DocuSign, Inc.

Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's second quarter fiscal year 2023 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 call is being recorded and will be available for replay from the investor relations section of the website following the call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I'll now pass the call over to Heather Harwood, head of investor relations. Please go ahead.

Thank you, operator. Good afternoon, and welcome to the DocuSign Q2 2023 earnings call. I'm Heather Harwood, DocuSign's head of investor relations. Joining me on the call today are DocuSign's interim CEO, Maggie Wilderotter, and our CFO, Cynthia Gaylor. The press release announcing our second quarter results was issued earlier today and is posted on our investor relations website. Now let me rewind everyone that some of our statements on today's call are forward-looking. We believe our assumptions and expectations related to these forward-looking statements are reasonable, but they are subject to known and unknown risks and uncertainties that may cause our actual results or performance to be materially different. In particular, our expectations regarding the pace of digital transformation and factors affecting customer demand are based on our best estimates at this time and are therefore subject to change. Please read and consider the risk factors in our filings with the SEC together with the content of this call. Any forward-looking statements are based on our assumptions and expectations to date and accept 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-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 a quantitative reconciliation of those figures, please refer to today's earnings press release, which can be found on our website at investor.docuSign.com. I'd now like to turn the call over to Maggie Welderotter. Maggie?

Thanks very much, Heather. And good afternoon, everyone. And thank you for joining us today. First, let me introduce myself. I have been on the DocuSign board for over five years and board chair for the last few years. In addition to my board service here at DocuSign, I also sit on several other public and private boards. I've had the privilege to serve on 51 corporate boards in my career. 36 public and 15 private, starting at age 28 when I first joined a corporate board. I also have 18 years of CEO operating experience at private and public companies, and most recently was CEO of a Fortune 500 Frontier Communications for 12 years, retiring five years ago. I have had the privilege in my career to hire and lead great teams, to find clear strategies for success, driving results through clarity of deliverables and accountability. And I've also done so with a maniacal focus on serving customers, both internal and external. I am taking the same approach in my interim role as CEO of DocuSign. Since joining as CEO, I prioritize connecting with customers and employees around the globe. through frequent town halls, office visits, virtual connections, and in-person meetings. This broad focus on listening, learning, and interacting has enabled me to move quickly to set a new agenda for success. We entered Q3 with a clear set of vital few deliverables for our people initiatives, product roadmap, and our focus on improving sustainable and profitable growth at scale. Six of our eight executive leaders joined during Q2 and are seasoned scale players. They joined Cynthia Gaylor, our CFO that you're going to hear from after me, and also Shanti Iyer, our CIO, on the executive leadership team. Our new executive leadership team and I have worked together over the past few weeks to clarify a clear strategic focus and define what is required from all employees for DocuSign to be successful. Let me start with our strategy. DocuSign is the leader in providing end-to-end digital agreements on a fully integrated platform. This starts with delivering simple, intuitive, integrated, and trusted customer and partner experiences that remove friction from all steps in creating, using, and managing digital agreements. To support this strategy, we have upgraded talent, launched retention initiatives to include a new employee training program that will commence this month teaching our teams how to operate with excellence. Inhesaw, our new president of product, has already put in place a clear product roadmap with mapped out releases starting next month. Steve Schutt, our new president of go-to-market, has revamped our selling motion and performance expectations for the small, medium business, and enterprise segments. Our marketing team is delivering new collateral, messaging, and tools for Steve's teams, as well as a simplified digital motion for consumers and one-time users. Finally, DocuSign has also added two additional seasoned scale leaders. I'm pleased that Jennifer Christie is our new Chief Human Resources Officer, and veteran Jim Shaughnessy as our new general counsel. I am privileged to lead such a terrific group of executives who have all hit the ground running by working together with a single focus. Set the company on a path for continuous performance improvements in Q3 and Q4 and beyond. I'm optimistic about the power of our brand, our value proposition for customers and partners, and the renewed results orientation being embraced by our employee base. Finally, the search for our next CEO is a top board priority. All of our independent directors have been actively interviewing great candidates, and we are close to making a decision. Terrific candidate pool participating in this process has reinforced the strength of our brand, and the shared belief that DocuSign has a tremendous future growth opportunity. I look forward to letting you know who the next CEO will be. With this preface, let me turn to some other Q2 results highlights. As you have seen in our earnings release, Q2 revenue was $622 million, representing a 22% year-over-year increase. We added 44,000 new customers during the quarter. Again, a 22% increase year over year, which brings our total global paying customer count to 1.28 million. We delivered an 18% operating margin in Q2 as well. The second half of this fiscal year, our goal is to drive operating expense reductions in order to meet the current operating margin guidance range of 16 to 18% that we had previously communicated to you. We are reviewing all categories of expenses and will adjust our spending accordingly. These expected expense reduction initiatives will create capacity for the right investments for our expected scale growth. For example, our IT and internal systems development teams are focused on key automation and software system upgrades, including our planned ERP system cutover this quarter. These enhanced capabilities will enable us to eliminate current manual processes, resulting in lower operational costs in the back half of this fiscal year, and it will also improve our customer and partner experiences. I am excited to share that we closed a number of large enterprise deals during the quarter that include both Microsoft and Goldman Sachs. In addition, our focus on partner expansion includes a new integration with Stripe to enable users of both product sets to view DocuSign agreements and Stripe payments side by side. Stripe customers can also create new DocuSign agreements directly from Stripe dashboards. This is another strong example of taking friction out of the customer agreement transactions. Over the past few months with increasing interest rates and inflation on a macroeconomic level, we also have started to see some softness in certain verticals like real estate and financial services. But despite these headwinds, our business model benefits from a well-diversified customer base across industries, geographies, and segments. Our products help all of our customers from large to small, improve their productivity, be more efficient, and improve their time to value creation. In closing, I am honored to continue to lead the DocuSign team until a successor is in place. During this time, we remain committed to stay focused on our vital few priorities, driving profitable growth at scale, and delivering further enhancements to the digital agreement platform to delight our customers. We have a $50 billion global market opportunity with an industry-leading product and market share position. We will use this position to aggressively expand our capabilities through wise investments, focus, and continuous improvement in our performance. DocuSign cannot be successful without strong shareholder support. So let me end my remarks here with thanking all of you for your continued support of our company. We know our results over the previous three quarters did not meet expectations. We got the message. That change was needed, and I hope you can see that we are fully committed to build upon our current momentum to deliver for all of our stakeholders. I will now hand it over to our CFO, Cynthia Gaylor, who will walk you through our Q2 financial results and outlook. Cynthia?