DocuSign, Inc.

Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's third 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 this call over to Ms. Anne Leshen, Head of Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to DocuSign's third quarter fiscal year 21 earnings conference call. On the call with me today, we have DocuSign's CEO, Dan Springer, and CFO, Cynthia Gaylord. The press release announcing our third quarter results was issued earlier today and is posted on our investor relations website. Before we get started, I'd like everyone to know that we plan to participate virtually in a few events in the upcoming weeks. The UBS Global TMT Virtual Conference on December 7th, the Need and Virtual Growth Conference on January 11th, and the Goldman Sachs Technology and Internet Conference on January 12th. As other events come up, we'll make additional announcements. Now 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 around the impact of the COVID-19 pandemic on our business, financial conditions, and results of operations are subject to change. Please read and consider the risk factors in our findings with the SEC 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, 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 gap measures, and a quantitative reconciliation of those figures, please refer to today's earnings press release, which can again 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, and welcome to our third quarter earnings call. It's hard to believe that we're almost at the end of 2020 and just how challenging the year has been for so many people, many companies, including DocuSign. are still working remotely, collaborating virtually, and balancing multiple demands. However, we've also seen the critical role that innovation can play at a time like this and how technology can help people adapt in the wake of the pandemic. As COVID-19 has accelerated the digital transformation of key business and agreement processes, DocuSign has become an increasingly essential cloud software platform. The last few quarters of heightened demand have offered a glimpse into the long-term growth opportunity we have. I want to share more on that with you today, so I'll focus my comments in three main areas. One, strength of Q3's results. Two, why we believe today's Agreement Cloud customers will grow with us over the long term. And three, the strength of our product development engine and partner ecosystem. So Q3 was another exceptional quarter for us. We saw results significantly outperform this quarter, with billings growth of 63% year over year and revenue growth of 53% year over year, leading to record levels of profitability. Our international business also showed substantial strength, with revenue up 77% year over year, now representing fully 20% of our total revenue. We landed 73,000 new customers, bringing our total to nearly 822,000 worldwide. And our customers expanded their use of DocuSign at the highest levels we've seen to date, yielding a net revenue retention rate of 122%. These results reflect how the team has executed with excellence amid the ongoing challenges. They also showcased the continued tailwinds for the expansion of e-signature as the first step in the adoption of the agreement cloud. Overall, the response to COVID-19 has caused organizations to accelerate their digital transformation efforts by two, three, four years or more. They've seen that remote work can be even more productive and the digital agreement processes are fast becoming business as usual. Let me share more on how our customers are doing that today. One example is an international e-commerce customer. To ensure their business processes could keep pace with the growth driven by the pandemic, they deploy DocuSign CLM in Argentina, Chile, Colombia, Mexico, the UK, and the US. By automating contract management for more than 1,500 different agreements, with vendors and partners. They are lowering risks, costs, and errors. Another example is one of our large US public school districts. They needed to adapt quickly to help tens of thousands of employees and over 300,000 students to teach and learn remotely. By partnering with DocuSign, they completed federal funding forms electronically and launched a virtual back-to-school program. and they're now planning hundreds of use cases to support other future needs. One more example is a large U.S. insurance customer. As part of the response to COVID-19, the company expanded into several new e-signature use cases, which drove nearly 100,000 additional transactions over just the past seven months. As I alluded to earlier, the insurer believes this will become business as usual from here on in. This last point reinforces something that history has taught us at DocuSign. When customers go from paper-based processes to digital agreement processes, they do not go back. We believe that trend will hold when the pandemic subsides, and the DocuSign's value will persist no matter how the future of work unfolds. We're not waiting for the future, though, as we continue to innovate across the entire agreement cloud suite. In September, we launched an important new product called DocuSign Analyzer. Imagine receiving a new contract from a vendor and having risks automatically flagged, like a bad indemnification clause or the absence of a clause you'd normally expect. Analyzer makes this possible, thanks to the legal AI technology we acquired with SEAL Software earlier this year. It's a fantastic time saver for legal teams and their business stakeholders. It can also integrate with DocuSign CLM, helping to automatically route work differently depending on analyzer's output, sending a high-risk contract to a more senior legal approver, for example. I'm pleased with how quickly we've been able to apply CL's technology in this new and exciting way. Speaking of acquisitions, we talked last quarter about Live Oak Technologies and how that would accelerate our efforts with DocuSign Notary. we are on track to deliver the beta version of the product before the end of this fiscal year. This will enable a notary transaction to occur entirely over video with the notary and participants all in different places. It will also complement our existing capacity to support in-person and video conference-based notarization in the U.S. and the witnessing approach commonly used in the U.K. and EMEA. Our partner ecosystem was another area of strength and growth for Q3. As a reminder, this ecosystem includes ISVs that integrate DocuSign into their own solutions, systems integrators that build practices around the agreement cloud, and resellers that drive sales reach for us globally. We continue to see overall traction with our more than 350 ISV integrations, including those announced in Q3 with Slack, and with Workplace from Facebook. These follow a familiar pattern for us to make DocuSign available wherever business gets done. And with our recent momentum, we continue to see new partners join our ecosystem at a healthy clip. There's also been increased interest from SIs looking to build out agreement cloud practices that attach to their existing Salesforce, Oracle, SAP, and Workday practices. thereby embedding DocuSign even deeper into critical front and back office business processes. Lastly, our resellers, including the likes of Kerasoft, Ingram Micro, and Insight, to name just a few, are seeing heightened demand for DocuSign 2, helping to drive sales through that channel. A great proof point is that Salesforce, as part of its revenue cloud business, will now resell DocuSign Gen for Salesforce CPQ+. a product that generates agreements for sales quotes. This creates incredible scale and reach and typically leads to customers looking to DocuSign for broader agreement automation and CLM initiatives. So, to wrap up my comments today, this is the third quarter in a row that we've had these significant levels of growth. This acceleration in demand is laying the foundation for future expansion across the agreement class. And while substantial global, social, and economic challenges undoubtedly remain, we believe we're still just scratching the surface of our long-term opportunity. Before handing it over to Cynthia to walk you through our Q3 results in more detail, I wanted to share one other great piece of news. Kane Hayes, the CEO of Gateway Health, has joined our board of directors. I am thrilled to have Kane providing strategic counsel to DocuSign and to me, especially given his track record in financial services and healthcare, two of our largest verticals. So that's it from me. Cynthia, over to you.