Operator: Our next question comes from the line of Josh Baer with Morgan Stanley. Please proceed with your question.
Josh Baer: Great. Thank you for the question. I had one more just to clarify on the topic of on-time renewals. So that was part of what drove billings upside this quarter, but now you’re saying that the guidance now reflects sort of the same level of on-time renewals. So is that right that there’s kind of been a change in how you’re incorporating the idea of on-time renewals into guidance? And now if things stay the same in Q3, you wouldn’t see upside to billings?
Blake Grayson: Right. So I’ll try to clarify this a bit more, I’m learning this as we go. The thing with on-time renewals is that essentially doing an on-time renewal that maybe in the prior year was pushed out affects your ability to continue that momentum. So it’s a timing situation. And so with that strength in the first half, even though you have execution that continues, it’s just you kind of run out of room a little bit on it. So it’s really more of a timing situation than a growth opportunity. So that’s why you see that. And the guidance — and again, that was in the previously communicated guidance last quarter, and we actually increased the full year guide for this year. So it’s all been in there in the guidance, but it’s just that nuance of how on time flows through.
Josh Baer: Okay. Got it. And then one more just on sort of the big picture agreement process and workflows. I was just wondering, are there certain departments or workflows where DocuSign should own that full agreement process versus others where maybe like the basic DocuSign eSignature is integrated into like in HR onboarding or some other departmental or workflow? How to think about the two different possibilities there? Thank you.
Allan Thygesen: Yes. I would say people use DocuSign for all kinds of workflows. But it was going to pick areas where we had a particularly strong early start. From a vertical perspective, obviously, in the finance and real estate area that was very strong. Then, I’d say, moved on to all forms of B2B sales were very enabled by DocuSign, and we see that a lot. And now we’re seeing quite a few HR applications, as you alluded to. So we have strong partnerships there with Workday, with SuccessFactors and a lot of deployments in that. And in procurement. Particularly these days, enterprises are very focused on procurement management and automating that process and making it more efficient and more transparent. We see more adoption there as well.
So as an example, a lot of our strength in the pharma space comes from procurement use cases. We have a fantastic relationship to pick a different one with NVIDIA, who uses DocuSign both for eSignature and for CLM. And it’s really focused on their supply chain efforts. So really, at this point, it’s very broad across all the major enterprise workflows and many industries, practically all industries. But we started in different — we had some industries that were fixed starters for the eSignature movement, if you will. But at this point, it’s pretty broad. Does that help?
Operator: Our next question comes from the line of Jackson Ader with MoffettNathanson. Please proceed with your question.
Jackson Ader: Great. Thanks for taking our questions, guys. First one on the product set or the feature set. It’s much broader and deeper than it was even just a couple of years ago. And I understand, given the macro environment, probably hard to pass or to expect to get all the value you’ve been putting in the products back from your customers. But I’m curious, how are you making sure that once the macro headwinds subside that you don’t put $10 of value into the product and only get $5 back, right, just to make up numbers?
Allan Thygesen: Yes. It’s certainly a fair push. What I would say what we’ve done here over the last nine months or so is really pick up the pace of innovation and product release adding half to our core products. I think the big transformation of DocuSign into this broader agreement platform and the intelligence layer is still ahead of us. We previewed some of that at both the vision and some early releases at Momentum. If you haven’t already watched the Momentum keynotes, it’s found on our website, it gives a really good overview of where we’re heading. So just as an example of things that I think are to come that make this really a more at-scale holistic platform things like orchestration, where we are enabling customers to dynamically assemble workflows related to agreements.
Components of every part of the DocuSign every one of our interfaces to third-party ISV applications, I think, is going to be incredibly powerful and re-architecting how agreements get done. That’s an example. I think Enterprise Search was something that we will begin to. We will begin to roll out in Q4, and that is being able to do that semantically across your entire agreement base. So to use an example, let’s imagine that you’re looking for force majeure in your contracts. Today, that would be a large team of lawyers spending months going through all your agreements. We can deliver that and have the AI dynamically interpret all the symptoms and ways in which that might be expressed and give you all the agreements that are relevant to that query.
That’s really transformational capability that we do not provide today. So I just want to say that, to-date, many of these releases have been complementary to our — to the products that we’ve been shipping for a while. And they’re great. And I think we’re — it’s giving us even more of a market leadership position. But the broader repositioning of DocuSign as the enabler of creator of this agreement workflow and agreement intelligence model is still to come. And we will begin, I think, delivering against that later this year and then all throughout next year. And so I think we have so much runway ahead of us from a product perspective.
Jackson Ader: Okay. Great. And then a quick follow-up. Blake, what should like what’s the plan or what should we expect for stock-based comp? I’m surprised to see it up year-over-year just given the trend in headcount?
Blake Grayson: Sure. So stock-based comp as a percentage of revenue in Q2 is about 22%. And that’s held relatively steady for us. We review that number with our outside compensation, consultants were slightly higher than our average peer group. The driver on the year-over-year increase has a lot to do with the new leadership folks that we’ve brought on to the team. And so you’ll see — me being one of those people, and you’ll see that. And so it is something we’re definitely paying attention to and mindful of, but that’s the gap when you’re asking about between headcount and cost. And so that will take time, obviously, but we’ll work through that.
Operator: Our next question comes from the line of Alex Zukin with Wolfe Research. Please proceed with your question.
Alex Zukin: Hi, guys. Thanks for taking the question and congrats on a solid quarter. I guess, two for me. The first one, I want to go back to the question around net retention because, I think, it’s really, really important. To some extent, how much of the net retention dynamic is under your control, meaning how much of it is a macro pressure versus competition and consolidation or repair loss effectively? And I ask that because to some extent, your — you’ve already released a number of really interesting new products in market, CLM+, CLM, the Identity product that you talked about. So is there any way to kind of just give us some confidence around like what level to the question earlier, it shouldn’t dip below or like when — how many quarters after the cohorts that you’re comping kind of normalize that we should start seeing it at least be stable?
Blake Grayson: Sure. It’s awfully challenging for me to try to look into that crystal ball and tell you on the cohort side. What I would say is I think you’ve nailed it in your question that it’s a combination, right? We have a combination of macro kind of effects that essentially as customers scrutinize their investments and they’re trying to save every dollar they can what do they do. But then it’s also combined with that, we have it under our control that if we can execute and provide products that customers want and over time we expand, it gives us that opportunity for expansion. So I think it’s a double kind of a component that affects that rate. And so it’s — part of its under our control and part of it’s also is the macro environment. But at the end of the day, I feel like if we can execute on that product road map over time, it kind of destinies in our hands. Allan will probably maybe add more to that.
