Q1 2026 DocuSign Inc Earnings Call

Good afternoon, ladies and gentlemen, thank you for joining Darkey find first quarter fiscal year 'twenty six earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session. As a reminder, this conference is being recorded and will be.

Operator: Thank you for joining DocuSign's first quarter fiscal year 26 earnings. At this time, all participants are in a listening mode. After the speaker's presentation, there will be a question and answer session.

Operator: As a reminder, this conference and will be available for replay from the Investor Relations section of the website following. If you require operator assistance during the conference, please press star.

Available for replay from the Investor Relations section of the website. Following the call. If you require operator assistance during the conference. Please press Star zero.

Matthew Soldenfeldt: I'll now pass the call over to Matthew Soldenfeldt, Head of Investor Relations. Please go ahead. Thank you, Operator.

Speaker Change: Now pass the call over to Matthew Selinger felt head of Investor Relations. Please go ahead.

Matthew Selinger: Thank you operator, good afternoon, and welcome to Dock you signs Q1 fiscal 2026 earnings call. Joining me on today's call are Darkey signed CEO Allen <unk> and CFO Blake Grayson the press release announcing our first quarter of fiscal 2026 results was issued earlier today and is posted on our Investor Relations web.

Allan Thygesen: Good afternoon and welcome to DocuSign's Q1 Fiscal 2026 Earnings Call.

Matthew Soldenfeldt: Joining me on today's call are DocuSign CEO Allan Thygesen and CFO Blake Grayson. The press release announcing our first quarter fiscal 2026 results was issued earlier today and is posted on our Investor Relations website along with a published version of our prepared remarks. Before we begin, let me remind everyone that some of our statements on today's call are forward-looking. We believe our assumptions and expectations related to these forward-looking statements are reasonable, but they are subject to known and unknown risks and uncertainties that may cause our actual results or performance to be materially different. In particular, our expectations regarding factors affecting customer demand and adoption are based on our best estimates at this time and are therefore subject to change.

Matthew Selinger: Along with the published version of our prepared remarks before we begin let me remind everyone that some of our statements on today's call are forward looking we believe our assumptions and expectations related to these forward looking statements are reasonable, but they are subject to known and unknown risks and uncertainties that may cause our actual results or performance to be materially differ.

Matthew Selinger: In particular, our expectations regarding factors affecting customer demand and adoption are based on our best estimates at this time and are therefore subject to change.

Matthew Soldenfeldt: 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.

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. During this call. We will present GAAP and non-GAAP financial measures. In addition, we provide non.

Matthew Soldenfeldt: During this call, we will present GAAP and non-GAAP financial measures. In addition, we provide non-GAAP weighted average share counts and information regarding free cash flows and billings. 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. For information regarding our non-GAAP financial information, the most directly comparable GAAP measures and the quantitative reconciliation of these figures, please refer to today's earnings press release, which can be found on our website at investors.docuSign.com.

Matthew Selinger: GAAP weighted average share count and information regarding free cash flows and billings. 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: For information regarding our non-GAAP financial information the most directly comparable GAAP measures and a quantitative reconciliation of these figures. Please refer to today's earnings press release, which can be found on our website at investors <unk> Dot com.

Allan Thygesen: I'd now like to turn the call over to Allan. Thank you, Matt, and good afternoon, everyone. Q1 2026 was an important quarter in our long-term transformation. At our annual Momentum customer event, we announced an ambitious roadmap for DocuSign Intelligent Agreement Management, or IAM, the world's leading AI-driven agreement platform. We're delivering innovation to customers at the fastest pace in our history. Q1 financial performance was strong. Revenue of $764 million and 8% growth outpaced our expectations from additional IM customers and self-serve digital revenue contribution. Profitability outperformed with operating margins improving by 1% versus last year to 29.5%.

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

Alan: Thank you, Matt and good afternoon, everyone.

Alan: Q1, 2026 was an important quarter in our long term transformation and our annual momentum customer event, we announced an ambitious roadmap for Doctor sign intelligent agreement management or I am the world's leading AI driven agreement platform.

Alan: We are delivering innovation to customers at the fastest pace in our history.

Alan: Q1 financial performance with strong revenue of 764 million, an 8% growth outpaced our expectations from additional I am customers and self serve digital revenue contribution.

Alan: Stability outperformed with operating margins improving by 1%.

Alan: Versus last year to 29, 5%.

Allan Thygesen: And a strong 30% free cash flow margin drove continued share repurchases and supports our conviction to authorize an additional $1 billion in buyback. As we transform DocuSign, we continue to make long-term decisions to drive accelerated growth. As discussed last quarter, in Q1, we made several foundational go-to-market changes to realize IAM's potential. Our full year guidance anticipated that these changes would lead to lower early renewal billings in Fiscal 26 after Q1. Instead, the impact happened sooner than anticipated, resulting in lower Q1 early renewals. As a result, billings growth ended slightly below our guidance range of 4% year-on-year, an outcome of timing, not demand.

Alan: And a strong 30% free cash flow margin drove continued share repurchases and supports our conviction to authorize an additional $1 billion.

Alan: Buybacks.

Alan: As we transform jockeys signed we continue to make long term decisions to drive accelerated growth.

Alan: As discussed last quarter in Q1, we made several foundational go to market changes to realize I am potential.

Alan: Our full year guidance anticipated that these changes would lead to lower early renewal billings in fiscal 'twenty six after Q1.

Alan: Instead, the impact happened sooner than anticipated, resulting in lower Q1 early renewals.

Alan: As a result billings growth and it's slightly below our guidance range of 4% year on year and I'll come up timing not demand.

Allan Thygesen: Blake will discuss these dynamics and our financials in his remarks. We're proud of the progress made in Q1 across our three strategic pillars. Over 10,000 customers have purchased the DocuSign IAM platform. We have strong product market fit in small and mid-market customers and early promise with enterprise and self-serve organizations. and we continue to make progress evolving our go-to-market to drive efficient long-term growth.

Speaker Change: We'll discuss these dynamics and our financials in his remarks.

Alan: We're proud of the progress made in Q1 across our three strategic pillars.

Alan: Over 10000 customers have purchased the Doctor sign I am platform.

Alan: We have strong product market fit in small and mid market customers and early promise with enterprise and self serve organizations.

Alan: And we continue to make progress evolving our go to market to drive efficient long term growth.

Allan Thygesen: Starting with our innovation pillar, the IAM platform has become the fastest growing offering in DocuSign's history, less than a year after its launch. Customers using IAM have processed tens of millions of agreements and continue to increase their engagement, especially through AI-generated dashboards and Search and DocuSign Navigator, our intelligent agreement repository. In Q1, IAM usage increased significantly thanks to UX improvements that better integrate Navigator with the eSignature envelope management experience. The demand for IAM highlights the mission-critical nature of agreement management for organizations. In a new Deloitte report, 77% of business leaders cite agreement management as a key driver of outperformance.

Alan: Starting with our innovation pillar the I M platform has become the fastest growing offering in Doctor Science history.

Alan: And a year after its launch.

Alan: Customers using I am at processed tens of millions of agreements.

Alan: Continued to increase their engagement, especially through AI generated dashboards and search and doctor sign navigator or intelligent agreement repository.

Alan: In Q1, I am usage increased significantly thanks to UX improvements that better integrate navigator with esignature envelope management experience.

Alan: The demand for I am highlights the mission critical nature of agreement management for organizations.

Alan: In our new Deloitte report, 77% of business leaders cite agreement management is a key driver of outperformance.

Allan Thygesen: Attendance at our Momentum Conference in April grew by 70% over last year, with notable increases in partner attendance and executive-level participation. The New York event kicked off a global series of six additional momentums across EMEA, APAC, and Latin America. At Momentum, we shared our robust IAM platform vision and introduced a deep lineup of new AI-powered capabilities across the Create, Commit, and Manage agreement lifecycle. Within Create, Agreement Desk provides powerful workflow management for agreement reviews and approvals, streamlining tedious processes to accelerate deal cycle. AI-Assisted Review compares contract language to a customer's existing standard terms and identifies non-compliant or high-risk language, eliminating the need to review hundreds of contracts.

Alan: Attendance at our momentum conference in April grew by 70% over last year with notable increases in partner attendance and executive level participation.

Alan: The New York event kicked off a global series of six additional momentum across EMEA, APAC and Latin America.

Alan: That momentum we shared a robust I am platform vision and introduced a deep lineup of new AI powered capabilities across the create commit and manage agreement lifecycle.

Alan: We then create agreement desk provides powerful workflow management for agreement reviews, and approvals streamlining tedious processes to accelerate deal cycles.

Speaker Change: Hey, guys. Just a review compares contract language to our customers' existing standard terms and identifies noncompliant or highest language eliminating the need to review hundreds of contracts.

Allan Thygesen: An agreement prep standardizes terms and templates, applying the right language to every agreement to reduce risk. Within Commit, workspaces transform how customers collaborate with contracting counterparties by centralizing all documents, communications, and tasks in a secure hub while protecting sensitive data. CLEAR Identity Verification will integrate CLEAR's biometric identity network with IAM, making IGEE verification as simple as snapping a selfie. Within Manage, custom extractions for DocuSign Navigator uses AI to automatically capture the data that matters most to customers. such as organization-specific agreement information or client-specific terms. Instead of spending hours or even days on manual review, customers get instant, actionable insights.

Speaker Change: An agreement prep Standardizes terms and templates.

Speaker Change: Buying the right language to every agreement to reduce risk.

Alan: Within commit workspaces transform how customers collaborate with contracting counterparties by centralizing all documents communications and tasks in a secure hub, while protecting sensitive data.

Alan: Clear identity verification will integrate clears biometric identity network with I am making I E verification as simple as snapping a selfie.

Alan: We then manage custom extractions for docs, who signed navigator uses AI to automatically capture the data that matters most to customers.

Alan: Such as organization specific agreement information or client specific terms.

Alan: Instead of spending hours or even days on manual review customers get instant actionable insights.

Allan Thygesen: The Obligation Management Dashboard transforms a company's scattered commitments into intelligence by surfacing renewal dates, payment terms, and other obligations, helping maximize contract value and avoid penalties. These new features enable sales reps to close more business, procurement teams to stay on top of renewal dates and pricing changes, and HR teams to onboard new employees more efficiently. At DocuSign, our own procurement and legal teams have reduced agreement search time by 90% by using IAM. AI-Assisted Review, WorkSpaces, and Obligation Management are available today. Most of the other capabilities will be available by August. Launch dates are published on our product road.

Alan: The obligation management dashboard transforms accompanies scattered commitments into intelligence by surfacing renewal dates payment terms and other obligations, helping maximize contract value and avoid penalties.

Alan: These new features enable sales reps to close more business procurement teams to stay on top of renewal dates and pricing changes and HR teams to onboard new employees more efficiently.

Speaker Change: At Darkey signed our own procurement and legal teams have reduced agreements search time by 90% by using I am.

Alan: AI assisted review Workspaces and obligation management are available today.

Alan: Most of the other capabilities will be available by August launch dates are published on our product roadmap.

Allan Thygesen: We also introduced DocuSign IRIS, our AI engine purpose built for agreement management that delivers leading LLM performance at a low cost per infrastructure. Iris leverages DocuSign's unique agreement domain expertise built from millions of workflows and two decades of contract intelligence.

Alan: We also introduced Doctor sign Iris our AI engine purpose built for agreement management that delivers leading hello them performance at a low cost per inference.

Alan: Iris Leverages Darkies signs unique agreement domain expertise built for millions of workflows in two decades of contract intelligence.

Allan Thygesen: Later in Fiscal 26, We will deliver the industry's first purpose-built AI contract agents designed to accelerate workflows, reduce risk, and achieve better outcomes across the entire agreement lifecycle. You can see a demo of our agents in our Momentum Keynote.

Alan: Later in fiscal 'twenty six.

Alan: We will deliver the industry's first purpose built.

Alan: My contract agents designed to accelerate workflows reduce risk and achieve better outcomes across the entire agreement lifecycle, you can see a demo of our agents in our momentum keynotes.

Alan: Yeah.

Allan Thygesen: Within our go-to-market pillar, we continue to drive transformation across three integrated routes, now all-selling IAM, direct, self-serve, and partner. In Q1, IM sales once again exceeded our outlook, and we remain on track for IM to account for a double digit percentage of our subscription book of business exiting Q4. Q1 direct customer IM deal volume exceeded Q4 and we saw another significant increase in the percentage of new customers choosing IM. International IAM deals were up over 50% from the last quarter. Confirming the IAM value proposition resonates with customers worldwide.

Alan: Within our go to market pillar, we continue to drive transformation across three integrated routes now all selling I am direct self serve and partner.

Alan: In Q1, <unk> sales once again exceeded our outlook and we remain on track for I am to account for a double digit percentage of our subscription book of business exited in Q4.

Alan: Q1 direct customer I am deal volume exceeded Q4, and we saw another significant increase in the percentage of new customers choosing I am.

Alan: International I M deals were up over 50% from the last quarter.

Alan: Confirming the eye and value proposition resonates with customers worldwide.

Allan Thygesen: In fiscal 26, we continue to generate large scale success with small and mid market customers while driving initial enterprise conversations and early wins. ServiceTitan, the operating system that powers the trades, and a longtime DocuSign customer, is deploying IAM across legal, HR, sales, and procurement, using DocuSign Maestro to create time-saving automated workflows, and DocuSign Navigator to gain greater insight into its business. As part of our growing strategic go-to-market partnership with Microsoft, we're delivering this IAM solution via the Azure Microsoft Cloud. IAM is also off to a strong start in self-serve. The launch of self-serve in April resulted in nearly 1,000 new IAM customers within just three weeks, all through organic adoption prior to the release of any marketing campaign.

Alan: In fiscal 'twenty six we continue to generate large scale success with small and mid market customers, while driving initial enterprise conversations and early wins.

Alan: Service tightened the operating system that powers, the trades and a longtime doctor site customer is deploying I am across legal HR sales and procurement.

Alan: Using dockside maestro to create time savings automated workflows, and dockside navigator to gain greater insight into its business.

Alan: As part of our growing strategic go to market partnership with Microsoft We're delivering this I M solution via the Azure marketplace.

Alan: I am is also off to a strong start and self serve the launch of self serve in April resulted in nearly a thousand new I am customers within just three weeks all through organic adoption prior to the release of any marketing campaigns.

Allan Thygesen: In Q1, overall digital revenue continued to grow at more than double the rate of overall revenue. We also implemented self-serve account management tools for our direct sales-driven customers, which improves their experience and our go-to-market efficiency. Efficiency gains from our rapidly improving self-service channel enabled us to make broader go to market changes in Q1, all with the intention of maximizing IAM's long term potential. We migrated a meaningful cohort of customers to the self-serve first digital experience, freeing up our sales team to concentrate on higher value prospects with greater revenue potential. Salesforce changes included rolling out new customer-size segments, territories, and performance-based compensation.

Alan: In Q1 overall digital revenue continued to grow at more than double the rate of overall revenue.

Alan: Also implemented self serve account management tools for our direct sales driven customers, which improves their experience and our go to market efficiency.

Alan: Efficiency gains from our rapidly improving self service channel enabled us to make broader go to market changes in Q1.

Alan: All with the intention of maximizing I am long term potential.

Alan: We migrated a meaningful cohort of customers to the self serve first digital experience freeing up our sales team to concentrate on higher value prospects with greater revenue potential.

Alan: Salesforce changes included rolling out new customer size segments territories and performance based compensation.

Allan Thygesen: We're using our investment dollars judiciously, and in fiscal 26, we invested in greater sales capacity without expanding our team. Our initial annual guidance expected a lower rate of early renewals in fiscal 26 as reps increasingly focus on IM expansion potential. We had anticipated the impact to take place after Q1, but the reduction in early renewals began sooner than forecasted. This resulted in lower than expected early renewal billings in Q1. We take responsibility for not fully anticipating the timing of the shift in our guidance.

Alan: We're using our investment dollars judiciously in fiscal 'twenty six we invested in greater sales capacity without expanding our team.

Alan: Our initial annual guidance expected as lower rate of early renewals in fiscal 'twenty six as reps increasingly focus on I am expansion potential.

Alan: We had anticipated the impact that take place after Q1, but the reduction in early renewals began sooner than forecasted. This resulted in lower than expected early renewal billings in Q1.

Alan: We take responsibility cannot fully anticipating the timing of the shift in our guidance.

Allan Thygesen: Stepping back, we're confident these are the right long-term changes to build a more durable growth engine. We're pleased with how quickly teams adjusted as evidenced by strong IAM sales throughout the quarter and fewer early renewals without expansion. We're also encouraged that the fundamentals in the overall core business continue to improve in Q1. Gross retention and dollar net retention improve year over year, while envelope scent and customer contract utilization grows steadily.

Alan: Stepping back we're confident these are the right long term changes to build a more durable growth engine.

Alan: We're pleased to how quickly teams adjusted as evidenced by strong I am sales throughout the quarter and fewer early renewals without expansion.

Alan: We're also encouraged that the fundamentals in the overall core business continued to improve in Q1.

Alan: Gross retention and dollar net retention improved year over year.

Alan: Envelope scent and customer contract utilization grew steadily.

Allan Thygesen: Also in Q1, we relaunched our partner program to focus primarily on IM and enable partners to build business with DocuSign through specialization. At Momentum, we recognize outstanding partners that continue to grow with DocuSign. CDW, a leading multi-brand provider of technology solutions, achieved impressive triple-digit growth with us last year. Through our alliances with Deloitte and SAP, we've expanded our global footprint and recently closed a major opportunity with a Fortune 500 company in the energy sector.

Alan: Also in Q1, we relaunched our partner program.

Alan: To focus primarily on I am and enable partners to build business with doctor sign through specializations.

Alan: At momentum, we recognized outstanding partners to continue to grow with Darkey Syn <unk>.

Alan: CDW, a leading multi brand provider technology solutions achieved impressive triple digit growth with us last year.

Alan: Through our lives is with Deloitte in S. E. P. We've expanded our global footprint and recently closed a major opportunity with a fortune 500 company in the energy sector.

Allan Thygesen: At Momentum, we also recognize customers delivering significant business impact on the DocuSign platform. Subaru of America significantly enhanced its operational efficiency and achieved substantial cost savings by digitizing its manual paper-based process. Primerica reduced agreement processing time by 25% and contract turnaround from 15 days to 1. KPMG cut its average signature process from five days to less than one, increased productivity by 30% and improved customer satisfaction.

Alan: At momentum, we also recognized customers delivering significant business impact on the Doctor side platform.

Speaker Change: Subaru of America significantly enhanced its operational efficiency and achieved substantial cost savings by digitizing its manual paper based processes.

Alan: Primary care reduced agreement processing time by 25% and contract turnaround from 15 days to one.

Speaker Change: K P. M G cut its average signature process from five days to less than one increase.

Speaker Change: Increased productivity by 30% and improved customer satisfaction.

Allan Thygesen: In closing, the road ahead is exciting. DocuSign is building on its leadership position to reimagine how organizations manage agreements through IAM. We have strong conviction in our strategy and the long-term business decisions we're making to drive acceleration to double-digit growth.

Speaker Change: In closing.

Speaker Change: The road ahead is exciting Doc.

Speaker Change: <unk> is building on its leadership position to re imagine how organizations manage agreements through I am we have strong conviction in our strategy and the long term business decisions, we're making to drive acceleration to double digit growth.

Allan Thygesen: In April, Newsweek named DocuSign the most trustworthy software company in America.

Speaker Change: In April Newsweek named Darkies side, the most trustworthy software company in America.

Allan Thygesen: for the second year in a row. We believe that trust strengthens our ability to help our 1.7 million customers transform how they manage agreements.

Alan: For the second year in a row.

Alan: We believe that trusts strengthens our ability to help out 1.7 million customers transform how they manage their agreements.

Allan Thygesen: I want to thank the entire DocuSign team for their dedication and commitment to creating value for our customers.

Alan: I want to thank the entire doctor sign team for their dedication and commitment to creating value for our customers.

Blake Grayson: Now I'll turn it over to Blake to discuss our financial results. Thanks, Allan, and good afternoon, everyone. Our primary goal in fiscal 2026 is to position DocuSign to drive long term growth acceleration while maintaining efficiency. In Q1, we made continued progress against this goal and delivered solid business results. Highlights included accelerated IAM deal volume, as well as continued year-over-year improvements in dollar net retention, customer usage and utilization, and increased efficiency and profitability. While we performed better than our expectations across almost all of our key guidance metrics, including revenue and profit margins, billings came slightly below our guidance range, driven by the timing of early renewals.

Alan: Now I'll turn it over to Blake to discuss our financial results.

Blake: Thanks, Alan and good afternoon, everyone.

Blake: Our primary goal in fiscal 2020 six is to position Darkey signed to drive long term growth acceleration, while maintaining efficiency.

Alan: In Q1, we made continued progress against this goal and delivered solid business results highlights included accelerated I am deal volume as well as continued year over year improvements in dollar net retention customer usage and utilization and increased efficiency and profitability while.

Alan: We performed better than our expectations across almost all of our key guidance metrics, including revenue and profit margins billings came in slightly below our guidance range driven by the timing of early renewals.

Blake Grayson: In Q1, total revenue was $764 million and subscription revenue was $746 million, both up 8% year-over-year, including a 0.6% year-over-year FX growth headway. Revenue outperformed our expectations on both the strength of greater digital and IAM contributions, as well as from a few smaller non-recurring items. Billings grew 4% year over year to $740 million with no FX impact year over year. Billings ended slightly below our guidance range due to lower than expected early renewals. Our billing results would have finished near the high end of our guidance range when excluding both the negative impact from early renewals and the positive billings impact relative to our forecast from FX.

Alan: In Q1 total revenue was $764 million and subscription revenue was 746 million, both up 8% year over year, including a 0.6% year over year FX growth headwind.

Alan: Revenue outperformed our expectations on both the strength of greater digital and I am contributions as well as from a few smaller nonrecurring items.

Alan: Billings grew 4% year over year to $740 million with no FX impact year over year.

Alan: Billings ended slightly below our guidance range due to lower than expected early renewals our billing results would've finished near the high end of our guidance range when excluding both the negative impact from early renewals and the positive billings impact relative to our forecast from FX.

Blake Grayson: Billings renewal timing was impacted by the go to market changes discussed last quarter, including rolling out new customer size segments, territories, and performance based compensation. As Allan explained, these changes were foundational and focused on positioning DocuSign to realize accelerated long-term growth. Specific to billings, as described last quarter, our original Fiscal 2026 Annual Billings Guidance assumed a 1% year-over-year growth headwind from reduced early renewal volume. While we expected that impact to occur after Q1, the change in incentives led to a reduction in early renewals sooner than originally forecast. Our sales team is acting as the program was designed.

Alan: Billings renewal timing was impacted by the go to market changes discussed last quarter, including rolling out a new customer size segments territories and performance based compensation.

Alan: As Alan explained these changes were foundational and focused on positioning doctor sign to realize accelerated long term growth specific.

Speaker Change: Specific to billings as described last quarter, our original fiscal 'twenty twenty-six annual billings guidance assumed a 1% year over year growth headwind from reduced early renewal volume.

Speaker Change: While we expected that impact to occur after Q1, the change in incentives led to a reduction in early renewals sooner than originally forecasted.

Alan: Our sales team is acting as the program was designed the health of early renewals in Q1 improved materially from the prior year for.

Blake Grayson: The health of early renewals in Q1 improved materially from the prior year. For example, we reduced the mix of early renewals that were flat or included partial churn by approximately 30% versus last year. Although the timing of early renewals has a negligible impact on revenue and does not reflect the long-term health of the business, we take responsibility for underestimating the potential timing and range of impact from the go-to-market changes. We will take a more conservative approach to forecasting the timing of early renewals for the remainder of fiscal 2026 in light of the go-to-market changes. Apart from the timing impact on billings, we are encouraged that fundamentals continue to improve in Q1.

Alan: For example, we reduced the mix of early renewals that were flat or included partial churn by approximately 30% versus last year.

Alan: Though the timing of early renewals has a negligible impact on revenue and does not reflect the long term health of the business, we take responsibility for underestimating the potential timing and range of impact from the go to market changes, we will take a more conservative approach to forecasting the timing of early renewals for the remainder of fiscal 'twenty 'twenty.

Alan: In light of the go to market changes.

Alan: Apart from the timing impact on billings, we are encouraged that fundamentals continued to improve in Q1.

Blake Grayson: The dollar net retention rate increased slightly to 101 percent in line with Q4 and up from 99 percent in Q1 of 2025. We continue to expect dollar net retention to moderately improve throughout the year based on both gross retention improvement and IAM upsell impact. IAM sales continue to show strong momentum, with both IAM deal volume and revenue slightly outpacing our expectations this quarter. IAM share of total direct deal volume, including upsell deals and new customer deals, increased meaningfully quarter over quarter, showing strength versus typical Q4 to Q1 business seasonality. The strength is underscored by passing 10,000 direct IAM customers in Q1, adding nearly 1,000 new IAM self-serve customers within weeks of launching that capability, and the strong early ramp in international sales.

Alan: The dollar net retention rate increased slightly to 101% in line with Q4 and up from 99% in Q1 of 2025, we continue to expect dollar net retention to moderately improve throughout the year based on both gross retention improvement and I am upsell impact.

Alan: I am sales continued to show strong momentum with both I am deal volume and revenue slightly outpacing our expectations this quarter.

Alan: I am share of total direct deal volume, including upsell deals and new customer deals increased meaningfully quarter over quarter, showing strength versus typical Q4 to Q1 business seasonality.

Alan: This strength is underscored by passing 10000 direct I am customers in Q1, adding nearly 1000, new I am self serve customers within weeks of launching that capability and the strong early ramp and international sales.

Blake Grayson: Through Q1, we are on track for IM customers to contribute a low double digit percentage of the subscription book of business exiting Q4. The year-over-year growth in envelope scent remains consistent with prior quarters and has continued through May. Customer consumption, a measure of contract utilization, increased in our direct business to the highest levels since early fiscal 2022, driven predominantly by increases in North America. We observed year-over-year improvements in consumption rate in nearly every direct customer size segment and major vertical for the first time in over two years. In Q1, total customers grew 10% year over year, surpassing 1.7 million.

Alan: Through Q1, we are on track for I am customers to contribute a low double digit percentage of the subscription book of business exited in Q4.

Alan: The year over year growth in envelope scent remains consistent with prior quarters and it's continued through may custom.

Alan: Customer consumption, a measure of contract utilization increased in our direct business to the highest levels since early fiscal 2022 driven predominantly by increases in North America, we observed a year over year improvement in consumption rate in nearly every direct customer size segment and major vertical for the <unk>.

Alan: First time in over two years.

Alan: In Q1 total customers grew 10% year over year, surpassing 1.7 million continued.

Blake Grayson: Continued strength in customer growth highlights the value of investing in diverse routes to market and geography. Additionally, we believe that the breadth and scale of our customer base provide a strong foundation for the continued growth of the IAM platform. Large customers spending over $300,000 annually increased by 6% year-over-year to $1,123, down slightly versus Q4 given normal seasonality. We're encouraged that a low single digit percentage share of the $300,000 plus base has adopted and begun to roll out IAM in their organization. This will be a multi-year journey that builds on both product and go-to-market evolution. Digital revenue growth also continued its recent strength, benefiting from initiatives that make it easier for self-serve customers to manage and upgrade their accounts.

Alan: Continued strength in customer growth highlights the value of investing in diverse routes to market and geographies. Additionally.

Alan: Additionally, we believe that the breadth and scale of our customer base provide a strong foundation for the continued growth of the I M platform.

Alan: Large customers spending over $300000 annually increased by 6% year over year to 1123 down slightly versus Q4, given normal seasonality.

Alan: We're encouraged that a low single digit percentage share of the $300000 plus base has adopted and begun to rollout I am in their organizations. This will be a multi year journey that builds on both product and go to market evolution.

Alan: Digital revenue growth also continued its recent strength benefiting from initiatives that make it easier for self serve customers to manage and upgrade their accounts digital revenue grew at more than double the rate of the overall business in Q1, and we are cautiously optimistic that the launch of I am should support future digital growth.

Blake Grayson: Digital revenue grew at more than double the rate of the overall business in Q1, and we are cautiously optimistic that the launch of IAM should support future digital growth. International revenue in Q1 represented 28% of total revenue and grew 10% year over year, or approximately 13% after adjusting for FX, which is similar to the prior quarter. Lower than expected expansion rates have impacted international growth, especially in EMEA. The IAM rollout combined with new EMEA sales leadership creates a stronger foundation for future growth potential. For example, international IAM deal volume in Q1 grew over 50% from Q4 when we launched in most of our larger international regions.

Alan: International revenue in Q1 represented 28% of total revenue and grew 10% year over year or approximately 13% after adjusting for FX, which is similar to the prior quarter.

Alan: Lower than expected expansion rates have impacted international growth, especially in EMEA.

Alan: The I am rollout combined with new EMEA sales leadership creates a stronger foundation for future growth potential.

Alan: For example, the international I am deal volume in Q1 grew over 50% from Q4, when we launched in most of our larger international regions.

Blake Grayson: Turning to the financials, our focus on Operating Efficiency Initiatives drew strong results in Q1. Non-GAAP gross margin for Q1 was 82.3%, up slightly from the prior year, as higher revenue offset the impact of additional cloud migration costs, which were slightly lower than expected due to the timing of migration efforts. As previously discussed, we continue to expect additional expenses associated with our cloud migration to impact gross margins throughout fiscal 2026 before easing in fiscal 2027 and beyond. Non-GAAP operating margin for Q1 was 29.5%, a 100 basis point improvement versus the prior year. The strength year-over-year was driven by higher revenue growth and prudent management of expense growth.

Alan: Turning to the financials, our focus on operating efficiency initiatives drove strong results in Q1.

Alan: non-GAAP gross margin for Q1 was 82, 3% up slightly from the prior year as higher revenue offset the impact of additional cloud migration costs, which were slightly lower than expected due the timing of migration efforts.

Alan: As previously discussed we continue to expect additional expenses associated with our cloud migration to impact gross margins throughout fiscal 2020 six before easing in fiscal 2020 seven and beyond.

Alan: non-GAAP operating margin for Q1 was 29, 5%, a 100 basis point improvement versus the prior year.

Alan: The strength year over year was driven by higher revenue growth and prudent management of expense growth.

Blake Grayson: We ended Q1 with 6,852 employees. This was up just slightly from the prior quarter and 6% from the prior year due to investing in our team, particularly in R&D, including the acquisition of Lexion. Our hiring approach remains strategic and consistent, ensuring alignment with key initiatives while thoughtfully considering location based on cost and necessary skill set. Our non-GAAP operating expense growth in sales and marketing and G&A areas were both lower than the total company, while R&D grew faster with continued investment. In Q1, we generated $228 million of free cash flow, a 30% margin. We expect that annual free cash flow margin will approximate non-GAAP operating margin for fiscal 2026.

Alan: We ended Q1 with 6852 employees. This was up just slightly from the prior quarter and 6% from the prior year due to investing in our team, particularly in R&D, including the acquisition of lexicon.

Alan: Our hiring approach remains strategic and consistent ensuring alignment with key initiatives, while thoughtfully considering location based on cost and necessary skill sets.

Alan: Our non-GAAP operating expense growth in sales and marketing and G&A areas were both lower than the total company, while R&D grew faster with continued investment.

Alan: In Q1, we generated $228 million of free cash flow, a 30% margin we expected annual free cash flow margin will approximate non-GAAP operating margin for fiscal 2026.

Blake Grayson: Our balance sheet remains strong, with over $1.1 billion in cash, cash equivalents, and investments. We have no debt on the balance sheet. Subsequent to quarter end, at the end of May, we secured a new $750 million credit revolver to replace our existing revolver agreement, creating additional capital capacity and flexibility. We continue to use our demonstrated strong free cash flow generation to return capital to shareholders. In Q1, we repurchased $183 million of stock through share buybacks, bringing our cumulative buyback over the past 12 months to over $700 million. With the additional $1 billion buyback authorization announced today, we now have up to $1.4 billion in repurchase authorization available for deployment, and we expect to continue opportunistically repurchasing shares as part of our capital allocation strategy.

Alan: Our balance sheet remains strong with over 1.1 billion in cash cash equivalents and investments we have no debt on the balance sheet.

Alan: Subsequent to quarter end at the end of May we secured a new $750 million credit revolver to replace our existing revolver agreement, creating additional capital capacity and flexibility.

Alan: We continue to use our demonstrated strong free cash flow generation to return capital to shareholders.

Alan: In Q1, we repurchased $183 million of stock through share buybacks, bringing our cumulative buyback over the past 12 months to over $700 million with the additional $1 billion buyback authorization announced today, we now have up to 1.4 billion and repurchase authorization available for deployment.

Alan: And we expect to continue Opportunistically repurchasing shares as part of our capital allocation strategy.

Blake Grayson: Regarding the cost of our equity programs, our stock compensation expense as a percentage of revenue was 19.1% in Q1, down approximately 100 basis points from the prior year and approximately 40 basis points after excluding the impact of restructuring in Q1 of fiscal 2025. On a two-year basis, stock compensation expense as a percentage of revenue was down approximately 200 basis points from 21.1% in Q1 of fiscal 2024, excluding the impact of restructuring, reflecting continued focus on using equity compensation efficiently and managing dilution. Non-GAAP diluted EPS for Q1 was $0.90, an $0.08 per share improvement from $0.82 last year.

Alan: Regarding the cost of our equity programs are stock compensation expense as a percentage of revenue was 19.1% in Q1 down approximately 100 basis points from the prior year and approximately 40 basis points. After excluding the impact of restructuring in Q1 of fiscal 2025 on a.

Alan: And two year basis stock compensation expense as a percentage of revenue was down approximately 200 basis points from 21, 1% in Q1 of fiscal 'twenty 'twenty four excluding the impact of restructuring, reflecting continued focus on using equity compensation and efficiently and managing dilution.

Alan: non-GAAP diluted EPS for Q1 was <unk> 98.

Alan: The eight cent per share improvement from 82 cents last year GAAP diluted EPS for Q1 was 34 cents versus <unk> 16 last year.

Blake Grayson: GAAP diluted EPS for Q1 was $0.34 versus $0.16 last year. Diluted weighted shares outstanding for Q1 was $212.8 million, in line with our expectations. basic shares outstanding for Q1 decreased by 2.6 million year-over-year to 203.3 million total shares reflecting the anti-dilutive impact of our buyback program.

Alan: Diluted weighted shares outstanding for Q1 was $212 8 million in line with our expectations basic shares outstanding for Q1 decreased by $2 6 million year over year to $203 3 million total shares reflecting the anti dilutive impact of our buyback program.

Blake Grayson: With that, let me turn to guidance. We expect total revenue between $777 million and $781 million in Q2, or a 6% year-over-year increase at the midpoint, and between $3.151 billion and $3.163 billion for fiscal 2026, also a 6% year-over-year increase at the midpoint. We expect subscription revenue of $760 million to $764 million in Q2, or a 6% year-over-year increase at the midpoint, and $3.083 billion to $3.095 billion for fiscal 2026, or a 6.5% year-over-year increase at the midpoint. We expect billings between $757 million to $767 million in Q2, or a 5% year-over-year growth rate at the midpoint, and between $3.285 billion to $3.339 billion for fiscal 2026, or a 6.5% year-over-year growth rate at the midpoint.

Alan: With that let me turn to guidance.

Alan: We expect total revenue between $777 million and $781 million in Q2 were a 6% year over year increase at the midpoint and between 3.151 billion and 3.163 billion for fiscal 2020 six.

Alan: So a 6% year over year increase at the midpoint.

Alan: We expect subscription revenue of $760 million to 764 million in Q2, or a 6% year over year increase at the midpoint and 3.083 billion to 3.095 billion for fiscal 2020 six or a six 5% year over year increase at the midpoint.

Alan: We expect billings between $757 million to $767 million in Q2, or a 5% year over year growth rate at the midpoint and between 3.285 billion to $3 339 billion for fiscal 'twenty, and 'twenty, six or a six 5% year over year growth rate at the midpoint.

Blake Grayson: Our updated top line guidance reflects the following dynamics present in our business and the external environment. For full-year revenue, the annual guidance midpoint is increasing by $22 million, reflecting the combination of Q1 strength and an anticipated neutral rather than a negative year-over-year FX impact, partially offset by some headwind from additional bookings prudence for the economic environment. For full-year billings, the annual guidance midpoint is declining by 15 million, which includes additional early renewal considerations and some conservatism in our bookings outlook, partially offset by the positive impact from favorable year-over-year FX rates. While we did not see any material macro impact on our Q1 results, we are taking a cautious approach for the remainder of fiscal 2026, given the uncertain economic environment.

Alan: Our updated topline guidance reflects the following dynamics present in our business and the external environment.

Alan: For full year revenue the annual guidance midpoint is increasing by $22 million, reflecting the combination of Q1 strength and an anticipated neutral rather than a negative year over year FX impact, partially offset by some headwind from additional bookings prudent for the economic environment.

Alan: For full year billings, the annual guidance midpoint is declining by $15 million, which includes additional early renewal considerations and some conservatism in our bookings outlook, partially offset by the positive impact from favorable year over year FX rates.

Alan: While we did not see any material macro impact on our Q1 results. We are taking a cautious approach for the remainder of fiscal 'twenty twenty-six given the uncertain economic environment.

Blake Grayson: For early renewals, we are including a more conservative forecast to account for a wider range of potential timing and magnitude impact. This change has nearly zero impact on our revenue forecast, as it is based on the timing of renewal contracts and is not related to customer demand. As shown in recent quarters and years, buildings are highly sensitive to customer renewal timing, which can result in meaningful variability from period to period. As we evaluate our updated Fiscal 2026 Billings Guidance, we remain encouraged that we continue to forecast a year-over-year Billings Acceleration in Fiscal 2026 after adjusting for the timing of early renewals and FX.

Alan: For early renewals, we are including a more conservative forecast to account for a wider range of potential timing and magnitude impacts. This change has nearly zero impact on our revenue forecast as it is based on the timing of renewal contracts and is not related to customer demand.

Alan: As shown in recent quarters and years billings are highly sensitive to customer renewal timing, which can result in meaningful variability from period to period.

Alan: As we evaluate our updated fiscal 'twenty twenty-six billings guidance, we remain encouraged that we continue to forecast a year over year billings acceleration in fiscal 'twenty or 'twenty six after adjusting for the timing of early renewals and FX. We also expect year over year billings growth to increase in the second half of Fiske.

Blake Grayson: We also expect year-over-year billings growth to increase in the second half of fiscal 2026 versus the first half as IAM deal volume continues to ramp. For profitability, we expect non-gap gross margin between 80.5% to 81.5% for Q2 and between 80.7% and 81.7% for fiscal 2026. We expect non-GAAP operating margin between 26.5% to 27.5% for Q2 and 27.8% to 28.8% for fiscal 2026, unchanged for the full year. We included the following two considerations in our Non-Gap Profitability Guide. For gross margins, for the full year, we continue to expect approximately one percentage point of headwind due to the ongoing cloud data center migration efforts.

Alan: 2026 versus the first half as I M deal volume continues to ramp.

Alan: For profitability, we expect non-GAAP gross margin between 85% to 81, 5% for Q2 and between 87% and 81.7% for fiscal 2026.

Alan: We expect non-GAAP operating margin between 26, 5% to 27, 5% for Q2, and 27, 8% to 28, 8% for fiscal 2020 six unchanged for the full year.

Alan: We included the following two considerations in our non-GAAP profitability guidance.

Alan: For gross margins for the full year, we continue to expect approximately one percentage point of headwind due to the ongoing cloud datacenter migration efforts that headwind was lower than Q1 due to a slight shift in migration timing out to the remainder of fiscal 2026 as previously discussed we anticipate a larger gross margin impact.

Blake Grayson: That headwind was lower in Q1 due to a slight shift in migration timing out to the remainder of fiscal 2026. As previously discussed, we anticipate a larger gross margin impact for migration in fiscal 2026, followed by a gradual easing in fiscal 2027 and beyond. For operating margins for the full year, we continue to expect an approximate 1.5 percentage point operating margin headwind due to the impact of cloud migration, the shift of some roles to cash compensation from equity, and the comp against one-time professional fees from Q2 of 2025. Q2 is our hardest comparison quarter this year.

Alan: Our migration in fiscal 2026, followed by a gradual easing in fiscal 'twenty to 'twenty seven and beyond.

Alan: For operating margins for the full year, we continue to expect an approximate 1.5 percentage point operating margin headwind due to the impact of cloud migration the shift of some rules to cash compensation from equity and the comp against one time professional fees from Q2 of 2025.

Alan: Q2 is our hardest comparison quarter of this year. The majority of the difference between Q2 of 2026 and Q2 2025 operating margins can be attributed to the one time benefits from professional fees, including the insurance reimbursement and litigation Reserve release described in the Q2 2025 results the ongoing cloud.

Blake Grayson: The majority of the difference between Q2 of 2026 and Q2 2025 operating margins can be attributed to the one-time benefits from professional fees, including the insurance reimbursement and litigation reserve release described in the Q2 2025 results, the ongoing cloud migration impact, and the equity-to-cash compensation change. Our overall approach to profitability in fiscal 2026 reflects our intent to prioritize IAM investments to drive long-term growth, while maintaining similar levels of full-year operating margins realized in fiscal 2025, excluding the unique gross margin and operating expense headwinds noted above. We remain encouraged about our longer-term opportunity to improve operating leverage by combining our approach to efficiency with an improved and accelerating outlook for buildings growth exiting fiscal 2026.

Alan: Asian impact and the equity the cash compensation changes.

Alan: Our overall approach to profitability in fiscal 'twenty 'twenty six reflects our intent to prioritize I am investments to drive long term growth, while maintaining similar levels of full year operating margins realized in fiscal 'twenty twenty-five excluding the unique gross margin and operating expense headwinds noted above.

Alan: We remain encouraged about our longer term opportunity to improve operating leverage by combining our approach to efficiency with an improved an accelerating outlook for billings growth exiting fiscal 'twenty 'twenty six.

Blake Grayson: We continue to expect non-GAAP fully diluted weighted average shares outstanding of $210 million to $215 million for both Q2 and fiscal 2026.

Alan: We continue to expect non-GAAP fully diluted weighted average shares outstanding of $210 million to $215 million for both Q2 and fiscal 2026.

Blake Grayson: In closing, in Q1, we continue DocuSign's transformation by delivering significantly increased innovation to customers, driving business momentum through IM adoption and digital maturity, and positioning our go-to-market team for greater long-term contribution. We also maintained our efficiency focus through improved profitability and strengthened our commitment to generate significant cash flow and return capital opportunistically through buyback. We have strong conviction in our strategy and ability to execute and we will continue to focus on increasing the value we deliver to customers, employees, and shareholders.

Alan: In closing in Q1, we continued Darkey science transformation by delivering significantly increased innovation to customers driving business momentum through I am adoption and digital maturity and positioning our go to market team for greater long term contribution.

Alan: We also maintained our efficiency focus through improved profitability and strengthen our commitment to generate significant cash flow and return capital Opportunistically through buybacks we.

Alan: We have strong conviction in our strategy and ability to execute and we will continue to focus on increasing the value, we deliver to customers employees and shareholders.

Blake Grayson: Thank you for your support. This concludes our prepared remarks.

Alan: Thank you for your support.

Alan: This concludes our prepared remarks with that operator, let's open the call for questions.

Operator: With that, Operator, let's open the call for questions. Thank you.

Alan: Thank you we will now be conducting a question Anthony.

Operator: We will now be conducting a question and answer. If you would like to ask a question... Press star 1 on your teleth... Confirmation Tone will indicate your line. You may press star 2 if you would like to remove Participants using. It may be necessary to pick up your handset before. One moment, please, while we.

Speaker Change: If he would like to ask a question. Please press star one on your telephone.

Speaker Change: Hey, Tom Promethean Thoma indicate your line is in the question queue you.

Speaker Change: You May press star two if he would like to remove your question from Nicky.

Speaker Change: All participants using speaker equipment it may be.

Speaker Change: Necessary to pick up your handset before pressing the psyche.

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

Operator: Thank you.

Speaker Change: Thank you. Our first question comes from the line of Barry with William Blair. Please proceed.

Jacob Roberge: Our first question comes from the line of Jacob Roberge with William Blair. Yeah, why don't I take the first part of that, and you can do the second, Blake. So, we made some changes at the beginning of the first quarter to our compensation to encourage reps to close deals in-quarter. We felt that that was the healthiest dynamic, unless there's a customer reason for booking the deal early. We thought that that would play out during the course of the year. It ended up happening predominantly here in Q1. And so, that's what accounts for the early renewals miss relative to our forecast.

Speaker Change: Yeah. Thanks for taking the questions and could you just double click on the go to market transition and what exactly is driving that the earlier the lower earlier in ALS and then it sounds like normalized billings growth would have come in at the high end of the range, but if we flashback to Q3 and Q4 of last year. There were some fairly healthy beat the guy.

Speaker Change: And so can you help us understand that delta and whether there is anything else that impacted the quarter.

Speaker Change: Yeah, why don't I take the first part of that and you can do the second Mike.

Speaker Change: We made some changes at the beginning of the first quarter.

Speaker Change: Two our compensation to encourage to encourage reps to.

Speaker Change: Close deals in quarter, we felt that that was the.

Speaker Change: The healthiest dynamic.

Speaker Change: Unless there is a customer reason for.

Speaker Change: The deal early.

Speaker Change: We thought that that would play out during the course of the year It ended up.

Speaker Change: Happening predominantly here in Q1.

Speaker Change: And so that's what accounts for the early renewals.

Speaker Change: No Miss relative to our forecast.

Allan Thygesen: I think those were the right changes. We want to set our sales reps up to focus on long-term success, on building their portfolios with IM. And we feel that that's now landed very well. The sales reps are behaving as we expected. And so, it's on us to have missed the forecast slightly on that, and that accounts for the early renewals miss. But overall, the business is on very healthy foundation. I think the IM progress is very substantial this quarter, and we are maintaining or increasing our revenue outlook.

Speaker Change: I think those were the right changes we want to set our sales reps to focus on long term success and building their their portfolios with I am.

Speaker Change: We feel that.

Speaker Change: Now landed very well the sales reps are behaving as we as we expected and so it's on us to have missed the forecast slightly on that and that's accounts for the for the early renewals Smith, but.

Speaker Change: But overall the business is very is very healthy.

Speaker Change: Nation I think the progress is very substantial this quarter.

Speaker Change: And we are maintaining or increasing our revenue outlook with that let me go to Blake sure. Thanks, Jay for the question with regards to the questions about <unk>.

Blake Grayson: With that, let me link it to Blake. Sure. Thanks, Jake, for the question. With regards to the questions about a normalized Q1 relative to the prior quarters, yes, I think you brought up Q3 and Q4. So, just in regards to Q1, business fundamentals remain strong. Like Alan just said, IM continued to ramp. Q1 direct deal volume for IM was larger than Q4. That's not something we would normally see in our business just because of seasonality, and that's direct only. I'm not including the nearly 1,000 new self-service IM customers we added, which is great. You heard in the prepared remarks consumption and usage growth just as consistent and positive year-over-year, which we're really happy about.

Blake: <unk> Q1 relative to the prior quarters. So I think you brought up Q3 and Q4. So just regarding Q1 business fundamentals remained strong like me like Alan just said I am continuing to ramp Q1 direct deal volume for Iron was larger than Q4, that's not something we would normally see in our business just because of the season.

Blake: And Thats, a direct only I'm not including the nearly 1000, new self service customers, we haven't which is great.

Speaker Change: Heard on the prepared remarks consumption and usage growth justice.

Speaker Change: <unk> and positive year over year, which we're really happy about dollar net retention improved just slightly for us flat quarter to quarter on around it based on a non rounded basis up just slightly.

Blake Grayson: Dollar net retention improved just slightly for us, flat quarter-to-quarter on a non-rounded basis, up just slightly. I would say on expansion and gross retention, both were up year-over-year. We think we can do a little bit better there, but as far as Q1 goes, especially if you're comparing it to Q3 and Q4, make sure to go back and look at the details that we talked about in those quarters, because in the second half of 25, early renewals were a tailwind particularly for us in both of those quarters. So, trying to compare beat magnitudes and such against those quarters in particular, I would just really advise you to go back and take a look at those numbers normalized for that timing component of early renewals.

Speaker Change: I would say an expansion in gross retention both were up year over year.

Speaker Change: We can do a little bit better there, but as far as like Q1 goes, especially if you're comparing it to Q3 and Q4 make sure to go back and look at the details that we've talked about in those quarters because of the second half of 'twenty five.

Speaker Change: Early renewals were a tailwind, particularly for us in both of those quarters. So trying to compare like beat magnitude in such against those quarters. In particular, you really I just really advise you to go back and take a look at those numbers kind of normalized for that timing on an overly renewals.

Allan Thygesen: Yeah, maybe just to complement what Blake just said, if you take both the FX and the early renewals part out, and you look at our time series of our billings, we're still past the trough last year and have a nice acceleration this year in our outlook, and that's what reflects our confidence in the business and the momentum at IM. Okay, that's helpful.

Speaker Change: Maybe just to complement what Mike just said.

Speaker Change: If you take both.

Speaker Change: The FX and the early renewals part out and you look at a time series of our billings, where we're sort of past the trough last year and have a nice acceleration this year and our outlook.

Speaker Change: That's.

Speaker Change: It reflects our confidence in the business and the momentum with I M.

Speaker Change: Okay. That's helpful and then Alan understand the moving pieces around the go to market and earlier needles, but but how do you feel about the broader health of the business do you still feel like that I am the upsell opportunity is intact, and then that retention and expansion understand it might've been a little bit softer than you would've expected this quarter, but should that continue to improve.

Allan Thygesen: And then, Allan, understand the moving pieces around the go-to-market and earlier renewals, but how do you feel about the broader health of the business? Do you still feel like that IAM upsell opportunity is intact? And then that retention and expansion, understand it might have been a little bit softer than you would have expected this quarter, but should that continue to improve from here? Or is there anything else in the quarter that would give you pause on that trajectory back to double-digit Now, I think we feel really good about where I am sitting. We've demonstrated product-market fit in the commercial segment, and that sales motion has now been replicated from our domestic business to our international business.

Speaker Change: I'm here or is there anything else in the quarter that would give you pause on that trajectory back to double digit growth.

Speaker Change: No I think we feel really good about where I am sitting we've demonstrated a product market fit in the commercial segment of that sales motion has now been replicated from our domestic business and national business.

Allan Thygesen: We're seeing great adoption. We mentioned some trends on the prepared remarks there. So, overall, I feel really good about where I am sitting. And, of course, our core sign business remains very, very healthy. We've got improving DNR overall in the business, and fundamental consumption metrics and contract utilization are also improving. And so, overall, I think we're sitting on a very good trajectory. You can feel the optimism inside the company with the sales teams. We did make some changes here at the beginning of the year that are necessary to set us up for the right medium to long-term growth, but perhaps introduced a little bit of disruption.

Speaker Change: We're seeing great adoption mentioned some trends on the.

Speaker Change: The prepared remarks, there. So overall I feel really good about where I am sitting and of course, our core spine business.

Speaker Change: <unk> is very very healthy we've got improving our overall in the business.

Speaker Change: No fundamental consumption metrics.

Speaker Change: Contract utilization are also improving and so overall I think we are sitting on a very good trajectory you can feel the optimism inside the company with the sales teams. We did make some changes here at the beginning of <unk>.

Speaker Change: The year that are necessary to set us up on the right for the right medium to long term growth.

Speaker Change: But perhaps you introduce a little bit of disruption I think thats past us now and we're seeing good trends in demand. So I think I think we're feeling very good about where things are heading.

Allan Thygesen: I think that's past us now, and we're seeing good trends into May. So, I think we're feeling very good about where things are sitting.

Operator: Okay, thanks for taking the questions. Thank you.

Speaker Change: Okay. Thanks for taking the questions.

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

Tyler Radke: Our next question comes from the line of Tyler Radke with Citi. Yeah, thank you for taking the questions here. And, you know, can certainly understand the billings dynamic, particularly coming off of a Q4. But I guess one of the questions we're getting from other investors is, you know, really around your confidence level in the second half. You know, if we take your commentary, it sort of implies a kind of continual ramp in billings growth from this Q1 level. So I guess, can you just give us a sense for what you've assumed in that ramp as it relates to early renewals?

Speaker Change: Yeah. Thank you for taking the questions here and you know can certainly.

Speaker Change: Certainly understand that the billings.

Speaker Change: Dynamic, particularly coming off of a Q4, but I guess one of the questions. We're getting from other investors is you know really around your confidence level in the second half.

Speaker Change: We take your commentary it sort of implies a and a continual ramp and billings growth from Q1 levels. So I guess can you just give us a sense for what you've assumed in that ramp as it relates to early renewals and then specifically around maybe the enterprise contribution.

Allan Thygesen: And then specifically around maybe the enterprise contribution from go to market and IIM, I imagine those are going to be even greater factors as you go into Q3, Q4. But just help us understand why this new guidance that implies an acceleration is de-risked in your view. First of all, we were always assuming an acceleration in the second half, and that remains the case, as you observed. In terms of the factors you pointed to, we snapped to a lower level of early renewals here in Q1, and we're expecting that to be maintained throughout the remainder of the year.

Speaker Change: From from go to market and and I am I imagine those are going to be even greater factors. As you go into Q3 Q4, but just help us understand.

Speaker Change: Why why this new guidance. It implies an acceleration is is de risked in your view.

Speaker Change: First of all we were always assuming acceleration in the second half.

Speaker Change: It remains the case as you observed.

Speaker Change: In terms of the fact issue you pointed to.

Speaker Change: If we snap to a lower level of early renewals here in Q1 and where.

Speaker Change: I think that to be maintained throughout the remainder of the year that feels like a very good assumption based on what we're seeing.

Allan Thygesen: That feels like a very good assumption based on what we're seeing. In terms of the enterprise stuff, part of the reason that we have a lot of confidence in our forecast looking forward is because we've already demonstrated that we can replicate our commercial motion, and that's the bulk of the forecast. We are counting on a little bit from the enterprise. I think that's well within our grasp. And then a bigger contribution from enterprise out in fiscal 27 and beyond. So there isn't an assumption that we're going to see some dramatic acceleration in our enterprise business in the second half.

Speaker Change: In terms of the enterprise stuff and part of the reason that we have a lot of confidence in our forecast looking forward is because we've already demonstrated that we can replicate our commercial motion and that's the bulk of the forecast we are counting on a little bit from the enterprise I think that's well within within our within our grasp and then a bigger contra.

Speaker Change: Houston from enterprise.

Speaker Change: In fiscal 2007 and beyond so there isn't that an assumption that we're going to see some dramatic acceleration in our enterprise business in the second half, it's really more just the rolling out and scaling of our commercial business globally.

Allan Thygesen: It's really more just the rolling out and scaling of our commercial business globally that drives that.

Speaker Change: That drives that.

Speaker Change: Just I'll just add one note to your question on Tyler on the renewals assumption, we do we have put in a little bit more room to operate on the timing of renewals and that's really as important to recognize that that's just timing. There is not an impact on revenue from that assumption, there's not an impact on customer demand from that but just in light of the environment I think it's a good idea.

Speaker Change: To have a little bit more room, there, because especially when it's timing and not related to the health of the revenue kind of profile of the business.

Tyler Radke: Great. And for a follow up question, I appreciate the comments on the consumption trends in the May, which would seem to suggest things are healthy and, you know, really across all verticals. But do you, are you hearing from customers sort of a desire to, you know, contract envelopes, maybe a bit closer to their underlying consumption than they, you know, previously were just given, you know, the macro environment and tariff environment, you know, seems to be changing on a daily basis. Is that sort of calculus change for customers? And is that something you've contemplated in the guidance?

Speaker Change: Great and for a follow up question I appreciate the comments on the consumption trends in the main which would seem to suggest things are healthy and you know really across all verticals, but.

Speaker Change: Do you are you hearing from customers sort of a <unk>.

Speaker Change: Desire to contract envelope, maybe a bit closer to their underlying consumption than than they.

Speaker Change: Previously, we're just given the macro environment and tariff environment seems to be changing on a daily basis is that sort of calculus change for customers and is that something you've contemplated in the guidance.

Allan Thygesen: Yeah, no, we haven't seen that. We, you know, we saw some of that coming off COVID. But that's been played out and is reflected in all the historical numbers at this point. So no, macro really was not a material factor. You know, maybe there's a few anecdotes here and there, but nothing that we've seen so far. That said, I think all CEOs and CFOs are slightly apprehensive about an environment that just feels more volatile and risky. And so we gave ourselves just a little bit more buffer, as Blake alluded to. But in terms of looking backwards, it was not material in Q1.

Speaker Change: Yeah, no we haven't seen that.

Speaker Change: Yes, we saw some of that coming off COVID-19, but that's been played out and is reflected in all of the.

Speaker Change: Historical numbers at this point so no Mac.

Speaker Change: Macro really does that.

Speaker Change: Material factor.

Speaker Change: There is a few anecdotes here and there, but nothing that we've seen so far that said I think all Ceos and Cfos are.

Speaker Change: Slightly apprehensive about environment. It just feels more volatile and risky and so we gave ourselves just a little bit more buffer as Blake alluded to but.

Speaker Change: In terms of looking backwards.

Speaker Change: It was not material in Q1.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from the line of Rob Owens with Piper Sandler. Please proceed.

Rob Owens: This question comes from the line of Rob Owens with Pipeline. And I guess if you just following on that that last thread. Some of the billings. Yeah, no, I don't think we've seen anything on size of deals. I mean, you can see I think we report our customers over 300k which were up year on year and we continue to see help there. That hasn't been an issue. And that's also reflected in some of the consumption stats would hold across customer size segments and industries. Okay, perfect. And then our understanding is the lean a little more aggressively this year, which didn't come to fruition in the first quarter.

Speaker Change: And I guess, if you just follow on that last thread.

Speaker Change: <unk>.

Speaker Change: Some of the the billings.

Speaker Change: I guess lowering that you took as a function of the uncertain economic environment, that's purely a function of timing and not necessarily a function of size of deals as well.

Speaker Change:

Speaker Change: Yes, no I don't think we've seen anything of size of deals I mean, you can see I think we report our customers over 300, K, which were up year on year and we continue to see out there that hasn't been an issue and that's also reflected in some of the consumption stats would hold across customer size segments and industries.

Speaker Change: Okay, perfect and then our understanding is the.

Speaker Change: Leaning a little more aggressively this year, which didn't come to fruition in the first quarter and I understand the commentary around the the timing of some of the cloud migration efforts anything else at play and you did talk about increasing sales capacity without expanding the team and is that something that you're factoring into the calculus here something that could lead to upside.

Rob Owens: And I understand the commentary around the timing of some of the cloud migration efforts.

Allan Thygesen: Anything else at play? And you did talk about increasing sales capacity without expanding the team. And is that something that you're factoring into the calculus here or something that can lend upside, just in terms of repurposing a lot of that existing Salesforce? We're not counting on that, but I certainly hope so, that over time that sales capacity will translate into more bookings and billings and revenue.

Speaker Change: Just in terms of Repurposing, a lot of an existing sales force. Thanks.

Speaker Change: We're not counting on that but.

Speaker Change: So I hope so that over time that sales capacity will translate into more bookings and billings revenue.

Allan Thygesen: Maybe just, let me just touch quickly on some of the changes that we made at the beginning of the year to set ourselves up for a long-term success. We, besides the early renewals piece, which really was a minor element of the changes that we made, big changes were, we really wanted our sales trips to be able to focus more time to go deeper and sell more broadly into organizations that represented the biggest growth opportunity. And so we re-segmented and changed the portfolios for our sellers and moved a substantial number of customers to a self-serve first model.

Speaker Change: Maybe just let me just touch quickly on some of the changes that we made at the beginning of year to set ourselves up for long term success.

Speaker Change: We are besides the the early renewals piece was really it was a minor element of the changes that we made big changes, where we really wanted our sales reps to be able to focus more time to go deeper and sell more broadly into organizations that represented the biggest growth opportunity and so we re segmented and changed.

Speaker Change: Our portfolios for our sellers and moved a substantial number of customers to a self serve first model. So that freed up capacity in effect without additional head count to let our reps go deeper we also changed our sales compensation models emphasize more annualized models and emphasize I am and so on and so there were a lot of leavers pulled.

Allan Thygesen: And so that freed up capacity in effect without additional headcount to let our reps go deeper. We also changed our sales compensation model to emphasize more annualized models and emphasize IAM and so on. So there were a lot of levers pulled to set ourselves up for, shall we say, a larger deal, more enterprise-y type of sales motion. That'll be a long journey for the company, but we've begun it. I'm very pleased with the early results and how the sales teams are responding to that. And we're feeling like those were the right changes to make to set us up to really capture the full potential IAM.

Speaker Change: To set ourselves up for shall we say a larger deal more enterprise type of sales motion that'll be.

Speaker Change: A long journey for the company.

Speaker Change: But we have begun it I'm very pleased with the early results and how the sales teams are responding to that.

Speaker Change: And we're feeling like that those were the right changes to make to set us up to really capture the full potential I am.

Rob Owens: Great, thanks for the color.

Speaker Change: Great. Thanks for the color.

Speaker Change: Mhm.

Speaker Change: Thank you. Our next question comes from the line of Josh Baer with Morgan Stanley. Please proceed.

Josh Baer: Thank you. Our next question comes from the line of Josh Baer with Morgan Stanley. Great, thanks for the question.

Josh Baer: Great. Thanks for the question I was hoping you could provide some context for how much of the double digit percentage.

Blake Grayson: I was hoping you could provide some context for how much of the double-digit percent that will be IAM as a percentage of subscription book of business is coming from upsell in net new customers versus that transition from ETH signature. Just any context for how accretive or incremental IAM is on the business.

Josh Baer: That will be I am at the percentage of subscription bookings book of business is coming from upsell and net new customers versus that transition from E signature just any.

Josh Baer: Any context for how accretive or incremental I am and it's on the business.

Blake Grayson: Why don't you take that one, Blake? Sure. So, you know, we're not disclosing expansion rates or anything like that. Obviously, with the book of business that we have, with the size of it, you know, $3 billion plus, we have a huge opportunity to be able to provide extra value to our existing customers. So, I think that existing install base, and that is an upsell from what they're doing today, because if you recall, the vast, vast majority of the IM deals that we're doing are expansions, a spend, because we're providing additional value to customers. But also, we're finding that, you know, new customers also are quite interested in it.

Josh Baer: Why don't you take that one sure. So we're not we're not disclosing expansion or anything like that obviously with the book of business that we have with the size of it.

Speaker Change: $3 billion, plus we have a huge opportunity to build will provide extra value to our existing customers. So I think that existing install base and that is an upsell from what they're doing today, because if you recall the vast vast majority of the iam deals that we're doing are expansions of spend because we're providing additional.

Speaker Change: And our customers, but also we're finding that new customers also are quite interested in it and it's a.

Blake Grayson: And it's becoming a much, much larger share of our new deals, our new company deals that we're doing. So, it's going to come from both of these things. But I think that it's fair to assume that with the size of the install base that we currently have, the biggest opportunity we have is with customers that we already do business.

Speaker Change: Becoming a much much larger share of our new deals are new company deals that we're doing so it's going to come from both of these things, but I think that it's fair to assume that with the size of the installed base that we currently have the biggest opportunity. We have is with customers that we already do business with.

Blake Grayson: Okay, that's helpful.

Speaker Change: Okay. That's helpful Blake, you've called out some smaller nonrecurring items benefiting revenue.

Blake Grayson: Blake, you called out some smaller non-recurring items benefiting revenue, just was wondering what are those and how big was that? Thank you. Yeah, sure. So we had a number of what I'll call just smaller items that we just don't feel like we can count on necessarily as recurring every quarter. They can, we just aren't including that in the guidance. They include things like short-term add-on deals where somebody comes in for a very short period of time for additional capacity, lower sales returns, lower bad debt. Those went almost all in our favor in Q1, in the revenue side.

Speaker Change: Was wondering what are those and how big was that thank you.

Speaker Change: Yeah sure. So we had a number of what I'll call just smaller items that we just don't feel like we can count on unnecessarily.

Speaker Change: Recurring every every quarter. They can we just arent, including that in the guidance. They include things like short term add on deals where somebody comes in for a very short period of time for additional capacity lower sales returns lower bad debt.

Speaker Change: Those.

Speaker Change: When almost all in our favor in Q1 and the revenues I know, they're not massive but not in a huge portion of it by what can happen when you add them up during.

Blake Grayson: Now, they're not massive, they're not a huge portion of it, but when you add them up, they help the quarter. But all good things, all positive elements for us for in Q1.

Speaker Change: For the quarter.

Speaker Change: All good things all positive developments for us for in Q1.

Speaker Change: Great. Thanks.

Speaker Change: Thank you. Our next question comes from the line of Brad Sills with Bank of America. Please proceed.

Brad Thill: comes from the line of Brad Thills with Bank of America. Oh, great. Thank you so much.

Brad Sills: Oh, great. Thank you so much Alan I wanted to ask a question on the go to market changes here I mean with the.

Allan Thygesen: Allan, I wanted to ask a question on the go-to-market changes here. I mean, with the focus on going deeper and more broadly within accounts. What are you seeing? I know it's early, but... https://docsign.com Yeah, we are, we're definitely doing larger and larger IM deals. And we've had some some early successes in the enterprise space. So I feel pretty good about the momentum. But as I said, it is still it is still early. We think in the long run, this has potential to really materially change how much value we're able to deliver to customers and therefore how much they're willing to pay us on a recurring basis.

Speaker Change: The focus on going deeper and more broadly within accounts now.

Speaker Change: What are you seeing I know, it's early but you know is there anything in the pipeline that you'd point to to say that the leading indicators are there and you're seeing some of the early.

Speaker Change: You know results that you might expect out of that.

Speaker Change: Yes.

Speaker Change: We are definitely doing larger and larger deals.

Speaker Change: We've had some some early successes in the enterprise space.

Speaker Change: So I'm feeling pretty good about the momentum, but as I said it is still it is still early.

Speaker Change: Think of the long run this has potential to really materially change.

Speaker Change: How much value, we're able to deliver to customers and therefore, how much they're willing to pay us on a recurring basis.

Allan Thygesen: So all the all the signs on the IM front in terms of both deal velocity and deal value, progress in various customer segments and geographies all positive so far.

Speaker Change: So all the all the signs on the I am front in terms of both deal velocity in deal value.

Speaker Change: Progress in various customer segments and geographies all are positive so far.

Speaker Change: Wonderful. Thank you Alan and then one more if I may on some.

Allan Thygesen: And then one more, if I may, on. of the new features you alluded to with IAM. Coming in August, anything that you'd point to in particular that you're excited about? I know you probably don't want to let the cat out of the bag too much, but maybe just some broad strokes. Well, we've already announced what's coming in August. So we at our Momentum event in April, we previewed our roadmap. We have, you know, just as an indication of the scale of the innovation momentum. When we launched IAM last year, I would say there were really three pieces of anchor functionality that were materially net new besides the refresh on the existing products.

Speaker Change: Some of the new features you alluded to it with I am.

Speaker Change: In August anything that you'd point to in particular that you're excited about.

Speaker Change: And I know you'd probably don't have to let the cat out of the bag too much but maybe just some broad strokes on.

Speaker Change: What's coming in August that they could perhaps be a catalyst in the I M business.

Speaker Change: What we borrowed it out so it's coming in August so we at our momentum event in April we previewed our roadmap.

Speaker Change: Just as an indication of the scale.

Speaker Change: Innovation momentum when we launched I am last year I'd say, there were really three pieces of anchor functionality that would materially net new besides the refresh on existing products.

Speaker Change: And I'd say, we did seven.

Allan Thygesen: And I'd say we did seven announcements of comparable magnitude here at Momentum in April. Some of those were immediately available, and some of those are rolling out here over the next three to four months.

Speaker Change: <unk> of comparable magnitude.

Speaker Change: Here at momentum in April some of those were immediately available on some of those are rolling out here over the next three to four months.

Speaker Change: I don't think there's any one thing that I would highlight but.

Allan Thygesen: I don't think there's any one thing that I would highlight, but maybe I'll talk about three very quickly. On the front end of creating agreements, we have Agreement Desk, which is essentially a system for managing the flow of contracts inside of a company. Imagine sales reps and legal instead of today, which is just, you know, a series of it tends to, again, be a series of disconnected interactions between the company and an outside party, a consumer or another company. We've created a single destination where all of that activity can happen with multiple parties. That's really an earthquake in that space and very well suited, of course, for financial services, but also for a whole host of other categories.

Speaker Change: Maybe I'll just talk about three very quickly.

Speaker Change: On the front end of creating agreements.

Speaker Change: We have.

Speaker Change: Agreement desk, which is essentially a system for managing the flow of contracts inside of a company imagine sales reps illegal instead.

Speaker Change: Instead of today, which is series of uncorrelated unconnected E mails, but nobody knows what the status is.

Speaker Change: Essentially a hub for managing that workflow that integrates with the tools you already have that was extremely well received at the event.

Speaker Change: On the.

Speaker Change: The execution side.

Speaker Change: We are.

Speaker Change: We announced some called Workspaces.

Speaker Change: And today, if you're trying to do a multi stage financial transaction, let's say signing up for wealth management or a real estate transaction on auto purchase.

Speaker Change: The thing like that intends to again be a series of disconnected interactions between the company and an outside party to a consumer or another company. We've created a single destination, where all of that activity can happen with multiple parties.

Speaker Change: It's really an earthquake in that space and very very well suited of course professional services, but also for a whole host of other categories and then I'd say on the managing your contracts after execution one of the things that we showed at the very shall we say AI centric feature and that really wouldn't have been possible, even a year or two ago.

Allan Thygesen: And then I'd say on the managing your contracts after execution, one of the things that we showed that's a very, shall we say, So that creates sort of an infinite flexibility in what you can look for in your agreements, which is something that pretty much all companies have asked us for for a long time. And we're finally able to deliver it in a really scalable, lightweight, delightful way. So those are just three examples of contract innovation at all stages of the journey. And I think that there was a lot of excitement at the event and we're excited about bringing those features to market globally.

Speaker Change: There's something called custom extractions, which essentially let you. Besides all the standard extractions like the names of the parties of the terms now you can define any arbitrary term you're interested in point to a couple of agreements.

Speaker Change: In terms of the present in the relevant language.

Speaker Change: I will essentially learn off that and then allow you to find that across your population have agreements. So that creates sort of an infinite flexibility in what you can look for in your agreements, which is something that pretty much all companies have asked us for for a long time and were finally able to deliver a really scalable lightweight.

Speaker Change: So I'll just three examples.

Speaker Change: Contract innovation at all stages of the journey.

Speaker Change: And I think there was a lot of excitement at the event and we're excited about bringing those features.

Speaker Change: To market globally.

Allan Thygesen: Great to hear.

Speaker Change: Great to hear thanks Alan.

Unknown Executive: Thanks, Alan. Here with Evercore ISI, peace. Yeah, thanks very much.

Speaker Change: Mhm.

Speaker Change: Thank you. Our next question comes from the line.

Speaker Change: Okay.

Speaker Change: <unk> with Evercore ISI. Please proceed.

Speaker Change: Yes, thanks, very much Alan I was wondering can you expand a little bit on your commentary around your GSI partners. I was just kind of curious whether they can be a source of sort of net new ACD for you. This year I realize it could take a while for them to build up practices, but can you just talk about <unk>.

Allan Thygesen: You know, Allan, I was wondering, can you expand a little bit on your commentary around your GSI partners? I was just kind of curious, you know, whether they could be a source of sort of net new ACV for you this year? I realize it could take a while for them to build up practices. But can you just talk about, you know, sort of where you are with them? And you know, what's the hope of them, you know, helping pull you into the enterprise, perhaps a little bit more, and then, you know, really helping to be a driver of new pipeline for you?

Speaker Change: Sort of where you are with them and you know what's the help of them, helping pull you into the enterprise, perhaps a little bit more and then really helping to be a driver of new pipeline for you all.

Allan Thygesen: Thanks. Yeah.

Speaker Change: Yes.

Allan Thygesen: So historically, we haven't had a huge relationship with SIs because it's been primarily about our CLM business, right? Signed was so simple and easy to deploy for companies that there wasn't a lot of need for the kind of value-added services that SIs provide. But with IM, that's really changing the picture and across really all of DocuSign. And at the same time, this is an area where the SIs do a tremendous amount of work already. They pretty much all have large practice areas in digital transformation that includes or is focused specifically on their agreement space and haven't had a platform to build those practices on top of.

Speaker Change: Yes, so historically.

Speaker Change: We haven't had a huge relationship with size because it's been primarily about our CLO business right side was so simple and easy to deploy for companies that there wasn't a lot of need for the kind of value added services and SaaS provider.

Speaker Change: I am that's really changed in the picture and across really all of Doctor sign and so.

Speaker Change: And at the same time this is an area where the size to a tremendous amount of work already.

Speaker Change: You all have large practice areas in digital transformation that includes or is focused specifically on the agreements space and haven't had a platform to build those practices on top of it. So we see a lot of inbound interest from our big names in the industry.

Allan Thygesen: So we see a lot of inbound interest from the big names in the industry. I would rate us as relatively immature in really being able to fully dance with the big SIs right now. But we are ramping up, as I said, a lot of interest. We know how critical that is to unlock the full potential of the enterprise. And they are very keen to partner with us as a well-trusted, well-respected brand that I think has the most complete and compelling vision and agreements. But we have growing to do to fully capitalize on what the GSIs represent.

Speaker Change: Raiders is relatively immature and really being able to fully dance with the bank.

Speaker Change: Size right now, but we are ramping up a lot of sense.

Speaker Change: Is that a lot of interest we know how critical that is to unlock the full potential of the enterprise and.

Speaker Change: They are very keen to partner with us as a well respected trusted well respected brands that I think has the most complete and compelling Michigan agreements. So.

Speaker Change: We have we have.

Speaker Change: Rowing to due to to fully capitalize on talking about the geoscience represent.

Allan Thygesen: That's a big focus of mine and Paula's.

Speaker Change: That's a big focus of mine and policy.

Blake Grayson: We hired a fantastic new leader for our partner who is very strong in that area. And so it's the top priority for us over the next couple of years to really build out our TSI partnership. Okay, great.

Speaker Change: And testing new leader for our partner organization was very strong in that area and so.

Speaker Change: It's a top priority for us to over the next couple of years to really build out our GSI partnerships.

Blake Grayson: And then Blake, sorry, if I missed this, I think you said in your prepared commentary, but the upside on margins this quarter was partially due to some of the duplication of cloud costs going away earlier. Can you just remind me sort of on some of the upside levers on margin this quarter relative to your guide back? Sure. You know, the biggest component that drove operating margin outperformance was the revenue outperformance on the top line, right? We don't have like a ton of variable cost in this business so that when we outperform on the top line, we usually have the advantage that it can follow the bottom line, which it did for us.

Speaker Change: Okay, Great and then Blake sorry, if I missed this I think you said in your prepared commentary, but the upside on margins. This quarter was partially due to some of the duplication of cloud costs.

Speaker Change: Going away earlier can you just remind me sort of on some of the upside levers on margin this quarter relative to your guide. Thanks.

Speaker Change: Sure.

Speaker Change: Biggest component that drove operating margin outperformance was the revenue outperformance on the top line right.

Speaker Change: We don't have like a ton of variable cost in this business. So that when we outperform on the topline we usually have the advantage on a can follow the bottom line. What you did for us and that drove the majority of the op margin side or on the cloud migration component. We just had a little bit of timing push from Q1, and then out into kind of Q2, and Q3 and you can see that reflected in our.

Blake Grayson: And that drove the majority of the outmargin side. On the cloud migration component, we just had a little bit of timing push from Q1 and then out into kind of Q2 and Q3. And you can see that reflected in our guide. That happens, you know, from time to time, nothing to concern of or anything like that. But that was the other component of the outmargin outperformance. Thanks. Thank you.

Speaker Change: Guide that happens from time to time, nothing to concern over or anything like that but that was the other component of the op margin outperformance.

Speaker Change: Thanks, guys.

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

Brent Thill: Our next question comes from the line of Brent. Thanks, Allan. Just on the sales change, I mean, we've all... I think everyone's just curious, is this... I know you said it's going to take time, but do you think... Massive overhaul, was it a tweak? You know, I think we feel pretty good about that settled in. And we're already seeing, you know, stabilization and normalization here early in Q2. So I'm pretty optimistic.

Speaker Change: Thanks, Alan just on the sales change I mean, we've all witnessed in the last couple of decades sales changes in Q1, they they have their their impact in <unk>.

Speaker Change: I think everyone's just curious is this.

Speaker Change: I know you said, it's going to take time, but do you think this is was this a massive overhaul was it a tweak do you think it's a six month digestion do you think it's a nine months I mean, how do you how do you gauge the magnitude and the duration of how.

Speaker Change: How long it takes to settle in.

Speaker Change: I think we feel pretty good about that settled in and we're already seeing stabilization normalization here early in Q2, So I'm pretty optimistic let me just start with I think the overall piece, which is we really wanted to set ourselves up with the right long term decision to maximize.

Allan Thygesen: Let me just start with the, I think the overall piece, which is, we really wanted to set ourselves up with the right long term decision to maximize our opportunity and value here. And so, you know, you want when you make when you do that, you know, you have to be willing to encounter just a little bit of turbulence in the short run. We've shown a pattern of doing that. You may recall, we had some difficult decisions in Q1 in the last couple of years. And we're just trying to set ourselves up for the right long-term health.

Speaker Change: Our opportunity in value here and so.

Speaker Change: When you make when you do that.

Speaker Change: You have to be willing to comment just a little bit of turbulence in the short run we have shown a pattern of doing that.

Speaker Change: We had some difficult decisions.

Speaker Change: In Q1 in the last couple of years and.

Speaker Change: We're just.

Speaker Change: China set ourselves up for the right.

Allan Thygesen: I'm very pleased with where it's going. I'd say that if you think about where the adjustments play out, the commercial segment can adjust very quickly. You give people new BICs, but the sales cycle is short enough and it's a higher volume, more repetitive motion, so they were able to get there very quickly. Takes a little longer in an enterprise segment when you're building relationships over a more extended period of time, but I'm feeling like that the team's really settling in. I'm just glad that the quality and scale and pipeline that that team's generating is picking up, and we were in any event always going to be building our enterprise business during the course of the year.

Speaker Change: Long term health.

Speaker Change: Pleased with rents going I would say that if you think about where the adjustments play out the commercial segment can adjust very quickly give people new bags, but the sales cycles short enough and it's a higher volume or repetitive motion. So they were able to get there very quickly. It takes a little longer on our enterprise segment, which youre building relationships over a more extended.

Speaker Change: Period of time, but.

Speaker Change: Feeling like.

Speaker Change: The team is really settling in and just the quality and scale of pipeline.

Speaker Change: That team is generating is picking up and we weren't any event always going to be building.

Speaker Change: Enterprise business during the course of the year so.

Allan Thygesen: So, I'm feeling pretty good. We did throw a lot of levers. I'd put it at sort of a, as I said, I think on the last earnings call, at sort of a medium-sized change and very carefully planned and considered. And it's sort of ironic that one of these smaller things that really weren't the core strategic focus ended up tripping us up a little bit on the billing side, but that's really a timing issue and not something that plays to the long-term health or strength of the business. So, I'm feeling great about changes we made, how they've settled in, and how they set us up.

Speaker Change: Bob.

Bob: I'm feeling I'm feeling pretty good we did we did throw a lot of levers.

Speaker Change: I'd put it.

Speaker Change: As I said I think on the last earnings call.

Speaker Change: Sort of a medium size change.

Speaker Change: And very carefully planned and considered and.

Speaker Change: And it's sort of ironic that one of these smaller things that really werent a core strategic focus.

Speaker Change: We ended up trying perhaps up a little bit on the billing side, but yes, that's really a timing issue and not something that plays to the long term health or strength of the business. So I'm feeling great about changes, we made how they've settled in and how they set us up.

Blake Grayson: And for Blake, just the number of 300k plus customers were down quarter on quarter. Is that just seasonal?

Speaker Change: Okay and for Blake just the number of 300, K plus customers were down quarter on quarter is that just seasonal or is there anything else to read into that.

Blake Grayson: Yeah, thanks, Brent. Yeah, it's mostly seasonal. You'll see that occur. I think the biggest thing that I tend to look at is just on that year-over-year side growing. And you also heard us and it's, you know, it's a small component today, obviously, but low single-digit share of those larger customers, you know, starting to use IAM, you know, again, while it's a super small chunk of it, I'm excited about the opportunity that we have there over the long term. It's going to take time. But that was exciting for me to see just the very early beginnings of our penetration there.

Speaker Change: Yes, Thanks, Brian Yeah, it's mostly seasonal youll see that occur I think the biggest thing that I tend to look at it is just on that year over year side.

Speaker Change: And you also heard us and it's a small component today, obviously, but low single digit share of those larger customers starting to use I am.

Speaker Change: Again, while its a super small chunk of it I'm excited about the opportunity that we have there over the long term, it's going to take time, but that was exciting for me to see just the very early beginnings of our penetration there.

Speaker Change: Great. Thanks.

Blake Grayson: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Patrick Walgreens with citizens JMP. Please proceed.

Patrick Walravens: Our next question comes from the line of Patrick Walravens with Citizens Dan. Oh, great. Thanks for all the detail on this.

Speaker Change: Oh great.

Speaker Change: Thanks for all the detail on this.

Patrick Walravens: One more if it's all right. So when did you know that Billings?

Speaker Change: One more if its alright. So when did you know that billings would come in below where you had guided.

Allan Thygesen: below where Yeah, why don't I start and then you can jump in. So, early billings, almost definitionally, happened very late in the quarter. And so we didn't really have good visibility on it until the last couple of weeks. And so, you know, that was not something we had, you know, perfectly foreseen, or we would obviously have previewed it at the beginning of the quarter. because it is such a timing-sensitive thing that comes together in the last couple of weeks or even the last couple of days.

Speaker Change: Yes.

Speaker Change: Well why don't I start on a new shopping so.

Speaker Change: Hello.

Speaker Change: Early billings almost definitional.

Speaker Change: Happened very late in the quarter.

Speaker Change: And so we didn't really have good visibility on it until the last couple of weeks.

Speaker Change: And.

Speaker Change: So, yes that was not something yet.

Speaker Change: Perfectly foreseen or would obviously improve unit at the beginning of the quarter.

Speaker Change: <unk>.

Speaker Change: It is such a timing sensitive thing that comes together in the last couple of weeks or even the last couple of days.

Blake Grayson: I don't know, Blake, if you want to add to that. No, I mean, I just would just reinforce, like, the vast – just so everybody knows, the vast majority of our early renewals very consistently comes in the last two weeks of the quarter. And so there is volatility. That's why you'll hear us talk about, oh, you know, the timing of these billings based on start dates and close dates. It can cause a lot of volatility in the number. And so that's the component here. What I regret from the work we've done is we forecasted the timing impact later than Q1, and it occurred in Q1.

Speaker Change: No Blake if you want to know just.

Speaker Change: Just reinforced the vas just so everybody knows the vast majority of our early renewals very consistently comes in the last two weeks of the quarter and so there is volatility sorry, you'll hear us talk about the timing of these billings based on start dates and closed data can cause a lot of volatility.

Speaker Change: And the number and so that's the component here what I regret from the work that we've done is we forecasted the timing impact later than Q1 and it occurred in Q1, everybody is operating as the way we have planned right like the way the plans design like Alan said, we're really happy with how this is working out from a forecasting person.

Allan Thygesen: Everybody's operating as the way we had planned, right? Like, the way the plan's designed, like Allan said, we're really happy with how this is working out. From a forecasting perspective, and I and the leadership team own this, is that we forecasted it would occur later than Q1, and it happened in Q1. Now, at the end of the day, that's just timing. It doesn't affect the health of the business. It doesn't affect revenue. It's not an indication of demand. And so from a business perspective, it's kind of a – I don't want to call it a non-event, but it doesn't affect the health of the business, so I'm really excited.

Speaker Change: Active and I and the leadership team on this is that we forecast for later than Q1 and it happened in Q1 now at the end of the day, that's just timing it doesn't affect the health of the business it doesn't affect revenue its not an indication of demand.

Speaker Change: And so from a business perspective.

Speaker Change: I don't want to call it a non event, but it doesn't affect the health of the business I'm really excited about.

Allan Thygesen: Yeah, we saw the right kind of productive changes in our early mix, more than being aggressive and so on. And so that's exactly the changes we're looking for.

Speaker Change: Yes, we saw the right kind of changes in our earliest mix more than being accretive so on and so that's exactly the changes we're looking for Oh I'm sorry go ahead.

Allan Thygesen: Go ahead. I'm sorry. Go ahead.

Allan Thygesen: Oh, and as a follow up, if I could ask a little bigger, bigger picture. So, Allan, what are you seeing competitively? How do you feel about that? You know, I'm sure everyone saw that Dan ended up at Ironclad, so maybe if you can comment on If that's a competitor and we're just in, that would be. You know, I think in terms of the legacy markets, if you will, that we operate in, I see very little change in the competitive dynamics. I think the signed shares and competitive dynamics have been stable, if anything. I think we're maybe even doing a little bit better.

Speaker Change: And then as a follow up if I could ask maybe a little bigger bigger picture. So Alan what are you seeing competitively how do you feel about that and then.

Speaker Change: I'm sure everyone thought that Dan ended up at iron clad so maybe if you can comment on.

Speaker Change: Is that the competitor.

Speaker Change: That would be great.

Speaker Change: I think in terms of our legacy markets. If you will that we operate and I see very little change in the competitive dynamics.

Speaker Change: I think the signs shares in competitive areas have been stable if anything it before maybe even doing a little bit better.

Allan Thygesen: The CLM space continues to be quite competitive, a number of players, and it's a small category overall, but we are, I think we're holding our own, but it's definitely competitive. In terms of our re-articulation and revisioning of the company, I think we're really setting the pace. But as we've expanded our ambitions, not only are we seeing, of course, some of the players that have competed with us in existing categories, but running into other potential competitors. But overall, I think we're setting the pace and becoming much more of a thought leader for the agreement space more holistically, and I think it's really about our execution right now.

Speaker Change: CRM space continues to be quite competitive.

Speaker Change: There are players.

Speaker Change: And.

Speaker Change: It's a small category overall, but we are.

Speaker Change: I think we're holding our own but it's it's.

Speaker Change: Uncompetitive in terms of our re articulation and revisiting of the company I think we're really setting the pace.

Speaker Change: But as we've expanded our our ambitions.

Speaker Change: Not only are we're seeing of course some of the players that have competed with us.

Speaker Change: In our existing categories without running into two other.

Speaker Change: Potential competitors, but overall I think we're setting the.

Speaker Change: Setting the pace and becoming much more of a thought leader for the agreement space more Holistically and I think it's really about our execution right now im not as focused on competition.

Allan Thygesen: I'm not as focused on competition as perhaps in our past discussions as we had the more mature e-sign categories.

Speaker Change: As perhaps.

Speaker Change: As discussions that we as we have more mature you signed categories.

Operator: Okay, thank you. Thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Mhm.

Speaker Change: Thank you. Our next question comes from the line of Scott Berg with.

Ian Black: Our next question comes from...

Speaker Change: With Needham and company. Please proceed.

Ian Black: Hi, this is Ian Black on for Scott Berg. Does the release of your new transitional IAM skew impact early renewals? And how has that skew affected your go to market? Yeah, I would say the transitional skew is immaterial to the results for us. You know, for the quarter, we would have highlighted that if that was there, it's really meant, it's an option for customers, you know, we want to make sure that they have the right options available to them, but it wasn't an impact for us. Thank you, and how has that SKU impacted your guys' go-to-market motion?

Speaker Change: Hi, This is Ian black on for Scott Berg.

Speaker Change: We secured new trades.

Speaker Change: I am SKU impact early renewals and how does that skew affected your go to market motion.

Speaker Change: Yes, I would say the transitional SKU is immaterial to the results for us.

Speaker Change: For the quarter, we would have highlighted that if that was arens really Matt. It's an option for customers, we want to make sure that they have the right options available to them, but it wasn't an impact for us.

Speaker Change: Thank you and how is that skew impacted your guys. Its go to market motion.

Allan Thygesen: It's not, I mean, you could say it's included in the guidance that we have, but the impact we think is relatively small.

Speaker Change: It's not I mean, you could say its included in the guidance that we have.

Speaker Change: We think is round.

Speaker Change: Relatively small.

Operator: Okay, thank you.

Speaker Change: Okay. Thank you.

Aleksandr Zukin: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Alexander <unk> with Wolfe Research. Please proceed.

Aleksandr Zukin: Our next question comes from the line of Aleksandr Zukin. Hi, this is Arsenije on for Aleks. I guess just what's holding you guys back from excluding early renewals from that updated guidance given the dynamic in Q1 and can you just walk us through how much early renewals are assumed now versus last year when guidance was initially provided and why it's viewed as conservative and just a quick follow-up off to that.

Speaker Change: Hi, This is <unk> on for Alex I guess, just what's holding you guys back from excluding early renewals from that updated guidance given the dynamic in Q1 and can you just walk us through how much early renewals or assume now versus last year. When guidance was initially provided and why it's viewed as conservative and just a quick follow up after that.

Blake Grayson: Thanks. Sure. So, we don't break out our book of renewals based on on-time, early, late. There's just a whole host of different ways you can think about that. Early renewals, just as an education, some folks don't know or not, is a very regular and recurring part of our business. It is something that in the majority of cases come with expansion. And so, you like that because that means that customers are either needing more capacity, want more features, all those types of things. So, it's not something where I don't want anybody to think like an early renewal is like a bad renewal by any sense of measure because that's one of the things we really like is that when customers are consuming more than they had planned or they had originally thought, a lot of times that means they want to get more from us as well.

Speaker Change: Sure. So we don't break out our book of renewables based on on time early late Theres, just a whole host of different ways. You can think about that early renewals just as an education and the folks that some folks out there or not is a very regular and recurring part of our business. It is something that in the majority of.

Speaker Change: Cases come with expansion and so you like that because that means that customers are either needing more capacity you want more features all of those types of things. So it's not something where I don't want anybody to think like an early renewal is like a bat renewal by any sense a measured because.

Speaker Change: Thats one of the things, we really like is that when customers are consuming more than they had planned or they had originally thought a lot of times that means they wanted to get more from us as well.

Blake Grayson: Obviously, the conservatism in the early renewal component in the forecast, which is timing, I think you heard in the prepared remarks, you've got the impact from FX and then we have two different kind of positive impact from FX, two different offsetting impacts. They're both worth about the same size, whether it's the early renewal component, giving us a little bit more room to operate around the issue of timing and then a little bit more conservatism around the bookings just based on the uncertainty in the environment. We think that's the prudent thing to do as we look out today.

Speaker Change: Obviously, the conservatism and the early renewal component in the forecast, which is which is timing I think you.

Speaker Change: In the prepared remarks.

Speaker Change: Got the impact from FX and then we have two different kind of.

Speaker Change: Positive impact from FX to different.

Speaker Change: Offsetting the impacts of both worth about the same size, whether its the early renewal component, giving us a little bit more room to operate around the issue of timing and then a little bit more conservatism around the bookings just based on the uncertainty in the environment and we think that's the prudent thing to do.

Speaker Change: As we look out today.

Blake Grayson: Got it.

Speaker Change: Got it that's helpful. And then just looking at tie them pricing today. It seems to have gone up since last quarter without having that lower price point relative to like E. Cig business Pro is this indicative of you just seeing better adoption there expected in trying to capture more value with this momentum to get better growth.

Blake Grayson: That's helpful. And then just looking at IM pricing today, it seems to have gone up since last quarter without having that lower price point relative to like ECIG Business Pro. Is this indicative of you just seeing better adoption than expected and trying to capture more value with this momentum to get better growth? No. Look, I think we feel we're delivering a lot more value, and we charge a premium, and customers have been willing to pay that across all five segments. And we're adding features along the way. And the packages are becoming more valuable. And with all that we announced here at the Momentum, there's a lot more there across every segment.

Speaker Change: No.

Speaker Change: Look I think we feel we are delivering a lot more value and we charge a premium.

Speaker Change: Customers have been willing to pay that across all size segments. So in routing features along the way.

Speaker Change: Is that becoming more valuable.

Speaker Change: Now with all that we announced here.

Speaker Change: Right.

Speaker Change: There's a lot more there across every segment.

Blake Grayson: Thank you.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you. Our next question comes from the line.

Blake Grayson: Our next question. Hey, great. Appreciate you squeezing me on. Blake, there's been a lot of questions on the impact, but you mentioned the health of early renewals and Q1 improved. Can you unpack that piece a bit more? What were you seeing last year? Was that customers renewing smaller in certain instances, and is IAM something that you now have in response? Or what else are you doing to continue to improve the health? Yeah, thanks. And thanks for the question, too. I think what we got from the go-to-market changes that we made was that, so the renewals happen to, you can have expansion, or you can have a flat renewal, or you can have an early renewal with partial churn.

Michael: Michael <unk> with Wells Fargo. Please proceed.

Speaker Change: Okay. Great I. Appreciate you squeezing me on Blake Theres been a lot of questions on the impact that you mentioned the house of early renewals in Q unapproved can you unpack that piece a bit more what were you seeing last year was that.

Speaker Change: Mers renewing all or in certain instances.

Speaker Change: Something that you now have in response or what else are you doing to continue to improve the health of those renewals going forward.

Speaker Change: Yeah, Thanks, and thanks for the question to I think what we got from the go to market changes that we made was that the renewal happened to US you can have expansion or are you going to have a flat renewal or you can have an early renewal with partial churn for those renewals that are flat or a house.

Blake Grayson: For those renewals that are flat or have partial churn, you actually would prefer to renew them in their kind of natural renewal cycle timing, so you call it their on-time contract date. Now, there's a bunch of different customers may want to do a flat renewal with high capacity or consumption. Maybe they don't want an expansion, but they need a new renewal, so flat could be good in those ways. But the big difference what we saw on a year-over-year basis in that mixed percentage I shared in the prepared remarks is that the mix of flat and partial churn renewals dropped 30% year-over-year.

Michael: Partial churn you actually prefer to renewing them in their kind of natural renewal cycle timing. So you call like Theyre on time contract base.

Michael: So theres a bunch of different reasons why customers may want to do a flat renewal with high capacity of consumption, maybe they don't want an expansion, but they need a new were also flat could be good in those ways, but the big difference what we saw on a year over year basis and that mix percentage I shared in the prepared remarks is that the mix flat and partial churn.

Michael: Renewals dropped 30% year over year and so that's the data point that you hear from us on at least for me.

Blake Grayson: And so that's the data point that you hear from us, or at least from me, when I think about, oh, those are working the way it was intended, in that you're seeing a larger mix than shifting to those earlies with expansion rather than some that also have some more partial churn in them. And partial churn renewals happen, right? Not every customer expands with you when they renew. And so that was really, when I'm talking about the health of the renewal, that's a larger focus on those flat to renewals with expansion that really drive the health of the business forward.

Michael: I think about all of those are working the way that was unintended and that you are seeing a larger mix then shifting to those early as with expansion rather than some that also have some.

Michael: More partial churn and partial churn renewals happen right not every customer expands with you.

Michael: When you when they renew and so that was really what I'm talking about the health of the renewal that's a larger focus on those flat too.

Michael: Renewals with expansion that really drive the health of the business forward.

Blake Grayson: Thanks. Just as a small follow-up, we've seen the pros and cons of early renewal impacts on billings. Have you considered ARR as a substitute for billings at all? Or what, from your perspective, makes billings the right metric to focus us all in on, given some of the puts and takes and questions you're fielding here? Yeah, no, it's a great question and something that we talk about a lot. Billings is clearly not ideal because of the impact of timing, right? In this quarter, in the past couple quarters, actually, the way we handle that is we try to be really clear about that.

Michael: Thanks, just as a small follow up we've seen the pros and cons of early renewal impact on billings have you considered a or as a substitute for billings at all or what from your perspective makes the billings the right metric to focus thats all in on given some of the puts and takes and questions here feeling here.

Speaker Change: Yeah, no. It's a great question and something that we talk about a lot bill.

Michael: Billings is clearly not ideal because of the impact of timing right. In this in this quarter in the past couple of quarters actually.

Speaker Change: We handle that as we try to be really clear about that so when it's a tailwind and it provides kind of that extra growth for us. We are trying to be very clear and transparent with folks about that and I think we did a good job of that in the second half of last year, where we have that tailwind and we're sort of highlighted.

Blake Grayson: So when it's a tailwind, and it provides kind of that extra growth for us, we are trying to be very clear and transparent with folks about that. And I think we did a good job of that in the second half of last year where we had that tailwind, and we're sure to highlight it. It's also part of the reason why we're talking about IAM as a percentage of recurring revenue in book of business and not billings. What I can just say is we're actively thinking about better ways to communicate our business trends and be more thoughtful, but really consider kind of like the long term evolution of this business, especially with IAM, which is still early.

Speaker Change: It's also part of the reason why we're talking about I am as a percentage of recurring revenue and book of business and not buildings what.

Speaker Change: But I can just say is we're actively thinking about better ways to communicate our business trends and be more thoughtful, but really considered kind of like the long term evolution of this business.

Speaker Change: Especially with I am which is still early so I would say I recognize it and so stay tuned on that.

Blake Grayson: So I would say I recognize it.

Blake Grayson: And so on that.

Blake Grayson: Thanks very much.

Speaker Change: Thanks very much.

Speaker Change: Okay.

Will Powell: Thank you.

Speaker Change: Thank you. Our next question comes from the line of will power with Baird. Please proceed.

Will Powell: Our next question comes from the line of Will Powell. Okay, great. Thanks for squeezing me in as well.

Speaker Change: Okay, great. Thanks for squeezing me in as well, maybe just shifting gears a little bit on you all noted the.

Will Powell: Maybe just shifting gears a little bit. You all noted the strong consumption trends in the quarter, I think even indicated Some of the indicators there were as strong as they've been in a couple of years. Maybe anything you can do to kind of unpack kind of the drivers there and kind of the outlook for. assumption as you move forward. Yeah, I'll take a stab at this. I would say it's pretty challenging to disentangle exactly what that means, other than the fact that I think higher consumption and higher usage is almost always a good thing for us.

Speaker Change: The strong consumption trends in the quarter I think even indicated you know.

Speaker Change: Some of the indicators never as strong as it had been in a couple of years, maybe anything you can do to kind of unpack kind of the drivers there in Canada the outlook for.

Speaker Change: Consumption as you move forward here.

Speaker Change: Yes, I mean, I'll take a stab at this.

Speaker Change: I would say, it's pretty challenging to disentangle exactly what that means other than the fact that I think higher consumption of higher usage is almost always a good thing for us.

Allan Thygesen: With the trickiness in there and disentangling is, oh, do you have people that are potentially running higher to their limit, you know, for something that's going on in their business? But almost always, if people are using more of their contracts than they have previously, that's a good thing. And so I think it just bodes well for us, but the timing and the tipping point to move from contract utilization to a new contract is really an independent kind of decision that each customer makes on their own in kind of operating with their own representative from DocuSign.

Speaker Change: With the Trickiness in there and Disentangling is or do you have people that are potentially running higher to their limit for something that's going on in their business.

Speaker Change: But almost always if people are using more of their contracts than they have previously.

Speaker Change: And so I think that just bodes well for us, but the timing of the tipping point to move from contract utilization to a new contract is really an independent kind of decision that each customer mix on their own in kind of a operating with their own representative from doctors signed but.

Allan Thygesen: But nothing else more than I've seen within the data, I think that, you know, the usage trends still continue to look good for us from a year-over-year perspective. We highlighted that's continuing in May. It's been very, very consistent for us, I would say, over the past few quarters, which I think has been great, and I believe, based on that data, it bodes well for us. Yeah, I would just add that, look, one of the things I was very pleased to see is that I think Blake called this out in his prepared remarks. I think we hit like a four year high in contract consumption.

Speaker Change: Nothing nothing else more than I've seen within the data I think that the.

Speaker Change: Usage trends still continue to look good for us for on a year over year perspective, we highlighted thats continuing to may its been very very consistent for us I would say over the past few quarters, which I think has been great.

Speaker Change: Believe based on that data that bodes well for us.

Matt: Yes, Matt I would just add that.

Speaker Change: Look one of the things I was very pleased to see is that.

Speaker Change: Mike called this out in his remarks prepared remarks angry hit like a four year high and contract consumption.

Allan Thygesen: So we're really through that full post COVID cycle and at a pretty healthy point there. And so I think that bodes well for the future.

Speaker Change: So we're really through that full post COVID-19 cycle.

Speaker Change: At a pretty.

Speaker Change: Pretty healthy point, there and so I think that bodes well for the future. So Mike's team.

Allan Thygesen: So makes me Time to march on more Mystic.

Speaker Change: At March and Mark Mystic.

Allan Thygesen: Yep, the most convincing positive.

Speaker Change: Yeah, well I was trying to St positive. My other question was just on gross retention I think you all indicated you expected that to improve in the second half of the year I. Just I was just hoping you could provide any.

Allan Thygesen: My other question was just on growth retention. I think you all indicated you expected that to improve in the second half of the year. I just, I just hoped you could provide any Some additional color as kind of the key drivers and confidence level around that. Yeah, so for us in gross retention, we improved year over year in Q1. We expect that trend to continue for the remainder of the year. It's a trend that's been going on here, I would say, at least for the last 18 months, and we're really excited about that. It's working better with our customers, getting in front of deal renewal timings, looking at their usage, looking at the types of usage that they can have with us, and having those conversations, as well, about IAM and having those discussions, as well.

Speaker Change: Some additional color as to kind of the key drivers and confidence level around that.

Speaker Change: Yeah, so for us in gross retention, we improved year over year in Q1, we expect that trend to continue for the for the remainder of the year. Its a trend thats been going on here I would say at least for the last 18 months.

Speaker Change: And we're really excited about that it's working better with our customers talking getting in front of deal renewal timings looking at their usage looking at the types of uses that they can have with us and having those conversations having conversations as well about iam and having those discussions as well and so it's just a continuation of a trend.

Blake Grayson: And so it's just a continuation of a trend of better results for us that we're excited about.

Speaker Change: Better results for Us and we're excited about.

Blake Grayson: Thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you our next question.

Patrick Walravens: For next... Thank you very much. I'm just curious if you can speak to the activity levels that you're seeing from segments of the economy that might be slowing or could slow in the second half due to interest rates or tariffs, and I'm thinking of real estate, construction, manufacturing, the tech industry has had layoffs, consumer goods, etc. In understanding that you didn't seem to see any aggregate change or material change in macro, but is there any bifurcation where those industries are slowing and other industries are picking up or just anything you're noticing that looks any different?

Mark Murphy: On the line of Mark Murphy with Jpmorgan. Please proceed.

Mark Murphy: Thank you very much I'm just curious if you can speak to the activity levels that you're seeing from.

Speaker Change: Segments of the economy, there that might be slowing or.

Speaker Change: Could slow in the second half due to interest rates or tariffs and I'm thinking of.

Speaker Change: Real estate construction and manufacturing the tech industry has had layoffs consumer goods et cetera is in understood.

Speaker Change: Understanding that.

Speaker Change: You didn't seem to see any aggregate change or material change in macro but is there any bifurcation, where there's industries are slowing in other industries are picking up or just anything you're noticing that looks any different.

Allan Thygesen: Sure. I'll take a stab at that. So I would say the trends have been relatively consistent for us over the last few quarters. Like on a usage kind of basis, the same verticals continue to show strength for us, whether that's financial services, health care, insurance, those have been kind of standout ones for us. I would say real estate continues to grow year over year, but less than the total, if you will, and that's been pretty consistent as well. So they're still growing. I just think there's room to improve there over time, depending on how everything works out, but no massive volatility over the last quarter in any major segment.

Speaker Change: I'll take a stab at that so I would say the trends have been relatively consistent for us over the last few quarters like on a usage basis. The same verticals continue to show strength for us whether that's financial services healthcare insurance those have been kind of standout ones for us I would say real estate continues to grow year.

Speaker Change: Year over year, but less than the total if you will and thats been pretty consistent as well so theres still growing I, just think theres room to improve there over time, depending on how everything works out but no no massive volatility.

Speaker Change: Over the last quarter and any major segment.

Blake Grayson: Okay, and Blake, as a quick follow up, you know, you you had commented that the Q1 billings delta is a function of timing, not demand. Actually, I guess Alan said that. But that being the case, you know, I'm, I'm curious why the renewals couldn't bounce back, you know, rather automatically in Q2. In other words, if if non early renewals just become you know, regular old on-time renewals. And, you know, then if that happened, why couldn't that produce a slightly better level of Q2 billings growth than what you're guiding to? Yeah, that's a great question, right?

Speaker Change: Okay and as a quick follow up you know you you had commented that the Q1 billings Delta is a function of timing not demand actually I guess, Alan said that but.

Speaker Change: But that being the case.

Speaker Change: I'm curious why the renewals could it bounce back.

Speaker Change: Rather automatically in Q2 in other words, if if not early renewals just become.

Speaker Change: You know regular old on time renewals.

Speaker Change: And then if that happens do you why why couldn't that produce a slightly better level of Q2 billings growth and what you're guiding to.

Speaker Change: Yes, that's a great question right because in general lower early than our quarter results in higher on time resolve renewals in future quarters now all of our renewals are just one quarter out some are 123 or more than four.

Blake Grayson: Because in general, lower early than a quarter results in higher on-time results, renewals in future quarters. Not all of our renewals are just one quarter out. Some are one, two, three, or more than four quarters out, depending on the customer. So there you do have a partial offset from that kind of lower water level on future release contribution, which, you know, that's going to create hard comps here every year as you progress through the year. But the reason why you don't see that necessarily in our full year guidance is because of that we've also included the additional room to operate as we progress through the year.

Speaker Change: Quarters out depending on the customer so that you do have a partial offset from that kind of lower water level on future or at least contribution, which that's going to create hard comps year over year as you progress through the year.

Speaker Change: The reason why you don't see that necessarily in our full year guidance is because of that we've also included the additional room to operate as we progress through the year. So that's just conservatism for us on the timing aspect and the magnitude of it.

Blake Grayson: So that's just conservatism for us on the timing aspect and the magnitude of it. It makes sense to that, especially when the extra conservatism is around timing and it doesn't have a material effect on our revenue forecast.

Speaker Change: Makes sense to do that especially when the extra conservatism is around timing and it doesn't have a material effect on our revenue forecast, but thats why you don't see that shut him back in the guide.

Blake Grayson: But that's why you don't see that showing back in the guide.

Blake Grayson: Understood.

Blake Grayson: Thank you.

Speaker Change: Understood. Thank you.

Operator: Okay, everyone.

Speaker Change: Okay, everyone. Thank.

Allan Thygesen: Thank you, operator.

Allan Thygesen: Thank you to all who joined today's call. In closing, I just want to emphasize how excited we are about the increased pace of innovation at DocuSign, the value we're delivering to customers, and the long-term decision-making we're doing to realize the large IIM opportunity. Thanks to the team for their energy and focus and to our owners for your ongoing support.

Speaker Change: Thank you operator, thank you to all who joined today's call.

Speaker Change: In closing I just want to emphasize how excited we are about the increased pace of innovation the doctor signs the value, we're delivering to customers and the long term decision, making we're doing to realize the large I am opportunity.

Speaker Change: For the team for their energy and focus and to our owners for your ongoing support. Thank you.

Operator: Thank you.

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

Operator: concludes the day's...

Operator: Connect Your Lines.

Operator: Thank you for your participation.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Uh huh.

Operator: https://www.youtube.com.uk

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.