It's Friday and welcome to Opening Bid. I'm Yahoo Finance executive editor Brian Sozzi. Big show on tap that will hit right at the core of everyone's favorite trade. That is AI. DocuSign CEO Allan Thygesen is in the house post earnings. I'm psyched to hear how DocuSign plans to keep ChatGPT at bay. That thing is a beast. But before all that fun, the top story of the morning for me is this blockbuster $72 billion deal Netflix is making for Warner Brothers. Here are six things on my mind as I go through this one. No order of importance. First up, this is a terrible Friday if you are Paramount, Comcast, Amazon, Disney, or Roku. Really awful. Don't count out the Ellison billions and Trump connections over at Paramount. This Netflix WB deal is far from done. Hat tip to Amazon founder Jeff Bezos for only spending $8.5 billion to buy MGM Studios in 2022. MGM does matter. Best believe Netflix subscription prices are going way up should this deal close. How could that not happen? The cultures of these two companies couldn't be more different. Legacy bloated media at Warner Brothers meets lean and mean Netflix. Warner Brothers employees from top to bottom best spruce up their resumes. On this point, Netflix calling out $2 billion to $3 billion in cost savings per year by year three. That's a hell of a lot of cost savings. And score a win for often bumbling and stumbling investment bank Wells Fargo. It's one of the advisers to Netflix, not a spot in the lineup for investment banking fees. Goldman Sachs. Sorry, not sorry. That out of the way, let's get to my first power player interview for today. And I really am looking forward to this one. DocuSign topped analyst estimates for the third quarter with just over $818 million in sales. The company's AI-powered intelligent agreement management now has 25,000 customers despite direct competition from OpenAI's DocuGPT. But investors are still cautious on the stock at the open after DocuSign's guidance for the current quarter came in just shy of Wall Street's expectations. Allan Thygesen, DocuSign CEO, is back on Opening Bid. Allan, good to see you as always. Do you know if Netflix used your technology to sign off on this deal?
That's all we can hope for. Well, Allan, good to see you here. The stock a little under pressure here in the early going. What did investors miss in that outlook of yours?
Well, we had a very strong quarter. We beat our guidance on top and bottom line, the upper end of the guidance. As you pointed out, we have some really strong early signs of progress in our intelligent agreement management suite with 25,000 customers on a new AI-enabled product. I don't think there are a lot of enterprise software companies that can say that, and our core business is holding up very well. So look, it was a very strong quarter objectively, and we will just have to let the stock price do what it's going to do.
You're also having some success with early renewals. When a customer is coming to you now saying, 'Hey, Allan and team, I want to renew my subscriptions for your service early.' Why are they doing this?
It's very often driven by overconsumption. Customers who are consuming more envelopes, that's the unit of measure for how many contracts you're sending with DocuSign, often want to renew early. And then that can also lead into a discussion about our new products because it's a natural evolution going from using us for sign to using us for a broader suite of agreement management solutions. So we're seeing both straight-up e-sign upgrades as well as upgrades into our IAM suite.
I know you've worked hard, Allan, in selling that AI story and vision to the street as it pertains to DocuSign within these early renewals. When you are talking to customers, what is the AI they are signing up for right now?
We provide AI assistance throughout the journey that an agreement traverses. But to be very specific, we create a repository of all your agreements. That's incredibly useful in a number of use cases. Let's take sales. If you're running a sales organization, you want to know which agreements are up for renewal and what should I renegotiate when I do engage with that customer. That is exactly what customers are doing. We mentioned Service Titan for example, they're rolling us out across their sales teams to do exactly that, to basically improve their sales process, speed up renewals, make better contract decisions. We can achieve both internal efficiency and get more out of the data that's embedded in agreements. And that story is replicated in procurement, in HR, and in consumer banking type applications.
Are you working closely with these companies building models like ChatGPT or OpenAI, Anthropic?
We absolutely are. In fact, our first partner in the current slate of LLMs was OpenAI. We run a lot of OpenAI models on top of Azure. And as you know, we announced last month a partnership with them where we're building DocuSign directly into ChatGPT so that you can pull up agreement data and execute agreements directly from a ChatGPT interface. And we're now seeing inbound from all the other LLM providers, the Googles and Anthropics of the world, wanting to replicate that. We have a unique and proprietary position as by far the largest provider of agreement workflows and agreement data, and that happens to be data that companies generally want to expose in these types of chat experiences. So I think we're in a very strong position there. And of course, it's always been our philosophy: we want to make the customer's data available to them wherever they want to do it. If they want to do it in DocuSign, great. If they want to do it in Salesforce, SAP, or Workday, they can do that. And now in OpenAI, Gemini, Anthropic, and others.
If OpenAI is using your technology and there's an integration happening there, were you surprised when they came out recently with what was it, DocuGPT?
No. All platform companies need to illustrate to customers what you can do with the technology. They released a bunch of videos of things they've done internally, and one of them was a contract review extraction tool that I think their finance team had built. Those are not external products. Those are basically visualizations of what's possible with the platform. They should absolutely be doing that. And I think everybody's looking at contracts as one of the last frontiers. It's basically been unstructured data that wasn't accessible. And now with LLMs, you can access it. But there's so much more to delivering an agreement management solution for enterprises. We integrate hundreds of millions of dollars of private, consented agreements that companies give to us. That increases dramatically the accuracy of the models and the extractions compared to just using public data. We're in all the agreement workflows, so that gives us more context. And then we are the most trusted brand in software in the US for the last two years running, as voted by Newsweek. I think we are in a good position to benefit from all the great work that OpenAI and others are doing on the LLM front, and then layering our special and proprietary sauce on top.
As you know, Allan, of course the stock did get hit when they came out, OpenAI came out with that new technology. Next year, what are you working on that will keep a company like that and all its funding at bay?
I don't think we're going to be competing with OpenAI. It's hard for me to imagine that agreement management will be on the top five list for them. But you always want to think about competition. DocuSign is in such a strong position. We were the first mover in identifying this broader opportunity of agreement management and what AI could unlock, and we have built out this really broad suite now. In the next phase, the two things we're going to do is take that suite and really tune it for individual functions: sales, procurement, HR, and so on. You'll see that next spring. And then really add more and more enterprise features to enable large companies to deal with all the complexity and regulatory issues they have internally related to agreements. I think that's going to be a very powerful position, enabling us to create this whole new category of software that we've staked claim to. So I'm very bullish. We saw some nice early enterprise wins here in the last couple of quarters, and so we're on our way, coupled with our strength in commercial. I think we're very well positioned.
A lot of leaders, Allan, are weighing in on Gemini 3. Someone you and I both know, Marc Benioff, CEO of Salesforce, came out very bullish on Gemini 3. The difference is with a lot of those leaders weighing in, they didn't work at Google like you did. You spent over 11 years there. What do you think about Gemini 3? Is Google back? And were they ever lost to begin with?
Google always had tremendous IP. It was a question of whether they could express it fully in their products and get aligned. I'm very impressed with the turnaround. You can really see Google has its mojo back now. Gemini is an excellent product, and I think it's going to be a very competitive space. We of course want to take advantage of all the top models, so I'm thrilled for my former colleagues that they're doing well. But it's going to be very competitive in the frontier model space, and you can see people carving out different positions. Google has an enormous advantage from a data and model perspective, distribution, and they're at all layers in the stack, so I think they're well positioned.
Do you think there will eventually just be one winner?
