The current sell-off may end up emboldening the bulls, if the last tech bubble is a guide

The bubble isn’t burst yet.

Justin Edmonds/Getty Images

Traders at the moment seem to have as much patience with tech stocks as Kansas City Chiefs fans do for a moment of unity.

Thursday was the fourth ugly finish in five sessions, with the Nasdaq Composite

skidding 2%, and the other major indexes backtracking as well.

Andrea Cicione, head of strategy at independent investment research firm TS Lombard, said excessive leverage in the market really began in earnest in July. Cicione added that was occurring in U.S. stocks wasn’t happening anywhere else in the world.

And while he’s seeing signs of a bubble, he thinks if the selling doesn’t intensify, the bubble may reflate soon.

“The leverage accumulation so far may not be enough to burst the bubble just yet,” he writes. “If the recent selloff does not intensify further, the whole episode may end up simply emboldening the bulls to buy the dip and take even more risk.”

Between 1997 and 1998, the Nasdaq experienced three sell-offs of at least 17%, only to emerge stronger and rise four-fold to the 2000 peak. “Leverage is a key characteristic of all bubbles, and almost invariably it is the mechanism that leads to their collapse. But there may not have been enough leverage for the dot-com 2.0 bubble to burst just yet,” he says.

The reason leverage is important in bursting bubbles is because it uniquely can lead to forced unwinding. “When faced with margin calls they cannot meet, investors may have to liquidate positions against their will. The resulting fall in prices can instil doubts in the mind of others, persuading them to sell,” he said.

The buzz

Consumer price data for August is due at 8:30 a.m. Eastern.

The quarterly services survey and August budget deficit are also due for release. The Congressional Budget Office, which typically gets the budget picture pretty close to the mark, estimated the August deficit was $198 billion, and said the September-ending fiscal year gap will be the highest relative to the economy since 1945.

Database software giant Oracle

topped earnings and revenue expectations, helped by revenue from key client Zoom Video Communications
Oracle also declined to discuss whether it will buy the U.S. operations of social-media company TikTok, as U.S. President Donald Trump said Thursday there will be no extension of the Sept. 15 deadline for it to be sold to a U.S. company or shut.

Peloton Interactive
the exercise bicycle company, reported stronger-than-forecast fiscal fourth-quarter earnings and revenue, with its current year outlook also well ahead of estimates.

Jean-Sébastien Jacques, the chief executive of mining giant Rio Tinto
announced he will resign in March following the controversy over the firm blowing up ancient caves while excavating for iron ore.

Thursday marked the first day since spring when new coronavirus cases in the European Union and the U.K. exceeded the United States.

The market

U.S. stock futures


were stronger.

Gold futures

fell while oil futures

edged higher.

The British pound

continues to reel from its more combative stance taken against the European Union in trade negotiations.

The chart

This incredible UBS illustration of Tesla

shows how shares have performed compared to other tech giants since joining the $100 billion market cap club. It took Apple

and Facebook

between 4 to 11 years to achieve what Tesla did in three quarters. UBS increased its Tesla price target to $325 from $160 ahead of the company’s battery day presentation.

Random reads

Here’s the 2010 memo from a venture capital firm on an investment which valued retail software maker Shopify at $25 million. Shopify

is now worth $114 billion.

China said its U.K. ambassador’s Twitter account was hacked — after a steamy post was liked.

An experimental treatment kept mice strong in space, one that could have uses back on Earth.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

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A reminder as schools reopen — federal law now gives some parents paid time off to help their kids with remote learning

Last month, a recently-reopened school district near Atlanta, Ga. told more than 1,000 students and staffers they had to quarantine after a coronavirus outbreak.

Earlier this month, approximately 450 students and employees in a central Florida school system needed to isolate after positive COVID-19 cases. Almost 2,000 miles away, around 100 teenagers and staff in a Denver-area school had to do the same because of cases in their school.

Rocky school reopenings are already upending educators’ plans this fall — and they’re likely doing the same thing to the work schedules of many parents who, if they aren’t already working from home, may suddenly need to be there with their quarantined student.

The good news is there’s a range of employee leave laws that could conceivably kick in to protect parents in this situation, separate and apart from an employer’s own paid time off policies. The tricky part, however, is that there’s a complicated mix of rules. And the worrying note, some say, is that the laws don’t do enough to help parents who are trying to make it all work right now.

New federal laws temporarily expanded paid family leave

During the early days of the pandemic, federal lawmakers passed the Families First Coronavirus Response Act (FFCRA). Though America is the only highly industrialized country without a federal paid family leave law, the FFCRA temporarily enabled paid leave for families pulled from work to quarantine, care for others with COVID-19, or care for children who are at home because of closed day cares and schools.

The FFCRA has two important parts: one portion addressing emergency paid sick leave and another portion for expanded family and medical leave.

When it comes to school and child care, the U.S. Department of Labor says covered workers can access up to two weeks (80 hours) of emergency paid sick leave at two-thirds pay. The cap on pay in this time period is $200 daily and $2,000 total, according to the Center for WorkLife Law within the University of California, Hastings College of the Law.

A covered worker (they have to have been on the payroll for at least 30 days) can also tap the law’s expanded family and medical leave for an additional 10 weeks of pay at two-thirds their compensation. In that 10-week period, an employer pays a maximum of $200 a day and up to $10,000 total, the Center for WorkLife Law. Employers ultimately receive a dollar-for-dollar tax credit that covers them for paying the leave.

The law applies to employers with fewer than 500 workers. A small business with fewer than 50 workers can apply for an exemption if it can show the absence of employees would jeopardize its operations and bottom line.

The paid leave provisions are in effect from April 1, 2020, to Dec. 31, 2020.

If a school closes for half a day, parents can get paid time off

The Labor Department weighed in late last month on how the FFCRA fit in with the fall school year.

If a student attends school some days but has distance learning on other days, parents can receive paid leave on the days their child is home.

If a student physically attends school some days, but has distance learning on other days, the department said a parent can get paid leave on the days their child is home. That’s because the school is essentially “closed” to the student for the day in eyes of the law. (If a child is home under a quarantine order, that can justify the parent’s paid leave.)

On the other hand, if a parent chooses all remote learning instead of in-person instruction, they cannot access paid leave under the federal law. The school is not “closed” in that context, the Labor Department said.

If school administrators start the year remotely and say they’ll make a reopening decision at a later date, the school is still closed and the paid leave is still available.

Likewise, a school might be open, albeit for a half day. The FFCRA allows workers to apply for paid leave in bite-sized pieces, like from 2:30 p.m. to 4 p.m.

“You may take intermittent leave in any increment, provided that you and your employer agree,” a Labor Department questionnaire said. “The Department encourages employers and employees to collaborate to achieve flexibility and meet mutual needs.”

State and local laws can support working parents too

Now consider the fact that FFCRA isn’t the only paid leave law out there.

As the pandemic continued, various states and cities have expanded their paid leave laws to incorporate things like school closures. Is it possible to stack the time off, so that a parent could pull paid leave from one law and then turn around and pull from another?

“It depends what law you talking about and what the context is,” said Liz Morris, deputy director of the Center for WorkLife Law. “The bottom line is, it’s extremely complicated the way these laws all interact.”

The center launched a helpline in April to assist workers navigating all the rules out there. “Anybody who has COVID-19 caregiving issue in workplace can call,” Morris said.

The center’s helpline is (415) 851-3308 and its email is:

Morris’ team has talked to people trying to figure out the leave laws, pregnant women and new mothers who are concerned about being at work and others with health conditions who are worried about returning to work.

There’s a range of federal and state laws, but Morris said they may not be good enough for everyone — especially if they’ve already used up their paid leave under the FFCRA.

‘We’re trying to rely on this patchwork… What we really need is a single comprehensive law that protects everyone.’

— Liz Morris, deputy director of the Center for WorkLife Law at University of California, Hastings College of the Law

“We’re trying to rely on this patchwork of laws to bring together a set of legal rights for people so that they just have a job to return to when this is all over and need income … What we really need is a single comprehensive law that protects everyone.”

Paid time off is important for parents juggling work and school right now, but it’s not everything, said Rich Fuerstenberg, senior partner in the Life, Absence and Disability practice at Mercer, a human resources consulting firm.

For one thing, leave under the FFCRA “is a one-shot deal. Once it’s gone, it’s gone,” he noted.

Going into the fall, Fuerstenberg said the companies he’s been working with have been thinking hard about their work schedule flexibility policies, how they can assist with child care costs and also looking at how much paid time off they are giving staff.

Almost two-thirds (62%) of companies said they were allowing parents to change their work schedules so employees could manage their child’s new school routine this fall, according to a July-August Mercer survey of more than 800 employers.

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JP Morgan enters green bond push with $1 billion debut debt deal

The San Francisco skyline is obscured in orange haze Wednesday.

AFP/Getty Images

JP Morgan Chase & Co. entered the green-bond world on Wednesday, offloading the bank’s first set of bonds specifically to fund projects with a sustainability bent.

While the banking giant has arranged debt with an environmental or social-good purpose for its clients and other companies, this was JP Morgan’s first $1 billion foray into issuing such bonds on its own behalf.

Many investors welcomed the move, not only because of the weight JP Morgan

carries in the market as the nation’s biggest U.S. bank by assets, but also because of a growing acceptance within the U.S. that a climate crisis threatens both environmental and financial instability.

Read: CFTC’s groundbreaking climate-change report sounds a bipartisan alarm on costly risks for U.S. financial system

JP Morgan’s bond deal hit as wildfires raged along the West Coast, with smoke from fires shrouding the San Francisco Bay Area on Wednesday in an eerie orange haze and underscoring how climate change threatens to make extreme fire events, power outages and forced evacuations the norm.

“The more the larger players come along, the larger the scale to move things along faster,” said Steve Liberatore, Nuveen’s lead portfolio manager for environmental, social and governance (ESG) criteria and impact investments.

But Liberatore also stressed that a key part of tackling the unfolding “climate disaster” is to mitigate it in an “economically beneficial way for the average person.”

That can mean achieving a lower cost of capital for renewable energy projects than what’s available for funding fossil fuels.

To that end, JP Morgan was able to pull in pricing Wednesday amid high investor demand, clearing the bonds at a spread of 48 basis points over Treasurys BX:TMUBMUSD10Y, after they initially were floated in the range of 65 basis points.

A bond spread is the level of compensation investors get paid above a risk-free benchmark to act as a creditor, with lower spreads often indicating high demand or a lower expectation of default.

“Generally, green bonds yield less, meaning the cost of financing is lower,” said Pri de Silva, senior corporate credit analysts at Aware Asset Management, adding that JP Morgan priced similar bonds in May that were trading on Wednesday closer to 58 basis points over Treasurys.

“From a funding perspective, I’d say there was a 10-basis-point advantage,” de Silva said, even though he noted the “sunk costs” involved in setting up the new green issuance platform, including providing the “belts and suspenders” to ensure there’s a process in place to track that only eligible projects are funded.

To that end, JP Morgan said proceeds from the debut green bond would finance a range of projects from green buildings to renewable energy, in a public filing.

Notably, the bank also listed areas that will be excluded from the funding from bond proceeds, including coal, oil, gas and nuclear energy projects, as well as activities that involve modern slavery, child labor and human rights exploitation.

Amid an overall corporate debt boom, the second quarter also saw a record $99.9 billion of “sustainability bonds” issued globally, according to Moody’s Investors Service, a category that encompasses green, social and sustainable bonds.

JP Morgan’s debut follows on the heels of Citigroup

and Bank of America
which issued green and social-good bonds earlier this year.

See: Bank of America sold a first-of-a-kind Covid-19 bond

“Banks are in a unique position to issue green bonds as they are interrelated with the broader economy,” said Brian Ellis, portfolio manager, Calvert Green Bond Fund.

“From an investor’s perspective, growth in green bond issuance provides increased opportunities for portfolio and project diversification, but also the ability to be more selective because there’s a larger group to choose from.”

JP Morgan declined to comment.

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DocuSign, Inc. (DOCU) CEO Dan Springer Presents at D.A. Davidson 19th Annual Software & Internet Conference (Transcript)

DocuSign, Inc. (NASDAQ:DOCU) D.A. Davidson 19th Annual Software & Internet Conference September 9, 2020 5:45 PM ET

Company Participants

Dan Springer – CEO

Conference Call Participants

Rishi Jaluria – D.A. Davidson

Rishi Jaluria

Alright. Good afternoon, everyone. Let’s go ahead and get started. Last one of the day. Hopefully everyone had a productive day. My name is Rishi Jaluria. I cover software here at D.A. Davidson. I’m delighted to have with me DocuSign’s CEO, Dan Springer. Any investors that want to ask Dan question, please submit it through the chat function at the bottom, and I’m going to continue to monitor that as it goes on or feel free to e-mail me directly at

With that, Dan, thank you for joining us and I’m not sure if this beard is a new quarantine look, I’m a big fan.

Dan Springer

It is. Thank you for having me. And we’ll see how it goes. There’s been some debate back and forth about whether it’s time to lose the beard. It’s been about three months in the making.

Question-and-Answer Session

Q – Rishi Jaluria

Very cool. Alright. Let’s start kind of a high level. Not that anyone needs to know what DocuSign is, because we’ve all used it. But maybe I’ll — starting with having a look at the evolution of DocuSign from being just a digital ink provider into this broader Agreement Cloud that you’ve really become today.

Dan Springer

Yes. Well, as you said it right, when you say the word DocuSign, most people immediately respond with eSignature. And it’s clearly what brought us to the dance. It’s clearly what built over $1 billion in revenue. And we feel great about it. There’s nothing but positive feeling we have because it’s a fantastic ROI products for our customers. And that makes them happy to be customers and makes our employees happy to be at the company where our customers love the products. So, it’s just nothing but goodness.

And we talked about in the past, I think we could with an only eSignature business, because the TAM is so significant, we could grow at a substantial rate. And as we have historically, just on the eSignature platform. But as you alluded to, Rishi a couple of years ago, when I still recently newly joined, I joined about four years ago, start talking to customers, it became clear to me that they were asking us to broaden that, and what we ended up coming as an answer to that is what we call DocuSign Agreement Cloud. And we now really squarely think of ourselves as the Agreement Cloud company. And in addition to eSignature, we’ve realized that our customers need more of — they need a way to prepare agreements that are native to the signature workflow and process. So, somewhere down the process — some are going through that workflow, they want to edit and associate a permanent agreement. You don’t have to cancel, start over again, go back to Microsoft Word or whatever, where you created the agreement before, to create a new one, put it back into the flow and start over again. So, that was a key step and we are excited that we launched last year the prepare functionality.

We also saw more and more demand from people who said, we need to act on agreements once they’ve been memorialized. And so, we’ve already had some pretty good API integrations. We’ve really stepped that up again. Now 60% of all of our transactions actually occur, not with someone starting an envelope session in a web or mobile browser, but someone having an API call kick-off a DocuSign envelope being sent. So truly integrated, whether it’s integrated into Salesforce or SAP, or Workday, or one of their other softwares that are integrated with us, or in your internal systems, where they’ve leveraged our API library to build an integration.

And then the last piece, after the act on, say, taking actions was around the edge. And increasingly what we see has happened with the advent of the digital signature becoming so popular, people now have digital agreements and they need a way to manage all of those agreements. So, the manage phase is about the repository. It’s about rules and obligations management for those. It’s about search, and being able to intelligently understand how to run your business better and manage your business better, because you can access those agreements that you create. So, that cycle, prepare, sign, act, and manage is how we think about the components of the Agreement Cloud.

And one of the things I always say, Rishi — I know it’s a long-winded answer, but kind to set up the whole piece together. When a seller goes out today, to talk to a customer or to a prospect, they need to say, DocuSign, we’re the Agreement Cloud company. Let me walk you through how we prepare, sign, act and manage. And they give their little spiel. If a customer says back to them, hey, that’s great. And it was really, really good to understand that foundation. But today, I’d like to buy some eSignature. That’s why I called you. The only right answer is, yes, ma’am or yes, sir, we can sell you some eSignature today. And what we’ve seen with business today, eSignature is still a killer app here. It’s still the killer piece. People are going to want to enter the relationship with DocuSign. And there’s no shame about that. Signature will be that leading franchise for us for years and years and years to come. But we do want to start every conversation with the Agreement Cloud position. So that’s the vision.

Rishi Jaluria

Alright, that sounds great. Alright. Let’s dive kind of into the current environment. So obviously, you’ve put up some really impressive numbers, billings accelerating twice during the current environment, and Q2 often is really a difficult compare. Maybe can you — you talk about what you’re seeing — how sustainable do you think this boost is because arguably you’re the second biggest software beneficiary after [Zoom], which is a crazy thing to think about. And I’m going to tie an investor question I just got into this one, which is, do you see pent-up demand for products that’s going to be unleashed once the pandemic is in the rearview?

Dan Springer

Yes, that’s an interesting perspective, and the last question, too. So let me give you the high-level view we have, I think we were off in Q1 to a great start. The first half of Q1, we started February 1st, beginning of our year, we were having a good year. When the pandemic hit, it absolutely accelerated. It created a tailwind and accelerated our business. It’s not something you want to have accelerating your business. And obviously, we have struggled, as most other companies have, taken our 5,000 employees that involve work a 100% remotely now. It’s been very challenging onboarding new employees. We’ve hired almost 1,000 people since the pandemic started. So onboarding people, we never had a chance to meet in person. It’s not the easiest thing. But it has created a need for certain companies in a work-from-home environment to take some use cases around contracts, agreements, new hiring packages and things that they used to do in a manual paper-based process that they couldn’t do because no one was in the office to get paper. And so that has definitely been a boost.

If you look at the billings, I think is the best indicator of that. See 59% in Q1 and 61%, as you said, off a tough compare — reasonably tough compare in Q2. A big part of that is definitely because we had that sort of boost.

In terms of what happens going forward, I mean, I don’t think it’s going back. So our perspective is nobody says, have this paper-based process, it’s manual, and I route it around, it always takes a while to sign. And you know what? I miss that. Now I got the digital solution, but I really want to go back to that paper-based manual process because it takes more time, it’s a less good experience. It costs more money. I mean, what’s not to like. So people aren’t going back. And I know it’s a big question for a lot of SaaS businesses right now. We’re very comfortable with it.

The question, how long will it continue? And then the new one is, will there be other pent-up demand to unleash, here’s how I sort of think about it. I think we will continue to provide increased value and Mike put out perspective and said, yes, we’re going to see attractive growth rates in revenue and billings on good compares from the previous Q3s and Q4s, particularly Q4 is a very strong compare. So we obviously have confidence that the rest of this year we’re going to see good strength. We haven’t provided any guidance into the New Year. But I can tell you at a high level, we think that there’s a lot of momentum that is built in the business, and a lot of people are starting to see that these digital transformation plans they had, they had in the distance, they just pulled forward. It wasn’t — these aren’t things that weren’t going to happen eventually, they’re just happening a little bit faster now. And so I think we’re going to continue to see that expansion and growth in the future. And the prospects for that eSignature piece are very good.

In terms of pent-up demand, I don’t know that I’d say there’s a lot of pent-up demand for additional eSignature solutions. But if you go back to that Agreement Cloud and you think about things like CLM in that manage phase, we know there’s a lot of companies that started talking to us about CLM in, let’s say, February and March getting ready to make a purchase decision. The pandemic hit and those transactions slowed. People said, you know, I got all my people in different places. To put in a CLM, you need to do a statement of work, higher professional services of some sort, maybe the systems integrator, maybe it’s your own people, maybe it’s DocuSign for a server. There’s a little more complexity to those. And I think we’re going to see towards the end of this year and going into the New Year, there will be some pent-up demand for those software products that we sell, that we’ll probably see a little bit of a boost from that.

Rishi Jaluria

Alright. I want to go to maybe some of the recent acquisitions that you’ve made to expand the platform, right? SpringCM, Seal and now Liveoak. Can you talk a little bit about traction with these acquisitions? And obviously, we can’t read real traction because that just happened. But kind of how you’re thinking about that? And maybe philosophically, how do you weigh that build versus buy decision here?

Dan Springer

Yes. So in terms of those three, so SpringCM is almost 2 years old now. In fact, it’s coming up on the 2-year anniversary on that deal where — we did the Liveoak, as you said just weeks ago. And Seal though actually closed in the end of May. So that wasn’t that long ago either. Keep in mind, Seal had been a partner. We had an investment in Seal software prior and as we had — we’ve been co-selling with them. So we knew them pretty well before we decided to buy the rest of that business. I think the way I’d position it this way. I think SpringCM, now it’s called DocuSign CLM, we’ve made some changes. We integrated into our business. It’s going well. At the end of last year, we ended up telling people we were ahead of our plan. We actually were getting that adoption in the — now being able to cross-sell that into our DocuSign base above our plans and expectations. That definitely slowed a little when hit COVID and so — because of that longer sales cycle I was describing, take some of that momentum. But we’re starting to see that pipeline build through this period. And I think as I said, I think we feel that will be back on track as we get through this first stage of the pandemic.

In terms of Seal software, we’re already selling it jointly with customers. I think we feel it’s continued to have good momentum. Same situation with Spring, I think COVID definitely put some headwinds. When someone is making a big AI-type decision, they really want to be able to get their teams together. It’s harder to do that. So that has elongated some cycle, but we’re also seeing a lot of momentum building there, filling there same sort of space. With Liveoak, as you said, the key thing that we’re doing is Liveoak has got collaboration capability that we saw as an interesting. But more importantly, we saw that, that together with our electronic Notary Service together will allow us to really deliver on the promise of remote online notary. And so that beta — and in fact, we just put together and sort of published the demo of what that data is going to look like, that’s coming out in a couple of months. And by the beginning of the year, we should have that again really available. So we think that won’t really kick off until Q1 for us in terms of starting to see meaningful volumes, but it will be in customers’ hands in Q4. And it feels like that development work is going great.

And in terms of your strategy question broadly about build versus buy, looking at the highest level, I suppose I’d rather build versus buy only because then you don’t have any integration questions. You don’t have any integration risk questions with teams, et cetera, that’s all known in your control. You don’t spend as much money probably. But the way we look at it is, we are trying to deliver on that Agreement Cloud vision. And if we see somebody has built something that is central to that vision we want to deliver to our customers, we think they have the domain expertise, maybe the starting of the business it could accelerate our pace to get there in a significant way, and it’s not egregious as a cost, then buying is something definitely we’re open to do. We feel — we did this first deal of Spring, so we didn’t want to do another one for a while. We really wanted to make sure we got the integration right. We build that muscle, how we can successfully integrate companies. I think we did a really nice job. And I think we had some initial — like we had to figure that out. We were kind of doing it for the first time as a company in many, many years, definitely under the regime of this leadership team. And I think we got pretty good at it, and that allowed us to make the decision to do Seal. Seal went very smoothly and allowed us to very quickly follow up with Liveoak. The Liveoak is a much smaller deal, small, 25-person team in Austin. But still we wouldn’t have been able to make that decision so quickly if we hadn’t booked the Seal, the process we had to integrate Seal, I think was going to go very successful.

Rishi Jaluria

And I’m sure you’ll integrate Seal really well, please don’t stop giving out little stuffed animals, the Seal is I think just a different from a lot of those.

Dan Springer

Yes, yes.

Rishi Jaluria

Alright. I wanted to think about — going back to the API, as you brought that up, I think that’s a really fascinating point that, that 60% of signatures happening through APIs. Can you talk a little bit more about that API strategy, and especially with the fact that you have like 100,000 developers getting DocuSign APIs today?

Dan Springer

Yes. Yes, 100,000 sandboxes now. Yes. The way we’ve thought about it is, developers are going to be key to us in our ecosystem. And one of the things that’s interesting about DocuSign in the history of the company, when we were private, it’s quite unusual how many large software companies, that all compete with each other, were not only customers of ours and go-to-market partners, but investors in the business. So that includes Microsoft, SAP, Salesforce, Google, Intel, I mean just sort of down the line most of the big tech, and particularly in the software space companies were part of our ecosystem that way. So we spent a lot of time thinking about integration with that broadly sign ecosystem. We have about 450 prebuilt integrations with a leading software company, leading SaaS provider. And then again, as you said, we have about 100,000 developers who built their own, just leveraging our award-winning API sort of set of tools. And I think the answer is, we want to have both those strategies. We want to look at people who are getting successful where our customers are saying, hey, this is an important integration, and then we’ll work with those companies to create direct bidirectional feeds.

And then in the other situation, we want to let 1,000 flowers bloom. And a lot of our customers are doing those innovations. It’s not about a third-party software. They’re just hardwiring us into their own business systems. It’s going to be homegrown software, and we think that’s great. One thing we find is that those use cases are pretty sticky. When people build the integration, they tend to last longer, and then we grow with the customer. As their business grows, they just have more transactions with some of those platforms and we get more growth. So we really like those aspects a lot. We just, last week, rolled out a new developer center, very slick. We kind of took it up I’d say, from a level of good to a leading in the space. And I think that strategy is going to allow us to continue to be successful by continued investment in the developer community.

Rishi Jaluria

Got it. Alright. I want to turn to international now. We’ve had some really strong international growth this past quarter and even before that. What geographies are we seeing the most strength in? What changes in the international or should we expect now that Mike’s taking over that? And maybe alongside that, Mike is someone that we all got to know really well as CFO. What should we expect now with Cynthia kind of taking over the role of CFO?

Dan Springer

Yes. Yes. So let me start talking a little bit about the market, and then I’ll come back and talk to you about the team and how we’re thinking about the leadership from that standpoint. So look, I mean, you saw we bumped up from 18% to 19% of our revenue from international. And I was pleased to get that extra point this quarter. Just to be frank about it, a company well over $1 billion in revenue, I believe software company like ours should have more than 19% of its revenue internationally. We were a little late to enter in the international markets. Some of that was because we had a lot of success domestically, and the company just hadn’t gotten around to it quite frankly. But there’s also some nuances about the core signature business, I’ll just share with you to understand how it will play out.

Most of countries, the vast, vast majority have 1 or 2 models for agreements. It’s common law or civil law. And the differences are specific to each country, but mostly there around how you identify someone in order to make an agreement, and that’s how the rule of law works there. So the Commonwealth countries are the ones that you think about real Commonwealth, the British Commonwealth. So that’s the U.S., that’s Canada, it’s the UK and Ireland, it’s Australia, New Zealand, countries you think about in that context. And those are the places we’ve done well because we launched in the U.S. and we had that framework in place and went into those markets.

We came to basically all the other countries in the world, which are in the civil law now. So that’ Germany, that’s France, Brazil, that’s Japan. I mean, they’re not part of the Commonwealth, they tend to have the civil structure. And we had to do some work on our core platform procedure to really be attractive to those markets. So we were slower in getting in there. And therefore, they’re — our level of adoption there is lower. So that’s how to think about where we are in the markets. But I think the growth opportunities are — France is just as effective as the market for us in the UK is, UK is bigger right now because we got an earlier start in the UK than we did in France. Think about that one.

In terms of what to expect, I think you’re going to see Mike is going to aggressive and help us try the giant growth opportunity. And I think we’re going to see some work right now, the kind of three phases, as I’ve been thinking about it. There’s some work on execution. As you guys maybe heard on the call, Mike started his role sort of playing a GM of Europe. We ask you to sort of look at coordinate across our functions there. And we got so encouraged by that effort over the last couple of quarters that we came up with this idea that we really should just make this senior executive responsibility and inevitably the all-in international opportunity. But the first phase is very much around getting us as a company to work effectively across each of these pieces. And I think that’s good. I think that’s a good opportunity for us to do that in the other regions. And so we’re not done with that in Europe, but we’re off to a great start there. We’re seeing improvement already. We’re going to see that in LatAm. We’re going to see that in Japan. We’re going to see that in APAC. So that will be phase one.

Phase two is think about what are the other countries we have this what we call focused 8 model. We said we don’t want to put physical presence. We sell digitally in 140 countries, but we want to be focused on our direct efforts in the core 8. Those focused 8 countries are U.S., Canada, Brazil, Germany, France, UK, Australia or ANZ, and Japan. And so those are the focused 8. The question is, what are the next ones we should be going into? And when does that happen? So that will be a big secondary thing for Mike to dig in on. And so I think that’s what you should expect. I think you’re going to see even more great growth coming out of the international business.

Now in terms of Cynthia, I wouldn’t have been able to promote Mike into that role and allocate his time to the international growth if we didn’t have a fantastic CFO like Cynthia right there. And it was just a perfect set. I’ve been on Board for a couple of years chairing our Audit Committee, so working closely with the finance organization. Great experience, both as sort of a strategist, she was Head of Corp Dev for Twitter. She was a Morgan Stanley MD in their tech team there. So that was a fantastic background. And then she was the CFO of a public software company, Pivotal. So it’s just kind of check all the boxes of the experience we want. And the fit, we just knew was going to be fantastic, which is always one of these issues. It’s harder to sometimes to figure out while interviewing. So as the pieces came together, Pivotal got bought back in to their ecosystem, the Dell system. And she is available. We saw the path of Mike, and it’s just the piece that fell together really very nicely. I think what you’re going to see with her as a very strategic CFO who is very straightforward. The nice things about Cynthia, you don’t have to wonder if there’s a — in the same way, Mike, it is direct. And you’re going to get a clear straight answer. She is going to tell you what she is going to tell you. And she’ll also tell you what she is not going to tell you. And you can ask her 19 times about some questions disclosing some perspective. And the answer was no the first time. It will be no the next 18 times too. You are all free to keep asking. It’s your job. But she is going to be really disciplined in that way. And I think she is going to be just fantastic add to our senior management team.

Rishi Jaluria

Yes. Right. And really looking forward to working with Cynthia. So I got another question on — or two more investor questions. So first is, with the broad move into the Agreement Cloud, are you potentially infringing on the TAM of your partners? What does that mean for the core eSignature? Do you see companies like Salesforce and SAP and Adobe investing into their CLM offerings and maybe launching their own products to compete with the DocuSign Agreement Cloud? And while you’ve mentioned Adobe, we may as well ask about what you’re seeing from Adobe Sign because that was the most common investor question I got when I launched it with $40, and I still get that question today over $200 here.

Dan Springer

Yes. Well, so I think if we talk about the ecosystem a little bit, Rishi, and I think the answer is we have a robust set of relationships. I feel pretty good. Same thing when we kind of start to go public, the two big questions were competition from Adobe because it’s a great company and a reasonable question to ask. And this question of are all these partners going to someday try to compete and get into your core signature business? So I’ve been answering that question for a number of years, and there’s been very little change to the answer because there’s been very little change to the market situation. I don’t have — see a lot of concern from our partners that they think we’re infringing on their franchises and what we’re doing with the Agreement Cloud. I think we’re building the next big cloud opportunity. I don’t — I think it’s very distinct from what’s in like the CRM cloud or the HR cloud or ERP, it’s just different. It’s how people do their agreements as opposed to how they manage those systems of record.

But that could change I suppose at some point. We haven’t seen any indication of that yet to have a partner, so to say, hey, we’re uncomfortable with what you guys are doing in this basically to compete with us. I suppose it could happen someday, but I haven’t seen any of it today. And I’m pretty confident that they all look at DocuSign as a clear leader in the space. And so if you were one of our key partners, and you were to say, well, I’m going to build my own or I don’t know, buy — I don’t know if you buy, but buy someone else that has kind of capability and start competing with DocuSign, I think they have put themselves at such a competitive disadvantage against the other folks in the ecosystem, that’s great. They’re using this product signature price. We’re going to push the fact that we use DocuSign. So I think it kind of — the Switzerland aspect we have sort of I think restricts the probability of that. Anything could happen, I can’t promise that it won’t happen. So if Oracle launches eSignature product tomorrow, I can’t take responsibility for that. But I don’t think they’re going to.

And then when we think about the question around the competitiveness, we do really thoughtful analysis every quarter, Rishi, right before — we do it right before the earnings call, to take a look at how our pricing has changed and how competitive threats have changed. There has been virtually no change since we’ve been a public company. 10 quarters in, and we’re just not seeing it. We do know when people who compete with us, Adobe is the next biggest player, we’re about 6, 7 times their size and we’re growing, we think close to twice as fast as theirs. We’re taking share even at that rate. But they compete primarily on price, and they bundle a lot. So we will have cost, sits with enterprise customer commentating like, hey, Adobe’s offering us free or virtually free signature as part of our overall relationship to sort of strengthen that relationship because they don’t — I think the — they can compete on features or quality. They just don’t have the scale that we have. They don’t have the brand, they don’t have the uptime. They don’t have the network that we’ve built, the security. They just — they haven’t been able to at their scale to make the same investments we’ve made. And don’t forget, Adobe is a great company, but eSignature is somewhere around 1% of their revenue. It would be crazy for Shantanu to be investing in that. The other way we’re investing in it, where it’s our Agreement Cloud is our only business. So I think that kind of naturally makes sense, and we haven’t seen any changes there. We talk about, very clearly it sounds sometimes like a little tough to achieve, but we mean it very straightforward, which is our biggest competitor is paper. And we’re out there in the market as we’re competing with paper and manual-based processes. That’s what we have to make sure we can beat and show the dramatic ROI benefit, and the rest of it takes care itself.

Rishi Jaluria

That makes a ton of sense. Alright. On kind of going back to the expansion into the broader Agreement Cloud, how has adoption of the products outside of the core eSignature been to the extent you can, like what sort of multi-product penetration are we at now? How should this trend over time? Any way to kind of frame this would be helpful?

Dan Springer

Yes. Yes. Great question. So we get that question a lot. And a lot of times it comes around the net retention rate, too, right? I say, hey, if you got a net retention rate of 120% was last quarter and 119% the quarter before. I think is that because you’re selling a lot of CLM into the product? And so let me be really clear. Signature is the dramatic majority of our business. And it will be to years from now. It will be through — it’s just the scale and the rate at which eSignature is growing. Even before this kind of boost, we talked about from COVID. Now at the COVID boost, it’s even more dramatic in terms of getting a bigger scale and the rate of growth there being very difficult for the other products to sort of make a dent in it is that’s just the reality of where we are. I don’t think it’s a bad reality, it’s good reality. But we do believe the TAM for outside of signature, we paid about $25 billion is how we think about the signature TAM. And we got to grow over time. And we think the rest of the Agreement Cloud broadly the time will be around $25 billion as well. And we’re already seeing significant chunks like CLM, like intelligent agreements, Advanced Analytics. We’re getting into a bunch of other areas there. But in totality, that maybe equals the signature TAM.

So — and we’re, of course, well on our start with signature and we’re new in the other agreements. So it’s going to be years and years before we start saying things like the percentage of CLM, we’re ways away from that. I can tell you that when we have 120% net revenue retention, the vast majority of that is because signature grew. And the people — if you look a year ago, it was almost all signature, but then today, it’s mostly signature, right? So it’s a small piece. But the TAM, I think, is a good way to think about the size of these other deals. So I actually think that the — if you’re doing a CLM deal, it can be the same as our total eSignature business with that customer, depending on where the maturity is. So it’s that sort of magnitude of deals. They tend to actually be bigger deals on average on signature deals. They’re more involved. As I said, is also a statement of work, there’s just some implementation and integration work.

So the magnitude over time should start to approach roughly even, but it will be years and years and years before the rest of it can catch up. It’s the same problem. You talked about international, when you go. If international is growing faster, shouldn’t you catch up? And the answer is, yes, the domestic business is growing a little fast from a very large base. So it’s hard for the international business to sort of catch up, even though it’s growing at a much higher rate. So that’s how I sort of think about the mix.

Rishi Jaluria

I got another follow-up question on international, which is how do we think about pricing? Is international more price sensitive, especially APAC? And then maybe I’m guessing LatAm on top of that. So how do we think about that?

Dan Springer

Yes. There’s not dramatic differences in pricing for us. It’s interesting to say that about — think about APAC. Remember, most of our APAC business is Australia and New Zealand, which has very similar pricing models as the U.S. because the Aussie dollar is down, at times it’s been at parity with the U.S. dollar. Now it’s around $0.70 on the dollar. So I think it’s probably more — it’s a little less expensive there if you do in U.S. dollar adjust, but they’re in the same ballpark. We don’t have a big — we don’t have a presence in China there. We don’t do a lot of selling in India, which took a little bit of digital. So some of those markets that get associated. I think in Asia we’re being very, very price competitive. We’re in Japan and ANZ. So we don’t — I mean, we have some business in Southeast Asia, but it’s small as a mix. So we don’t see it as much. Europe, I don’t think pricing is very different. LatAm, I think will be a market. In Brazil, where there’s a little more price competitiveness. I wouldn’t say it’s dramatic, but I would say it’s noticeable difference. And I think the challenge there is some people will not need our full advanced functionality but want to buy, so like an enterprise pro addition, but want to pay a business addition kind of pricing.

So we have some of that scenario where I think we have a little bit of challenge sometimes trying to control that distribution. But in general, it’s not something that we spend a lot of time thinking about in terms of international pricing.

Rishi Jaluria

Makes sense. And please, by the way, I know you’re not there in a big way, but please get into India because Jesus Christ, they’re like, will travel across town for 2 hours and Mumbai to get people who physically sign things. That is clearly a massive need for these solutions. Alright. Last question I got because it’s end of day, and I think we all can use a drink desperately. But an interesting one, just how should we think about blockchain. Is that something that you could see more widely used buy customers and buy products in the future, especially as it goes more into the broader Agreement Cloud?

Dan Springer

Yes. Yes. Blockchain is one of these fascinating topics. But by the way, we talked earlier about questions that have been with us through from the IPO process. And at the time, blockchain — crypto was even a little more — 2.5 years ago, a little more in the business press. So it was probably even a more heightened sense of interest in the topic. So look, we look at blockchain and say, blockchain is an underlying technology that we think has got a lot of promise. And we’ve actually built out for customers that have requested it, the ability to do a blockchain storage of their agreements. And there are certain people that are intrigued by that as a business process. I can tell you to date that the number of people that have done a blockchain implementation with DocuSign is exactly equal to the number of customers that wanted to do a press release about doing a blockchain. And so this is not — it’s not a constructive business piece for one reason, the economics. It’s the scale economics aren’t there yet, blockchain is too small. So we’ve partnered with Ethereum. It’s open source rate blockchain network. And it costs us about $1 to sort of say we’re going to store that agreement in their blockchain virtually forever. The same way we store them all in the DocuSign system forever. The total cost for us of a transaction, we just think about that implementation cost to do just talking about signature now. But to do that creation of the envelope, the routing around in the envelope, the storing of it, the processing, the encryption, all of the whole things that happened to that workflow, it cost us about $0.07, and that includes the storage, whatever, right?

So we have incremental buck on top of that, you look at it and you go, it’s just irrational almost if you’re doing a pure economic decision today. And so I think the key thing about blockchain is, today, it’s just not commercially viable to scale. But if you think about what you need is you probably need about one or two orders of magnitude change before it becomes really highly valuable in that solution. So I think the question is how fast the overall blockchain development is going to occur. If it happens really fast, I think we’ll see in the future, DocuSign customers saying, I want to have that option. That’s why we’ve built that capability. If it doesn’t take off, and I think the answer is blockchain will be an interesting technology that people will still be kind of curious about, and then when they want to sort of demonstrate a new technology and do a “press release”, it will still happen from time to time. But it just won’t take off because it’s just not commercially — economically viable at this time.

Rishi Jaluria

I think it’s a great place to hop off, Dan. Thank you so much. Always appreciate the insights and for sticking out until the end of the day. I wish this was in person, so we could go grab a beer in happy hour, but I trust you’ll get some much needed relaxation time. So thank you again. Really appreciate it.

Dan Springer

Thank you, Rishi. Pleased to be with you guys. And looking forward to the time where we can have that beer together versus this.

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Lyft says ride-hailing service continued to recover in August

Lyft on Tuesday released updated ride-hailing numbers that show an uptick in demand for rides.

Robyn Beck/AFP via Getty Images

Lyft Inc. said Tuesday that the ride-hailing recovery is progressing after a steep drop in demand because of the COVID-19 pandemic.


said in a filing with the Securities and Exchange Commission that rides rose 7.3% in August from July (although August rides were down 53% year over year), and that in the week ended Sept. 6, it saw the highest number of rides since April. That brings its decline in rides to less than 50% year over year, the company said. In addition, Lyft said its Canadian business — its only operations outside the nation — was rebounding more quickly than its U.S. business, with weekly rides in Vancouver reaching a record high in the week ended Sept. 6.

The company also said it spent less on driver incentives in August as more drivers returned to its ride-hailing app.

Those numbers prompted the San Francisco-based company to say it now expects that its year-over-year change in revenue will outperform the change in rides in the third quarter that ends Sept. 30. Lyft also said its adjusted Ebitda loss for the third quarter will be less than $265 million, compared with an adjusted loss of $128.1 million in the same period a year ago.

See: Lyft revenue and riders fall by more than half, and California could soon be cut off

In its filing, Lyft also said it put an additional $17.5 million into the Proposition 22 campaign, the California ballot measure that aims to avoid complying with a new law that would mean classifying its drivers as employees. Instead, Lyft and larger rival Uber Technologies Inc.
as well as other companies that rely on independent contractors, are proposing to exempt gig workers from the law.

See: The different routes Uber and Lyft could take as they fight California law

Amid another broad decline for tech stocks Tuesday, with the Nasdaq Composite Index

falling 4.1%, Lyft shares rose 3.9% to $30.10, while Uber shares rose 3.3% to $34.32. Both stocks fell roughly 2% in after-hours trading following the filing.

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