DocuSign, Inc.

Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's fourth quarter and full fiscal year 23 earnings conference call. At this time, all participants are on 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 this call. 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 Heather Harwood, head of investor relations. Please go ahead.

Thank you, operator. Good afternoon and welcome to the DocuSign Q4 and fiscal year 2023 earnings call. I am Heather Harwood, DocuSign's head of investor relations. Joining me on the call today are DocuSign's CEO, Alan Teegerson, and our CFO, Cynthia Gaylor. The press release announcing our fourth quarter and fiscal year 2023 results was issued earlier today and is posted on our investor relations website. 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 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 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-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 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.docusigns.com. I'd now like to turn the call over to Alan. Alan?

Thanks, Heather, and good afternoon, everyone. Our fourth quarter marked my first full quarter as DocuSign's CEO. Having led our organization for five months with the opportunity to meet many of our customers, partners, and employees, I'm even more optimistic today about the future of DocuSign. We had a solid finish to a transitional year, delivering across key financial metrics in Q4 while making tangible progress against our key priorities. Q4 total revenue came in at $660 million, up 14% versus prior year, finishing the year with $2.5 billion of revenue and 19% year-on-year growth. Driven by our continued focus on profitability and efficiency, we reported 24% non-GAAP operating margin for the quarter and 21% for the year. While we are pleased with our Q4 results, I also want to acknowledge today's challenging macro environment. Customer sentiment continues to be cautious, and that is reflected in moderated expansion rates. Before we get further into business updates, I want to acknowledge today's news that Cynthia Gaylor has decided to step down from her role as Chief Financial Officer. Cynthia has been with DocuSign for nearly four and a half years, first as a board member and chair of our audit committee, and last few years as our CFO. I know many of you know Cynthia well and gotten to know her even better over time as part of the DocuSign story. I want to thank Cynthia for her unwavering commitment and strategic leadership these last few years. Been a great partner to me during my first months as CEO. And she's been instrumental to the company and the board as we've navigated a period of dynamic change while laying a strong foundation for sustainable profitable growth at scale. I thank her for her support during the transition as we search for a successor. Let me turn back to the business. During Q4, we refined and communicated DocuSign's strategy throughout our organization to drive greater alignment on how our teams can deliver more strategic value to our customers. Today, we have a clearly defined strategy in place to underscore the key pillars of our strategic vision, We're inspired by customer feedback. Our focus is to deliver smarter, easier, and trusted agreements. We're improving the reach and efficiency of our go-to market by developing a world-class self-serve experience, strengthening our direct sales productivity, and amplifying our sales and marketing partnerships. We're also strengthening our internal operational efficiency by optimizing and modernizing systems and processes. Now, it's important to emphasize that even as the market leader in e-signature, we are just at the beginning of capitalizing on the opportunity to redefine and truly reimagine what a smarter agreement looks like. Today, e-sign provides an online replica of a static document. While that is a huge improvement in convenience and productivity for senders and signers, it's hardly the endpoint. Just like creating digital copies of maps or recorded music, was the beginning of a reimagination of long-established categories, fundamentally altering creation, distribution, and use. Our goal is to turn flat agreements into structured data that can be used to make intelligent decisions. Value of an agreement is in the data. Every step of an agreement can deliver more value when it's automated, intelligent, and seamlessly integrated into core business systems. DocuSign is uniquely positioned to redefine the agreement processes across every industry. Along these lines, we released several new product enhancements during the fourth quarter, including expanded integrations to better collaborate in Microsoft Teams, Slack, and Zoom. And for eSignature, we enabled new AI-assisted document highlighting and signing capabilities in mobile and web for faster time-to-value. In April, we will release web forms, which will help customers deliver a better and simpler experience by moving from legacy contract forms to a modern web and app experience. We also plan to accelerate our release cycles in fiscal 2024 with innovative and differentiated solutions that simplify the agreement process while we identify new ways to revolutionize how businesses initiate, negotiate, and manage agreements. There's substantial interest in the industry about rapid advances in AI, and large language models in particular. We are already leveraging sophisticated AI models for contract analysis and automation of some workflows, and we're very excited to harness generative AI data and pattern identification as yet another way we can increase productivity, reduce friction, and save our customers time. As we move forward, mobility can be a compelling part of our business. and we're encouraged by the significant interest from some of the very largest players in our industry who recognize our domain leadership and expertise and want to partner with us. Moving to our product-led growth and self-serve initiatives, we've made solid progress over the last few months, modernizing our commerce experience to reduce friction, improve ease of use, and provide customers more flexibility. We've expanded seat capacity available We are web and mobile sites. We've expanded currency options available to make the buying process easier in international markets. Gain traction with these initiatives as we exit the quarter, and we will continue to keep you updated on our progress. Further, as you saw in an announcement a few weeks ago, I couldn't be more excited to have Robert Ciappone joining our team as President and General Manager of Growth. Robert brings a wealth of experience, and we look forward to benefiting from his insights and expertise for more than two decades of scaling global technology companies. He joins DocuSign from an organization that's broadly recognized as having a world-class product-led growth motion. Executing on our product growth strategy is a key priority for the company, as it will be a primary driver of customer acquisition, conversion, and expansion. I'm thrilled to have Robert leading our efforts in this area. Turning to our go-to-market, we're just coming off our global sales kickoff last week, and I can tell you that the sales team is incredibly excited and energized for the year ahead. We're focused on delivering across three complementary channels, direct, self-serve, and partners, and to provide world-class customer success, driving customer growth and retention through all three. As an example of global growth and multi-product expansion, this past quarter, a leading global consulting firm, who has been using eSignature for a decade, expanded and added our CLM cross product. This is a competitive sales cycle since the customer is already in the process of implementing a competitive CLM solution in a few countries. However, DocuSign 1 preferred vendor status as CLM, and the customer has since rolled us out in six countries across two continents and has built integrations with their internal systems and the DocuSign partner Salesforce and ServiceNow. Related to go-to-market, I want to acknowledge the restructuring we recently announced. It was a difficult decision, but it was a critically important step for our company to reshape and right-size our organization for the opportunity ahead. It was not a broad-based restructuring. 95% of the workforce reduction was in our worldwide field organization. Our assessment was that DocuSign could capture more efficiency in our overall go-to-market across all segments, and that we could unlock more profitable growth by investing part of the savings in product development and innovation. Now the direct channel remains absolutely critical to our future. We're rebalancing our approach towards offering a lighter touch experience with more self-serve capabilities that give customers of all sizes choice in how they engage with DocuSign. That pivot in turn frees up resources motion and expanded roadmap for agreement workflows, new AI capabilities, accelerating our migration to the cloud, and improving our internal systems. That in turn will create an even stronger and more valuable offering for our customers and for our sales team to sell. We still have some work to do to strengthen our self-serve experience over the next six to 12 months, and while we may see some modest near-term disruption, we're confident these are the right steps to going forward to drive innovation and growth for our customers for the long term. Additionally, a stronger self-serve motion will enable greater expansion opportunities internationally. Turning to our internal operations and processes, Anurag Akram recently joined as our Chief Operating Officer and will play a crucial role within our organization. Anurag's focus is to bring together and transform our strategy, develop new strategies around pricing and packaging, incremental efficiencies internally, and help evolve early-stage ideas into future growth initiatives. Related to these efforts, I noted on the last call that we rolled out product bundles to introduce more features and functionalities to our customers. I'm pleased to share that these bundle promotions performed better than expected, and we saw good adoption for our new SMB customers in particular. Our experience suggests that customers that adopt a broader set of features renew and expand their commitment with us. You should expect to see more initiatives around pricing and packaging in the future, including bundling and ensuring early adoption of our highest value features. Finally, I would like to update you on our partner ecosystem, another key pillar of our strategy. We're seeing good progress with a number of our largest software partners. ServiceNow is a good example, highlighted by the launch of the CLM Spoke as part of ServiceNow's automation engine. Our partnership has gained momentum with several leading organizations utilizing our integration to digitize their agreements. This is directly aligned with our focus on capturing opportunities by integrating more deeply with partner applications. So in closing, this year has been one of incredible change for DocuSign. And in Q4, we made meaningful strides towards defining our strategy, right-sizing and optimizing our organization. We believe the foundation has been set and that we're in a better position to navigate the evolving macro environment while investing for opportunities that enable long-term profitable growth. We're optimistic about the year ahead for DocuSign, and we're committed to delivering meaningful customer and shareholder value. We look forward to sharing further progress on our initiatives as we redefine how the world comes together and agrees. We will enable smarter, easier, and trusted agreements. With that, Let me once again thank Cynthia and turn the call over to her to walk through the financials.