DocuSign Inc at UBS Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And I thought to kick off, so you just reported pretty impressive earnings last week. So maybe we could do a quick recap on how you're feeling about the business, what kind of jumped out post the quarter and then we can dive into some bigger topics.

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe just to take it up a level, I would guess that people in the room are familiar with what DocuSign is or at least have had an experience with regards to a lot of international clients. Maybe they're a little less familiar, you're newer in those markets. But I guess one of the questions that comes up is, it seems so obvious what the value of electronic signatures are, but we're still dealing with a lot of paper-based processes. Obviously, the big banks like UBS, we have a freakish amount of paper-based processes. So can you talk a little bit about where we are in terms of eSignature adoption and why we're not further along than -- it seems like everything should be DocuSigned. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. DECEMBER 09, 2019 / 2:15PM, DOCU.OQ - DocuSign Inc at UBS Global TMT Conference

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Right. And maybe just drilling in on that, because we certainly do see other companies that try and tap into that opportunity, Adobe potentially being the most visible. I guess on one hand, as a user, it seems like it's easy to do, you just pick something that looks somewhat like your signature, you click, it's done, but there's a lot that needs to happen in the back-end to make that happen. And it's the reason why you've been as strong as you are and have as much market share you are. So can you just talk a little bit about the complexity that goes on behind the scenes to do eSig at scale and make it pulled up?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And you touched on the concept of embedding the workflows into systems and System of Agreement and Agreement Cloud have been a big focus for DocuSign. Could you just -- maybe for people in the room who aren't as familiar with what a System of Agreement is, since I think it's sort of a new concept, can you just maybe start talking about what that means and how you bring eSignatures into that? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. DECEMBER 09, 2019 / 2:15PM, DOCU.OQ - DocuSign Inc at UBS Global TMT Conference

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And in this scenario where you might have an existing customer, now you have a much broader portfolio of products. I guess sort of first, where are you in terms of advocacy within your customer base of getting them convinced that eSignature is not just the signature, but the broader workflow associated with that? And then related, how do you go-to-market around that, where you convince customers to buy more products? Is that sort of an organic process or something you drive? How does that work?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe just to put a finer point on it. So Q1, it was a little bit weaker on the billings side than people thought. Q2 was a really strong quarter. Q3 has seen more sort of a normalization. And I know this rolling 4-quarter concept is one that you've talked about in the past. Does it feel like that's still sort of the right framework, that there'll be a little -- maybe a little bit more -- well, I guess maybe to start, it feels like Q3 sort of validates that you have your hands around the sort of change in the sales cycles. Is that a fair statement? And then as investors, how should we think about what the trend line looks? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. DECEMBER 09, 2019 / 2:15PM, DOCU.OQ - DocuSign Inc at UBS Global TMT Conference

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Okay. And maybe just going back on the go to market. So earlier in the year, you had a bifurcation or sort of adjustment to the sales force to have one team focused on new logo additions, one team focused on upsell. Can you talk a little bit about, first, why that felt like the right thing to do? And secondly, now that you're a little further into the learning on that, what the learnings have been, what you found?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe just going back to that 117% net dollar retention. If I listen to what you're saying, you've got broader portfolio of upsell opportunities, you've got more of a dedicated effort around expanding within existing customers. So to put context around that, I mean that 117% certainly stands out, but it also makes a lot of sense given what you're doing operationally over the last 6 to 12 months. So I know you talked about 112% to 119%. But is there a case that we should see something more towards the upper end because it -- or maybe ask it in a different way not to put you on the spot.

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : But is it reasonable to think that as those things work that should feed into -- is the 117% a sign that these efforts are working, or are there other factors?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe on a -- just a slightly different tack on the go to market. What I think is interesting is you sort of service the entire spectrum of potential customers from very, very small organizations up to the biggest organizations. And what's also interesting is a lot of times you'll hear companies talk about having very lightweight self-service product at the low end and then having a much broader portfolio at the high end. But you have upsells for you and things like that even with these smaller customers. So maybe -- well, maybe just to touch on that, how do you think about the expansion opportunity within even those smaller accounts? And then related, the enterprise side, you have a dedicated effort around upsell. Does upsell just happen organically even in the small accounts, not just eSig, but things like Gen and other things that you can layer on top of that?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And on that -- so traditionally, system integrators and that cohort hasn't -- I mean these things are pretty straightforward. There's not a lot of consulting dollars involved, but now you have a much bigger strategic vision. On the earnings call, Dan was talking about some of the relationships you're starting to form in more of the SI world. Can you just talk a little bit about that and how you see that opportunity to expand that as a

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Okay. I think maybe sort of related, but if I look at DocuSign as a horizontal platform versus opportunities to get more verticalized in use cases. Maybe just to start, federal is an area that seems to be gotten a lot of attention. You've had at least one sort of notable big win there now. Why sort of carve-out federal as a distinct area to talk about? What's the opportunity that you see there?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe just to broaden that, because I think if you look at other industries you operate like the financial services industry and the health care industry, they also have, not FedRAMP, but they have their own...

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Exactly. So how do you sort of take -- how do -- what do you feel like you should be driving in terms of the compliance with different regulatory considerations in each of those vertical markets? Where are there other markets where it might make sense to be a bit more vertical?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe talking about other vectors of expansion. You mentioned international as something that did well. You've had momentum in the common law countries for some time, but you called out the, I think it was civil...

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Yes. There's the ones you're starting to see a bit -- maybe a bit more traction. Can you just touch on that point quickly? Maybe first, why those -- you sort of look at those separately and talk about those separately? And then second, was there anything this quarter in particular that seems to be inflecting or seems to be doing better in the civil markets since you called it out?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe looking at -- so you have all these opportunities to go after. You're expanding the Agreement Cloud, you've got international expansion. You've got -- just driving adoption of eSignature period, which is still very low. As sort of the CFO and the one who figures out which of these needs get funded, how that funding is distributed, where do you see the greatest prioritization and opportunity? I'm sure it's across all those things. But if you think about all the functionality that would need to get added to be really successful in Japan versus just keep doing what you're doing in eSig and adding more sales and marketing research, just how do you think about that portfolio?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Great. Well, we've got some time left. But I just wanted to give you a quick plug. So we have these apps that you guys can send a question in. I think you can do it through the UBS Conference app. So if you have any questions, you can send them in, and I will read them out. So feel free to do that. But I'll ask one more while everyone's formulating their ideas. So you have a lot of very high-profile partnerships within the ISV community. To reinforce this, just a few weeks ago, I know there were some announcements there about different relationships that you have through the Salesforce app exchange. I mean I won't ask about Salesforce specifically, but maybe just a little bit more broadly, how do you think about other software vendors and the ecosystem you're formulating there? How do they play into the growth strategy? And where are some of the relationships that are maybe strongest?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe sort of in a similar note and going back to the international discussion, so a lot of those companies are much further down the curve, just by sheer virtue of the size of those businesses in terms of having a very international presence. Japan is a huge focus for Salesforce and has been for some time. Does that help you kind of build your brand awareness in those markets? Are there features that those partners are asking you for, so you can do more together in some of those markets that have been a bit earlier for DocuSign? I'm just curious sort of how that push and pull...

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe shifting back to some of the things we were talking about earlier. Within the Agreement Cloud, so you acquired SpringCM that gives you sort of your foothold there. Where are some of the areas within that Agreement Cloud that you think there's more work that could -- you talked about that sort of the initiation, getting the contract going, but where are some of the areas that customers are asking you for more product today?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And going back to sort of the TAM discussions, way at the outset. But what -- so within eSignature, a lot of that is displacement of paper-based processes and kind of new spend. But as you get into things like document management, red-lining, there have been a category of software companies that have addressed those things, obviously, without the eSignature piece. But is that like a different competitive dynamic for you? Do you have -- how do you sort of think about coexisting with existing content management solutions versus bringing your own product.

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe going back to the discussion of your direct sales organization. On one hand, it seems like you are still very early on eSignature adoption. There's lots more opportunities to drive more eSignature use. On the other, clearly want to get some proof points going around the System of Agreement and Agreement Cloud and get people really excited about all the use cases there. Does the sales force have any particular incentives around -- are they just intended to bring in as many dollars as they can? And if it's easier for them to go out and get -- and I guess now you've got sort of the hunter model, but it just seems like eSignature is just probably the easier thing to sell at this -- or maybe I'm presuming, but...

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Is there any specific incentives to try to make sure that they're out pushing Agreement Cloud?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : And maybe just to finish out on that thought with the minute we have left. So if we think about Agreement Cloud relative to the traditional eSignature business, if we think about how the opportunity manifests in the next 2 to 3 years, is it that we should expect you sell a lot of CLM software and that kind of drives the incremental dollars? Or is the sort of nearer-term value just driving much bigger eSignature usage, much more stickiness and really establishing DocuSign as part of the core infrastructure?

Question: Jennifer Alexandra Swanson Lowe - UBS Investment Bank, Research Division - Analyst : Thanks. Well, I think that's time. Thank you so much for being here. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. DECEMBER 09, 2019 / 2:15PM, DOCU.OQ - DocuSign Inc at UBS Global TMT Conference