Austin Williams: Hey. Great. This is Austin Williams on for Michael Turrin. I just wanted to go back to the expansion rate. It looked like the expansion ticked down a touch here. Is there anything you would call out as it relates to those expansions and how we should think about that settling in from here?
Cynthia Gaylor: That was on the dollar net retention number? You broke up a little bit.
Austin Williams: Yes.
Cynthia Gaylor: Yeah. Yeah. So on last quarter’s call, we talked about kind of that trend line. And as I said in my prepared remarks, we would continue to expect the trend line to push downward in Q4. I think what’s embedded in that number is mainly expansion rates are moderating, and so the growth and expansion is declining. As a reminder, that’s a €“ it’s a dollar net retention number. So it’s based on our book of business. The book of business is quite large. So it takes larger dollars and larger rate of expansion to move the number up. And just given some of the dynamics we’ve been talking about the last few quarters around expansion rates and deal sizes contracting, we would expect to see continued pressure on that particular metric for Q4.
Operator: And our next question comes from the line of Brad Sills with Bank of America. Please proceed with your question.
Brad Sills: Wonderful. Thanks for taking my questions, and welcome, Allan. I wanted to ask a question on Agreement Cloud. As the company starts to transition over the longer term, I understand towards a more workflow-oriented business. Today, we think of eSignature as transactional. Do you think there’s a different go-to-market that’s required here to really materially move the needle and gain some traction there? You talked about some SI efforts there, global SIs, et cetera. I assume they would play a role there. But any thoughts on that? Thank you.
Allan Thygesen: Yes. So a couple of points there, I think from a customer segment perspective, we have a very nicely balanced book of business now across SMB, mid-market and enterprise. A lot of our enterprise adoption has been departmental level historic, but we’re negotiating more enterprise-level agreements. I think we need to continue to evolve our sophistication and readiness there. We’ve brought in some leaders with great experience there, but I think we’re still coming up the curve in terms of being fully ready to being a broad enter platform supplier, if you will. So that would be my €“ the main point I’d make on that. In terms of the other parts of the business, I think the CLM business is already very much an enterprise play.
And as we’ve rolled that out, we’ve seen a lot of our larger deals have a significant CLM element. So we’re pushing hard on that. I think that is still a relatively early-stage market opportunity. As you noted, there’s €“ it’s so complicated and there’s so much customization on a vertical or company-specific basis that inevitably, there’s a strong service element to that. While we will have a base level of services, we absolutely need third-party partners like the big SIs and others. And they’re very eager. In fact, we have a lot of inbound interest to partner with DocuSign in creating combined solutions to address those needs. So, I’m bullish on that, but I want to maintain DocuSign’s focus as a SaaS software company with necessary customer success and professional services elements and then augment that with the ecosystem of ISVs and SIs and others to present solutions to enterprises that have more complicated needs.
Brad Sills: Great to hear. Thanks Allan. And then one for you, Cynthia, if I may, please. Just on the guidance for next year, low single-digit billings growth. This quarter, you saw, it looks like 19%. Obviously, you had some deals pulled into Q3, but good results in comparison to kind of the guide. So, just what are you factoring in for next year? Is it a worsening macro? You talked about some elongating sales cycles and perhaps deal size compression. Are you just assuming that, that environment sustains here? Any color on just what’s factored into that next year outlook? Thank you.
Cynthia Gaylor: Yes. Sure. So, we’re not technically guiding to next year. We’re kind of giving you our best view of what we’re seeing. And again, in the spirit of being transparent, we did want to provide some direction to what we’re seeing as we look into Q4 and next year. The embedded assumption there, I guess, when you look at Q3, it was 17%. Q4 is, I think, 6%. And so we’re certainly seeing kind of a more challenging macro environment and some softening trends materialize, right? And I talked about kind of smaller deal sizes, smaller expansions and expansions at a slower rate. So, I think those things in particular between the macro and then what we’re just seeing with customer behavior on the softening trends of expansions.
Customers are still expanding, but they’re just expanding at a lower rate, and that puts pressure on the growth rate. I’d also say in the macro, there’s just more scrutiny by customers on spend and budgets. So, we’re not modeling material degradation there or material improvement. So, we’re kind of assuming just kind of a softening macro environment that we’re currently seeing.
Brad Sills: Thanks Cynthia.
Operator: Our next question comes from the line of Mark Murphy with JPMorgan. Please proceed with your question.
Mark Murphy: Yes, thank you very much and I’ll add my congrats. Allan, I’m interested in how commonly do you sense that some of your customers might have overprovisioned themselves with DocuSign capacity during the pandemic. And maybe now they’ve been drawing down some of that eSignature inventory in a manner that maybe it could position them to run out of the excess capacity. It sounded like you actually might have seen a little bit of that here in Q3 and where they might be able to reengage on new purchases. Maybe it’s in the back half of next year or somewhere out beyond that.
Allan Thygesen: I do think that we’re on the tail end of that part of the cycle as we’ve — significantly lapping COVID as a broad phenomenon and the stance the companies took at that time. At the same time, of course, some of our customers saw very inflated volumes during COVID and during a very low interest rate environment. You’re familiar with the government loan scenario. I think the mortgage and real estate volumes, which just simply lower now even if they have completely exhausted their pre-bought envelope allotments. So, I think I’d like to be cautiously optimistic along the lines that you note. But I think there’s that counteracting factor of some of the things that were the most volatile, whether it was the most pre-buying, are probably also people who are now in a different demand environment, if that makes sense.
Mark Murphy: Okay. Yeah, understood. And just as a quick follow-up, how are you viewing the partnership between DocuSign and Microsoft? How that might evolve over time? Because I think there’s a viewpoint out there that Microsoft is conspicuously absent from this market in some ways in that perhaps they could end up offering eSignature as part of Office 365. And I’m just wondering if you see any opportunity to be involved there or perhaps if you see some other angles to that relationship.
