DocuSign (DOCU) Q4 2026 Earnings Call Transcript

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DATE

Tuesday, March 17, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Allan Thygesen
• Chief Financial Officer — Blake Grayson
• Head of Investor Relations — Matt Sonefeldt

TAKEAWAYS

• Total Revenue -- $837 million for the quarter, up 8% year over year, with full-year revenue of $3.2 billion, also up 8%.
• Subscription Revenue -- $819 million for the quarter, increasing 8% year over year; $3.2 billion for the year, up 9%.
• Billings -- $1 billion for the quarter, marking the first quarterly result above this threshold, with 10% year-over-year growth; annual billings reached $3.4 billion, up 10%.
• Annual Recurring Revenue (ARR) -- $3.3 billion, up 8% from the previous year, consistently matching the prior year's ARR growth rate.
• IAM ARR -- Over $350 million, representing 10.8% of total ARR, up from 2.3% a year prior.
• International Revenue -- Surpassed 30% of total revenue in the quarter, rising 15% year over year.
• Dollar Net Retention Rate (DNR) -- 102% for the quarter, up from 101% last year, improving for six consecutive quarters.
• Customer Base -- Over 1.8 million total customers, up 9% year over year, with 1,205 customers spending over $300,000 annually, a 7% increase.
• Non-GAAP Gross Margin -- 81.8% for the quarter and 82.0% for the full year, both down slightly versus the prior year primarily due to cloud migration costs.
• Non-GAAP Operating Income -- $247 million for the quarter, up 10%; $968 million for the full year, up 9%.
• Non-GAAP Operating Margin -- 29.5% for the quarter (up 70 basis points), reaching 30% for the full year (up 30 basis points) for the first time.
• Free Cash Flow -- $350 million in the quarter, up 25% year over year; over $1 billion for the year, a 33% margin.
• Cash & Investments -- $1.1 billion at quarter-end with no debt outstanding.
• Share Repurchases -- $269 million repurchased in the quarter; $869 million for the year, representing 82% of annual free cash flow.
• Repurchase Authorization -- Expanded by $2 billion for a new total of $2.6 billion remaining authorization.
• Non-GAAP Diluted EPS -- $1.01 for the quarter, a $0.15 per share increase over last year; $3.84 for the year, up from $3.55.
• GAAP Diluted EPS -- $0.44 for the quarter, compared to $0.39 the prior year; $1.48 for the full year, down from $5.08 due to a prior-year tax valuation benefit.
• Employee Count -- 7,044 at year-end, up from 6,838, with most hires in lower-cost locations focused on IAM development.
• Fiscal 2027 ARR Guidance -- 8.25%-8.75% growth rate, targeting $3.551 billion in total ARR and IAM to represent approximately 18% of total ARR, exceeding $600 million.
• Fiscal 2027 Revenue Guidance -- $3.484 billion to $3.496 billion, or 8% growth at the midpoint; Q1 revenue expected in the $822 million to $826 million range.
• Fiscal 2027 Profitability Guidance -- Non-GAAP gross margin expected at 81.5%-82.0%, with non-GAAP operating margin between 30.0% and 30.5%.
• Fiscal 2027 Share Count Guidance -- Non-GAAP fully diluted weighted average shares outstanding projected at 190 million to 195 million.
• IAM Product Launches -- New IAM SKUs for HR and procurement, richer legal automation tools, and expanded compliance features announced for rollout.
• AI Data and Efficiency -- More than 200 million private agreements ingested into Navigator, with "AI processing costs optimized by upwards of 50x" compared to direct LLM prompts.
• Partner Channel Momentum -- Total partner contributed bookings up over 30% year over year in the quarter.
• Consumption-Based Pricing -- IAM subscription pricing model to launch in Q1, following validation with 40–50 enterprise customers.
• Share Count Reduction -- Q4 diluted weighted average shares outstanding fell to 204.7 million, down from 214.5 million the previous year.

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RISKS

• Non-GAAP gross margin declined by 50 basis points in the quarter and 20 basis points for the year due to "ongoing costs associated with our cloud infrastructure migration."
• GAAP diluted EPS dropped to $1.48 from $5.08 year over year as prior-year results benefited from a one-time tax valuation allowance release.

SUMMARY

Management confirmed that IAM ARR rose from 2.3% to 10.8% of total ARR, with consistent company-wide ARR growth at 8%. Guidance calls for an accelerated shift, targeting IAM to exceed $600 million ARR and 18% of total next year. The quarter marked the first with billings over $1 billion, over $1 billion in free cash flow, and more than 30% of revenue from international business. DocuSign reported its largest quarterly repurchase and expanded the buyback program to $2.6 billion remaining authorization. Pricing innovation, including IAM consumption-based models and new SKUs, is positioned to support further enterprise and functional expansion. Management noted "continued strong adoption" and improving DNR, while stating that retention rates for early IAM renewal cohorts "are better than the company average." Enhanced partnerships with Microsoft and Anthropic were highlighted as strategic channels for enterprise and AI-driven growth.

• Executives stated, "IAM is tracking as we hoped it would" and expect it to be "a key growth lever" to ultimately reach long-term double-digit top-line growth.
• The company is moving away from reporting billings as a primary metric, shifting ARR as the top performance indicator going forward.
• Allan Thygesen said, "we have a huge advantage in using private consented agreements, not just public data," for DocuSign AI models.
• IAM renewal cycles are expected to increasingly drive platform adoption, with management confirming "gross retention and dollar net retention rates for these IAM early renewal cohorts are better than the company average."
• Recent launches include AI-powered agentic tools for legal workflows, with new vertical- and function-focused product offerings planned for fiscal 2027.
• IAM's integration with major third-party AI platforms, such as OpenAI's ChatGPT, Google Gemini, GitHub Copilot Studio, and Salesforce Agentforce, provides broad workflow coverage for customers.
• Most new engineering code is now AI-assisted, according to management, indicating extensive internal adoption of AI tools for productivity gains.
• Blake Grayson stated that "Stock-based comp grew 2% year-over-year" and is expected to decline again in the upcoming year as further cost actions are taken.
• IAM's go-to-market strategy for fiscal 2027 includes a new top-down, C-suite focused sales motion and a partner-led channel that delivered over 30% bookings growth.
• Enterprise customer projects, including the Aon Meridian case, are described by management as transformational in scope and complexity for both process automation and customer value.

INDUSTRY GLOSSARY

• IAM (Intelligent Agreement Management): DocuSign's AI-native, end-to-end platform designed to automate, analyze, and manage business agreements across functions, integrating advanced workflows and artificial intelligence.
• Navigator: DocuSign's intelligent contract repository used for AI-powered search, data extraction, and workflow automation leveraging large volumes of private agreements.
• SCIM: A standards-based system for identity management that enables automated and scalable management of user access across applications, referenced as part of DocuSign's enterprise security and compliance enhancements.
• Envelope: DocuSign’s unit for digital transaction volume, representing each complete package of documents sent for electronic signature.
• DNR (Dollar Net Retention Rate): A metric reflecting the change in recurring revenue from existing customers due to expansion, contraction, and churn.
• SKUs: Stock Keeping Units, referring here to differentiated product configurations or packages tailored by function or vertical (e.g., IAM for HR, procurement).

Full Conference Call Transcript

Matt Sonefeldt: Thank you, operator. Good afternoon, and welcome to DocuSign's Q4 Fiscal 2026 Earnings Call. Joining me on today's call are DocuSign's CEO, Allan Thygesen; and CFO, Blake Grayson. The press release announcing our fourth quarter fiscal 2026 results was issued earlier today and is posted on our Investor Relations website along with a published version of our prepared remarks. Before we begin, let me remind everyone that some of our statements on today's call are forward looking, including any statements regarding future performance. We believe our assumptions and expectations related to these forward-looking statements are reasonable, but they are subject to known and unknown risks and uncertainties that may cause our actual results or performance to be materially different.

In particular, our expectations regarding factors affecting customer demand and adoption are based on our best estimates at this time and are therefore subject to change. Please read and consider the risk factors in our filings with the SEC together with the content of this call. Any forward-looking statements are based on our assumptions and expectations to date. And except as required by law, we assume no obligation to update these statements in light of future events or new information. During this call, we will present GAAP and non-GAAP financial measures. In addition, we provide non-GAAP weighted average share count and information regarding free cash flows, billings and ARR.

These non-GAAP measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results. We encourage you to consider all measures when analyzing our performance. For information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to today's earnings press release, which can be found on our website at investor.docusign.com. I'd now would like to turn the call over to Allan.

Allan Thygesen: Thank you, Matt, and good afternoon, everyone. In fiscal 2026, DocuSign's AI-native Intelligent Agreement Management, or IAM platform, establish clear market leadership as the agreement system of action for companies of all sizes. After just 18 months, IAM customers are generating over $350 million in ARR and delivering strong retention and expansion. We're proud of the improvements in product, go-to-market and operational execution over the past 3 years that have led us to this inflection point. We are positioned to begin accelerating the business. Fiscal 2026 was defined by consistent execution, positioning us for durable long-term growth. In Q4, revenue was $837 million, up 8% year-over-year, while billings exceeded $1 billion for the first time, growing 10% year-over-year.

ARR ended at $3.3 billion, up 8% year-over-year. IAM represented 11% of ARR. Fiscal 2026 was our first year with non-GAAP operating margins of over 30% and free cash flow over $1 billion. In fiscal 2027, we expect to maintain operating margins at a similar level as we reinvest go-to-market efficiencies into increased R&D investment to accelerate our road map. We will also leverage strong cash flow generation to support our repurchase program, which we have expanded to $2.6 billion. In fiscal 2027, we're focused on 2 priorities to grow IAM. First, helping customers automate workflows and drive business results; and second, expanding our AI data and innovation advantage.

IAM is an AI-native end-to-end platform that transforms how customers manage agreements across every part of an organization. In the front office, sales workflows connect to legal, finance and operations teams while also integrating with CRM platforms, enabling customers to close deals faster, deliver a better customer experience and gain meaningful top line benefits. In the back office, IAM's extraction and analysis capabilities enable a CFO in procurement use cases or general counsel and legal use cases to better manage vendor relationships and gain previously unattainable insights into the business across hundreds of thousands of documents using IAM as a system of action.

Aon, a leading global professional services firm is implementing DocuSign's Intelligent Agreement Management to surface intelligence buried in its legacy agreements and delivered through Aon's Meridian capability, equipping colleagues with the clarity they need to serve clients more effectively. Bank of Queensland signed a 3-year strategic agreement and upgraded to IAM through the Microsoft Azure Marketplace. By leveraging our global partnership, Bank of Queensland will accelerate its digital transformation, streamline agreement workflows to reduce their cost to serve, improve speed to market and strengthen regulatory controls through deeper Microsoft integration. IAM is now the center of gravity across our direct sales, partner and product-led growth motions.

Building on significant commercial momentum in fiscal 2027, we will scale IAM with enterprises by adding a top-down C-suite focused sales motion. We're launching IAM consumption-based subscription pricing in Q1. Our partner channel is increasingly emphasizing IAM and made an improved contribution to our direct business in Q4 with total partner contributed bookings growing by over 30% year-over-year. Our product strategy is also focused on delivering more use case value across organizations and enterprises. In fiscal 2027, IAM will cover more surface area for our customers by introducing new IAM SKUs for specific functions within companies, including IAM for HR and procurement. We're also building richer agentic tools for legal teams. This complements existing SKUs for sales and customer experience.

We will continue to strengthen trust and compliance functionality through deeper permissioning, access management and auditing as well expanded IAM extensibility to more enterprise-focused third-party public and private applications. Recently launched AI-powered tools bolster IAM's workflow capabilities, Agreement Desk, Agreement Preparation and AI-Assisted Review streamline agreement creation. Workspaces and identity verification speed up secure agreement commitment and Custom Extractions and SCIM for DocuSign deliver sophisticated, scalable capabilities that enterprise customers require. You can see these in action in our demo videos found in the prepared remarks. eSignature remains a thriving part of our platform vision. In Q4, we added AI capabilities to eSignature that make every step of the signing process smarter and more trustworthy.

We continue to see consistent year-over-year growth in the eSignature base, especially among customers spending $300,000 or more a year. Q4 envelope consumption once again increased year-over-year at near multiyear highs, while growth in envelope sent remains healthy and consistent. Our focus on improving sales engagement and reducing customer friction delivered year-over-year improvements in gross and dollar net retention. Three years ago, we recognized that AI would transform how agreements are managed, and we began building the AI-native platform that became IAM. We believe that Agreement Management was a natural extension of DocuSign's business and that we had unique competitive advantages.

These include a deep understanding of customer agreement workflows and context, a large ecosystem with more than 1,100 integrations, market-leading security and compliance and customer trust and distribution relationships built over decades with companies around the world. Our AI data advantage continues to grow as customers invest in IAM. Today, the number of private consented agreements ingested has expanded to more than 200 million agreements in DocuSign Navigator, our intelligent repository, up from 150 million in December. AI search leader, Elastic, is deploying Navigator to automate contract workflows across the business, while fintech leader, Clasp, is leveraging Navigator and our suite of app extensions to automate agreement workflows and centralize as contract data.

DocuSign AI models draw upon an enormous unmatched body of agreement data gathered over 2 decades. By leveraging our customer consented library of private contracts. We believe we can achieve up to a 15 percentage point improvement in precision and recall compared to our models trained on public contract data, while operating at incredible cost efficiency. We've optimized AI processing costs by upwards of 50x compared to running direct prompts on LLMs. We further extend our AI advantage by directly integrating with the leading AI providers. Last month, we partnered directly with Anthropic to make IAM available as part of Claude Cowork. The DocuSign MCP connector is available in beta today through Anthropic's Connectors Directory.

It enables DocuSign customers to use Cowork's natural language prompts to automate agreement workflows and securely create, review, send and manage agreements in IAM, all with DocuSign's trusted security and access controls. In addition to Cowork, IAM also connects via MCP server to OpenAI's ChatGPT, Google Gemini, GitHub Copilot Studio and Salesforce's Agentforce. IAM's ability to integrate with customer workflows and third-party applications delivers significant value to our customers. leading venture-backed fintech company, Vestwell, connected IAM to its CRM and reduced the time required to create a new customer agreement package from 75 minutes to 5 minutes. Move Forward Financial, a real estate lender, is saving money and delivering a better customer experience by using IAM for sales.

Payworks, a Canadian developer of workforce management software increased 24-hour contract completion rates from 55% to 87% and recovered more than $400,000 in annual sales representative productivity by integrating IAM workflows with a complex Salesforce implementation. Inside DocuSign, we're adopting AI across the organization, deploying new tools and enablement programs to boost productivity and gain efficiencies. The vast majority of our engineering organization is developing with AI and 60% of new code is AI assisted. In closing, we're proud of the immense value IAM delivers to customers by enabling them to build sophisticated and efficient agreement workflows and unlock the power of the data in their agreements.

DocuSign IAM has emerged as the category-leading agreement management platform and puts DocuSign at the leading edge of AI innovation. I want to thank the entire DocuSign team for their dedication to helping our customers move faster, grow their businesses and operate more efficiently, all while transforming DocuSign into a durable long-term growth business. With that, let me turn it over to Blake.

Blake Grayson: Thanks, Allan, and good afternoon, everyone. Fiscal 2026 represented a critical year for DocuSign as we continued our transformation, leveraging our recognized leading position amongst the world's most trusted software companies to help customers realize value from their full repository of agreements through IAM. With 1.8 million customers, representing most large enterprises, mid-market companies and over 1.5 million small businesses, we are in a unique position to provide the insights, productivity and velocity companies need to improve their performance, particularly via leveraging AI. Fiscal 2026 was both our first full year integrating IAM into our business as our primary growth driver and our first year generating over $1 billion in free cash flow.

We are proud of the progress we've made over the past 3 years and aspire to even greater gains in the future. Q4 total revenue was $837 million and subscription revenue was $819 million, both up 8% year-over-year. For the full year fiscal 2026, total revenue was $3.2 billion, up 8% year-over-year and subscription revenue was also $3.2 billion, up 9% year-over-year. Revenue in Q4 and for the full year benefited from approximately 80 basis points and 20 basis points year-over-year, respectively, from foreign exchange rates. Additionally, as discussed in prior quarters, fiscal 2026 revenue also had a slight tailwind from digital add-ons that launched in late fiscal 2025.

Our annual recurring revenue, or ARR, grew 8% year-over-year in fiscal 2026 to nearly $3.3 billion. This is consistent with our fiscal 2025 ARR growth rate of 8% year-over-year. ARR growth this year was driven by accelerating gross new bookings, primarily from IAM customers as well as gross retention improvements. Our ARR growth in fiscal 2025 was driven predominantly by gross retention as we made sizable gains that year. We're excited about the opportunity to accelerate our ARR growth in fiscal 2027 as we continue to become an even more valuable partner to our customers. As a reminder, and as detailed in our filings, ARR is calculated using fixed exchange rates set at the start of the fiscal year.

Billings for Q4 were up 10% year-over-year and exceeded $1 billion for the first time in DocuSign's history. Approximately half of the Q4 billings outperformance relative to our guidance was driven by timing with the remainder from FX and bookings. For the full year fiscal 2026, billings were $3.4 billion, also up 10% year-over-year. Billings in Q4 and for the full year benefited by approximately 2.3% and 1.1% year-over-year, respectively, from foreign exchange rates. As a reminder, this quarter will be the last time we report on billings as a top metric as we shift to discussing ARR going forward. Please see Slide 29 in our Q4 earnings deck for a full summary of our top line metrics changes.

The underlying foundation of our business remains durable and healthy. Our dollar net retention rate, or DNR, was 102% in Q4, up from 101% in the prior year showing moderate sequential improvement over the last 6 quarters. Both consumption, a measure of envelope utilization and the volume of envelope sent in Q4 continued to improve year-over-year with consumption remaining near multiyear highs across customer segments and verticals. We are seeing continued strong adoption of our IAM platform. In Q4 and after just over 18 months from launch, IAM represented over $350 million in ARR or 10.8% of total company ARR, up from 2.3% at the end of fiscal 2025.

Although still early, our first IAM renewal cohorts are performing better than the company average, and we continue to see adoption rates for IAM features climb as users engage with the platform's expanding functionality. In Q4, total customers grew 9% year-over-year to over $1.8 million. We ended the quarter with 1,205 customers spending over $300,000 annually, a 7% increase year-over-year. International revenue surpassed 30% of total revenue in Q4 and grew 15% year-over-year. Our commitment to operating efficiency delivered strong profitability for the quarter and fiscal 2026. Non-GAAP gross margin for Q4 was 81.8%, down 50 basis points from the prior year due to ongoing costs associated with our cloud infrastructure migration, as discussed throughout the year.

For fiscal 2026, non-GAAP gross margin was 82.0%, down 20 basis points on a year-over-year basis a better result than the anticipated full percentage point of headwind in our initial fiscal 2026 guidance as higher revenue partially offset the cloud migration impact. Non-GAAP operating income for Q4 was $247 million, up 10% year-over-year. Operating margin was 29.5%, up 70 basis points versus last year. For the full year, non-GAAP operating income was $968 million, up 9% year-over-year, with full year operating margin reaching 30% in the fiscal year for the first time in our company's history, representing a 30 basis point increase year-over-year.

We ended fiscal 2026 with 7,044 employees, up modestly from 6,838 a year ago, as we continue to invest deliberately in roles focused on growing the IAM platform. While we are hiring across all of our global offices, the vast majority of our net new head count growth has come from, and we expect will continue to be in lower-cost locations. Also in fiscal 2026, we delivered our first year with over $1 billion of free cash flow, a 33% margin compared to 31% a year prior. In Q4, we generated $350 million of free cash flow, representing 25% year-over-year growth and a 42% margin.

Strength in Q4 was driven primarily by improved collections efficiency as well as higher billing seasonality and the timing of billings. Our balance sheet remains strong. We ended the quarter with approximately $1.1 billion of cash, cash equivalents and investments. We have no debt on the balance sheet. In Q4, we also increased our buyback activity repurchasing $269 million in shares. This was our largest quarterly dollar buyback to date. For the full year fiscal 2026, we repurchased $869 million in stock representing 82% of our annual free cash flow. When including the additional funds used to offset taxes due on RSU vesting, this rate is slightly over 100% for the year.

In Q4, we established a 10b5-1 program to repurchase shares before the open window rather than our typical buybacks that coincide with open trading windows after earnings. This mechanism extends the potential time frame for share buybacks, and we have already repurchased $158 million to date in Q1. In addition, today, we announced a $2 billion increase to our repurchase program, bringing our total remaining authorization to $2.6 billion. Our focus continues to be on improving free cash flow generation and redeploying excess capital opportunistically to shareholders. Non-GAAP diluted EPS for Q4 was $1.01, a $0.15 per share improvement from $0.86 last year. GAAP diluted EPS for Q4 was $0.44 versus $0.39 last year.

For fiscal 2026, non-GAAP diluted EPS was $3.84 versus $3.55 in fiscal 2025, and GAAP diluted EPS was $1.48 versus $5.08 last year. As a reminder, GAAP earnings in fiscal 2025 were positively impacted by the tax valuation allowance released that year. In Q4 and fiscal 2026, the buyback program contributed to reducing our share count. Diluted weighted average shares outstanding for Q4 were 204.7 million, a decrease from 214.5 million last year. Basic weighted average shares outstanding for Q4 decreased by 2.8 million year-over-year to 200.5 million from 203.3 million total shares. With that, let me turn to guidance. For ARR, we anticipate accelerating growth in fiscal 2027 compared to the prior year.

We expect a year-over-year growth rate range of 8.25% to 8.75% or an 8.5% year-over-year increase to $3.551 billion at the midpoint at the end of Q4 of fiscal 2027. We expect growth to be driven by gross new bookings, primarily from both new and expanding IAM customers as well as by gross retention improvements versus fiscal 2026. Related to this, we expect another year of modest improvement in DNR. We expect IAM to represent approximately 18% of our total ARR at the end of Q4 fiscal 2027, driving IAM to well over $600 million in ARR by the end of this year.

This is our first year guiding to ARR and I want to provide some context on our philosophy and approach around it. Our guidance represents our current best estimates for both total ARR and IAM's trajectory based on the business data and bookings forecast available today. Therefore, we intend to only revise our ARR forecast as our underlying bookings expectations evolve for the entire year and not necessarily on a quarterly basis. As you are aware, our bookings are seasonally weighted more heavily to the second half of the year, in particular, Q4, which is typically our strongest quarter.

As a result, updating our full year ARR forecast will depend on our visibility later into the year, which will take time to achieve. For total revenue in the first quarter and fiscal year 2027, we expect $822 million to $826 million in Q1 or an 8% year-over-year increase at the midpoint and $3.484 billion to $3.496 billion for fiscal 2027 or an 8% year-over-year increase at the midpoint. After adjusting for impacts from FX and the moderate tailwinds from digital add-ons in fiscal 2026, revenue growth is in line with the prior year.

Beginning fiscal year 2027, we will only guide to total revenue, given that subscription revenue has now become the vast majority of our recognized revenue base, specifically 98% of our revenue in fiscal 2026. We will continue to report the breakdown between subscription and professional services and other revenue in the footnotes of our SEC filings based on materiality thresholds. For profitability, we expect non-GAAP gross margin to be between 80.8% to 81.2% for Q1 and between 81.5% and 82.0% for fiscal 2027. We expect non-GAAP operating margin to reach 29.0% to 29.5% for Q1 and 30.0% to 30.5% for fiscal 2027.

Our fiscal 2027 operating margins guidance reflects a similar level of margin expansion as we saw in fiscal 2026. We expect non-GAAP fully diluted weighted average shares outstanding of 196 million to 201 million for Q1 and 190 million to 195 million for fiscal 2027, a meaningful reduction from the prior year as we expect that our buyback activity will more than offset dilution. For detailed commentary on top and bottom line factors to guidance, please see the Modeling Considerations appendix in our prepared remarks. In closing, fiscal 2026 was defined by the successful global rollout of IAM and our continued commitment to business fundamentals and improving efficiencies while redeploying excess capital to shareholders.

As we look toward fiscal 2027, we remain focused on leveraging efficiency gains to drive product innovation and ultimately accelerating ARR growth delivering the long-term improvements that our customers, shareholders and employees will be proud of. That concludes our prepared remarks. With that, operator, let's open the call for questions.

Operator: [Operator Instructions] Our first question is from Rob Owens with Piper Sandler. Rob, please check and see if your line is muted.

Robbie Owens: Allan, in your prepared remarks, you talked about being positioned to accelerate the business, and clearly, that's reflected here in the ARR guide. And after 2 years of consistent growth now calling for modest acceleration. So maybe help us unpack what's underpinning that confidence. You talked about gross retention, net retention. But can you stack rank kind of the delta between the 2 with IAM playing a role, maybe speak to some of the top of funnel activity that you're seeing as well? And lastly, on that line -- along those lines, the level of conservatism that you have in this guidance relative to prior years?

Allan Thygesen: Sure. Thanks for the question. Overall, I think we're really pleased with the momentum in the business. That's what's reflected in our guide. We continue to see, I think, very strong adoption of product market fit in the commercial segment and accelerating momentum in enterprise, which represents an even larger addressable opportunity. In terms of the drivers of the growth this year, it's a combination of new expansion bookings and retention. And both are very significant focus areas inside the company. On the expansion side, as I said, it cuts across segments, primarily driven by IAM. And on the retention side, of course, the bulk of the business is in design.

And I think we're doing a better and better job on retention there reflected in the increasing DNR rates. We're starting to see a modest contribution from IAM as well, which has even higher retention, but it's still a very small part of the book. So that's not a huge driver this year, of course, will become more important as we go further out. Blake, I don't know if there's anything you want to add that?

Blake Grayson: Yes. Just kind of ending question on the level of conservatism, I think, Rob, that was in your question. We forecast -- we continue to forecast and communicate what we see in the business. No change in our philosophy there. And as things develop over time, we'll continue to update, but no change in structure or anything like that.

Operator: Our next question is from Tyler Radke with Citi.

Tyler Radke: I appreciate all the disclosure and prepared remarks, you put out ahead of time and good to see the slight excel on the guide. I guess, Blake, you walked through sort of the guidance philosophy on ARR, which we understand is fundamentally a different metric than billings. But I guess as we just sort of look at the IAM piece implied within your guidance, I mean, very strong growth this year. I think you added about $280 million, $285 million of net new IAM in FY '24, which was up orders of magnitude -- or sorry, in FY '26 up orders of magnitude from the prior year.

But if we look at your guide for next year for FY '27, it sort of implies like a similar amount of net new in IAM. So can you just help us understand, I mean, it seems like this is a business that's growing exponentially. You got a lot of new initiatives ahead. You talked about consumption pricing, the C-suite selling. So like why wouldn't that number continue to ramp? And maybe just sort of help frame that in the context of returning to double-digit growth, kind of what else do you kind of need to see to kick in to get back there?

Blake Grayson: Sure. Thanks for the question. What we saw this year and what we're expecting to see next year, again, it's a pretty linear progression in the IAM share of ARR. You saw us go from 2.3% to 10.8% this year. We're forecasting approximately 18% by the end of next year. A lot of that has to do with renewal cycles, right? So how are we having those discussions with our customers, getting deeper into their business and a consultative approach around what's right for them. I would just say IAM is tracking as we hoped it would. I'm excited for it to become an even larger percentage of our business over time.

It absolutely is a key growth lever for us to get to that aspirational double-digit growth rate. That, combined with improvements in gross retention, which not only are we making those in eSign, but also we are seeing in IAM contribute to that in small shares today just because we're getting our very first renewal cohorts through. But the combination of those 2 things, I think, helps us reach that longer-term aspirational goal of reaching double-digit growth. So hopefully, that helps.

Operator: Our next question is from Mark Murphy with JPMorgan.

Mark Murphy: Congrats, Allan. It's intriguing to see the 200 million documents have been adjusted into Navigator because I think theoretically, it would give you an accuracy advantage or performance advantage, if you compare it to LLMs that might be out there running queries on their own. You're also saying that the Anthropic partnership is central to your strategy. Could you comment on how much of a priority you want your own sovereign system Iris to be versus kind of working with Anthropic? And basically, how much of an accuracy advantage are you seeing when people are using Iris?

Allan Thygesen: Yes. I start just at the highest level, AI has been fantastic for DocuSign over the last 3 years. I think we saw the potential impact on the agreement space early, articulated the IAM vision, you can see how that's powered some incremental growth for us. I want to distinguish between the agreement library and the processing that we do on that and then what's the UI that people interact with. On the data side, we have a huge advantage in using private consented agreements, not just public data. When we started with IAM, we were processing off public data. And now, as you mentioned, we've reached 200 million agreements that have been consented to be processed.

And that's powering increased accuracy in our models. At the same time, because we're processing large amounts of data, we've taken significant steps to drive additional efficiency in how we process that data, and that's what's driving the very significant cost advantage that we have in processing these large data sets. So I think it's a -- we are certainly benefiting from the overall model innovation that the Anthropics and OpenAIs and Googles of the world are doing, building on top of that, leveraging the incredible CapEx innovation they're doing. But then we have our own proprietary access to data, workflows and trust from customers that adds to that.

In terms of the user experience, we always have the philosophy that we want to reach users and enable them wherever they want to do their work. So they can certainly do that through the DocuSign UI. But we've always been available in Salesforce, in the SAPs of the world, Workday and many other applications. And so it's sort of a logical extension of that to now be available in the leading chatbots like Anthropics or OpenAI, which we announced last fall. And so I don't -- I view that as a continuation of our strategy.

And you should expect to see us if new surfaces arise that are important to our customers, we want to make DocuSign data and actions available in those surfaces. Hopefully that helps.

Operator: Our next question is from Patrick Walravens with Citizens JMP.

Patrick Walravens: Great. And let me add my congratulations. If I could ask one for each of you. Allan, I was intrigued by the comment about the bank. I think it was maybe the Bank of Queensland that bought DocuSign through the Microsoft Azure Marketplace. So if you could just comment on the Microsoft relationship and how that's trending, that would be great. And then, Blake, for you, I've gotten e-mails about this. So if you wouldn't mind touching on where you are on your philosophy on stock-based comp, I think that would be appreciated by investors.

Allan Thygesen: Yes. So on the Bank of Queensland deal, yes, we -- that was transaction through the Microsoft Azure Marketplace, and we've done a number of enterprise transactions there. As you all know, Microsoft has a number of Azure commitment agreements with large companies and often they appreciate being able to buy through that platform. But it's beyond just the convenience factor. I would say I've been thrilled with Microsoft as a partner. They really linked in here and we're a big part of the sale. In fact, a Microsoft leader presented that case at our conference last week to the entire partner community. So they've been fantastic, and we look forward to doing even more with them.

Blake, I think there's a second question for you.

Blake Grayson: Yes. Thanks, Patrick. So related to stock-based comp. We made a concerted effort around that line item. I think you'll see in the financials that stock-based comp grew -- I mean, it's been pretty flat actually for the past couple of years. Stock-based comp grew 2% year-over-year in fiscal '26. I think that was coming off a slight decrease, negative 1% in fiscal '25. And you can see that in our results if you just take SBC as a percentage of revenue. It's been declining in the past couple of years. And so we're happy with that. I expect it to decline again into fiscal '27.

As you all know, there's been a number of actions that we've taken over the past years to manage stock-based comp around whether that's head count resource management, whether it's around fewer executive grants and also shift to more PSUs whether that's making adjustments to equity structures around leaning a bit more into cash comp. We recognize we still have work to do, but I'm proud of the continued progress that we're making and we're focused on continuing that.

Allan Thygesen: Yes. So just to add to your question, you asked about Microsoft, but I don't want to -- since you mentioned Bank of Queensland, I think it's an important use case to talk about. So I think you all know that financial services has always been an important vertical for DocuSign. And of course, we powered many use cases from bank account onboarding to mortgages, to loan agreements, et cetera. But historically, we sat just at the end of the process, the execution moment, very important moment, very high value moment, but that has powered -- let's say we basically work with practically every bank, certainly all the large ones.

But now we can essentially power the entire onboarding process from the initial presentation of the sign-up process to real-time data validation of the data that a customer enters to real-time identity verification of their documents and that they are present and then, of course, the execution moment and then writing the data back to whatever system powers the next step in the process, which is dramatic simplification and both improvement in the customer experience and improvement in internal efficiency. And Bank of Queensland is an example of one of the early customers for that end-to-end process. And I think we're going to do a lot more of that over the next couple of years.

So I just thought that was an exciting use case, not just for what it illustrates about the Microsoft partnership, but what it illustrates for a use case that might not be well understood.

Operator: Our next question is from Kirk Materne with Evercore ISI.

S. Kirk Materne: I was wondering -- you could you just mentioned banks, and I was wondering, Allan, if you could just talk a little bit about what you guys are thinking about from a vertical perspective. I realize, you're a horizontal platform at its core. But I was just kind of curious what you're seeing in terms of either faster adoption in some verticals for IAM and maybe what you're doing to lean into some verticals where there's a really good product fit for that product?

Allan Thygesen: Yes. Thanks for the question. At a high level, I would say we're still an incredibly broad application. And that's true for sign and it's as true for IAM. We see it adopted across the industries, across companies with different sizes and now across geographies. I would say that we are moving increasingly towards functional use cases. So the account sign-up example I just gave for banks, of course, is a customer experience front of the house type application. We also do that in B2B or B2B sales organization. That's, of course, been a long-standing partnership with Salesforce and we do that for other CRMs as well.

And now increasingly, more use cases in procurement, where there's a lot of B2B contracting that happens and in HR, where the attraction and recruiting and onboarding of new employees, it mirrors in many ways, the bank account example that I gave you at the beginning. So we are focused on those functional use cases, if you will, more than specific industries to the extent that we focus on industries. Financial services, health care and government are 3 areas that we invest a little extra in because while they're complicated, they're high value, and we do well in them. But it's very broad from an industry perspective.

S. Kirk Materne: Okay. That's super helpful. If I could just ask a follow-up for Blake. Just Blake, on gross retention, do you have any sense on how that changes with IAM customers for you all? I realize the cohorts are pretty new here, but I was just kind of curious if that's playing out the way you would have expected in terms of potentially higher gross retention for those customers?

Blake Grayson: Yes. We are seeing -- and I'm going to preface this by a very early days of our first renewal cohort. So the sample size is pretty small. But even with that said, gross retention and dollar net retention rates for these IAM early renewal cohorts are better than the company average. So I would say cautiously optimistic, excited. It's frankly what we expected from this because just of all the feature functionality that comes with IAM and we'll see how that develops over time, but I'm cautiously optimistic about that so far.

Operator: Our next question is from Allan Verkhovski with BTIG.

Allan M. Verkhovski: Allan, it's interesting to see how you've optimized AI processing costs by upwards of 50x compared to running the direct prompts on LLMs. Why is IAM consumption-based pricing the right way of monetizing? And what were your top learnings from the quarter in conversations with your larger customers about how much of an uplift you can drive with IAM? And then I've got a quick follow-up with Blake after.

Allan Thygesen: Yes. Just to be clear, the consumption pricing we're referring to is consumption, if you will, of service credits. It's not a straight up token type billing model. So you buy a certain amount of capacity. This of course is not new to DocuSign, as you all know, better than almost anyone. Our eSignature business has historically revolved around an envelope model. We pre-buy envelope capacity. You can take a business as sort of a generalization of that. Now with all the different ways we can deliver value with IAM, we've basically looked at how each of those products and use cases drive value and create a credit system. We've now used that with 40, 50 customers.

They've been very enthusiastic. So both our customers and our sales teams appreciate that model, and so we're now rolling it out next month. And I think that will just power most of our enterprise business going forward. We still think that the -- for commercial customers, simpler pricing model, makes sense, but for enterprises where there's so many different ways to deliver value and grow value over time that a consumption-based credit model is the right approach, and that's been validated in the last 6 months of trialing.

Allan M. Verkhovski: Got it. And then, Blake, is your internal time line for when you can get to 10% top line growth sooner, unchanged or later after this quarter and why?

Blake Grayson: Yes. Just to be frank, on this, that is our long-term aspiration for us. It is for me in the long term achievable. If we can both grow expansion and accelerate gross new bookings and improve our retention rates, that's something we could do. The when on that is not as important to me at the moment. We're going to go as fast as we can at this company and provide value to our customers. I think it's something we can achieve. It's going to take some time for us, as you can see. But I'm really excited about the opportunity ahead. But as far as like time line or anything like that, nothing really to share.

Operator: Our next question is from Josh Baer with Morgan Stanley.

Josh Baer: A couple on the enterprise opportunity. One, Blake, you were mentioning that around like the linear progression of IAM as a percentage of ARR. I guess I'm wondering -- I know that wasn't like a comment about all years in the future. But I would expect with your positioning and kind of readiness in the enterprise for that to accelerate just because of the size of the enterprise opportunity and now unlocking that. Is there -- I mean, would that be the case? So like how are you thinking about the unlock of enterprise and the impact on that linearity?

Allan Thygesen: Why don't you go first and then I'll add.

Blake Grayson: Yes. I think, obviously, for us, we've got big aspirations for enterprise. It's still early days for us there. And you heard a couple of examples. You heard Aon's one that we're really excited about internally. And obviously, externally, the other ones that we've talked about. I think for us, we're just going to have to see how this ramps over time, right, is that as our customers use IAM and they experiment it and they use more of it, you can see that ramp over time, but it's a little bit like eSignature, right? You go into maybe through a division and then you're able to expand that to more users and whatnot.

But I think that it's still early days for us. We're really excited about the opportunity. Our long-term success depends on growing the enterprise business. We're really excited about that, and we are very head-down focused in order to drive that. And Allan, I don't know if there's more to go on that.

Allan Thygesen: Yes. Just on the enterprise topic, it's really shifting into gear for us. It's contributing more of the top line mix. And over time, I expect it ultimately to become a bigger part of our business than it has been historically in eSign. Just because of the addressable opportunity and the pain is so much larger. Just for purposes of illustration, I just want to double-click on the Aon example just for a second. So as you can imagine, Aon being an insurance business, their product is essentially agreements. They literally process hundreds of millions of documents. And they have a strategic project called Meridian.

That's basically a customer portal where the customer can access all of their agreements with Aon and derive insights from those agreements and, of course, also create opportunities for additional value for Aon. And they chose DocuSign to power that, which we're honored by. That is a massively complex enterprise project and a project that is transformational in terms of the customer value proposition for Aon. And so it's sponsored by the highest level of the company. We're thrilled to be deeply engaged with them, and they are certainly pushing us in several areas. But that's what you want and expect from your largest customers and partners.

And so there's a number of examples like that, but Aon was, I think, the most iconic of this quarter.

Josh Baer: Really helpful. And just to stay on this topic, any way to frame the pipeline or demand for IAM specifically in the enterprise? And related, is there -- could there be any initiatives or are there any current initiatives of bringing customers on to AIM before the renewals that we are kind of just talking about with regard to the linear progression?

Allan Thygesen: Yes. I mean, look, it's always the case in subscription business, the renewal creates a natural focus point, so to say, for discussions. But we are absolutely working to accelerate discussions with customers who are further out from their renewal and finding ways to do deals out of cycle. We have various contract structures to help facilitate that and as well as opportunity identification for our sales teams and our partners. And as you know, enterprise sales cycles are long anyway. And so you've got to start way ahead if you want to do a big deal like an Aon type deal. So yes, that is a focus.

I don't think we'll ever be able to completely avoid the natural timing that's associated around renewals. It's just a fact of life, and customers also anticipate that and work towards that. But we are absolutely pulling a lot of levers to enable our sales teams, our partners and customers to have discussions as soon as customers frankly are ready to entertain them.

Operator: Our next question is from Alex Zukin with Wolfe Research.

Aleksandr Zukin: I guess maybe 2 quick ones for me. I'll ask the inverse of Tyler's question. If I think about the guidance around ARR, looking at the IAM flat and that implies non IAM ARR is going to actually get -- is guided to get a lot meaningfully better. So just curious what's driving kind of the confidence? Is that a gross retention dynamic continuing to improve? And then I've got a quick follow-up for Blake.

Blake Grayson: Yes. Let me see if I can answer the question I think in the spirit and the way you're asking it. Is the -- if you look at the IAM net new ARR and you try to compare it to the company net new ARR, that can be a tricky comparison because the way to think about IAM is really not necessarily as an incremental brand new product, but it's a platform shift, right? Like we have got a lot of people in our in our -- a lot of customers in our installed base that are moving to IAM. And remember, IAM comes with the new signature offer as well. And customers are paying for that.

That's part of their IAM deals that they're doing with us. So while IAM has many incremental features on top, it's also driving that platform shift. So I encourage you to think about it because of that as a platform. Use total company ARR when thinking about our absolute kind of dollar growth. For us, retention gains are critical. IAM is one of those big levers for us to be able to do that, that we think that will play out over time, right? Because you got to get somebody in -- a customer to move into IAM, keep them getting excited about it and then renew them as well.

And so this is going to play out like over years for us. And I think that I'm really excited about it. But along with that, too, we're making gains in our company -- total company retention as well, which, as Allan said earlier, and I think all of you know, it's still predominantly an eSign business. And so for us, those 2 things matter a lot. I'm really excited to be able to improve upon the gains that we made this year and get even bigger ones next year.

Aleksandr Zukin: Understood. And then maybe just with respect to the consumption-based pricing that you guys are introducing, I guess probably how much of the IAM ARR in the year that you're guiding to? Do you expect to be coming from consumption? Or are you not including any of that in the guide? And kind of how do we think about that progression as it applies to NRR improvements gradually throughout the year?

Blake Grayson: So this is a -- we're launching subscription consumption-based pricing. So I would say the consumption element is all part of our ARR forecast, whether it's consumption or seats or not. And so I would encourage you to think about it that way. Like Allan said, this is a lot akin to what we do at envelopes today, right. That a person, a customer signs up for a subscription and then they get a capacity that they can utilize against it. So I don't think there's any big swing necessarily just because of the pricing plan.

I think it's going to give us an opportunity to appeal to a lot more of these enterprise customers, and I think that's the best way for us to be able to increase usage over time.

Allan Thygesen: Yes. I agree with all that. And I'd just say, look, it's primarily relevant in the enterprise space, which is a smaller, but accelerating part of our business. And of course, it does lend itself to, as you implied in your question, potentially realize more growth over time in accounts because you already have the pricing mechanism installed and it should be sort of easier to say, well, you just need more credits. And so let's see where it goes for this year. It's important for the enterprise go-to-market. And probably somewhat meaningful for the overall business, but not the primary driver.

Operator: Our next question is from Rishi Jaluria with RBC Capital Markets.

Rishi Jaluria: Wonderful. Maybe to start, not to keep harping on the ARR kind of question. But I guess just kind of taking a big value, right, you're guiding to effectively non-IAM ARR being flat, IAM ARR growing hyper growth, call it, 70%, 80%, depending on the assumptions you make, I get that there is a conversion element from it right? And so maybe I'll ask a question that we've been trying to figure out for a while.

And hopefully, you have a decent amount of telemetry that make kind of some sort of preliminary indication, but just wanted to get a sense what sort of pattern of behavior do you see in terms of overall ACV, TCV, LTM, whatever sorry, LTV like whatever metric you want to use, but just in terms of so far as you've taken existing customers, move them from just the core eSignature to the IAM platform, how much higher does that spending look like? And then I've got a quick follow-up.

Allan Thygesen: Sure. Yes. I mean our focus continues to be on driving our dollar net retention rate up. And that's -- we're going to do that in large part by making IAM the foundation, not only of our expansion strategy but also our retention strategy going forward. So talking about expansion rates, the stuff gets pretty tricky when you start to balance those components. And we are seeing in general, in the vast majority of cases, an expansion opportunity for our customers that are coming. We're not breaking that out. But we also need to see the early renewal cohort customers, and we're encouraged, like I said earlier about that. But it's something that for us, for IAM in total.

It provides an expand and retention opportunity, but we're not breaking out the expansion rates right now.

Rishi Jaluria: Understood. That's helpful. And then maybe just thinking going back to some of the partnerships that you have with Anthropic, you've got one with OpenAI. We've seen you highlighted on stage with them over the past several months. And it's coming at a time where clearly investors are worried about potential competition either from DIY using those platforms or the platforms themselves. Can you maybe talk a little bit about how is your conversation with both of those and any other model providers as well because I know you have the ability to work with most models out there.

But just how those conversations have kind of changed over time and how you've been able to double down on a lot of the things that have made you successful in shaping the nature of the partnership?

Allan Thygesen: Yes. Thanks. The reality is, I think every provider of chatbots, the leading ones like OpenAI and Anthropic and Google, but there are many others who are aiming to provide a chat interface to their customers. And as they think about how do I provide value in that chatbot, one of the most important data elements that you want to expose and process that you want to kick off is agreements. And so we've had a lot of inbound interest. Every major provider of models is interested in partnering with us on this, which is reflected in those announcements, and there'll be more like that.

And so I just think we are well positioned as the system of record for agreements as well as a system of action, and we can power those actions through our own interface, through third-party agentic interfaces or third-party applications like Salesforce, SAP and Workday. And I'm very bullish on our position as the authority and logical top partner for companies with ambitions to retrieve agreement data, kickoff agreement processes, complete them. We're a good partner for that. And I think that's reflected in what you've seen in the public news.

Operator: Our next question is from Scott Berg with Needham & Company.

Unknown Analyst: This is [ John DeVries ] on for Scott. One question for us. We noticed the company is conducting some AB testing on self-serve eSignature plans. Have any pricing changes that have been incorporated into the fiscal '27 guidance?

Blake Grayson: Well, I'll take that and Allan, you want to add on, go ahead. Our guidance reflects all of our plans for this fiscal year, including tests like that, like we're testing that at the moment. And we'll see how it goes. We're excited about it. But the guidance is a reflection of the plans that we have for this next fiscal year.

Allan Thygesen: Yes. We're constantly -- in a digital business, you're constantly testing all kinds of new pricing and packaging. And this is just one of those that we're doing in a couple of geographies. And we'll see which ones work, and which don't.

Operator: Our next question is from Brent Thill with Jefferies.

Unknown Analyst: This is [ John Bain ] for Brent Thill. Question on AI. I mean, wondering which features or where you're seeing the most traction and momentum? And also whether you're seeing any meaningful usage or volume or lease through the chatbots?

Allan Thygesen: Yes. On the first point, look, the foundational major AI platform feature was Navigator, which gives you access to your repository agreements. I think that still powers a tremendous amount of value for customers of all sizes. It's really remarkable. How many different ways people find value from that. But we're now increasingly delivering AI-enabled features across the agreement journey. So for example, we have automated Agreement Review, that's, I think, becoming a very expected thing. We are -- you'll see automated data validation, automated use of AI for identity verification and for risk assessment. We've launched a number of features in that area over the last 6 months.

So really across the board, AI is wherever we can use that to power more value for customers, we're going to do that. And you can see that now across the various stages of the journey and in different functional workflows. And there's so much more to come here. So I'm very optimistic that this is going to power value delivery and innovation for us for a while.

Operator: Our next question is from Patrick McIlwee with William Blair.

Patrick McIlwee: Allan and Blake, one more on IAM, it's great to hear you're expecting absolute ARR from that product to nearly double this year. And I understand a lot of that growth is coming from existing customers transitioning, but can you just provide a quick update on what type of traction you're seeing in going out and winning net new customers with those incremental capabilities? And as we think about that, how you feel this solution is competing against other CLM vendors and broader workflow platforms?

Allan Thygesen: Yes. I think that's going extremely well. It's an even larger part of our NewCo dollars then of normal renewals. And I think when you come in fresh, you get to position all the exciting things that IAM has to offer, whereas with some [ ESAB ] customers, they may have an existing perception of what's possible with agreements or what we can deliver for them and you need to change those perceptions. But NewCo will continue to be a core element of DocuSign's growth. Of course, all of our customers start as new customers and many of them started as small customers and grew into very large customers.

And so that is an essential acquisition pipeline that we continue to invest in. With all that said, the primary focus of our go-to-market with IAM is with existing customers, and that's the vast majority of IAM revenue. And it's a huge advantage for DocuSign that we walk in. We already have your agreements. We're already a trusted group supplier. We're already generally very well perceived because of the quality of the side product and the experience customers had. And that's an amazing starting point for delivering value and for processing their agreements with AI that's unmatched by any other company. So I think we have a lot of data and product advantages. We also have huge distribution advantages.

And that might not be as fully understood. But you can start to see that really come into play with the number of customers that we've already brought on to our new AI platform, a number of agreements that we've ingested and processed.

Patrick McIlwee: Okay. Great. And just quickly, you touched on it in the prepared remarks, but the flat guidance for operating margins, understand you're reinvesting some efficiencies from the go-to-market side in R&D. Is there any context you can provide on what those investments are geared towards or what capabilities you're looking at as you invest there?

Allan Thygesen: Yes. Maybe just first for context, I know you all know this, but I'm just going to repeat it anyway. We've gone from 20% operating margins to 30% operating margins over the last 3 years, growing revenue 30%, while we've dropped headcount 13%. So I think, DocuSign has been already on some of the improvements that you're all seeking. I think the decision we made in planning for this year is that we're rightsized for the opportunity ahead of the growth acceleration opportunity that we have. That doesn't mean that we're not reprioritizing aggressively inside the company. So we continue to seek incremental efficiency in our go-to-market motion.

We've done a lot there, and there's going to be more opportunities and then we're investing some of that in our product and technology organization. The areas that we're investing in enterprise and AI, continued acceleration of our legal tech road map, federal, U.S. federal is a big opportunity for us. So those are examples of things. Security continues to be a key investment area. Those are 5 areas that got sort of incremental funding on top of baseline, freed up by some of the efficiencies and other functions.

Operator: There are no further questions at this time. I would like to turn the conference back over to Allan for closing remarks.

Allan Thygesen: Thank you, operator, and thank you to all for joining today's call. In closing, we are very excited about the value IAM is delivering to customers in their workflows and through our AI innovation. We will be positioned to begin accelerating the business in 2026 or fiscal '27 while generating strong efficiency and profitability. Thanks for your support. Look forward to talking next quarter.

Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

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