Good afternoon, ladies and gentlemen. Thank you for joining DocuSign's First Quarter Fiscal 2020 Earnings Conference Call. As a reminder, this call is being recorded and will be available for replay from the Investor Relations section of the website following the conference call. [Operator Instructions].

I would now like to turn the conference over to your host, Anne Leschin, Head of Investor Relations. Thank you. You may begin..

Thank you, operator. Good afternoon, everyone. Welcome to DocuSign's first quarter fiscal 2020 earnings conference call. On the call today, we have DocuSign's CEO, Dan Springer; and CFO, Mike Sheridan. The press release announcing our first quarter results was issued earlier today and is posted on our Investor Relations website.

Before we get started, I'd like to let everyone know that we will be participating in the 40th Nasdaq Conference in London on June 13th, as other events come up, we'll make additional announcements.

Now, let me remind everyone that the statements made on this call include forward-looking statements that are based on assumptions we believe to be reasonable as of this date and on information currently available to management, including statements about expected financial metrics, customer growth and estimates, and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any other results, performance, achievements expressed or implied by the forward-looking statements.

Further information on these risks and uncertainties is included in our January 31st, 2019 annual report on Form 10-K and other filings with the SEC. You should not rely on forward-looking statements as predictions of future events.

Except as required by law, we assume no obligation to update these forward-looking statements or the reason if actual results differ materially from those anticipated in forward-looking statements. I'd now like to turn the call over to Dan.

Dan?.

Thanks, Annie. Good afternoon, everyone, and thanks for joining our Q1 earnings call today. I'd like to start by highlighting some of the quarter's results and then go into announcements we made this quarter around our DocuSign Agreement Cloud suite of products. Let me start with financial results and a couple of key highlights.

DocuSign began the year with solid top and bottom line results, marking our 6th consecutive quarter of positive non-GAAP earnings per share. First quarter revenue was $214 million, representing 37% growth year-over-year. We were again profitable on a non-GAAP basis with operating income of nearly $10 million or 5% for the quarter.

We also had an exceptionally strong quarter in terms of cash flow, with $30 million of free cash flow. Two highlights stand out for me this quarter. The first is the announcement of the DocuSign Agreement Cloud. Our expanding product portfolio that addresses not just signing, but the entire agreement process both before and after that signature.

I will talk more about this shortly, but this broader scope and deeper offering could significantly increase our TAM from the $25 billion eSignature TAM. Second highlight is the further rollout of specialized sales team focused on new customer acquisition while others will focus on the installed base.

This is something we tested with great success last year and rolled out more broadly in North America this year. We are already seeing a net increase in new logos as well as the expansion of use cases within our existing customers. Overall, we are confident and excited about the year ahead, and the longer-term vision and opportunity for DocuSign.

So, today, I'd like to share some more detail on two areas – the demand we are seeing for DocuSign eSignature and the strategic opportunity that the DocuSign Agreement Cloud represents. Let's first talk about the demand. We continue to see strong growth and leadership in our core eSignature solution across all segments and geographies.

Let me share some numbers with you to give context. Our customer count continues to increase, and as of the end of Q1, we have almost 508,000 paying customers around the world. That's up from 405,000 in Q1 of fiscal year 2019. We continue to see growth in our international markets.

In markets like the UK, France, Germany, Brazil, Australia, and Japan, we are just beginning to tap the potential. And no matter where our customers are based, we believe there is significant opportunity to expand the use of eSignature into other department.

As has long been the case, once companies experience speed, time, and simplicity benefit of DocuSign eSignature, they are keen to replicate those results elsewhere in the enterprise.

A great example of this is one of our global consumer packaged goods customer started with just a single eSignature use case in their human resources department, and just a few years later, they now have 100 use cases deployed or in development across multiple business units.

We expect this pattern of use case expansion to continue driving revenue growth for the company for years to come. Now, let's talk about the DocuSign Agreement Cloud, and our ability to automate and connect the entire agreement process.

In March this year, we just announced the DocuSign Agreement Cloud, our expanding suite of more than a dozen products and over 350 integrations for digitally transforming how organizations prepare, sign, act on, and manage their agreements.

The DocuSign Agreement Cloud includes our flagship eSignature product and several other DocuSign product offerings, as well as the recently acquired SpringCM offering for contract life cycle management, and the hundreds of integrations to other applications involved in the agreement process, such as those from Salesforce, Microsoft, Google, Oracle, and SAP.

It also includes three new products that were announced after our last earnings call. So, I'd like to take a moment to highlight them today. The first is DocuSign Gen, designed for small to medium businesses, primarily in the salesforce ecosystem.

Gen enables sales reps and other users to automatically generate signature-ready contracts with just a few clicks, and do it directly from within salesforce. This can result in faster deals, fewer errors, and greater productivity. The second new product is DocuSign Click.

It allows organizations of any size to capture consent to standard agreement terms on websites such as a privacy policy with just a single click. These so-called, no-signature-required agreements are a new opportunity for DocuSign to replace in-house or custom solutions, which are costly to maintain and often lack DocuSign's extensive auditability.

The third new product is DocuSign Identify. It allows the company to automate the verification of government-issued IDs and European eID for transactions that require them. For example, opening a bank account would normally require the signer to physically present a photo ID.

DocuSign ID verification allows this process to be digitized and automated, enabling signers to verify their identity on a mobile device from practically anywhere.

So, when you put all this together, we believe that the DocuSign Agreement Cloud defines an entirely new category of cloud software, one that complements the marketing, sales, HR, ERP, and other cloud categories that already exists, connecting them all into agreement processing.

To give you a customer example, one of the world's largest companies is using several products in the DocuSign Agreement Cloud together. They're using DocuSign eSignature, SpringCM, DocuSign for Salesforce, and our integration with SAP. This system is now live in 43 countries and over $70 billion worth of agreements flow through it annually.

It's allowed the customer to cut the time it takes to get an agreement completed by about 80%, saving hundreds of millions of dollars as a result. We are seeing more and more examples like this all the time. And with the DocuSign Agreement Cloud, we are excited to have the product suite that can fulfill them.

So, to summarize; overall, we posted a solid first quarter for fiscal 2020. Revenue growth, profitability, and customer accounts were all strong. And we are seeing benefits from the work done to optimize our go-to-market processes.

We have confidence in the rest of the fiscal year given the demand for our core eSignature offering remains strong and customers are expressing early interest in our expanded product offering.

And, finally, we have positioned the DocuSign Agreement Cloud to be the next must-have cloud, providing us with an opportunity to deliver even more value to customers, while significantly expanding our TAM.

One other item I wanted to mention, you will see in our 10,-Q some ongoing patent litigation with a company called RPost in the Eastern District of Texas. This trial is currently scheduled for mid-July.

Essentially, RPost is claiming that we and several other technology companies, including our competitors are infringing on RPost patents covering certified email delivery. DocuSign believes that its services do not infringe because they operate differently from the RPost patent.

Two federal judges have already held portions of the RPost patent to be invalid and DocuSign has asked the court of Texas to follow the same reasoning. As a result, DocuSign believes it has strong legal position and we are defending this litigation vigorously.

Finally, I want to mention that we are hosting over 1,500 of our customers, partners and developers next week at our annual Momentum user conference in San Francisco. We're really looking forward to sharing the DocuSign Agreement Cloud vision with the group and hearing more on how we can make them successful.

With that, I'd like to hand it over to Mike to walk through our financials in greater detail.

Mike?.

Thanks, Dan. And good afternoon, everyone. First, let me remind you that the non-GAAP financial results that I will discuss on this call exclude stock-based compensation, amortization of intangibles and the amortization of debt discount.

We began fiscal 2020 with a good first quarter, in which we generated strong top line growth from all of our global regions and increased our profitability and cash flow. Our total revenue rose 37% year-over-year to $214 million, with subscription revenue growing 36% year-over-year to $201 million.

Our international revenue growth was particularly strong. Total international revenues came in at $38 million in the first quarter, which is a growth rate of 45% year-over-year. International revenues from our core DocuSign products exceeded this rate year-over-year. First quarter billings increased 27% year-over-year to $215 million.

Included in this growth was a strong start in customers purchasing multiproduct solutions of eSignature, together with document generation and CLM products. Multiproduct sales involve more complexity in terms of integration designs and related SOWs.

This very positive motion in our business also elongated some of our upsell cycles this quarter for existing customers wanting to deploy our expanded offerings. This extended sales cycle impacted our billings in dollar net retention in Q1.

With that said, our existing customers continued to expand their deployments of our product offerings, leading to a dollar net retention of 112%. We added a total of approximately 31,000 new customers this quarter, of which 4,000 were new direct customers. This is a very strong 33% increase in our commercial and enterprise installed base.

We now have 508,000 total customers and 60,000 direct customers worldwide. Customers with ACV greater than $300,000 grew 51% year-over-year to bring the total to 324 customers. This strong growth is indicative of our continued expansion among our installed base as customers extend existing use cases and add new ones.

Gross margin for the first quarter was 79% compared to 80% in the same quarter last year. Subscription gross margin in the quarter was 86%, which is consistent with last year. Our operating leverage continued to improve in Q1.

Operating expenses for the quarter were $160 million or 75% of total revenue compared to $121 million or 77% of total revenue for the first quarter of fiscal 2019. Operating income for the first quarter was $10 million or 5% operating margin, which compares to $5 million or a 3% operating margin in Q1 of fiscal 2019.

We ended Q1 with 3,219 employees, a year-over-year increase of 36%. Turning to cash flow, we had a particularly strong collections in the quarter. And as a result, we generated $46 million in operating cash flow compared with $15 million in Q1 of last year, and free cash flow of $30 million compared to $9 million in the prior year.

We had forecasted some of these collections in Q1 to occur in Q2, so we expect our Q2 collections to be lower than our historical averages. Overall, we believe our cash flow was a strong indicator of the improving leverage in our business. Turning to our guidance for the second quarter and full-year fiscal 2020.

We estimate, number one, that revenue will reach $218 million to $222 million in Q2 and $917 million to $922 million for fiscal 2020; and, number two, billings will range between $215 million to $225 million in Q2 and $1.010 billion to $1.030 billion for fiscal 2020. We expect gross margin to be 78% to 80% for Q2 and the fiscal year.

For operating expenses, we expect sales and marketing in the range of 48% to 50% of revenues in Q2 and fiscal 2020, R&D in the range of 15% to 17% for Q2 and fiscal 2020, and G&A in the range of 10% to 14% for Q2 and 10% to 13% for fiscal 2020.

This broader range of guidance for G&A expenses anticipates up to $10 million of expenses related to the RPost litigation that Dan mentioned in his remarks. For the second quarter, we expect $3 million to $4 million of interest in other non-operating income, including interest income and expense associated with the convertible debt.

And for fiscal 2020, we expect interest and non-operating income of $12 million to $16 million. We expect a tax provision of approximately $2 million to $2.2 million for the second quarter and $8 million to $10 million for fiscal 2020.

We expect fully diluted weighted average shares outstanding of 185 million to 190 million shares for Q2 and 190 million to 195 million shares for fiscal 2020. In closing, I am pleased with our start to fiscal 2020, in particular as it relates to early momentum and customer interest in our expanded product offerings.

We believe that we are entering Q2 with growing momentum in our global markets. Thanks again for joining us today and we can now go to Q&A..

Great, thank you. [Operator Instructions]. Our first question here is from Sterling Auty from J.P. Morgan. Please go ahead..

Yeah, thanks. Hi, guys. Wanted to dive into the comment about elongated sales cycles on the upsell opportunity.

Can you give us a little bit more color? What is it specifically that's causing – is it a decision process on the customer? What can you do to possibly shorten it again? And how is that actually also impacting subscription revenue?.

Sure. Sterling, I think what happens is, we were a single-product company, and we're moving to a broader platform and a multi-product company. And so, when we have the opportunity, which we're excited about to sell people a broader suite, there are more people that are involved. I can give you a specific example, the large bank customer in Europe.

And normally, we would have had a more straightforward eSignature only. They were interested in also looking at some of the CLM capabilities of Spring, and as we got to the sort of end of the quarter, we realized our normal sort of pacing and process would take longer and the deal to close 10 days after the end of the quarter.

But going into the quarter, we would have expected in a traditional eSignature sales cycle a single product, fewer signatures required, et cetera, and that it will be faster. So, that's kind of what we tend to see. In terms of your question of making that go faster, I actually want to have more and more of our deals have the multi-product capability.

I do think there's an opportunity for us to continually improve on the enablement we do of our sales force. And remember, this is still new for a lot of folks, move from a single product to a multi-product model, but enable them to, one, be able to forecast better, but also to be able to accelerate that process.

And from a standpoint in terms of the revenue growth, Mike, you want to chat a little bit about that?.

Yeah. Sterling, in terms of subscription revenue, these product sets are pretty much all subscription products. So, the timing of the ultimate booking or billing will impact the starting point of the revenue, but in terms of mix and everything else that you have modeled, it doesn't really have any impact..

Okay, great. And then, one follow-up question. The services revenue, I know it's small in terms of overall, but second straight quarter that it's up nicely relative to expectations.

What's driving the upside in services?.

One of the pieces there is, if you think about the new products that we're selling, they generally require a statement of work for implementation, because again of the CLM capability. That software is fantastic, but it's not honed and it is as easy to use and implement as the DocuSign eSignature capability, which requires a lot less.

So, we do expect there will be some increases in demand there. I would like to point out that we're very committed to our partner strategy, and one of our aspirations is to take a lot of that, that demand for services and to leverage the partner network.

So, I wouldn't want to set the expectation that you should see some sort of exponential growth in our services revenue. We would still like to leverage the partner channel..

Sounds good. Thank you..

Our next question is from Karl Keirstead from Deutsche Bank. Please go head..

Hi, thank you. Maybe I've got two on the same subject just around the sales cycles. So, maybe the first one is for you, Michael. So, in Q1, the reported billings was a little bit worse sequential growth than we saw in Q1 last year. And I'm sure it's for the reasons you mentioned.

If I take the high end of the July quarter guidance, it's actually seasonally stronger than 2Q last year. So, one might infer that the deals such as the one that Dan mentioned like maybe they spilled into 2Q and you're banking on them closing. So, fundamentally, we're talking about a 1Q to 2Q shift.

Is there any credence to that? And then, yeah, maybe I'll stop there and I'll ask my follow-up once you're done. Thanks..

Yeah, Karl. I think that, to the extent that we have a longer sales cycle, you would expect that, in any quarter, some of those are going to shift out of quarter. I would tell you that it's not a one quarter phenomenon.

I think as we continue to be successful with these multi-product deals, that same sales cycle will also be relevant at the end of Q2 or at the end of Q3. Over time, I think, to Dan's point, with enablement and other factors, we will continue to get a better and improved motion around these kinds of deals.

But I wouldn't look at it as just a factor at the end of a particular quarter. It will be time as we continue to transition into these larger deals..

Got it. Okay. And then, maybe my follow-up is just clarity on what exactly customers are considering that's causing the delays because if what you're referring to is are the SpringCM deals, you've given us enough disclosures that we know that that generally represents sub 10% of billings and maybe even sub 5% of billings.

So, at first blush, these additional SpringCM products don't seem to be a large enough portion of the total deal conversation to cause a slip, but maybe there is a flaw on that logic. If you could clarify. Thanks..

Yeah. And I would first tell you that, I agree, I don't think we've had a slip. I think this is right in line with how we've seen our business and how we're guiding it.

But if you look at a couple of things, Karl, if you break this down into new customers and then expansion of existing relationships, you can tell from our new customer growth that continues – that's going to largely be eSignature business.

On these upsells, what we're seeing is customers that already have eSignature are looking to us to, A, expand that eSignature relationship as they have in the past, but now they're coming back to us at a level that we're actually very encouraged about as sort of the first full quarter of being integrated, coming back to us saying we're really interested in your document generation technology, we're really interested in your CLM technology.

So, these aren't just pure deals of a new product. It's the combination of the two that if – as I think Dan mentioned, if it remained just an eSignature expansion deal, well, those are pretty much close at a regular cadence.

When it expands into, yes, we want to do that, but we also want to consider now deploying these other products into our solution set, that combination is what's causing us to take a little more time to bring them to closure. Dan mentioned statements of work, for example.

That would, in a combined deal, be a step in the process that's a little bit different than if it was just a pure single product eSignature kind of transaction..

The only thing I would add to that, Karl, it's not exclusively SpringCM. If we talk about the overall DocuSign Agreement Cloud, there is partner sale opportunities like Seal Software where we just made an investment in them as you recall, Intelledox, some of our other partner stories. So, there is a broader set than just the Spring component..

Got it. Okay. Thank you both for that..

The next question is from Alex Zukin from Piper Jaffray. Please go ahead..

Yeah, sorry.

Just on the same line of topics, can we maybe talk about just how many deals are we talking about here that kind of are taking longer? And any sense for – just if you can give a frame for us kind of the amount of time you expected it to take from a sales cycle perspective, how many months is that now taking for the new sales cycle? And then, I've got a quick follow-up..

Yeah. Alex, I would tell you that you shouldn't look at this as some dramatic change in our overall business model. I think this is our first full quarter bringing these products to market in an integrated basis. I think that, over time, it's going to normalize. And I think, over time, those sales cycles will improve.

But we don't want to overstate anything. We feel very good about the bookings and the billings that occurred within the quarter. And as we've talked about in the past, there's lots of factors that affect billing. So, we always want to encourage everybody to look at that one statistic in the context of all others.

But if you look out longer term, I don't see this as any kind of major shift in how you should be reading our guidance or our business model going forward..

Yeah. I think that's exactly right. And then, just to your specific question, I gave the one example of the large bank with 10 days. If you want to think about the time of that elongation, 10 days past the end of the quarter before that one then came through in May.

I don't know that there's an exact answer of sort of what percent or what time frame we think. I think as we get more and more experience, we'll start to be able to put more data and more clarity to what that expectation would be. But I think the key point that Mike made is we're not looking at this as problematic.

We're looking at this as a positive trend that people want to buy more from us. They're buying into the Agreement Cloud. And now, our responsibility is to get our sales force enabled to a position where it becomes our regular sales motion. And that's sort of where we are today..

Got it.

And then, maybe can you just comment on the quality of the pipeline and the competitive landscape? Are you seeing – is there any sense of some of these deals are taking longer because of volatility of the macro or just maybe level set for us what you're seeing from that regard?.

Yeah. I think we see the market, broadly defined, competitive set, economic environment unchanged from where we've been the last several quarters.

Obviously, we read the papers as do you and we see sort of the trade issues that are out there, but we haven't actually seen anything in our business that suggests there's a different sort of buying enthusiasm or capacity or demand for our products.

The one thing we highlighted here, to try to give you more insight color, is the demand for the multi-product is sort of changing a little bit the way we're going to market in terms of that cycle. We haven't seen anything else again from a competitive or market dynamic that's changed at all in the last several quarters..

Okay, great. Thank you, guys..

Our next question is from Justin Furby from William Blair. Please go ahead..

Thanks, guys.

Maybe just to start, for Dan or Mike, you've had a quarter now of some of these deals and some of them have closed and some have pushed, but can you give a sense for what it looks like in terms of uplift or what the opportunity is when it just moves from pure eSignature to a broader document cloud deal and how you expect it to unfold over the next few quarters?.

Yeah. So, I think the answer is it's quite varied.

I think there is some situations where people are significant eSignature customers of ours and they say, 'hey, we want to sort of dabble a little bit some of these other exciting pieces of capability you have across the Agreement Cloud.' We have other situations where people are coming to us saying, 'hey, this is a core functionality in terms of something like a CLM capability or like sort of intelligent search which comes in our managed phase through our partnership with Seal, and that's a core piece of the agreement.

So, it really does vary dramatically. I don't think we have a data set yet where we can give you a sort of percentage of the other component. But one thing I would steer you toward is, if you think about the past when we talked about the TAM, because that's a lot of the way we look at this, is this really increase of our TAM.

And if we – before talked about the signature TAM was around $25 billion. When you look at the total complete agreement cloud, we talk about that as sort of a doubling opportunity in the TAM. Now, the pieces that we've filled out to date aren't the comprehensive agreement cloud.

So, we think that's the longer term thing to shoot for, but we think we're making real progress towards increasing our capabilities. That's sort of how we're looking at it..

And just one thing I would add to Dan's point about variety, one of the positives that we saw in the quarter was we thought that, at the beginning, document generation and CLM would really be something that initially would be more of the larger side of our customer base interest.

We actually saw interest that penetrated more deeply into the small and mid than our initial expectations. So, in that point of variety, that was a positive development of it..

Got it. And then, Dan, can you comment more on the sales changes? When is that completed? And does it cause any – what is the risk of a disruption as you go through that process? And I've got one just quick follow-up. Thanks..

Absolutely. Yeah, we feel really good. As I mentioned, last year, we started with our smaller commercial customers. Sometimes [indiscernible] the term SMB where we sort of experimented and tested this model of really separating those, going after newco versus those selling to the base. And we were quite pleased with those results.

And so, we've rolled that out more broadly into our commercial and enterprise group in Q1 of this year. And again, as I said, we feel really excited. If you take a look at the direct new customer adds, those were quite strong this quarter and we feel really good about that focus on newco.

One of the things we've long talked about is, if you do take folks that are selling across both and dedicate a significant portion of those resources to newco, some of the lower hanging fruit might not get that same attention in terms of the upsell opportunities and that was one of the things we want to be mindful of, but based on what we saw in Q1, again, with particularly the strong success on newco, we feel very comfortable that we've baked in the right changes.

And I don't think you should expect any significant model changes going forward..

Great. And that's helpful. And then, Mike, just for you. The retention, if you look at it on a gross basis in terms of gross churn across your business, did it stay consistent? Any changes there? Thanks..

Yeah. I think the only thing I would point to on the dollar net retention is, obviously, we are talking about some of the upsell transactions which affect that statistic. Otherwise, I wouldn't see anything underlying statistics within the business that was out of the norm..

Got it. Thanks, guys..

The next question here is from Stan Zlotsky from Morgan Stanley. Please go ahead..

Perfect. Thank you so much for taking my questions. And maybe just follow-up on Justin's question a second ago.

So, as these larger deals, with SpringCM included, start to close, could we start to see net revenue retention start to trend up more towards the historical ranges that you've seen more in the 114% to 115% range as we go through the year?.

Yeah. Hi, Stan. I would tell you that – I would reiterate the 112% to 119% we've always talked about. But, yes, I think that there's an opportunity for us to have that move into the more historical kind of mid-teens kind of range..

Got it. Perfect.

And then, just on the new Agreement Cloud and all the associated products, such as the ID product that you're bringing to market, how are you thinking about selling these products and brands to market and when do you think they would really start to catch traction and we can start to see them become a more material part of the broader story? Thank you..

Well, in terms of the go-to-market, as I mentioned before, we really are taking a strategy of enabling our core sales force to be able to sell the broader Agreement Cloud and the pieces there.

We do have subject matter experts that we bring to support, the same way you might think about a solutions consultant providing the technical support of our existing eSignature.

And we have overlay model capability as well in a situation like with Spring, where we do an acquisition and we want to bring that expertise to market and support our existing AEs. But I think you're going to see us continue to do that as that [indiscernible] core AE market. And in terms of a sense of timing, it's early days.

I don't think you should expect to see us breaking out sort of revenue impact from different product lines in the foreseeable future. But we have plans in place to show revenue this year from these businesses and we think it can be a significant part of our business going forward..

Got it. Thank you..

Our next question is from Kash Rangan from Bank of America Merrill Lynch. Please go ahead..

Hi. This is Shankar on behalf of Kash. So, I have a follow-up on the sales cycle.

Was there any particular vertical or geography where this set of extension that has happened or it's just more broad based?.

I think it has more to do with the combination of the products, Shankar, than it does with any kind of geography or vertical..

Yeah. And the only thing I'd add to it is it would skew, obviously, to larger customers. So, if you see the place where we had our greatest strength through this particular quarter, with the first quarter of really sort of having this expanded capability in place, the smaller commercial business was particularly strong.

So, the impact from a delay standpoint was skewed towards larger, but that's the only thing I'd say. And again, when we look across the quarter and we looked across the mix, we're pretty pleased with the results as we introduce the new functionality and the new capability that the underlying demand we see from the marketplace is a positive.

So, we see this as an important supporting evidence that the DocuSign Agreement Cloud is absolutely the right way for us to go and continue that successful march into becoming a multi-product company..

Got it.

On the new customers and the ACV that you sell to a new customer, when you land with a new customer, have you seen a trend where you land at a much higher ACV than [indiscernible] one or two years ago? And when you think about the land and expand strategy, how long does it take for a customer to go from one use case to the hundreds of use cases you talked about? Is it more a one to three-year kind of window or is it a much longer time frame?.

Well, the land and expand timing, we don't see that having changed. We haven't seen the ACVs fundamentally different, either in the last several years or anything specifically in the last quarter. So, I don't expect that to change. I think that core motion that we're excited about is going to stay quite constant.

And in terms of the time it takes for that to sort of expand, it really does vary quite a bit. In general, I would just tell you that, particularly for a larger customer, there does tend to be a sort of half year to year of them really getting adopted with the first set of use cases that they bring DocuSign in for.

And then, after that, it's quite a variation where some, within a year, have dramatically expanded and some do take three, four years before they get to be at scale..

And, Shankar, the one thing I'd say about that initial land, a lot of that comment that Dan just made is by design. Our focus when we land a new customer is to size that initial deployment at a level that we have great confidence that they can adopt it. We have a lot of resources focused on that initial adoption.

If we try to push deal sizes, the initial motion, it increases our risk of churn. This is a lesson we've learned over many years. So, we really do try to right-size those initial deployments, so we get a strong foothold that leads to the expansion over time..

Got it. Thank you, guys..

[Operator Instructions]. Next question is from Walter Pritchard from Citi. Please go ahead..

Thanks. Another question just on the expansion rate. I guess if we go back a number of quarters ago, you were pushing expansion rates toward the higher end of that range that you mentioned, Mike, and you didn't have the other products there.

And so, I'm wondering, as you sort of dissect the expansion rate you're seeing right now, is there any change in the expansion you're seeing just simply from customers rolling out additional use cases and footprint of the e-sign capability? And then, just as a follow-up to what somebody else asked, you would think you might be able to get up towards the higher end of your expansion rate having the ability now to layer in new products.

So, just wanted to maybe understand the dynamics within the expansion rate and where that could go..

Yeah. Walter, two things. One, I would say, if you look out over several quarters, I think our – like our four-quarter, six-quarter rolling averages, like a 114-ish kind of level, so we have had moments where it has peaked above that, but it's generally been in those mid-teens.

So, I wouldn't want to have you think that it was something more like at the high end of that range. It's been more in the mid.

And as I had responded earlier to a prior comment, I think you're right, we do expect that, in coming quarters, you'll see as we get these new products integrated into our sales cycles and so forth, we should see that rate move into those ranges over time..

And then, Mike, on the international revenue, you saw that uptick. I know you have had a bit of a headwind there and you commented that the core is growing faster than the reported number.

Can you help us understand where you are in working through those headwinds and when we should see the international no longer dragged down by some of those products you discontinued in Brazil and so forth?.

Yeah. So, clearly, what you would see from this quarter, is that the gap is – with the combined being above 40%, compared to last year, we had quarters more in like the mid to high 20 percentiles where our core was growing higher than 40%. That was a wider gap.

So, I think we're entering this fiscal year with much of that sun-setting of legacy products already accomplished. There's still some of it. But I don't think what you'll see in the quarters coming is the kinds of impact and separation that you've seen in prior quarters. I think we're much closer to normalization around that now..

Okay. Thanks for taking the questions..

Our next question is from Patrick Walravens from JMP Securities. Please go ahead..

Hi. This is Mark for Pat. Thank you so much for taking my question. Mike, you mentioned that the international revenue was particularly strong. And just wondering what are some factors that drive the strong growth and which region contributed the most..

Yes. So, thanks. I think both our Asia-Pacific region, as well as Europe contributed. I think that Europe was probably a bit stronger, but that probably has to do with the fact that we've just a bit more – we have more infrastructure in place in Europe and so forth. We've been there longer.

But I think most of the growth is coming from markets that are newer than the US and we're getting very good traction. I will say, in this theme of multi-products, we saw that same phenomenon in our international customers as well. So, that has been a global positive movement for us.

I'd also say that, in Brazil, which is a little bit ahead of other international countries in terms of their adoption of digital technologies, we saw good strength there as well..

Got it. Thank you..

This concludes the question-and-answer session. I'd like to turn the floor back to management for any closing comments..

Thank you, guys, all very much for joining us. We look forward to seeing, hopefully, a bunch of you at the Momentum conference next week and then at upcoming events. Thanks..

This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation..