DocuSign's Business Stabilization and AI-Driven Growth Strategy

DocuSign has stabilized and improved efficiency, positioning itself for growth with a promising new AI-enabled product line.

### The DocuSign Journey: Stabilization, Efficiency, and Growth
* 📈  Since joining DocuSign nearly two years ago, the focus has been on **stabilizing the business**, **enhancing efficiency**, and **developing a new growth chapter**, achieving a **significant milestone this quarter**.
* 💡  The company has successfully stabilized operations and improved profitability, positioning itself for **future growth** with the launch of a **new product line** beyond just e-signatures.
* 🚀  Early results from the new product, which has been introduced to North American commercial customers, show promising adoption and deployment, with users appreciating the **ability to gain immediate insights into their contracts**.
* 🤖  DocuSign has integrated AI into its products for years, and recent advancements have allowed the company to **enhance contract data processing**, delivering **valuable insights quickly and efficiently**.
* ☁️  With increased investment in product technology and a strategic partnership with Microsoft, DocuSign is transitioning to the public cloud while maintaining control over expenses, benefiting from **decreasing AI processing costs**.
* 📊  While the company acknowledges that past growth rates may not be achievable in the near term, it is focused on **returning to double-digit profitable growth**, with early signs indicating **positive momentum**.
* 💬  The cost of processing agreements has **significantly decreased**, allowing for **more ambitious tasks** while maintaining **lower costs per item**, despite larger investments from major vendors in AI technology.

I just want the story, the DocuSign story. Right. I think historically you've beat the market's expectations on Billings, and so everyone was very excited. They're a little concerned on that. The story behind billings growth. Well, you know, so when I joined a little under two years ago, I think there were three questions. One, could we stabilize the business? Could we become more efficient? And then could we develop our next chapter? And so this quarter, I think, is a nice milestone. I think we have really stabilized the business. We've made the business much more efficient. The profitability, as you mentioned, and we are now poised, I think, for growth. We've launched our new product line, which is much broader than the e-signature that everyone's so familiar with. And we saw some early, very positive results this quarter. It's still early, but we're very encouraged to dig into those positive

results. I infused with thinking about a broadening out from contracts. How is it working for the companies that use it? Yes. So. So we launched it to North American commercial customers. And we've had a number of folks that have not only ordered but deployed. And the early results are really good. See, what they're saying is they love the fact that we can ingest all of their agreements and give them immediate insight into every contract that they have. And this is valuable for every role in the company, whether you're a CFO or a frontline seller or purchasing agent or an H.R. recruiter, you want to know the agreements that are relevant to you? What are the essential terms and how are things going? And that's what we provide. And we can do that fairly instantaneously. When you have an AI-enabled product or a product that's made more valuable by AI, it's usually required an investment on the talent side or the compute side.

What can you tell me and your investors and the audience convince us that that investment is paying off fully? Yeah, well, so actually, if you look at our and our past performance here, we've been doing it for a long time. We've had AI embedded in our products since before you LIMS came out, and that's been features that we've embedded as well as charged separately for. But obviously, with the advent of these new models, we were able to take a significant leap forward. And the feature that I just described is AI-enabled. So, we take your contract data, run it through some of these models, score them, and then give you back the central data about your agreements. And we could do that in a very lightweight, instantaneous way. From an investment perspective, we have ramped up our investment in product and technology, and we are moving to the public cloud. We have a big partnership with Microsoft, but I think we're holding the line pretty well on expenses.

We can do this efficiently. And of course, the costs of AI continue to drop. The cost of processing and agreement has dropped tremendously just in the last six months. We are looking at the moment and then today you're up 3.7%. I look back over the five years, at one point your share price eclipsed 300. And I'm just wondering as to whether you think this euphoria is ever going to infuse itself into the capitalization, the market capitalization of your business once again on as the pandemic did once before. Well, I think, you know, those were days when ducks were growing at 56% a year or so. I don't know that we have a path to that yet. I certainly love that. But I'm not projecting that. I think for now, we're setting ourselves a milestone to return to double-digit profitable growth. I think we have a path to that. And the early signs here are

encouraging, and we'll see how the markets respond to that. We're obviously a much more profitable company now and operating at a bigger scale. So I'm not going to predict where the market's going to value us, but we are really, really pleased with the early progress here. Very quickly, something you just said, Alan, that the cost of air is dropping. I don't know that I've heard many people say that to me at least. What do you mean? Well, so if you look at the efficiency of these models and the cost per item process, whether it's an image or in our case, an agreement, the cost has dropped very significantly by a couple of orders of magnitude. With that said, obviously people are taking on more ambitious tasks. The models are getting larger. And so the compute costs for the large vendors, for example, the amount of capital investment they're making is going up and up, I think, is because of the expansiveness of the opportunity.

that they see. But I'm telling you, as a customer on a per-item process perspective, costs are dropping very rapidly.

DocuSign's Margins Overshadow Billing Trends

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DocuSign has stabilized and made its business more efficient over the past two years, leading to positive early results from its new product line.

The company is now offering broader services beyond e-signatures, providing immediate insight into agreements for commercial customers.

The AI-enabled product is delivering valuable information to various roles within companies, enhancing its overall impact.

The company has a long history of embedding AI in its products and has recently taken a significant leap forward with new models.

They are ramping up investment in product and technology while moving to the public cloud and partnering with Microsoft.

The cost of processing agreements has dropped significantly, and the company is aiming for double-digit profitable growth as a milestone.

The Impact of Dropping Air Costs on Business

The company is experiencing significant profitability and growth, leading to optimism about its market valuation.

The cost of air, referring to the efficiency of models and processes, has dropped significantly, making operations more affordable.

However, as companies take on more ambitious tasks and invest in larger models, the compute costs and capital investments for vendors are also increasing.

Rapidly Decreasing Costs from a Customer Perspective

Customer costs are dropping rapidly on a per-item basis.

This trend is notable and contrasts with other perspectives.

The overall process is becoming more affordable for customers.