Allan Thygesen is the CEO of DocuSign. Very excited to say we get to sit down with the man himself one-on-one, just a day or so after the earnings calls for the company for Q3. Allan, thanks for being here. Congrats on a great quarter.
Thank you, I appreciate it. It's good to see you.
Billings obviously I think are top of mind and largely moving the stock today up some 26, 27%. Obviously the stock is up 87% year-to-date, but also significant numbers on subscriber revenue, new customers all increasing for the quarter. The guidance part is interesting to me. Why are you projecting a further boost to billings for Q4?
Well, so we are projecting an improvement over what we had previously projected, which I think logically follows from the strength that we saw in Q3, but a little bit of a normalization since we had some early renewals that boosted our billings a little extra normally this quarter. But overall, I think the business has positive momentum. A combination of strength with our install base with our existing products that everyone's familiar with, and our digital channel is performing better and better. And then we have launched this whole new product suite we can probably talk a little about, called Intelligent Agreement Management, initially to mid-market customers, and that's going very well.
Talk to me more about the rollout of IAM, Intelligent Agreement Management. I know you've been using AI in different ways over the last few years, but talk to me about how that process has changed and what most excites you about where IAM is today.
Yes, we have been using AI. Lots of folks have probably used our products for signature, right? When we're recognizing the fields for example where you're supposed to type your name or your address or whatever, that's all driven by AI. When we do identity verification, that's all AI driven. But with the advent of all the recent changes in LLMs, we've just seen such a massive acceleration in capability. One of the things that current AI is really good at is evaluating unstructured text and extracting information. If you think about all the consumer use cases for that, that is the perfect application for agreements. Agreements today are stored as unstructured data, Word files or PDF files. We can with AI extract the information: who are the parties, when was the agreement entered into, when does it renew, what are the notice periods, what are payment terms. These are things that are simply not available today. We can give that insight to everyone from your CFO to the finance leader, to sales leaders, to frontline sellers. They can understand when are their agreements up for renewal, what terms they might want to renegotiate at that time. That's proving to be super valuable, and that's all AI driven.
What most excites you about what AI can do for the company, even in the next 12 months, that may be things you haven't been able to do just yet? Obviously we're seeing this huge proliferation of LLMs and widespread adoption in ways we couldn't even really imagine 12 or 18 months ago.
The example I just gave is one. Another example is in almost any size or type of company, you get agreements from other parties and then you want to look at it and say, okay, which things are maybe out of spec with what I normally would agree to? We can do all of that automated with AI, and we actually just released a product that does that. That's helpful for companies of all sizes, and often that review is a huge bottleneck in getting started with new customers or prospects. So that's another example. I think we'll see more rollouts of that. I think the next step is automating the drafting and negotiating of agreements in an assisted way initially, but still. And then ultimately you could imagine entire agreement workflows being fully automated. Why is there all this human touch in completing an NDA? Why isn't that just sent, edited, resolved, and filed all without any human touch? That's an example of an agent. So I think that's the journey we'll be on, and that'll be multiple years, but it's pretty exciting and it's a better experience for everyone on each side of the agreements.
Allan, it seems to me as if making that experience better largely deals with better managing the more tedious component of a lot of the document space, right? The hassle of signing, quite literally the fine print in more ways than one. Is that how you are framing all this? It's like, hey, you've all dealt with this world, we all know what this is like, we can make all this a little bit easier.
It's absolutely about saving time for everyone involved, not just the lawyers but the salesperson, the purchasing agent, the recruiter, and of course the party on the other side. That's super important and we can do a lot there. But the other part is unlocking the value in agreements. There's a tremendous amount of data about, for example, what your customers really care about. They signed that agreement, and that gives you a lot of information that's not available today. Extracting that and improving your stance for whenever that's up for renewal, or for when you're selling to a similar customer or buying from a similar merchant in the future, that's an example of intelligence. So it's both about workflow, making things more efficient, and about extracting value and intelligence out of agreements so that you can do things better the next time around.
DocuSign bought an agreement management company earlier this year called Lexion for about $165 million. How have you been able to leverage the opportunities off of that acquisition to expand the underlying business?
