DocuSign, Inc.

Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's second quarter fiscal 2021 earnings conference call. As a reminder, this call is being recorded and will be available for replay from the investor relations section of the website following the call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I will now pass the call over to Annie Leshin, head of investor relations. Please go ahead.

Thank you, operator. Good afternoon, everyone. Welcome to DocuSign's second quarter fiscal year 21 earnings conference call. On the call with me today, we have DocuSign CEO Dan Springer and CFO Mike Sheridan. The press release announcing our second quarter results was issued earlier today. and is posted on our investor relations website. Before we get started, I'd like to let everyone know that we plan to participate virtually in several events in the upcoming weeks. First, the DA Davidson's 19th Annual Software and Internet Conference on September 9th, Citi's 2020 Global Technology Conference on September 10th, Deutsche Bank's Technology Conference on September 14th, and Jeffrey's Virtual Software Conference on September 15th. As other events come up, we'll make additional announcements. Now that we remind everyone that some of the statements on today's call are forward-looking, we believe our assumptions and expectations related to those 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 around the impact of the COVID-19 pandemic on our business, financial condition, and results of operations are subject to change. Please read and consider the risk factors in our filings with the SEC together with the content of this call. Any forward-looking statements are based on our assumptions and expectations to date, and except as required by law, we assume no obligation to update these statements in light of future events or new information. During this call, we will present GAAP and non-GAAP financial measures. Non-GAAP financial measures exclude stock-based compensation expenses, employer payroll tax on employee stock transactions, Amortization of acquired intangible assets, amortization of debt discount and issuance costs from our notes, acquisition-related expenses, and, as applicable, other special items. In addition, we provide non-GAAP weighted average share counts and information regarding free cash flows and billing. These non-GAAP measures are not intended to be considered in isolation from, or 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 a quantitative reconciliation of those figures, please refer to today's press release, which can be found on our website at investor.docuSign.com. I'd now like to turn the call over to Dan. Dan?

Thanks, Annie. Good afternoon, everyone. Welcome to our second quarter earnings call for fiscal 2021. I appreciate everyone joining us today, and I'd like to cover four key areas of the business with you. The evolution of COVID-19 and the impact we're seeing on our business. The essential role that eSignature and the Agreement Cloud continue to play in the digital transformation of our customers' businesses around the world. A recent acquisition to accelerate the opportunity in remote online notary and a few additions to the board and executive team, including Mike Sheridan's new international leadership role. So let's start with the evolving dynamics of the pandemic. It would be an understatement to say that we're all still experiencing significant changes in the way that we work and live as a result of COVID-19. We're seeing it with our more than 5,000 employees around the world, as we don't expect to return to an office environment until June of next year. As a team, we're focused on helping each other adapt to these changing circumstances and to balance the myriad demands on our collective time. We're seeing it with our customers too. I spoke last quarter about how so many of them faced a sudden need to transition to remote work when the pandemic first hit. Today, that need has evolved from an initial crisis response to a business necessity. And because agreements are central to doing business, the need to agree electronically and remotely has never been stronger. This is causing greater adoption of our offerings, something we believe will persist beyond the crisis. Because in our experience, it's very rare to see anyone go back to paper once they've gone digital. The upshot of all this is that DocuSign is becoming an increasingly essential cloud software platform for organizations of all types and sizes, a fact that is well reflected in our Q2 results. Billings grew 61% year over year to $406 million, and revenue grew 45% to $342 million. We added more than 88,000 new customers, bringing our total to nearly three-quarters of a million worldwide. For perspective, we acquired more new customers in the first half of this year than we did in all of last year. Our operating margins and cash flows reached record levels, while we continued to make key investments to address the heightened demand. As is evident from these numbers, the trends that emerged in the latter half of Q1 have continued throughout Q2. We've seen a sustained rise in demand for our core e-signature offerings, not only from new customers, but also those expanding across use cases, departments, and borders. The interest in transforming other parts of the agreement process is growing too, and that in turn creates pipeline for the rest of the agreement cloud suite. Now let me give you some examples of recent customer wins and expansion. One of our largest retail customers runs a network of healthcare clinics within its stores. When COVID-19 hit, the company accelerated plans to provide telehealth services using DocuSign eSignature to handle consents and other paperwork remotely. This is a great example of COVID-accelerated demand that we see as durable. Now, telehealth will remain after COVID-19, but the paperless processes that came with it will likely end up getting implemented for in-person clinic visits too, because the electronic way is more efficient and a better experience than paper and clipboards. Another example is from a large financial institution that's a longtime DocuSign customer. The company already used eSignature widely, But when COVID-19 hit, it accelerated plans for further rollouts, and together we helped activate 11 new lines of business. This illustrates a pattern we're seeing where established customers are now bringing eSignature to new divisions, departments, and regions. This was going to happen at some point, but it's just happening faster now. Finally, I have a few examples from an area of the economy I know you're all interested in, the public sector. To date, we've held a strong competitive position at the local, state, and federal levels here in the United States. This quarter, we built on that base with a healthy mix of e-signature and multi-product Agreement Cloud deals, including DocuSign CLM and our Identity family of products. We helped a major city deploy a digitized workflow to handle applications for housing assistance. and we enabled a federal agency to capture applications and distribute relief funds to healthcare providers on the front lines of coronavirus response. So, in summary, it was an exceptional quarter for customer growth and expansion. Economic headwinds did cause some to request relief, but that was more than offset by increased demand overall. And while DocuSign faces the same economic uncertainty as everyone else, We remain optimistic about our ability to deliver increasing and durable value no matter where business is conducted. I'd like to move on now to how we're investing in innovation and new Agreement Cloud product offerings. Specifically, I'd like to talk about our acquisition in July of Live Oak Technologies, an Austin-based startup that was already a close partner of ours. For agreements that would normally require people to be together in person, Live Oak enables the transaction to be done remotely via video conferencing. The company's platform includes several other technologies specific to remote agreements too, such as video identity verification, collaborative form filling, an integration with DocuSign eSignature, and a detailed audit trail. With this acquisition, we will leverage Live Oak's technology to accelerate the launch of DocuSign Notary. A solution for remote online notarization, where signeries and the notary public are in different places. DocuSign Notary will do for notarization what eSignature did for signing. It will enable a dramatically better experience for everyone involved from wherever they may be. We believe this is a natural extension of our eSignature business. And once people use remote online notarization, we don't expect them to go back. In fact, when we announced this move, the customer response was very clearly, how soon can I get it? And the answer is the DocuSign notary is slated for beta release later this year. The initial version will be for existing customers that already have a notary capability within their organization, or what we call first-party notary. And we expect to enable third-party notaries in the near future. Now before I close out my remarks, I wanted to share a few enhancements to our board and executive team. I'm thrilled to share that Theresa Briggs and James Beer have recently joined our board of directors. Theresa is assuming the role of audit committee chair, and she brings a wealth of financial experience from Deloitte, as well as fantastic and relevant board experience at ServiceNow and Snowflake. James has extensive financial experience as CFO at Atlassian today, previously at American Airlines, McKesson, and Symantec, all of which will be invaluable as we continue to scale our business. On the executive team, we have appointed Kamal Hathi as Chief Technology Officer, reporting into Tom Casey. In this new role, Kamal will oversee the development and execution of our overall technology roadmap. Given his 20-plus year run at Microsoft and his recent experience at Trader Interactive, We believe Kamal is the ideal person to build the platform that powers the agreement cloud as it continues to scale. I'm also excited to announce that I'm promoting Mike Sheridan to the role of President of International at DocuSign, and that Cynthia Gaylor, a current board member and audit committee chair, will be joining as our new CFO. As you've heard me say in almost every call to date, our international business is a key growth driver for us. International growth was over 60% this quarter, and its contribution to our overall business is increasing. Since the beginning of this year, Mike has been spearheading our growth initiatives across EMEA. Given the strong results of his efforts there, we are now broadening his scope to drive growth across all international markets. So I couldn't be more pleased for Mike, and for DocuSign, to be doubling down on international. We couldn't do this if we didn't have access to a CFO like Cynthia. She brings more than 25 years of finance and capital markets experience, with an extensive background in strategy and operations, as well as a deep understanding of enterprise and consumer software. Most recently, she was the CFO of Pivotal Software, prior to which she led corporate development at Twitter and was a managing director in the Morgan Stanley Technology Group. I'm looking forward to working closely with Cynthia in an operating capacity as we continue to drive the business forward. As Mike and I work through the scope of his new role over the past few months, we also collaborated with Cynthia so she could hit the ground running. She will continue to partner closely with Mike and myself over the next several months to ensure a strong and seamless transition. So, with that, I'd like to welcome Cynthia to the team and to again congratulate Mike on his new role. I'll close this out by saying that the catalyst for further digital transformation remains strong, and we firmly believe DocuSign can continue to deliver value across the entire agreement cycle. And our strong Q2, combined with the momentum we're seeing as we enter Q3, gives us confidence in this business. While the pandemic continues to have an unpredictable effect on the market at large, we will stay nimble, and we'll continue to do everything we can to help our customers, partners, and employees adapt, transform, and move forward. Now, let me turn over to Mike for a deeper dive on the financials and some comments on his new role.