DocuSign (DOCU) CFO on How AI Tools are Driving Record Earnings

0:00It's time now to spotlight DocuSign, the company posted another strong quarter with revenue profitability and billings all moving higher, and said its AI-powered intelligent agreement management platform is driving its recent growth story. So joining us now is Blake Grayson, CFO of DocuSign. Blake, first and foremost, thanks so much for joining me today. So appreciate your time. When you look back at your fourth quarter, where did you feel you saw the strongest execution and where do you still see some room for growth? Yeah, and thanks for having me today. Great quarter, really excited about the progress for making a DocuSign. Some highlights for us in that, you know, we first quarter we've ever generated over a billion dollars in billings, first a year we ever generated over a billion dollars in free cash flow. And then our new IAM platform, Intelligent Agreement Management, crossing $350 million of annualized recurring revenue after about 18 months of launch. And so we're just getting started with this, IAM represented 11% of our annual ARR for

1:00this last fiscal year. We're looking to increase that, you know, modestly here to approximately 18% by the end of this coming fiscal year. So we're really excited about the prospects here at DocuSign. Okay, and so I wanted to call out the Intelligent Agreement Management, of course, making up a huge portion of your annual recurring revenue as you mentioned. So what's really driving this adoption and how meaningful can IAM really become to the overall revenue mixed story? Yeah, so it's essentially what IAM does is it takes the foundational benefits that we have from eSignature, the DocuSign is so well known for, and applying that essentially more broadly across all of agreements for a company. We've got over 200 million agreements already, you know, private consented agreements already in the repository. So it allows our customers to gain, you know, essentially have a place where they can gain insights, they can move faster, they can grow faster, they can integrate with the systems that they already have today. We have over 1,100 third party integrations, so you can already essentially just get launched in a super quick fashion to be able to add value for your customers, and especially

2:01in workflows, whether you want to do new account signups or talk about, oh, what are my obligations that I have coming up that I need to be able to talk about or what pricing volumes am I essentially eligible for that I can go after? And so it really does allow companies to unlock the true value in their agreements. And, you know, the average customer for us in IEM has over 5,000 agreements. We have customers with tens of thousands, hundreds of thousands and millions of agreements. And so there's just huge value across a very large number of documents and agreements. And, you know, we also have our kind of the trust, security, and compliance that I think customers really demand in this environment and what is what DocuSign is known for. Okay, and AI, of course, a major part of now the DocuSign story, and so we're really seeing the clearest proof that AI is a driving growth part of your overall business and, of course, adding to the further improvement of the business. Yeah, you know, for us, AI is a huge enabler for IEM. I mean, frankly, we need AI in order to provide the insights that our customers deserve,

3:03right, with just the scale that customers agreements have in the DocuSign as well. We've recently launched partnerships with all of pretty much the LLMs out there, whether it's anthropic or, you know, co-pilot or Gemini or Salesforce, Asian Force and whatnot. And so we're really excited to meet customers where they are to be able to leverage the data they have with DocuSign in a trusted environment to be able to provide them insights. And I think that's the accelerator for us in for a lot of companies about leveraging AI for their products in order to create a better customer experience. Okay, that's exactly what I was going to ask is that the fact that DocuSign is, of course, not alone in this AI push. And so where really do you see DocuSign gaining an ad specifically as far as this agreement management push? Yeah, you know, I think that our position is one of the most trusted software companies in the world, frankly, sets us apart. And that are our customers today. We have over 1.8 million customers. They trust us to maintain the security and compliance with their agreements. And they they trust how we hold those agreements. And then the insights

4:04we can deliver from them. I think that plays a huge role because as a CFO or as anybody who runs a company, you want to make sure your data is protected. I you can make an argument that the data in the agreements that a company has is some of those important information they have. And there's also certain people that you don't want to share that information with. And so we're taking a lot of steps and build and prove that. And I think that relationship positions us really well for this agreement management opportunity. Okay, and with Billings growth outpacing revenue growth this quarter, what does it really tell you about demand trends and some of the confidence you see now heading into fiscal 2027? Yeah, you know, I'm really excited. The kind of introduction of I am about 18 months ago is really created a value opportunity for our customers. And we're working to share that kind of in a consultative approach with our customers or how can provide advantages to them in the future. Billings was I think we were Billings 10.4% on a year-over-year basis, which is great. Sometimes timing, you know, affects that. But that just shows the strength of this business. It leads to the how we're poised to accelerate our ARR growth

5:07this next year. And that was part of our guidance that we shared with investors on our earnings call this week. And so I'm really excited. You know, we got work to do. But there's a lot of fun opportunity ahead. I think for DocuSign and for its customers and leveraging their agreements. Okay. And so when you look out to the rest of this year, what key metric should we be watching for to gauge whether DocuSign is really successfully transitioning from a tools company into a mission-critical system of action? Yeah, exactly. And, you know, thank you for bringing that up. That system of action is super important. I think it's I am representing a growing percentage of our ARR. And we'll report that every quarter. And then on top of that, we're going to be, we know, we guided to an ARR number full of year and we'll continue to kind of revise or revisit or, you know, kind of reaffirm that guide as we go along. I think that's the important. Like, the key thing for DocuSign is we believe that we can accelerate the growth of this company over the long term, right? And for us to do that, I am going to be a critical component of it. It's super early days for us, but I'm really excited about the prospects for us. Okay. And so appreciate your time and really all the enthusiasm and congratulations on

6:10a pretty phenomenal quarter. So we so appreciate it. Blake Grayson at CFO of DocuSign.