Greetings and welcome to the Docusign Q3 Fiscal 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Heather Harwood, Head of Investor Relations. Thank you, Heather. You may begin.

Thank you, operator. Good afternoon and welcome to Docusign's Q3 fiscal 2025 earnings call. Joining me on today's call are Docusign's CEO, Allan Thygesen; and CFO, Blake Grayson. The press release announcing our third quarter fiscal 2025 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. 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 the pace of product innovation and factors affecting customer demand 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 counts and information regarding free cash flows and billings. 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 like to turn the call over to Allan.

Thank you, Heather, and good afternoon, everyone. In Q3, we delivered powerful new innovation for customers, highlighted by new capabilities for the Docusign Intelligent Agreement Management or IAM platform. We also continued to drive improved performance and maintained greater efficiency in our core business. Q3 revenue was $755 million, up 8% year-over-year. Fundamentals across the core business improved, continuing the recent trends. Dollar net retention increased to 100% in Q3, up from its low of 98% in Q4 fiscal 2024. Increases in customer usage and utilization combined with our ongoing focus on gross retention drove dollar net retention improvement. We also saw sustained momentum in new customer growth at 11% year-over-year to 1.6 million customers. In addition, we produced strong profitability with 29.6% non-GAAP operating margins, up from 26.8% in Q3 fiscal 2024, evidence of our commitment to improving efficiency while making the needed investments to re-accelerate growth. As we move forward, we've set our sights on delivering transformational value for our customers with the Docusign IAM platform. We recognize that it is early days in the multi-year IAM journey, but we believe we have taken strong initial steps on the path towards our aspiration to achieve sustainable long-term double-digit growth. Our Q3 results demonstrate continued progress across our three strategic pillars. Accelerating product innovation, strengthening our omnichannel go-to-market capabilities, and increasing operating efficiency. Starting with innovation, we enhanced the IAM platform across three fronts. Launching several new capabilities, expanding availability to more regions, and enabling department-level deployments for enterprise customers. These releases help customers of all sizes cut into the staggering $2 trillion in global economic value lost each year to inefficient agreement management. Within just a few months of closing the Lexion acquisition, we've built Lexion's AI capabilities into the IAM platform, including the ability to surface insights…

Thanks, Allan, and good afternoon, everyone. We delivered another strong quarter in Q3. Our business showed improvements as we executed against our three strategic pillars. Accelerating product innovation, strengthening our omnichannel go-to-market capabilities, and increasing operating efficiency. In addition to demonstrating an improving core business, during our first full quarter since the late Q2 IAM platform launch, we saw encouraging signs of early traction with growing IAM deal volumes and customer engagement. Q3 total revenue was $755 million and subscription revenue was $735 million, both up 8% year-over-year. Billings were $752 million, up 9% year-over-year. Early renewals drove approximately one-third of the billings outperformance, with the remainder coming from better retention performance, digital growth, and early IAM contributions. As a reminder, quarter-to-quarter billings can fluctuate due to the timing of deals. The dollar net retention rate improved to 100% in Q3, up from 99% in Q2 and up two points from the historical low of 98% in Q4 fiscal 2024. This represents substantial progress in our focus on stabilizing the core business and I'm proud of our team's work to improve customer retention. We believe we have a large remaining opportunity to improve retention as we better align our product and go-to-market motions with customer needs. As we look into Q4, we expect dollar net retention to be flat to up slightly. Continued year-over-year improvements in usage, utilization, and customer growth further supported positive business trends in Q3. Usage trends, once again, showed modest improvements. The volume of envelopes sent increased year-over-year for the fourth consecutive quarter. Also, consumption, a measure of utilization, continued to improve year-over-year, particularly in verticals like insurance, technology, and healthcare. We continued to see consistent growth in new customer acquisition. In Q3, total customers grew 11% year-over-year to 1.6 million. This continued momentum in customer…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Jake Roberge with William Blair. Please proceed.

Hey, thanks for taking the questions and great to see both revenue and billings start to reaccelerate. Can you help us understand how much of that reacceleration is being driven by the stabilization in your core versus the momentum that you're starting to see with IAM? And then I understand the tough billings comp during the fourth quarter, but how sustainable do you think that type of performance is?

Yes. Blake, you want to take that?

Sure. So thanks for the question. So on core versus IAM the predominant driver is the core and that's just really because of the evolution of IAM and it's so early. So you heard in the prepared remarks really pleased with the Q3 billings performance. Early was the largest driver that was about a third of it. And the remaining three components that drove the remaining, sorry, the remaining two-thirds, there were three components to it, better retention in the core business and just making continued improvements there. We also saw accelerating growth in digital sites upgrades and usage and that's also in our core business. And then the third driver, which is the smallest of the three was the better than expected IAM bookings. Now it's the smallest of the three, but that's just a function of the evolution of the timing of IAM. This is the very first full quarter we've had in IAM launched in a single customer segment in North America. And so it's going to take time for that to evolve, but still really excited about the contribution that we see hopefully had for IAM.

Yeah, that's helpful. It was obviously great to hear IAM saw the 10x sequential increase in adoption. Can you talk about what's different about IAM versus what you've previously done with CLM and just why that product has been able to sell so much faster than what CLM was previously able to?

Yes, I'll take that one. So CLM has been developed for and I think serves the needs of large enterprises with complex B2B centric and negotiated agreement workflows. And it continues to be our lead offering for that particular customer segment. But that leaves a very large universe both of agreement types, so all kinds of business to consumer workflows, all kinds of business to individual like employment related workflows and even automation of simpler B2B workflows unaddressed essentially by CLM systems. CLM systems also been historically the province of legal departments and maybe some sales ops or purchasing ops people, but they've not generally been used by a broader set of users, frontline sellers, frontline buyers or recruiters etcetera. And our goal with IAM is to make that more widely available. And then lastly of course, CLM is targeted at large companies that can sustain the amount of investment necessary to set it up properly do all the training and integration and so on. With IAM we can deliver out of the box value to a much broader set of companies as illustrated by the fact that we launched it to the commercial segment. So companies with maybe let's say 50 to 1000 or 2000 employees. And even those companies have, as it turns out, significant agreement pain that really have been unaddressed by everyone in the enterprise software space. And so we're seeing very good take up. It's a very productive sales conversation for our sellers, a very quick adoption for the buying organizations and it kind of grows organically from there inside the companies. So it's a very encouraging start. It's still early. We are rolling it out now across other markets outside of North America and Australia, and we just started selling it into enterprises for so to say, departmental level workflows. So I think it's a great complement to CLM, but we will continue selling CLM as our enterprise class tool for complex B2B negotiation-related workflows. One last thing I would just add is that we are -- the CLM system is benefiting from all the IAM related innovation. So as an example, the integration with all of our e-signature related products has been improved dramatically, Navigator, which is our intelligent repository is embedded out to be made available to CLM customers. And a variety of other IAM features you'll hear more about on future calls will be released immediately very shortly after for CLM customers as well. So they benefit from all the investment and innovation that's happening on the IAM.

Very helpful. Thanks for taking the questions and congrats on the great results.

Thank you. Our next question comes from the line of Tyler Radke with Citi. Please proceed.

Yes. Thanks for taking the question. Question on the go-to-market side. You talked about how Paula Hansen's really hit the ground running since joining in August. But what where do you kind of see the biggest opportunity with some of her focus areas heading into next year, be it the ELA motion and IAM attach. And just give us a sense for how you're thinking about kind of changes as you're going through the planning process for FY'26 here?

Yes. Yes, thanks for that question. Yes, Paula has really hit the ground running. I'm just thrilled with IAM and the whole leadership team with having her on the team and leading our critical sales and partnership organizations. In terms of our focus, I think if we look just a year out, the bulk of our IAM opportunity comes from the commercial segment, partly because we launched it six months earlier. It's very suitable for that. We have a longer sales cycle enterprise. There's more integration. We have more work to do from both a product and go-to-market perspective. With that said, we are determined and believe that ultimately the largest opportunity is in the enterprise. And so we want to begin building that. As I mentioned, we'll have departmental level deployments here starting. We just started selling that here now. And then I think over the next year, we'll build out the capability to support end-to-end wall-to-wall type deployments in the enterprise. And so Paula is focused on really the entire go-to-market cycle, everything from our enterprise marketing to our presales to our sales and sales enablement to our post-sale support. And that's not just in terms of Docusign. That's also in partnership with our system integrator partners and distributors and resellers. And so it's really across the board. It's not a -- it's an evolution, I would say, of our model. We obviously have an existing engagement model with enterprises. We sell to most of the large enterprises in the US and abroad. I think more than 85% Fortune 500 already use Docusign. So we start in a good place and have an established land and expand motion. But I think we still have some growing and maturing to do to do the big platform company-wide solution sell and that's one of the reasons why we brought Paul on board to help us grow that capability and I think the team -- the entire team is focused on maturing our capabilities to be able to service that opportunity.

Great. And a follow-up for Blake. Just as we think about the margin opportunity, it sounds like there are some incremental costs here, whether it's the recent hires, investments into IAM and particularly around AI and some of the cash compensation. What are the additional levers that you see for efficiency going forward? And how should we think about margins heading into next year?

Sure. I'll try to take a stab at this. From a high level, I'm really pleased with the progress we've made in the last one to two years. Our operating margin in the third quarter was up nearly 300 basis points from a year ago. That's up more than double from where we were two years ago. I'm happy that we're raising our operating margin guidance for Q4 and we're maintaining that same year-over-year improvement or actually slightly more in Q4 than we saw in Q3. So I'm really proud of the team for that. We're always looking for efficiency and productivity gains. But right now, what I'm most excited about as far as long-term operating leverage goes, it's from gains that we can get from accelerating growth. And that's where we're really focused on right now. Our costs don't need to scale at the same rate as revenue. And so if we can focus on supporting that growth opportunity while maintaining the efficiency gains we made, I think we're really happy with that result. And to your point, Tyler, we did call out a couple of unique items for FY'26 just for folks to keep in mind that creates some temporary pressure for us. We've got those cloud transition costs. And you can see that. If you look at our Q4 guide on a year-over-year basis relative to what we see in the full year. And so I think that Q4 run rate is probably a good proxy. Now that should ease for us in fiscal year '27 and beyond. We also have those onetime credits this year, so in the last quarter or Q2, you'll recall, we highlighted those and the adjustments to our compensation structure for next year. And the magnitude of that is it's probably slightly larger than those Q2 onetime credit impacts that I referenced. But we continue to be really focused on productivity, extracting the efficiencies and we've shown with our actions that when we can drive those without impacting growth or customer experience, we'll do it. But accelerating growth is a great lever for driving long-term operating leverage for us. So I'm really focused highly on that, but also maintaining the efficiencies that we've gained.

Thank you.

Thank you. Our next question comes from the line of Brent Thill with Jefferies. Please proceed with your question.

Good afternoon. Allan, curious if you could put your macro hat on over the next nine months and just give us your 40,000 foot view of what you see is happening from your CEO approach. It feels like things are getting a little bit better, but I don't want to get too ahead of ourselves. How would you characterize what you're seeing and what you're planning as we go into next year?

Yes. I would say, first of all, the year that's almost over here. I think we've seen a marginal improvement in the environment for enterprise technology and enterprise software. We're practically a macro index behind your question because we're so diversified across both sectors and company sizes. So I think we get a reasonable read and we get engaged in everything from account openings to new hiring and so on. So everything I'm seeing is that the economy is in the major markets that we participate in and we're obviously overweighted in North America, tends to look reasonably positive. We're not projecting any material change to that. If that were to happen, we would benefit from that, but we're not projecting that or expecting it or operating the company in that manner. So that's my overall approach. We're not seeing market, I'd say, discontinuities. One thing that I thought was interesting, we've in the past, gotten questions around the mortgage market because obviously people identified us with mortgages even though at this point, it's really a relatively small part of our business. And we're seeing a number of mortgage-related customers increasing their device capacity. So that is a positive indication, at least a sentiment where we're not seeing major volume increases. It's still on par or even a little less than the overall business in terms of envelop volume, but just an interesting commentary on one segment that I know is of interest.

Does Blake get a little more capital to give to the go-to-market team to make a bigger push into early next year or are you still being very disciplined on that side?

I think Blake and I are 100% aligned. We want to -- we've had some hard won battles to get us to be more operationally efficient and we don't want to give that up. At the same time, as he said, we are focused at this point on accelerating growth and unlocking efficiency from that. We feel right now that our sales and marketing investment envelope overall is appropriate. We may move resources around for segments and so on in light of the opportunity, but we think we can self-fund that, if you will, based on where we're sitting now. Obviously, if we start seeing really positive investment from our sales and marketing investments and we feel we have incremental opportunity, we won't hesitate to make those investments. But right now we're holding the line on our envelope that feels like the right trade up.

Great. Thanks.

Thank you. Our next question comes from the line of Patrick Walravens with Citizens JMP. Please proceed.

Great. Thank you for taking my question. This is Austin Cole on for Pat. I think that generative AI and documents is kind of extracting data from documents is kind of a natural marriage. What are some of the use cases that you're seeing with Navigators so far? And what kind of with regard to the customer engagement with IAM kind of gives you confidence in attacking larger customers with this product? Thank you.

Yes. Yes, we agree that extraction is a very natural use case for LLMs and we can deliver value very quickly and sustainably and it applies across a broad range of industries and functions. In terms of specific examples, I mean one obvious example is that we can easily extract things like renewal dates and notice periods. And as a result give people alerts or even automate notifications and workflows based on that information. So if you imagine, if you're running sales or procurement can be on one side or the other and you want to see everything that's coming up in the next six months and that's within the 90 day notice period. We can literally give you that in a dashboard. That's tremendously powerful, both for frontline sellers or buyers as well as management. So that's an example of a use case that people really like and that is easy to implement be done with very high reliability. There's very little data leakage risk et cetera. So all of those things are very positive for companies, I think, of all sizes

Great. Thank you.

Thank you. Our next question comes from the line of Josh Baer with Morgan Stanley. Please proceed.

Great. Thank you for the question. I was hoping you could comment on the penetration of e-signature in the US and globally really focusing on the strength in your customer growth. Wondering how much is greenfield, competitive replacements and where you see the largest opportunities?

Yes. We are continuing to add new customers. I think we've maintained a pretty steady growth rate of net overall customer count in the 11%, 10%, 11% range for several quarters now. There is still headroom in the US. It's predominantly in the SMB space, as you would expect given but I just said about already having 85% of the Fortune 500 as customers. There's even more opportunity internationally. And so we see a lot of additions in markets in Europe, in South America and in Asia. And we think that, that's still a long way to run. And so that's -- it's a wonderful way to grow our installed base and complement our same-store growth if you will. With that said, I think the bulk of our focus as a company is on growing our installed base now with this month broader product set. And the fact that we have a much richer, more valuable offering allows us to leverage the fact that we have this massive installed base that's generally very happy with us to offer more value. And I think we've got tremendous headroom to grow based on that. So new customer acquisitions super important, fuels our growth in the future, ensures that we're with younger, faster-growing companies. But we have tremendous headroom with existing customers of all sizes and it's a huge competitive advantage for us that we have. I think we're at 1.6 million monthly paying customers. That's a highly unusual number from an enterprise software company. And so we want to fully leverage that competitive advantage.

Thanks, Allan. If I could ask one for Blake just on the billings guide. Given the early renewals in the year-over-year comp, the tough comp and some of the early renewals that helped Q3. I think the Q4 guidance for billings looks pretty bullish. Just wondering if you've signed any big deals already like how the quarter is going? Is there an assumption for IAM ramping anything contributing to that to the billings guide for Q4? Thank you.

Sure. I think that obviously part of the guide that we do has to assume some early renewal component, right. It happens for us every quarter. We make an estimate based on that. I would say there's nothing. There's no onetime standout component on that. But it's just a reflection of the book that we see in the renewals that were up for this quarter. And so our best expectation or estimate of the rate that we'll be able to book.

Got it. Thank you.

Thank you. Our next question comes from the line of Mark Murphy with JPMorgan. Please proceed.

Hi. This is Sonak Kolar on for Mark Murphy. Thanks for taking the question and congrats on the results. Allan, coming off Docusign Discover in November, I see that there are a bunch of other additional smaller regional events planned for CLM and IAM. I was just wondering if you could provide us with a sense of the recent customer excitement levels and feedback the team is picking up at some of these events and perhaps any key focus areas or questions that are coming up with potential customers on IAM before they're willing to commit to that wide-scale rollout?

Yes. Just first, as a clarification, we announced or introduced IAM at a series of event we call Docusign momentum, which is really our customer-focused event. We did the original launch event in New York in April and then we've done events on five continents since then. Sao Paulo, London, Munich, Paris, Singapore, Sydney and Tokyo. I think I've been to all of them except for Sao Paulo. So it's -- I think at every event, in every continent, we see this is a tremendously broad horizontal value proposition that is equally appealing to midsized and large companies and pretty universal across industries. I don't really see actually a ton of differentiation even across geos. I think the sooner we can get that capability and enhance customers everywhere the better we will do. So I think it's a very horizontal opportunity. Docusign Discover that you just mentioned was our first event focused on developers. Docusign has always had a very powerful API for people to integrate signature into their applications could either be commercialized these or even in-house corporate developers. And so we have a big ecosystem already of people who work with us. But it was fairly monolithic we say, it wasn't a componentized view of all that we offer. We've now really rearchitected that and it's and of course it gives access to all of our new capabilities. And so what we announced here was a whole suite of tools and a variety of programs for developers. And I think the feedback from that community was really positive. Now look, it's going to take a while for us to become a real platform company. We have a big opportunity to do that, and it would be a huge boost to rocket if we can execute that successfully. But…

Great. Thank you. That's very helpful. As a quick follow-up for Blake. I've seen in the past two years, it doesn't seem like Q4 has been a very active period in terms of Docusign's buyback activity. Is there anything to consider on the capital allocation framework as we approach Q4 of this year?

No, no change at all from a Q4 perspective. I don't -- we don't look at it like on a quarterly basis. We really just look at it as a function of it. We are generating really strong free cash flow. We have an opportunity to be able to deploy that capital to a number of different areas, right? Stock buybacks, one of them. M&A is another one running the business and investing into another one. And so that's how we take a look in our framework at it. I don't expect any changes to our strategy and I'm really excited by the free cash flow generation that we're producing. It allows us to do have the flexibility and the optionality to consider all of those components.

Understood. Thanks again and congrats.

Thank you. Our next question comes from the line of Michael Turrin with Wells Fargo Securities. Please proceed.

Hi. This is Michael Berg on for Michael Turrin. Thanks for taking our question. I just wanted to double click on the improvement in gross retention and what's driving that. Maybe we could get into the hood and explore what you are seeing or what you've done right to drive the improvements there? Is it more -- is it macro? Is it execution? Is it IAM? Just want to get some more color on that dynamic. Thanks.

Yeah, I'll take a stab and then Allan feel free to jump in. I've been impressed with the team's focus, honestly internally around the data accumulation and getting in front of those real opportunities, taking it down to a rep level, deal by deal, getting in front of it, having large renewal conversations way in front of the actual contract renewal date. I feel like just our level of operational execution has improved quite a bit, I would say, over the last 6 to 12 months. And so super excited about that. Obviously, as you start to have conversations with folks around IAM and things like that like our ability to have larger average deal sizes obviously is a small contributor to that just because of the evolution of the timing of that. But it's been, I mean, just been super happy with the team's continued focus. And just to be, you see it, obviously, in our dollar net retention rate going up, we still have room there. I think that while we're really pleased with where we've come from. We still know there's a lot of opportunities still outstanding. So we're not resting our laurels at all about this and continuing to build out and see how we can have deeper customer relationships, build stickier relationships with our customers so we can improve that.

I agree with everything Blake just said. I would simply add that, I think one of the things that we did well here in the last 12 months, I think, has contributed to the DNR improvement is just massively improving our coverage and customer success sort of implied by what Blake is saying but I just want to double click on a little bit. So historically our customer success that was focused at the very top of the book. That's where you've got some additional support and engagement and use case development and so on. And we found that we had a big opportunity to do a more scaled model out of lower cost hubs in Brazil and now in Egypt. And that's showing really nice results for more of the torso of the book, if you will. And I think we still have more opportunity there. So on multiple fronts, I think, there's been a lot of levers to pull in product, in sales, in marketing, in customer success to drive retention. And as Blake said, we're definitely not done with that. We think we can do better and we want to do better.

Helpful. Thank you. And then just a quick follow-up on it. Is there anything notable to point out? And any changes in the competitive dynamics that may be aiding the growth retention dynamics you were just describing?

I don't actually see the competitive environment changing all that much. It's been fairly stable. It's the same class of competitors. I do think on a go-forward basis, the competitive dynamics change. So as we evolve from the signature business to this broader suite of intelligent agreement management products. The folks that we've historically competed with just in signature, I think, we separate ourselves more there. So I think that will help from a retention and competition perspective over time. But it's just too early. We just launched six months ago, so most of those agreements haven't come up for renewal yet. But I think it's aiding our competitive posture and as it becomes available in more segments and more geos that will help us.

Helpful. Thank you.

Thank you. Our next question comes from the line of Alex Zukin with Wolfe Research.

Hi. This is Arsenije on for Alex Zukin. How many reps are eligible to sell IAM today? And was that an easy training or prep cycle given reps having CLM experience? And just seeing that early traction in IAM is great, but we don't want to get ahead of our skis on expectations here given how early it is. Is there any help we can get on guardrails for growth next year? Thanks.

Sure. Yes, I'll take a stab. We're not disclosing the number of reps that we have in a given segment or market. It's just really a function what IAM frankly was, I'll say, positively surprised a bit was how quickly we are able to ramp the number of reps engaged with this platform because this is a new thing for Docusign and how we're going to address it. And we saw a pretty quick ramp in our North America commercial business that we're really excited about. Now the North America commercial business, I think, as everybody knows, is different than an enterprise like much larger enterprise kind of cycle. And so we're going to have to see how that goes. We just started having conversations with the very first few enterprise customers about departmental opportunities just in the last few weeks. And so it's still very early days for us. And so as much as I'd like to be able to provide like real direction about where we think FY'26 is going to be. We'll address all that much more of that at least in our March guidance call and we do full year guidance next year. But again, it's still early. And so we're just trying to learn and get as much data as possible and make sure we have the right trend lines before we can start kind of talking about those things.

Got it. And I guess can you explain what's driving that early renewal tailwinds that we're seeing, that's contributing a bit more to that billings outperformance than we've seen historically. And on fiscal 4Q, I think last year, you called out early renewals contributing about $30 million tailwind and guidance for this quarter coming up, embedding a little bit of early renewals. I guess is there anything you can give us in terms of what's embedded in that guide, how to think about it into 4Q on that billings dynamic? Thanks.

Yes, sure. We don't break out the guide components based on early is for something else. I will say that our early have been a little bit stronger. One of the things that makes me okay with that is that the health of those early renewals are so good and actually quite strong. And a lot of those early come from just that next quarter out, right? And so as we're talking to customers and if their usage is trending up and they want to get in front of those things, that's okay. And so but it is something for me that we do look out. And as long as the health of early is okay, it's really more of just a timing thing.

Thank you.

Thank you. Our last question comes from the line of Ian Black with Needham & Company. Please proceed.

Thank you for taking my question. Where should we think about NRR normalizing at and how much impact are you still seeing from capacity rationalization? Thank you.

Sure. We don't -- I don't have an idea of where the dollar net retention ends out. I mean this is a company that saw big decel from that outside of COVID. We saw the historical low in Q4 of last year and we've made a lot of efforts to first stabilize that. And now we've seen a couple of quarters of slight improvement. So really excited about that. I think from a capacity kind of utilization perspective and such, I don't know maybe if you're referring to like the COVID components or whatever, but our -- the book -- and I think we shared this data point, I think, maybe in Q3 of last year because a lot of folks are asking about how many of the contracts that you have on your book were written during the COVID period and such and we have been largely through all that. I mean as of today, the number of contracts or the kind of the dollar average that is -- the dollars that are in our book of business that were in contracts written during calendar years 2020 and 2021. So I'm using that as a proxy for the code. It's under 1%. now. And they're going to be, I mean, they're gone effectively from our business. And so I think we're in a much more stabilized place. I think you can see that in the results that we've shown. And so the trends, I think, like we said in the prepared remarks and you've heard today is that they're modestly improving like year-over-year envelope sent increasing for four consecutive quarters. Utilization rates for us on capacity have been improving. And so those are all what I would call like leading indicators for us, where we get optimistic about the trends and opportunities we have in front of us.

Yes. So we are encouraged about the stabilization in our core and the early signs. It's still very early for IAM, I want to stress that, but it was a really solid quarter overall.

Thank you operator. Thank you to all of you who joined today's call. I am really proud of the progress as we deliver powerful innovation to our customers through the IAM platform and continue to improve our core business fundamentals. Thanks to the team for their commitment and to our owners for your support as we realize the long-term vision. Talk to you next time.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.