Allan Thygesen: No, that one maybe not. And I’ll just add to what Blake said, I think consumption — we think of consumption as an imperfect but important leading and predictive indicator of renewal. And so that’s why we track it closely and we’re talking about it. And we’re seeing modestly encouraging signs there in consumption trends relative to the commitments customers have made. Maybe one other comment on that is we are also coming to the end of the COVID. We have a few quarters left of COVID renewals, but it is already significantly down and weight in our business and so that’s coming to an end, which is positive.
Michael Turrin: That’s all super helpful. And then maybe one more on just the leading indicator side. Appreciating it’s noisy, but if we look at billings this quarter, it’s down sequentially. Last quarter you talked about — it wasn’t early renewals. It was just kind of the timing of renewals, having some improvements. So did that maybe help Q2 relative to Q3 or just help us kind of square the seasonal trends and what can drive the volatility from quarter-to-quarter on that metric? Thank you.
Blake Grayson: Yes, you bet. So, right, Q3 billings growth of 5% relative to Q2 of 10% year-over-year. Still really pleased with the Q3. We came in above our expectations on that. But the detail like you’re asking about from Q2 to Q3, it’s really driven, I would say, by three primary areas. The first is we have a hard comp in Q3. If you look back at our historical results, I think our Q3 billings growth in fiscal ’23 was up 17% — around 17% year-over-year. And that was the highest in fiscal ’23. And that was driven by a year ago, we had a pretty strong early renewals kind of momentum that grew that billings number in Q2 the prior year. Now we’re still doing well this year with regard to our renewals, it’s just a hard comp that we’re having to deal with.
The second thing item is what you talked about, which is that on-time renewal impact. And as I discussed in the last call and my predecessor discussed on the call before that, the benefit that we’ve had in the higher on-time renewals in the first half of ’24. It just — you have a smaller impact as you go through the year in the second half. And so it’s really primarily a timing issue. And so we’re still doing actually really quite well on on-time renewal execution. The team is doing a great job with it. It’s just a smaller impact on year-over-year growth as we progress through the year. And then the final — the third thing that impacts that billings number, frankly, is just lower expansion rates, right? I mean IT budget scrutiny and people that are sitting in my seat are asking the right questions, which is how do I do more with less, where are the places that I can manage costs well, it’s — I mean, I’m doing it here, frankly, in my role as an operational CFO.
And that, along with macro impacts overall billings growth, and it’s evident in those DNR rates. But as Allan mentioned and I have mentioned already, like we are seeing those consumption trends that we saw some marginal improvement quarter-over-quarter. And it’s still early for us. We got to see that hopefully hold here for the next few quarters. But things are also improving, but that’s just really the dynamics of the decel and year-over-year growth between Q2 and Q3.
Michael Turrin: Appreciate the details. Thank you.
Operator: Thank you. Our next question is from Tyler Radke with Citi. Please proceed with your question.
Tyler Radke: Yes. Thanks for taking the question. I’m not sure if this is who this is for, but I guess as we think about the product set for next year, Obviously, there’s a lot of organic investments you’re making on the Gen AI side. Can you just talk about how you expect that the product set available products and upsells to evolve next year? And with the launch of some of these generative AI services, how does that kind of change the philosophy around still kind of offering an envelope base signature product rather than something more subscription base that’s not tight to envelope? Thank you.
Allan Thygesen: Yes, there’s several points in there. First, I’d just say, look, our CLM business is growing faster than our signature business, and I expect as we launch this broader intelligent agreement management platform to a broader set of customers that pattern of that broader category growing faster will continue. The second point you made about the envelope versus subscription basis. We are, in fact, already experimenting with should we say, unlimited envelope billing models for a variety of customers. So for very large customers, we have entered into some enterprise license agreements. And those have been, I think, quite helpful at one very large bank that we did one with as they, after they signed that agreement, they proceeded to remove a competing solution from some of their workflows.
And I think we have that opportunity across some of our very large customers. And then in the Commercial segment, the mid-market and SMB segment, we’re now competing more directly with some of our lower-priced competitors who have offered unlimited envelope packages. And not surprisingly, if you give people a competitive unlimited envelope from DocuSign versus a lesser branded, less well featured product then they choose DocuSign. And so we’re seeing really, really positive results and to the point where I expect that we will continue to broaden that rollout. So overall, I’m feeling quite good about our evolution and our response to competition on multiple fronts as well as the broadening of our product road map that you alluded to in the first part of your question.
