunity is there for us?

Blake Grayson: But to your question about, you know, how much more opportunity is there out there for us, the thing that's most on my mind, and I think I can speak for the leadership team as well, is that balancing this idea between productivity and growth. And we want to make sure that what we can do is feed this growth engine that we are so excited about, and I am, and make sure that we get, you know, it launched obviously in all these different new regions that are coming out and new customer segments. And so, while I do think there's opportunity for us into the future for continued efficiency and productivity improvements, I think the bigger focus for us right now is focusing on the growth lever.

Blake Grayson: And then I'll just hop in on the operating market question. So super proud of the team, you know, for this quarter. Once you know, normalize a bit and I'd reference this in the prepared remarks about 150 basis points for one time items still producing over 30% operating margins. It's something where, you know, as a team, we've made a ton of improvement over the last two years, you know, as a company here.

Blake Grayson: And you know, you look at things like sales and marketing expenses, a percentage of revenue for us was 41%. And I think two years ago is 30%, you know, for this quarter. So just a lot of improvement, a lot of focus on productivity and efficiency. But to your question about, you know, how much more opportunity is there out there for us?

Speaker Change: The thing that's most on my mind, and I think I can speak for the leadership team as well as that.

Speaker Change: Balance in this idea of between productivity and growth.

Speaker Change: and we want to make sure that what we can do is.

Speaker Change: Speed this growth engine that we are so excited about in I.M.

Speaker Change: and makes sure that we get, you know, it launched obviously in all these different regions that are coming out in new customer segments. And so while I do think there's opportunity for us into the future for continued efficiency and productivity improvements, I think the bigger focus for us right now is focusing on this growth level. How we make sure we keep a mindset of productivity, but also don't lose sight of that growth engine, because that's obviously so excited about it. We made a lot of progress on efficiency and productivity, so I'm really confident in the team and our abilities there, but it's also that balance perspective that we're really focused on.

Blake Grayson: How do we make sure we keep a mindset of productivity, but also don't lose sight of that growth engine because that's what we're obviously so excited about, and we've made a lot of progress on efficiency and productivity. So I'm really confident in the team and our abilities there, but it's also that balanced perspective that we're really focused on.

Blake Grayson: The thing that's most on my mind, and I think I can speak for the leadership team as well, is that balancing this idea between productivity and growth. And we want to make sure that what we can do is feed this growth engine that we are so excited about and I am. And make sure that we get, you know, it launched obviously in all these different new regions that are coming out in new customer segments.

Unknown Executive: Thank you.

Jacob Roberge: Our next question comes from the line of Jake Roberge with William Blair. Please proceed with your question. Hi, thanks for taking the questions. And great to hear that win rates are improving; the customer bookings are increasing month over month for four I am.

Speaker Change: i

Blake Grayson: And so while I do think there's opportunity for us into the future for continued efficiency and productivity improvements. I think the bigger focus for us right now is focusing on the growth lever. How do we make sure we keep a mindset of productivity but also don't lose sight of that growth engine? Because that's what we're obviously so excited about and we've made a lot of progress on efficiency and productivity. So I'm really confident in the team and our abilities there, but it's also that balanced perspective that we're really focused on.

Speaker Change: Thank you. Our next question comes from the line of Jake Roberts with William Blair. Please proceed with your questions.

Unknown Executive: Thank you.

Jake Roberts: Hi, thanks for taking the questions and great to hear that when Ray Thurham proved in the customer bookings or increasing month over month for IAM. I'm curious what the, you could just expand on the early feedback that you've been getting from customers for that solution. And then why do you think IAM has been able to sell so much quicker in its early stages than what CLM previously did?

Jacob Roberge: I'm curious what the you could just expand on the early feedback that you've been getting from customers for that solution.

Jacob Roberge: And then why do you think I am has been able to sell so much quicker in its early stages than what CLM previously did?

Allan Thygesen: Yeah, I'll take that one. So, in terms of early customer feedback, I think the most important theme is that people are just really thrilled with the ability to collect all of your agreements and get insights from them near instantly. So both the ease of deployment, ease of use, and the time to value is really strong. And that resonates with customers really across industries and across functions. So there's a couple of quotes in the air release around that.

Jake Roberts: Yeah

Speaker Change: and I'll take that one.

Speaker Change: Sob.

Jacob Roberge: Our next question comes from the line of Jake Roberge with William Blair. Please proceed with your question. Hi, thanks for taking the questions and great to hear that win rates are improving the customer bookings are increasing month over month for four I am. I'm curious what the you could just expand on the early feedback that you've been getting from customers for that solution. And then why do you think I am has been able to sell so much quicker in its early stages than what CLM previously did?

Speaker Change: In terms of early customer feedback, I think that the most important theme is that

Speaker Change: Keep on just really thrilled with...

Speaker Change: The...

Speaker Change: Ability to collect all of your agreements and get insights from the near-insteadly.

Jacob Roberge: Yeah, I'll take that one. So in terms of early customer feedback, I think that the most important theme is that people just really thrilled with the ability to collect all of your agreements and get insights from them near instantly. So both the ease of deployment, ease of use and the time to value is really strong. And that resonates with with customers really across industries and across functions. So there's a couple quotes in the air release around that.

Speaker Change: So, both the ease of deployment, ease of use and the time of value.

Speaker Change: is really strong and that resonates with customers really across industries and across functions.

Allan Thygesen: You know, a couple of surprising things make it by a little bit more color. Even though we launched into the commercial segment, Richard tends to be smaller, not the smallest but smaller customers. The average customer has thousands of agreements in their boss story. And so that gives you a sense of that there's pain and complex. So the around the green management, even in mid size and smaller companies, it gives us a lot of confidence. We're seeing pretty rapid adoption as people have signed. They don't need a lot of handholding. And as you know, we have a very ubiquitous product with these signed 1.6 million customers.

Speaker Change: So it was a couple of quotes in the urge release around that. You're a couple of surprising things, make it feel a little bit more colour, even though we launched into the commercial segment, we should tend to be smaller, not the smallest, but smaller customers. The average customer has thousands of agreements.

Speaker Change: in their repository, and so that gives you a sense of that there's pain and complexity around a period of management, even in mid-sized and smaller companies. It gives us a lot of confidence. We're seeing a pretty rapid adoption when people have signed. They don't need a lot of handholding.

Speaker Change: And as you know, we have a very ubiquitous product with these sign, 1.6 million customers. You know, I'll go with IAM, we'll provide something that provides value for all of them. And really, it's a lot of differentiated by the competition going forward. And you know, there really are signs of really encouraging on that fund.

Allan Thygesen: And our goal with IAM was to buy something that could provide value for all of them and really a lot of differentiated value proposition going forward. And you know, the early signs are really encouraging on that.

Jacob Roberge: You know, couple of surprising things make it by a little bit more color, even though we launched into the commercial segment, which tends to be smaller, not the smallest, but smaller customers, the average customer has thousands of agreements in their boss story. And so that gives you a sense of that there's pain and complex. So the around agreement management, even in mid size and smaller companies, it gives us a lot of confidence.

Allan Thygesen: And we're still looking ahead to launching self serve to get the long tail and then going into the enterprise initial with the departmental adoption and of course in geography outside the three launch markets. And so a lot of a lot of headroom and scaling the reach of the product as well. But I think they say the mood inside the company is one of optimism and energy, and hey, this is really working. So it's fun. Okay, very helpful.

Speaker Change: and we're still looking ahead to launching self-serve to get the long tail and then going into the enterprise initial with the part-metal adoption and of course in geography outside the three launch markets and so.

Jacob Roberge: We're seeing a pretty rapid adoption was people have signed. They don't need a lot of hand holding. And as you know, we have a very ubiquitous product with with these signed 1.6 million customers. And our goal with I am was to buy something that could provide value for all of them. And really a lot of differentiated value proposition going forward. And you know, the early signs are really encouraging on that. And we're still looking ahead to launching self serve to get the long tail and then going into the enterprise, initial with the departmental adoption and of course, in geographies outside the three launch markets.

Speaker Change: Lotta, Lotta Headroom, and Scaling.

Speaker Change: the Reach of the Product as well. Very, but I think the mood inside the company is one of optimism and energy and hey, this is really working so it's fun.

Jacob Roberge: And then could you just talk about what led to the sales transition during the quarter and if Paula has identified any kind of changes that she wants to make since joining or if it will be more of a continuation of the changes that you've been making over the last year or two. But thanks. Yeah, yeah, let me quickly address that.

Paul: Okay, very helpful. And then could you just talk about what led to the sales transition during the quarter and if Paul has identified any kind of changes that she wants to make since joining or if it will be more of a continuation of the changes that you've been making over the last year too. But thanks.

Allan Thygesen: So look, I think we're in a transformation moment. I'm not the standing that I think we've built a great product, and the indication really indication of real positive. It's still a transformation; we're moving from selling a singular product that's more horizontal but has a very repeatable motion to something that's richer. It's more solution oriented is more platform aspect. And I just thought that finding a leader that I thought could really leave that transformation would be great. Our strategy has not changed over. I just want to emphasize we're continuing to focus on our three routes to market: direct channel to remain the biggest and most important.

Jacob Roberge: And so a lot of a lot of headroom and scaling the reach of the product as well. Very, but I think they say the mood inside the company is one of optimism and energy and and hey, this is really working.

Alan Thygesen: So it's fun. Okay, very helpful.

Speaker Change: Not the standing that I think we've built a great product and the indication that really indication is a really positive. It's still a transformation, removing from selling a singular product that's...

Alan Thygesen: And then could you just talk about what led to the sales transition during the quarter and Paul identified any kind of changes that she wants to make since joining. Or if it will be more of a continuation of the changes that you've been making over the last year or two, but thanks. Yeah.

Speaker Change: is a very repeatable motion to something that's written as more solutionary into this more platform aspect.

Paul: and I just thought that finding a leader that I thought could really meet that transformation would be great. I was glad you had not changed to a word, but I just want to emphasize we're continuing to focus on our three routes to market, our direct channel, we've remained the biggest and most important.

Alan Thygesen: Yeah, let me quickly address that. So look, I think we're on a transformation moment. I'm not the standing that I think we've built a great product and the indication really indication of real positive. It's still a transformation. We're moving from selling a singular product that's very horizontal, but has a very repeatable motion to something that's richer. It's more solution oriented. There's more platform aspect. And I just thought that finding a leader that that I thought could really leave that transformation would be great.

Allan Thygesen: Partners, which we talked a little bit more about in the last release, we can chat more about. And of course the self-serve motion. And I think Paula will be a tremendous follower and an execution leader for that strategy. And she's really hit the ground running, and she's a month in, and you would not know it.

Paul: Partners, which we talked a little bit more about in the experience release, we can chat more about and of course with self-serve motion.

Paul: and I think Paul will be a tremendous follow-up and execution leader for that strategy. As she's really hit the ground running, she's a month in and you would not know it.

Allan Thygesen: So thrilled to have her.

Allan Thygesen: Let me also just quickly, I don't think I answered the second part of your question about the difference with CLM. I think CLM has historically been extremely focused on the top of the house, very large enterprise clients because they were the only ones who can handle the complexity and the custom development and the custom integration that need to happen. You know, I think we have more customers than other vendors, but even there it's just a orders mag to smaller than in customer count than signature. And I think it's reflective of that that's up front at a cost and tax.

Speaker Change: So, I'm thrilled to have her. Let me also just quickly, I don't think I answered the second part of your question about the difference with sealant.

Alan Thygesen: Our strategy has not changed so far. I just want to emphasize, we're continuing to focus on our three routes to market, our direct channel will remain the biggest and most important. Partners, which we talked a little bit more about in the years, at least we can chat more about. And of course, the self-serve motion. And I think Paula will be a tremendous follower and an execution leader for that strategy. And she's really hit the ground running and she's a month in and you would not know it.

Colm: I think C-O-L-M.

Speaker Change: Head to Storock have been extremely focused at the top of the house, you know, very large enterprise clients because there were the only ones who could handle the complexity and the custom development and the custom integration that need to happen.

Speaker Change: You know, I think we have more customers than other vendors, but even there it's just an orders magnitude smaller than an in-test for a count than signature. And I think it's reflecting of that out-trumped, that a cost and tax.

Allan Thygesen: There's also flexibility issues in terms of how easy it is to configure. And then in terms of reach tends to be a relatively limit number of how we specialize users. Obviously, your legal team and maybe sales ops and purchasing ops. I am; we could deploy seats to every seller, every buyer, every HR person, every recruiter. They can see the agreements that are related to them. So choice of the breath is just a totally different thing. Now, with all that said, our CLM product remains our choice for enterprises that are ready for it. It has a lot of power and flexibility.

Alan Thygesen: So thrilled to have her.

Alan Thygesen: Let me also just quickly, I don't think I answered the second part of your question about the difference with CLM. I think CLM has historically been extremely focused on the top of the house. You know, very large enterprise clients because they were the only ones who could handle the complexity and the custom development and the custom integration that need to happen. You know, I think we have more customers than than other vendors, but even there, it's just orders mag to smaller than in customer count than signature.

Speaker Change: There's also flexibility issues in terms of how easy it is to configure, and then in terms of reach, it tends to be a relative to the limit number of highly specialized users, obviously your legal team and maybe sales ops and purchasing ops.

Speaker Change: Hi, I am. We can deploy these to every seller, every buyer, every HR person, every recruiter. They can see their agreements that are related to them, so the charge of the breath.

Speaker Change: It's just a totally different thing.

Speaker Change: Now, with all that said, our CLM product remains our, you know, choice for enterprises that are ready for it, it has a lot of power and flexibility. It definitely has more features than I am. And, you know, we will continue to support that for the foreseeable future.

Allan Thygesen: It's definitely has more features than I am. And yeah, we will continue to sell and support that for the foreseeable future. At some point in the very long run, will as we replace more more the pieces of I am with CLM with the I am underpinnings, it things will evolve. And that's the nature of things in enterprise offer. But we have a market leading product and CLM, and customers will get a lot of value from it, and we intend to continue to exploit that.

Alan Thygesen: And I think just reflecting of that, that's up front at a cost and tax. There's also flexibility issues in terms of how easy it is to configure. And then in terms of reach, it tends to be a relatively limited number of highly specialized users. Obviously your legal team and maybe sales ops and purchasing ops. I am, we could deploy seats to every seller, every buyer, every HR person, every recruiter. They can see the agreements that are related to them.

Speaker Change: At some point in the very long one, we'll...

Speaker Change: as we replace more and more of the pieces of IAM with CLM with the IAM underpinnings.

Speaker Change: Get things will evolve, and that's the nature of things in enterprise software, but we have a market leading product in CLM and customers will get a lot of value from it and we intend to continue to exploit that.

Alan Thygesen: So just the breath is just a totally different thing. Now, with all that said, our CLM product remains our choice for enterprises that are ready for it. It has a lot of power and flexibility. It definitely has more features than I am. And, you know, we will continue to sell and support that for the foreseeable future. At some point in the very long run, we'll, as we replace more and more the pieces of I am with CLM with the I am underpinnings, it things will evolve. And that's the nature of things in enterprise offer. But we have a market leading product in CLM and customers will get a lot of value from it and we intend to continue to exploit that.

Unknown Executive: Thank you.

Tyler Radke: Thank you. Our next question comes from the line of Tyler Radke with City. Please proceed with your questions.

Speaker Change: i

Speaker Change: Thank you. Our next question comes from the line of Tyler Radke with City. Please proceed with your questions.

Tyler Radke: Hi, this is Kylie on for Tyler. My main question is around dillings. The revenue guide for the full year was raised, while the billings beat and raised was a bit smaller.

Speaker Change: Hi, this is Kylie on for Tyler.

Kylie: My name question is around buildings. The revenue guide for the full year was raised.

Blake Grayson: Just curious if there were any term changes that caused the revenue to be raised more, and also curious if there are any seasonal changes to guidance relative to what you were messaging last quarter. Thanks.

Kylie: While the Billings beat and raised was a bit smaller, just curious if there were any term changes that caused the revenue to be raised more, and also curious if there are any seasonal changes to guidance relative to what you are messaging last quarter. Thanks.

Blake Grayson: Like, why don't you ask that one? Sure. So yes, that's correct.

Blake Grayson: So we flowed through the full beat in buildings to our full year guide. We flowed through the full beat in revenue and then raised for the full year as well. And so the driver of the Q2 revenue beat was really just based on timing of bookings. So bookings essentially came in earlier during the quarter than we expected on average, particularly with some larger deals and some anecdotes. And you've heard me talk about higher usage and consumption. We had a few deals amongst many others that reviewed essentially earlier than we had anticipated in our model. The flow through or the raise into the back half of the year is really a reflection of us scrubbing that kind of dynamic, looking at and saying, oh, there's, we have some tail in there as well relative to our forecast.

Speaker Change: Like what I'm going to check it on. Sure, so yeah, that's correct. So we flow through the full beat in billing store, full-year guide. We flow through the full beat in revenue and then raised.

Tyler Radke: Our next question comes from the line of Tyler Radke with city. Please proceed with your questions. Hi, this is Kylie on for Tyler.

Speaker Change: for the four year as well. And so, the driver of the Q2 revenue bee was really just based on timing of booking.

Blake Grayson: My main question is around buildings. The revenue guide for the full year was raised while the buildings be and raised was a bit smaller. Just curious if there were any term changes that caused the revenue to be raised more. And also curious if there are any seasonal changes to guidance relative to what you were messaging last quarter. Thanks. I want to take that one. Sure. So, yes, that's correct. So, we flowed through the full bee in buildings to our full year guide.

Speaker Change: So, looking essentially came in early during the quarter-knowing expected on average, particularly with some larger deals.

Speaker Change: and you know some anecdotes, you know and you've heard me talk about hired usage and consumption. We had a few deals, you know, amongst many others that renewed essentially earlier than we had anticipated in our model. The flow through or the rays into the back half of the year is really our reflection of us.

Blake Grayson: We flowed through the full bee in revenue and then raised for the full year as well. And so the driver of the Q2 revenue bee was really just based on timing of bookings. So, bookings essentially came in earlier in the quarter than we expected on average, particularly with some larger deals and some anecdotes. And you've heard me talk about higher usage and consumption. We had a few deals amongst many others that reviewed essentially earlier than we had anticipated in our model.

Speaker Change: Scrubbing that kind of dynamic looking at and saying, oh, there's we have some tail in there as well relative to our forecast and so that's the reflection of the race. It's not really a seasonal or a change in business or things like that because as you all know, buildings can be a day on, I can be pretty.

Blake Grayson: And so that's the reflection of the raise. It's not really seasonal or a change in business or things like that because, as you all know, buildings can be, you know, can be pretty sensitive right to timing. And so those are really the biggest components, but the revenue raised is really reflective of the beat in Q2, which is based on the timing of bookings.

Blake Grayson: The flow through or the raise into the back half of the year is really a reflection of us scrubbing that kind of dynamic looking at and saying, oh, there's, we have some tailwind there as well relative to our forecast. And so that's the reflection of the raise. It's not really seasonal or a change in business or things like that because as you all know, buildings can be, you know, can be pretty sensitive right to timing. And so those are really the biggest components, but the revenue raise is really reflective of the bee in Q2, which is based on timing of bookings. Thank you.

Speaker Change: Sense of Bright to Timing, and so those are really the biggest components, but the revenue raise is really reflective of the BMQ2 which is based on timings of the things.

Unknown Executive: Thank you.

Christopher Fountain: Our next question comes from the line of receipts with RBC Capital Markets.

Speaker Change: i

Raimo Lenschow: Thank you. Our next question comes from the line of routine to establish with RBC capital markets. Please proceed with your question.

Christopher Fountain: Please proceed with your question. Hi, this is Chris Fountain on Rishi Jaluria. Thanks for taking my question. I wanted to follow up on a point and to prepare the remarks you made about margins coming down in the second half just for some more IAM investments. I guess I'm just curious. I'm going to see what's really missing at this point.

Raimo Lenschow: Hi, this is Chris Fowman on Perichigilaria. Thanks for taking my question.

Chris Fowman: I wanted to follow up on a point in the prepared remarks you made about margins coming down in the second half just for some more I am investments I guess I'm just curious I guess what's really missing at this point is it's just more enterprise functionality or could you just provide some more detail on I guess where those dollars are going

Blake Grayson: Is it just more enterprise functionality, or could you just provide some more detail on, I guess, where those dollars are going? Yeah, sure. So I think if you normalize the Q2 number, after those one-time items, we do have a slight decline of about 150 basis points or so from Q2 into Q3. The IAM investment component, obviously, we're supporting this. Today, primarily in North America, CBU business, and we'll be supporting a lot more than that by the end of this fiscal year. So it's really just for a collection part of its timing, but it's really just for a collection of making sure that we're supporting all these other international geographies that have yet to launch, as well as many other customer segments within North America as well.

Speaker Change: Yeah, sure, so I think if you...

Speaker Change: Normalized the Q2 number, you know, after those one-time items, we do have a slight declining, about 150 basis points or so, from Q2 into Q3, the IM investment component obviously.

Blake Grayson: Our next question comes from the line of receipts with RBC Capital Markets. Please proceed with your question. Hi, this is Chris Fountain on Rishi Jaluria. Thanks for taking my question. I wanted to follow up on a point and to prepare the remarks you made about margins coming down in the second half just for some more IAM investments. I guess I'm just curious. I guess what's really missing at this point is it's just more enterprise functionality or could you just provide some more detail on I guess where those dollars are going?

Speaker Change: We're supporting today primarily in North America CPU business.

Speaker Change: and we'll be supporting a lot more than that by the end of the fiscal year. So it's really just for a reflection, part of it's timing, but it's really just for a reflection, making sure that we're supporting all these other international geographies that have yet to launch as well as many of the customer segments.

Blake Grayson: But even with that, our Q3 guide on operating Martin is still firedably above year on year. And so, you know, proud of the team and the efficiency on that. Got it.

Blake Grayson: Yeah, sure. So I think if you normalize the Q2 number after those one time items, we do have a slight declining about 150 basis points or so from Q2 into Q3. The IAM investment component obviously we're supporting today primarily in North America CPU business and we'll be supporting a lot more than that by the end of this fiscal year. So it's really just for a collection part of its timing, but it's really just for a collection of making sure that we're supporting all these other international geographies that have yet to launch as well as many other customer segments within North America as well.

Speaker Change: with in North America as well, but even with that, you know, our Q3 guide on operating Martin's still sizable above year on year, and so, you know, proud of the team and the efficiency on that.

Blake Grayson: Thank you, Blake.

Blake Grayson: And one quick follow-up just on the pricing model. How should we think about that for IAM and how it's evolved beyond the kind of historical pricing model? I think in the past you talked about moving more towards like a seat-based traditional subscription model.

Speaker Change: i

Speaker Change: Got it. Thank you Blake. One quick follow up just on the pricing model. How should we think about that for I am and how it's evolved beyond the kind of historical pricing model. I think in the past you talked about moving more towards like a seat-based traditional subscription model. Just any update there would be great.

Blake Grayson: Just any update there would be great. Yes, there's a lot of levers there. So have a first just to frame it, you know, historically our signed business has primarily had an envelope based on the model basically number of documents sent and you pre block capacity. You know, that obviously doesn't make sense for IAM broadly. And so we're anchoring it around seat based pricing for different user types plus adders for, should we say, capacity related to, for example, the number of documents stored in the repository as well as a variety of add-on services, advanced AI features, third party identification.

Speaker Change: Yes, there's a...

Speaker Change: and a lot of levers there. So...

Blake Grayson: But even with that, you know, our Q3 guide on operating Martin is still firedably above year on year. And so, you know, proud of the team and the efficiency on that. Got it. Thank you Blake. And one quick follow up just on the pricing model. How should we think about that for IAM and how it's evolved beyond the kind of historical pricing model? I think in the past you talked about moving more towards like a seat based traditional subscription model.

Speaker Change: I'm at first just to frame it, you know, historically our signed business has primarily had an envelope based on envelope basically number of documents sent.

Speaker Change: and you pre-bought acidity. You know, that obviously doesn't make sense for, for I am broadly. And so we're anchoring it around steep-based pricing for different user types.

Speaker Change: One, two, one.

Speaker Change: Adderers for, shall we say, capacity, later two, for example, that over a document stored in the repository.

Blake Grayson: Just any update there would be great. Yes, there's a lot of levers there. So have a first just to frame it, you know, historically, our signed business has primarily had an envelope based on a lot of basically number of documents sent and you pre block capacity. You know, that obviously doesn't make sense for for IAM broadly. And so we're anchoring it around seat based pricing for different user types plus adders for, should we say, capacity related to, for example, the number of documents stored in the repository as well as a variety of add on services, advanced AI features, third party identification.

Speaker Change: as well as the variety of add-on services.

Blake Grayson: And other value-added features. And you know, I think we're still exploring other ways in which we can best match our pricing to the value delivered. That's what you want in the pricing model. I think we're done pretty good job out of the gate.

Speaker Change: Advanced AI features, third party identification and verification and other value-out-of-features. And I think we're still exploring other ways in which we can best match our pricing to the value-deliver. That's what you want in the pricing model, I think we're...

Blake Grayson: But I'm sure we'll be learning more here over the next six to twelve months as we explore different customer segments and geographies. But that's the high level of how it's working today.

Speaker Change: That pretty good job out of the gate, but I'm sure we'll be learning more and here over the next 6-12 months as we explore different customer segments and geographies, but that's the high level of how it's working today.

Mark Murphy: Thank you. Our next question comes from the line of Mark Murphy with JP Morgan.

Speaker Change: i

Speaker Change: Thank you. Our next question, Tom Shumaline, of Mark Murphy, with JP Morgan. Please proceed with your question.

Mark Murphy: Please proceed with your question. Hey, this is already the one from Mark Murphy. You can grab some of the quarter in the mouth.

Blake Grayson: Verification and other value added features. And you know, I think we're still exploring other ways in which we can best match our pricing to the value delivered. That's what you want in the pricing model. I think we're done pretty good job out of the gate. But I'm sure we'll be learning more here over the next six to 12 months as we explore different customer segments and geographies. But that's the high level of how it's working today. Thank you.

Allan Thygesen: Thanks for taking the question. First, there's also a role in the IAM platform to more customer segments and international regions to the remainder of the year. Could you double-click there and just maybe provide a little bit of insight into which types of customers or regions are prioritizing in the near term. Thanks. Yeah.

Mark Murphy: Okay, this is already going on from Mark Murphy. We can go out from the quarter and the milestones. Thanks for taking the question. First, here's Dr. Scott Rowland, the IM platform to more customer segments and international regions to the remainder of the year. Could you double click there and just maybe provide a little bit of insight as to which steps to customers or regions you're prioritizing in the near term? Thanks.

Allan Thygesen: So from a customer's segment perspective, you're going to oversimplify, you know, we have a, we've sort of customers of all sizes right from two personal firms to 100,000 employee corporations. We launched to the commercial segment, so the mid market segment stretching down to the upper end of SME, and then here before the end of the year we will launch a pure self service version of that ability to buy, I am purely self-service, so that will allow us to reach all the way down as well, of course, remove friction for customer and any segment, and then we will begin selling to the enterprise segments. I think initially it will support mostly department level rollout, so it's rollout for a sales division or for an HR team or whatever, but we think we can go with something pretty robust and we've had a lot of inbound interest.

Mark Murphy: Yep.

Speaker Change: So, from a customer's segment perspective, if you're going to oversimplify, you know, we have a, what we serve customers of all sizes right from two person law firms to 100,000 employees or patients.

Mark Murphy: Our next question comes from a line of Mark Murphy with JP Morgan. Please proceed with your question. Hey, this is already going on for Mark Murphy. You can grab some of the quarter and the milestones and thanks for taking the question. First, you're talking about rolling the IAM platform to more customer segments and international regions to the remainder of the year. Could you double click there and just maybe provide a little bit of insight into which types of customers. Four regions are prioritizing in the near term. Thanks. Yeah.

Speaker Change: We launched to the commercial segment, so the mid-market segment stretching down to the upper end of SMB.

Speaker Change: and then here, before the end of the year, we will launch a pure self-service version of that or ability to buy at I am purely self-service, so that will allow us to reach all the way down as well as the course you're move friction.

Speaker Change: for anti-customer and any segment. And then we'll begin selling to the enterprise segments. I think initially it'll support mostly department level a lot, so it's a whole lot for a sales division or for any chart team or whatever.

Alan Thygesen: So, from a customer's segment perspective, you're going to oversimplify, you know, we have a, we serve customers of all sizes, right, from two personal firms to a hundred thousand employee corporations. We launch to the commercial segment, mid-market segment stretching down to the upper end of SME, and then here, before the end of the year, we will launch a pure self-service version of that, and I'll be able to buy, I am, purely self-service, so that'll allow us to reach all the way down, as well as, of course, remove friction for any customer in any segment, and then we will begin selling to the enterprise segments.

Speaker Change: But we think we can go over something pretty robust and we've had a lot of...

Allan Thygesen: From a geography perspective, we launched; our primary focus was in the US. We also launched our version in Canada and Australia. Later this fall, the product will become available, including all the localized AI for this Australian Canada. You'll also have the UK and then from Germany and France, and then the product more broadly without the full contract AI will be available worldwide. So by the end of the year, you know, any DocuSign customer will be able to buy a version of I.M. maybe just to double click a little on the AI point, so I mentioned how bringing intelligence to the agreement that you have is a key value prop for I.M.

Speaker Change: Inbound interest.

Speaker Change: From a geography perspective, we launched our primary focus was in the U.S., we also launched a version in Canada and Australia.

Speaker Change: Later this fall, the product will become available, including all the localized AI, for industrial and canna, you'll also have the UK and then for Germany and France.

Speaker Change: and then the product more broadly without the full contract AI will be available worldwide.

Alan Thygesen: I think initially it will support mostly departmental level rollout, so it's rollout for sales division, or for an HR team or whatever, but we think we can go over to something pretty robust, and we've had a lot of inbound interest. From a geography perspective, we launched our primary focus was in the U.S., we also launched a version in Canada and Australia. Later this fall, the product will become available, including all the localized AI, for this Australian Canada, you'll also have the UK, and then from Germany and France, and then the product more broadly, without the full contract AI, will be available worldwide.

Speaker Change: So, by the end of the year, any doctor's sign customer will be able to buy a version of I.M.

Speaker Change: Maybe just to double click a little on the AI point.

Speaker Change: So I mentioned how bringing intelligence to the agreement that you have is a key value profile for I.M. That rests on using AI to extract the central terms out of documents.

Allan Thygesen: that rests on using AI to extract the essential terms out of documents, and which then means you have to train models for not just for specific specific languages, but for specific legal systems. So UK is, yes, it's English, but it's a different English and a different legal standard than the US, and so you need to train those models for each of those markets. We're making very good progress on that, and I ran it off the markets that we're serving right off the bat, and we will add several more language and market combinations in early next year.

Speaker Change: And we then mean you have to train models for not just for specific, specific languages, but the specific legal systems.

Speaker Change: So, you pay is yes, it's English, but it's a different English and a different legal standard than the US.

Alan Thygesen: By the end of the year, any Dr. Sun customer will be able to buy a version of IAM, maybe just to double-click a little on the AI point. I mentioned how bringing intelligence to the agreement that you have is a key value prop for IAM, and that rests on using AI to extract the essential terms out of documents, and which then means you have to train models for not just for specific specific languages, but for specific legal systems.

Speaker Change: and so you need to train those models for each of those markets. We're making very good progress on that. And I ran a lot of the markets that we're serving right off the bat and we will add several more language and market combination in early.

Alan Thygesen: So the UK is, yes, it's English, but it's a different English and a different legal standard than the U.S. And so you need to train those models for each of those markets. We're making very good progress on that, and I ran it off the markets that we're serving right off the bat, and we will add several more language and market combinations in early next year. So, but that will be an ongoing and ongoing project, but important to fully deliver the value in all of our biggest markets. Very helpful, and great insight on the regionalization for the AI.

Allan Thygesen: So, but that will be an ongoing and ongoing project, but important to fully deliver the value in all of our biggest markets.

Speaker Change: Next year, but that will be an ongoing project, quite important to fully deliver the value in all of our biggest markets.

Allan Thygesen: Very helpful and great insight on the regionalization for the AI.

Blake Grayson: Turning to your remarks about hiring behind strategic initiatives as well as what's on kind of contributing to the heck out growth, could you help us maybe size the contribution from what's on trying to kind of better understand what the I guess organic headcount growth looks like and maybe also where you're hiring that behind is that an R&D or so the marketing or where you kind of prioritize your dollars. Thanks.

Speaker Change: and a great insight on the visualization for the AI. Turning to your remarks about hiring behind strategic initiatives as well as what's on, kind of contributing to the headcount group.

Speaker Change: Could you help us maybe size the contribution from what's going to kind of better understand what the, I guess organic head count growth looks like and maybe also where you're hiring that behind that in R&D or sell the market in where we're kind of prioritizing your dollars. Thanks.

Blake Grayson: Yeah, sure, I'll take the step of that one, Alan. So like I was a pretty fair chunk of our quarter of a quarter headcount growth, I think we grew about 170. You know, it has like some of the fair chunk of that. But for the remainder, it is primarily focused in areas across the company that are supporting our growth initiatives. So, you can imagine places in R&D and PLG and in other areas of the company as well that support those functions that those initiatives are growing. And I would just say, you know, relative to the heck count, you know, as well as for us, we are continuing to hire.

Allan E-rays: Yeah, sure. I'll take the stab at that one, Allan. So, I say it was a pretty fair chunk of our quarter or a reporter at Camperon, I think we grew about.

Allan E-rays: 170, you know, has less than the fair chunk of that. But for the remainder, it is primarily focused in areas across the company that are supporting our growth initiative. So, you can imagine places in R&D and PLG and other, you know, areas of the company as well as support those functions, there's initiatives are growing. I would just say, you know, relative to the headcount, you know, as well as for us, we are continuing to hire. We are continuing to hire in all of our regions.

Blake Grayson: Turning to your remarks about hiring behind strategic initiatives, as well as Luxion, kind of contributing to the headcount growth. Could you help us maybe size the contribution from Luxion, trying to kind of better understand what the, I guess, organic headcount growth looks like, and maybe also where you're hiring that behind is that in R&D or sales and marketing, or where you kind of prioritize your dollars. Thanks. Yeah, sure. I'll take the step of that one, Alan.

Blake Grayson: We are continuing to hire in all of our regions. Now, that said, we're also being very mindful about that. We're being mindful of, you know, cost for location and global time zones and things like that of that nature. So, as we think about heck count growth, I would also encourage you to make sure you pay attention as well on top to op-ex growth because you'll see a little bit of a differentiation there. And again, I would just reinforce that we're very mindful of being productive and efficient as much as possible as we continue to support the growth opportunity that we see in IAM.

Allan E-rays: Now, that said we're also being very mindful about that. We're being mindful of, you know, cost for location and the little time zones and things like that of that nature. So as we think about Headcount Road, I would also encourage you to make sure you pay attention as well on top to Off-Extra.

Blake Grayson: So, Luxion was a pretty fair chunk of our quarter or quarter headcount growth. I think we grew about 170, you know, it has like some of the fair chunk of that. But for the remainder, it is primarily focused in areas across the company that are supporting our growth initiatives. So, you can imagine places in R&D and PLG, and other areas in the company as well that support those functions that those initiatives are growing.

Allan E-rays: because you'll see a little bit of a differentiation there. And again, I would just reinforce that we're very mindful of being productive and efficient as much as possible as we continue to support the growth opportunity that we've seen I am.

Unknown Executive: Thank you; I appreciate it.

Blake Grayson: And I would just say, you know, relative to headcount, you know, as well, for us, we are continuing to hire. We are continuing to hire in all of our regions. Now, that said, we're also being very mindful about that. We're being mindful of, you know, cost for location and global time zones and things like that of that nature. So, as we think about headcount growth, I would also encourage you to make sure you pay attention as well on top to OptX growth, because you'll see a little bit of a differentiation there. And, again, I would just reinforce that we're very mindful of being productive and efficient as much as possible as we continue to support the growth opportunity that we see in IAM. Thank you, I appreciate it.

Unknown Executive: Thank you.

Speaker Change: Great, thank you for your appreciate it.

Patrick Walravens: Our next question comes from a line of Patrick Walravens with Citizens JMP.

Speaker Change: Thank you. Our next question comes from the line of Patrick Wal-Ravens with Citizens JMP. Please proceed with your questions.

Patrick Walravens: Please proceed with your question. Oh, great. Thank you. Congratulations.

Unknown Executive: Hey, I want to ask you a big picture question. What's your perspective on sort of the attempts to regulate AI? And then, you know, particularly here in California, you have this Senate Bill that's sitting on Newsom's desk about safe and secure innovation for frontier artificial intelligence models. Does that impact you, and sort of bigger picture thoughts would be really helpful. Yeah, look, I, first of all, I'd say we believe that it's very early with AI, and it's far too early to regulate something that's not well defined, but I don't believe that any of the currently proposed regulation here or in the EU or elsewhere meaningfully affects our clients.

Patrick Wal-Ravens: Oh, great. Thank you. Congratulations. Hey, Allan, class, you have a big picture question.

Speaker Change: The Earth.

Patrick Wal-Ravens: What's your perspective on sort of the attempts to regulate AI and then, you know, particular here in California, you have this Senate bill that's sitting on do some desk about.

Speaker Change: Safe and secure innovation for frontier artificial intelligence models. Does that impact you and sort of bigger picture thoughts would be really helpful?

Patrick Walravens: Thank you. Our next question comes from the line of Patrick Walravens with Citizens JMP. Please proceed with your question. Oh, great. Thank you. Congratulations.

Speaker Change: Yeah.

Speaker Change: Look, first of all, I'd say...

Speaker Change: We believe that it's very early when they are and it's far too, regulates something that's not well defined but

Alan Thygesen: Hey, I want to ask you a big picture question. What's your perspective on sort of the attempts to regulate AI? And then, you know, particularly here in California, you have this senate bill that's sitting on Newson's desk about safe and secure innovation for frontier artificial intelligence models. Does that impact you? And sort of bigger picture thoughts would be really helpful. Yeah, look, I, first of all, I'd say we believe that it's very early with AI, and it's far too regulated something that's not well defined, but I don't believe that any of the currently proposed regulation here or in the EU or elsewhere, meaningfully affects our clients.

Speaker Change: I don't believe that any of the currently proposed regulations here, or in the EU, or elsewhere, mainly affects our plans. So that's the most important get that out of the way.

Allan Thygesen: So it's one of the most important to get that out of the way in terms of sort of my observations as a tech industry participant observer. I do think that there is understandable concern about the potential for AI to be misused in various ways. I do think that I personally believe the first focus should be on adapting existing regulations for AI. And so looking for whether it's discrimination provisions, accomplished provision, whatever it is, how can we interpret existing laws and clarify how those should apply in an AI context rather than then conceiving things completely to know.

Speaker Change #100: in terms of this sort of my observations as a taking the strip of this pen and observer.

Speaker Change #100: I do think that there is understandable concern about the potential for AI to be misused in various ways.

Speaker Change #100: I do think that I personally believe the first focus.

Speaker Change #100: should be on adapting existing regulations for AI and so looking for whether it's discrimination, provision, and competition, or whatever is, how can we interpret existing laws and clarify how those should apply in the NNAI context?

Alan Thygesen: So that's one of the most important to get that out of the way in terms of sort of my observations as a tech industry participant observer. I do think that there is understandable concern about the potential for AI to be misused in various ways. I do think that I personally believe the first focus should be on adapting existing regulations for AI. And so looking for whether it's discrimination provisions, accomplished provisions, whatever it is, how can we interpret existing laws and clarify how those should apply in an AI context rather than then conceiving things completely to know. But I'm not an expert on the was it and 47 bill and obviously we'll adhere to the laws where we operate. All right, thank you. Thank you.

Allan Thygesen: But I'm not an expert on the Was it and 47 bill, and obviously we'll adhere to the laws where we operate. Awesome. All right.

Speaker Change #101: rather than conceiving things completely to know of, but I'm not an expert on the 1047 Bill and obviously we'll hear too the laws and markets where we operate.

Unknown Executive: Thank you.

Speaker Change #101: Awesome, all right, thank you.

Arsenije Matovic: Our next question comes from line of Alex Zoukin with Wolf Research. Please proceed with your questions.

Speaker Change #101: Thank you. Our next question comes to a line of Alex Zoukins with Wolf Research. Please proceed with your questions.

Arsenije Matovic: Hi, this is Arsenie on for Alex Zoukin. Thanks for taking the question. On dollar net retention, that has a state table at 99% and it's expected to stay stable.

Alex Zoukins: Hi, this is our Sunday on Fralix, who can thank you for taking the question. On dollar net retention that has stayed stable at 99% and it's expected to stay stable, but why is that not expected to expand as it seems you should have a lot of pandemic renewal cohorts going into the second half of this year? And I guess to help investors gain visibility into expansion from long customers, what has the dollar retention been for customers outside of the pandemic renewal cohort? And I'm just a quick follow up thanks.

Arsenije Matovic: But why is that not expected to expand as the team you should have allowed pandemic renewal cohorts going into the second half of this year? And I guess to help investors gain visibility and expansion from long customers, what has the dollar retention been for customers outside of the pandemic renewal cohort?

Arsenije Matovic: And then just a quick follow-up.

Arsenije Matovic: Thanks. Yeah, sure.

Blake Grayson: I'll take a stab at that. So again, just to reiterate, dollar net retention flat in Q2 and 99%, and the indication and the prepared remarks that we expect that to stay consistent through the remainder of the year.

Speaker Change #103: Yeah, sure. I'll take a stab at that. So again, just to reiterate, dollar and ever-tension flat in Q2 and 99% in the indication in the prepared remarks that we expect that to stay consistent through the remainder of the year. With regards to the COVID common, I think.

Arsenije Matovic: Our next question comes from line of Alex Zoukin with Wolf Research. Please proceed with your questions. Hi, this is Arsenie on for Alex Zoukin. Thanks for taking the question. On dollar net retention, that has a state table at 99% and it's expected to stay stable.

Blake Grayson: With regard to the COVID comment, I think, I think it was on our Q3 fiscal 24 earnings call. I believe we shared the data point that by the end of fiscal 24, only about 10% of our book of business will be from contracts written. During what I call the calendar years 2020 and 2021, it's the proxy for the pandemic. And that would continue to decline in fiscal 25. We're on track for that. Like we're in the mid single digit share for Q2, and we expect to be at the very low single digit share in FY 25 the end.

Blake Grayson: But why is that not expected to expand as the team you should have allowed pandemic renewal cohorts going into the second half of this year? And I guess to help investors gain visibility and expansion from long customers, what has the dollar retention been for customers outside of the pandemic renewal cohort and then just a quick follow up. Thanks. Yeah, sure. I'll take a stab at that. So again, just to reiterate dollar net retention flat in Q2 and 99% and the indication on the prepared remarks that we expect that to stay consistent through the remainder of the year.

Speaker Change #104: God, so I think it was on our Q3 Cisco 24 earnings call, I believe we shared the data point that

Speaker Change #104: By the end of this we'll 24-only about 10% of our book of business will be from contracts written.

Speaker Change #105: During what I call the calendar year 2020 and 2021, it's the prophecy for the pandemic.

Speaker Change #105: and now we continue to decline in fiscal 25. We're on track for that, like we're in the mid-singled digit share for Q2 and we expect to be at the very low single digit share in FY25.

Blake Grayson: So from an impact to DNR perspective, we primarily already flesh through like that impact generally speaking. I think for us, the longer term opportunities for us to improve DNR rate going forward rest both with improving renewals in our core business, improving those retention rates. And we've shown improvements in that to date, but we have more room to go that we can improve on. But then also this opportunity longer term with I am and that provides us the ability for I think real opportunity for expansion with customers based primarily on the value that we provide to them.

Speaker Change #105: So, from an impact of the in our perspective, we primarily already flush through that impact generally speaking.

Blake Grayson: With regard to the COVID comment, I think, I think it was on our Q3 fiscal 24 earnings call. I believe we shared the data point that by the end of fiscal 24, we're only about 10% of our book of business will be from contracts written during what I call the calendar years 2020 and 2021. It's the proxy for the pandemic. And that would continue to decline in fiscal 25. We're on track for that.

Speaker Change #106: I think for us, the longer term opportunities for us to improve DNR-RAID going forward, rest both with improving renewals in our poor business and improving those retention rates. And we've shown improvements in that today, but we have more room to go that we can improve on. But then also this opportunity, longer term with IM, and that provides us the ability for, I think, real opportunity for expansion with customers.

Blake Grayson: And customers being willing to share in some of that value upside. And so those are the components that I think we're most excited about.

Blake Grayson: Like we're in the mid single digit share for Q2 and we expect to be at the very low single digit share in FY 25 the end. So from an impact of DNR perspective, we primarily already fleshed through like that impact generally speaking. I think for us, the longer term opportunities for us to improve DNR rate going forward, rest both with improving renewals in our core business, improving those retention rates. And we've shown improvements in that to date, but we have more room to go that we can improve on.

Speaker Change #106: Based primarily on the values that we provided them, and customers being willing to share in some of that value upside. And so those are the components that I think were...

Blake Grayson: But as far as like breaking down cohorts of DNR and such, like we're through the bulk of our COVID comps already. Thank you.

Speaker Change #107: Most excited about it as far as breaking down cohorts of the yarn side, like we're through the bulk of our COVID-con some already.

Blake Grayson: Got it. Thank you.

Blake Grayson: And then just to clear up and I guess confirm, last quarter's full-year subscription revenue guide included Lexian as the guidance today. Is that correct? That's correct.

Speaker Change #108: Got it. Thank you. And then just to clear up and I guess confirm last quarter's full year subscription revenue guide included Lexion as the guidance today. Is that correct?

Blake Grayson: It was included in our guide last quarter. Thank you.

Blake Grayson: But then also these opportunities longer term with IAM. And that provides us the ability for I think real opportunity for expansion with customers based primarily on the value that we provide to them and customers being willing to share in some of that value upside. And so those are the components that I think we're most excited about.

Speaker Change #109: That's correct, it was included in our guidelines for it. Thank you.

Joshua Baer: Our next question comes in line of Josh Baer with Morgan Family. Please proceed with your question. Great. Thanks for the question. You mentioned higher consumption and envelope volumes and utilization a couple times. I'm wondering if you're suggesting that you could start to see customers come back to you to expand contracts for more envelopes and related. Just wondering how much of your business now is all you can eat a type of enterprise license agreements and does you know the higher consumption and utilization have this. The same impact just given like maybe the changing mix of contracts versus prior periods.

Speaker Change #109: it

Speaker Change #110: Thank you. Our next question comes the line of Josh Bear with Morgan Stanley. Please proceed with your question.

Josh Bear: Great, thanks for the question. You mentioned higher consumption and envelope volumes in utilization a couple times.

Blake Grayson: But as far as like breaking down cohorts of DNR and such, like we're through the bulk of our COVID comps already. Thank you very much. Thank you. Got it. Thank you. And then just to clear up, and I guess confirm, last quarter's full year subscription revenue guide included Lexian as the guidance today. Is that correct? That's correct. It was included in our guide last quarter. Thank you.

Speaker Change #112: I'm wondering if you're suggesting that you could start to see customers come back to you to expand contracts for more envelopes and related just wondering how much of your business now is all you can eat type of enterprise license agreements.

Speaker Change #113: and the higher consumption and utilization have the same impact, just given like maybe the changing mix of contracts versus prior periods.

Joshua Baer: Our next question comes in line of Josh Baer with Morgan family. Please proceed with your question. Great. Thanks for the question. You mentioned higher consumption and envelope volumes and utilization a couple times. I'm wondering if you're suggesting that you could start to see customers come back to you to expand contracts for more envelopes and related. Just wondering how much of your business now is all you can eat a type of enterprise license agreements. And does you know the higher consumption and utilization have this. The same impact just given like maybe the changing mix of contracts versus prior periods. Thanks.

Joshua Baer: Thanks. Sure.

Blake Grayson: So, with regards to verticals. Yes. You know, I think we look at our vertical consumption and envelope sent as a proxy for the opportunity that we see with our customers for expansion over time. And, but for every customer, it's going to be different. Right. So it's a little challenging to pick a certain rate of consumption improved pretty well. I would say on a prior year of year basis, and an envelope sent also increased for us on a year of year basis. So, as customers run, do those components and they're using more of the product, they get more excited about it.

Speaker Change #114: Sure, so with regards to verticals, yes, you know, I think we...

Speaker Change #115: Look at our vertical consumption and envelope sign as a proxy for the opportunity that we see with our customers.

Speaker Change #116: for expansion over time. But for every customer, it's going to be different, right? So it's a little challenging to pick up, should raise a consumption improved.

Speaker Change #116: Pretty well, I would say on a prior year basis, and an enveloped Santa also increased for us on a year of year basis. So, as customers run due to the components and they're using more of the product, they get more excited about it now.

Blake Grayson: Now with regards to expansion opportunities and. Thank you ask about the all you can eat component. That's pretty small for us in our core business. People are buying generally, you know, fixed rate, you know, on the looks, you know, for the most part, we have certain deals that don't do it that way, but for the most part is until that actually encourages me a little bit for the I am opportunity that we have because I think it's. Telling a customer away, OK, you don't have to worry as much about the consumption side of this, and you get these extra features and a platform essentially that we believe has so much incremental value for you.

Speaker Change #117: with regards to expansion opportunities and, um, thank you ask about that all you can eat component. That's pretty small for us in our port business. People are buying generally, you know, fixed rate, you know, on-blopes, you know, for the most part we have certain deals that don't do it that way, but for the most part it isn't. So that actually encourages me a little bit for the I am opportunity that we have because I think it's...

Blake Grayson: Sure. So with regards to verticals. Yes. You know, I think we look at our vertical consumption and envelope sent as a proxy for the opportunity that we see with our customers for expansion over time. And but for every customer, it's going to be different. Right. So it's a little challenging to pick a certain rate of consumption improved pretty well. I would say on a prior year of year basis and an envelope sent also increased for us on a year of year basis.

Blake Grayson: So as customers run do those components and they're using more of the product, they get more excited about it now with regards to expansion opportunities and. I think you asked about the all you can eat component. That's pretty small for us in our core business. People are buying generally, you know, fixed rate, you know, envelopes, you know, for the most part. We have certain deals that don't do it that way, but for the most part is until that actually encourages me a little bit for the I am opportunity that we have because I think it's telling a customer in a way.

Speaker Change #117: Telling a customer in a way, okay, you don't have to worry as much about the consumption side of this and you get these extra features and a platform essentially that we believe has so much incremental value for you.

Blake Grayson: It's I don't want to say it's an easy decision, but it's you can really see the line of sight there to why you would want to people expand and convert into an I am situation, and that takes time. You know, with our customers, we've got, you know, $3 billion book of business with an average contract length of 19 months, and so that takes time. But I'm encouraged by the usage and the consumption metrics that we seem to date.

Speaker Change #117: I don't want to say it's an easy decision but you can really see the line of sight there to why you would want people to expand and convert into an IAM situation. That takes time with our customers. We've got...

Speaker Change #117: You know, three billion dollar book of business with an average contract length of, I think, 19 months. And so that takes time. But I'm encouraged by the usage and the consumption metrics that we've seen today.

Allan Thygesen: That's helpful, and just wondering do you view the potential for interest rates to move lower as a tailwind for your business, just given the exposure to mortgages and real estate and financial services. Thanks. Yeah, I mean, I'll give you my opinion. I think a lot of people that's called probably are better at kind of forecasting interest rate, you know, kind of impacts on companies and such like that to me, but. Yes, I would say that, especially specifically to the mortgage environment, the real estate environment you talk about, I think if anything that drives higher demand for a customer is good for us.

Blake Grayson: Okay, you don't have to worry as much about the consumption side of this and you get these extra features and a platform essentially that that we believe has so much incremental value for you. It's I don't want to say it's an easy decision, but it's you can really see the line of sight there to why you would want to people expand and convert into an I am situation that takes time. You know, with our customers, we've got, you know, a $3 billion book of business with an average contract length of about 19 months. And so that takes time, but I'm I'm encouraged by the usage and the consumption metrics that we seem to date.

Speaker Change #118: That's helpful. And just wondering, do you view the potential for interest rates to move lower as a tailwind for your business? Just given the exposure to mortgages and real estate and financial services?

Speaker Change #118: Thanks.

Speaker Change #119: Yeah, I mean, I'll give you my opinion, I think a lot of people that's called probably your better at kind of forecasting its shape, you know, kind of impacts on companies. That's what's like that to me, but...

Speaker Change #119: Yes, I would say that's especially specifically to the mortgage environment and the real thing Martin, you talked about, I think this.

And so if lower interest rates drive more people to either refinance or buy homes and such, I think it's a potential help. I mean, on the flip side, though, too, for us real estate while envelope sent that vertical is going slower than average, it's still growing for us year of year. So, you know, cost is optimistic, but if there's we still think there's opportunities in our verticals for improvement, you know, if the macro environment approves for those.

Speaker Change #120: Anything that drives higher demand for a customer is good for us. And so if lower interest rates drive more people to the refinance or buy homes and such, I think it's a potential help on you know the foot side though, too, perhaps real estate, while envelopes sent.

Alan Thygesen: That's helpful and just wondering do you view the potential for interest rates to move lower as a tailwind for your business, just given the exposure to mortgages and real estate and financial services. Thanks. Yeah, I mean, I'll give you my opinion. I think a lot of people that's called probably are better at kind of forecasting interest, you know, kind of impacts on companies and such like that. The me, but yes, I would say that, especially specifically to the mortgage environment, the real estate environment you talk about.

Speaker Change #121: That vertical is growing slower than average. It's still growing for us here, beer. So, you know, cautious optimistic, but if there's still, we still think there's opportunities that aren't verticals for improvement, you know, if the macro environment improves for those verticals.

Speaker Change #122: Yeah, I would just add that for a lot of people know us from real-stick transactions, but it has declined as a percentage of our old business, and this point grew extremely diversified across.

Alan Thygesen: I think if anything that drives higher demand for a customer is good for us. And so if lower interest rates drive more people to either refinance or buy homes and such, I think it's a potential help. I mean, on the flip side, though, too, for us real estate, while envelope sent that vertical is going slower than average, it's still growing for us, year of year. So, you know, cost is optimistic, but if there's, we still think there's opportunities or verticals for improvement, you know, if the macro environment approves for those.

Alan Thygesen: So, you know, I think it's a potential help. Yeah, I would just add that a lot of people know us from realistic transactions, but it has declined as a percentage of our role business. And at this point, we're extremely diversified across industries. And so while we would benefit, it might not be as larger a benefit as one might have imagined, you know, four or five years ago when real estate was really, you know, the killer.

Speaker Change #123: Industries, and so while we would benefit, it might not be as large a benefit as one might imagine, you know, four or five years ago when real estate was really.

Speaker Change #123: You know, the killer, I think it was fun. We've got such a broad portfolio today.

Speaker Change #123: It would be nice, but I'm not saying we would be very happy to take a look at the script for a variety of reasons, including that, but it's maybe not as sensitive to that as it was.

Speaker Change #123: Give it a round of questions.

Speaker Change #124: helpful, thank you.

Speaker Change #125: Thank you, our next question comes from the line of Michael Turin with Wells Fargo. Please for see with your question.

Speaker Change #125: Hey, this is Rich Pullin on for my culture and thanks for taking my question. So first on just...

Rich Pullin: I was wondering if you could tease out some of, like, how meaningful those co-selling arrangements with large ISEs could be and just kind of how important that is to the partner motion, especially as you scale the eye on business.

Alan Thygesen: I think at this point, we've got such a broad portfolio that it would be nice. But I'm not saying we wouldn't be very happy to take longer for a variety of reasons, including that. But it's maybe not as sensitive to that as it was given our investigation, helpful.

Unknown Executive: Thank you.

Speaker Change #127: Yeah, I'm...

Speaker Change #128: So I think in terms of the co-selling with the large ISVs, the Microsoft.

Michael Turrin: Our next question comes from the line of Michael Turrin with Wells Fargo.

Speaker Change #128: It's a piece of the world. I think it's a very meaningful liver, particularly in the large enterprises you can go in the backstop to name existing visual commitment that can be very helpful, of course.

Blake Grayson: Please proceed with your question. Okay, this is Rich Polonon for Michael Turrin. Thanks for taking my question. So first one, just, I was wondering if you could tease out some of like how meaningful those co-selling agents with large ISPs could be. And just kind of how important that is to the partner motion, especially as you scale the eye and business. Yeah. So I think in terms of the co-selling with the large ISPs, the Microsoft's to pieces of the world, I think it's a very meaningful liver, particularly in the in the large enterprises, if you go in with Microsoft and they have existing visual commitment that can be very helpful.

Speaker Change #128: We're one of the most horizontal ISVs, and so map well to them as an example. I think the partnership with ACPD holds...

Speaker Change #129: Great potential on that.

Speaker Change #130: and the supply chain optimization pieces is something that's really important to enterprises right now. They are very keen to improve the workflows, things like new vendor onboarding and so on, or historically very cumbersome. And so I think we have a big opportunity there.

Speaker Change #130: but I do want to expand the window on partners. So, those three, Salesforce is getting back shot, get a lot of focus here.

Blake Grayson: And of course, we're one of the most horizontal ISPs and so map well to them as an example. I think the partnership with the safety holds great potential on the and the supply chain optimization pieces is something that's really important to enterprises right now. They are very keen to improve the workflows things like new vendor onboarding and so on are historically very cumbersome. And so I think we have a big opportunity there.

Speaker Change #130: We're looking at some of the next year folks you can imagine the names there that also get some decent attention.

Speaker Change #130: But I think the bigger unlock for us to complement our own sales efforts is really the reseller and system integrators. So resellers in the markets will be tuned.

Speaker Change #130: Reach customers through our direct sales team, so obviously in Geo and Geos where we can't, well we can't realistically do that, but even in markets like the US and Germany and Japan, we're with a lot of customers preferred to buy from a reseller.

Alan Thygesen: But I do want to expand the window on on partners. So those those three Salesforce is going to get a lot of focus here. We're we're looking at sort of the next year or folks you can imagine the name there that that also gets some decent attention. But I think the bigger unlock for us to complement our own sales efforts is really the reseller and system integrators. So resellers in the markets will be can't reach customers through our direct sales team.

Speaker Change #130: That's a very important channel. And the SIs look on very proud of how simple we've made a very complex problem of improving agreement workflows. But when you undertake it.

Speaker Change #131: Something up that scale and scope I think there's going to naturally be more opportunities for this ice and they all see that so we've had a tremendous amount of

Speaker Change #131: Inbound interest, historically most of our SI work has been focused on CLM, which is a small part of our business, but now

Alan Thygesen: So obviously in geos where we can't or we can't realistically do that. But even in markets like the US and Germany and Japan where a lot of customers prefer to buy from a reseller, that's a very important channel. And the size look I'm very proud of how simple we've made a very complex problem of improving agreement workflows. But when you undertake something of that scale and scope, I think there's going to naturally be more opportunities for this ice and they all see that.

Speaker Change #131: with I am really being the whole company, if you will. It's much more strategic, much larger than scope. And I think a huge opportunity to partner better with the loyalty and why the Pepp-Javanese in the world.

Speaker Change #131: and there's a lot of that already happening and I think much more to come, so that's a big time for first.

Speaker Change #132: Thank you, that's very helpful. And then just as a follow up.

Alan Thygesen: And so we've had a tremendous amount of inbound interest historically most of artists I work has been focused on CLM which is a small part of our business. But now with I am really being the whole company if you will. And it's it's much more strategic much larger in scope and we have I think a huge opportunity to partner better with the loyalty and wise. Perhaps you have an eye to the world and there's a lot of that already happening and I think much more to come.

Speaker Change #132: and some of these early iron deals that you're seeing.

Speaker Change #133: I know you talked a little bit about seeds and just kind of the potential for that to be a little bit more.

Speaker Change #134: Pervasive across, you know, an organization. Are you starting to already see some of those wider seat deployments in an organization, maybe like cross departments, are you typically starting with, you know, one department inside an organization and then just kind of expanding from there.

Speaker Change #135: Yeah, just clarify that was for I am right.

Alan Thygesen: So that's a big enable for us. Thank you. That's very helpful. And then just as a follow-up, in some of these early iron deals that you're seeing, I know you talked a little bit about seats and just kind of the potential for that to be a little bit more pervasive across, you know, an organization. Are you starting to already see some of those wider seat deployments in an organization, maybe like cross departments, are you typically starting with, you know, one department inside an organization?

Speaker Change #136: He had me as the companies were deployed and now are smaller and so it's a commercial segment. And so it tends to be company-wide in many cases. I think as we start our enterprise deployments it's more likely to be divisional to part metal.

Alan Thygesen: And then just kind of expanding from there? Yeah, I just clarify that was for I am right. If the companies were deploying them now are smaller, and so it's the commercial segment, and so it does tend to be company-wide in many cases. I think as we start our enterprise deployments, it's more likely to be divisional or departmental just because the scale and scope and risk and all the systems we'd have to put in to fully support that.

Speaker Change #136: and just because of this.

Speaker Change #136: Yep, the scale, scope and risk and all the systems we'd have to put in to fully support that.

Speaker Change #136: That's a forecast because we're just about to open the doors to the initial selling to the enterprise segment. But that would be my guess on how that's going to play out initially.

Speaker Change #137: He's probably the way he is very close, just by the way it's very familiar to us, but in that how he's found real tough.

Speaker Change #138: We went to the head of sales and said, hey, would you like to make yourself process more efficient and they said yes, please. And then we integrated ourselves force and they deployed it in sales and then purchasing or HR looked at that and went to mm.

Speaker Change #138: Can we do that and so we've been able to cross-sell in some companies and I think that I will have you more opportunity to do that.

Alan Thygesen: So that's a forecast because we're just about to open the doors to the initial selling to the enterprise segment. So that would be my guess on how that's going to play out initially. This part of the way is very familiar to us right now. That's how we found rollout. We went to the head of sales and said, hey, would you like to make your sales process more efficient? And they said, yes, please.

Speaker Change #139: Make a lot of sense.

Speaker Change #140: Thank you. Our next question comes from a line of Ian Black with Needham and Company. Please proceed with your questions.

Ian Black: Hi, thanks for the question. We need a good partner check on the Lexion Acquisition. How important is that functionality to the new IAM platform, and when you expect the acquisition to be integrated? Thank you.

Alan Thygesen: And then we integrated with sales force and they deployed it in sales. And then purchasing or HR looked at that and went, hmm, can we do that? And so we've been able to cross sell in some companies, and I think we'll have more opportunities to do that. Thanks, Larsen. Thank you.

Speaker Change #142: Yep, yeah, actually yeah.

Speaker Change #143: I just want to say how thrilled we are with the election on acquisition, but we close the deal at the end of May.

Speaker Change #143: and...

Speaker Change #144: Look, there's always our intent for this to be a, a, a, a, a product and team acquisition and we put a lot of focus on integrating their products and I'm proud to say that this month we will ship to significant features.

Ian Black: Our next question comes from a line of Ian Black with Needham and company. Please proceed with your question. Hi, thanks for the question. You had a good partner check on the lexion acquisition. How important is that functionality to the new IAM platform? And when do you expect the acquisition to be integrated? Thank you.

Speaker Change #144: that are directly enabled by the Lexi on acquisition. That's four months from when we close to deal.

Speaker Change #145: So, each could as to to the Lexian team and the Dr. Simon.

Speaker Change #145: Team members that are helping them. And there's more to come. So we've got a couple of more things that are, I think, really exciting. And they are dead center in the vision for I am. So, I'm,

Alan Thygesen: Yeah, actually, I just want to say how thrilled we are with the lexion acquisition. Look, we closed the deal at the end of May. And look, there's always our intent for this to be a principally a product and team acquisition, and we put a lot of focus on integrating their products. And I'm proud to say that this month, we will ship two significant features that are directly enabled by the lexion acquisition.

Speaker Change #145: I think that was turned out to be even better than I could have expected, and with real to have the team here, they've got an inclusion of entrepreneurial energy and innovation that's always welcome, and I think it's going to help out work not on a phone basis.

Alan Thygesen: That's four months from when we closed the deal. So huge kudos to to the lexion team and to the docus time team members that are that are helping them. And there's more to come. So we've got a couple more things that are, I think, really exciting. And they are dead center in the in the vision for IAM. And so I think that was turned out to be even better than I could have expected. And with real to have the team here, they've got an intuition of entrepreneurial energy and innovation that's always welcome. And I think it's going to help our work not going forward. Thank you.

Speaker Change #145: Thank you. Our last question comes from the line of Kirk Mattern with Evercore ISI. Please proceed with your question.

Speaker Change #145: Alright, this is Phil on for Kirk and thanks for taking my question.

Phil: Do you feel like NRR rates have stabilized and can start improving from here? And are there customers still trying to right side? They're spending that could create continued pressure on that front? Or do you feel like you're now at a level where upsell, cross-sell can outpace on below pressure on rate NRR rates?

Speaker Change #147: I mean, from a DNR perspective, you know, we've seen it stabilize here for a few quarters of the RL and we expect that to continue to the rest of the year.

Bill: Our last question comes from the line of Kirk Materne with Evercore ISI. Please proceed with your question. This is Bill on for Kirk and thanks for taking my question. Do you feel like NRR rates have stabilized and can start improving from here? And are their customers still trying to right side their spend that could create continued pressure on that front? Or do you feel like you're now at a level where upsell, cross sell can outpaced on below pressure on right NRR rates?

Speaker Change #148: You know, I'm not giving a FY26, you know, kind of, you know, our forecast, we're not like that. But I think what we're showing is that this business has been quite resilient. Now, that said, we have aspirations to begin growing this business, you know, at a faster clip than we are currently and that's why we talk so much about I am and things like that. So that needs her.

Speaker Change #148: So, I'm encouraged by the stabilization trends we've seen, and then we believe that it will hold at least through the end of this year. But, you know, obviously, we are focused on how do we accelerate the growth of this company doing right-by-art customers, providing them extra value, and build a really durable platform in the agreement management space. So, I think we're actually keeping so far quite well against that, you know, going forward, and we'll see how that all plays out.

Bill: Sure, I mean, from a DNR perspective, you know, we've seen it stabilized here for a few quarters of our own. We expect that to continue to the rest of the year. You know, I'm not giving a FY 26 kind of DNR forecast or like that. But I think what we're showing is that this business has been quite resilient. Now, that said, we have aspirations to begin growing this business at a faster clip than we are currently.

Speaker Change #149: I would just add, look, ultimately, it's our goal to return to dealt with due growth.

Bill: And that's why we talk so much about I am and things like that and that nature. But so I mean, I'm, you know, encouraged by the stabilization trends we've seen and then we believe that it will hold at least to the end of this year. But you know, obviously we're focused on how do we accelerate the growth of this company doing right by our customers providing them extra value and build a really like durable platform in the agreement management space. So I think we're executing so far, you know, quite well against that, you know, going forward and we'll see how that all plays out. Yeah.

Speaker Change #149: Not making it forecast about when exactly that'll happen, but implied in that given that we already are in 1.6 million companies, we're in close 85% of the Fortune 500 and comparable numbers in other markets. Most of our activity is going to be up-sell to existing customers.

Speaker Change #149: and assuming we're successful and we're sorry and growth that the NRW will move out as well. So that's our goal.

Speaker Change #150: Great, thanks for taking my questions.

Speaker Change #150: Thank you. Ladies and gentlemen, this concludes our question and answer session. I'll now turn the call over to Allan for closing comments.

Blake Grayson: I would just add, look, ultimately it's our goal to return to Delta to growth, not making a forecast about when exactly that happened, but implied in that given that we already are in 1.6 million companies were in, you know, close 85% of the Fortune 500 and comparable numbers and other markets, most of our activity is going to be upsell to existing customers. So, assuming we're successful in accelerating growth, the DNR will move up as well. So that's our goal. Great. Thanks for taking my question. Thank you.

Allan E-rays: Thank you all for joining today's call, closing it. I'm there proud of the progress Dr. Simon continues to make.

Allan E-rays: and I'm really excited for the value we will create for customers through the intelligent and green management platform. We appreciate your support as we continue to realize our vision.

Allan E-rays: i

Speaker Change #151: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Operator: Ladies and gentlemen, this concludes our question and answer session.

Alan Thygesen: I'll now turn the call over to Alan for closing comments. Thank you operator. Thank you all for joining today's call closing.

Speaker Change #151: Good bye!

Speaker Change #152: [inaudible] The New Year's Day, The New Year's Day, The New Year's Day, The New Year's Day, The New Year's Day,

Alan Thygesen: I'm very proud of the progress. Doctor signed continues to make. And I'm really excited for the value we will create for customers through the intelligent agreement management platform. We appreciate your support as we continue to realize our vision.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Good bye. Thank you.