Good afternoon, ladies and gentlemen. Thank you for joining today's DocuSign's fourth quarter and fiscal year 2019 earnings conference call. As a reminder, this call is being recorded and will be available for replay from the investor relations section of the website following this call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. I will now pass the call over to Annie Leschin, head of investor relations. Please go ahead.
Thank you, operator. Good afternoon, everyone. Welcome to DocuSign's fourth quarter and fiscal 2019 earnings conference call. On the call today, we have DocuSign CEO, Dan Springer, and CFO, Mike Sheridan. The press release announcing our fourth quarter and fiscal year results was issued earlier today and is posted on our investor relations website. Before we get started, I'd like to let everyone know that we will be participating in the JPMorgan Technology, Media, and Communications Conference the week of May 14th. As other events come up, we will make additional announcements.
Let me remind everyone that the statements made on this call include forward-looking statements that are based on assumptions we believe to be reasonable as of this date, and on information currently available to management, including estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from any other results, performance, or achievements expressed or implied by the forward-looking statements. Further information of these risks and uncertainties is included in our prospectus previously filed with the SEC and additional information in our October 31st quarterly report on Form 10-Q and other filings with the SEC. You should not rely upon forward-looking statements as predictions of future events.
Except as required by law, we assume no obligation to update these forward-looking statements or to update the reasons actual results differ materially from those anticipated in the forward-looking statements. I'd like to turn the call over to Dan. Dan?
Thanks, Annie, and good afternoon to everyone. Thank you for joining us today for our Q4 earnings call. I wanted to start by acknowledging the end of our first fiscal year as a public company. It has been an exciting journey. We have seen our team align around an expanded vision and, in turn, deliver consistent innovation that is bringing that vision to life. We have continued to drive widespread penetration and adoption at hundreds of thousands of customers around the world, making a significant impact on their businesses. And after spending the last two days with about 1,500 of our employees at our global kickoff here in San Francisco, I couldn't be more excited about what's to come. Against that backdrop, I want to cover three key areas in my remarks today.
Starting with a summary of our performance in Q4 and fiscal 2019, moving on to our priorities for fiscal 2020, and ending with some important factors that elevate our brand and drive customer success. I'll then hand it over to Mike to address our financials in detail. Let's start with our performance. Overall, DocuSign had a strong Q4, which in turn contributed to a very solid fiscal year. Total fourth quarter revenues came in at $200 million, representing 34% growth versus Q4 a year ago. We were again profitable on a non-GAAP basis, with an operating profit of $7 million for the quarter. We generated $23 million in free cash flow. This means we are exiting our first year as a public company with annual revenue of $701 million, reflecting 35% growth and a positive non-GAAP operating margin of 2%.
Our growth continues to be driven by three primary factors, acquiring new customers, expanding volumes and use cases within existing customers, all while bringing new and innovative solutions to market. As a result of this, at the end of Q4, we had 477,000 paying customers, an increase of 22,000 since Q3, and more than 100,000 since this time last year. Consistent with previous quarters, this growth is not limited to the U.S. Earlier today, we announced our expansion in Toronto with the opening of our new Canadian headquarters, and we're looking forward to building a larger team to drive growth in this attractive market. In total, our international business contributed 17% to the overall revenue for the fourth quarter as well as fiscal 2019, and it remains an area of keen focus for us going forward. Let's turn to our priorities for fiscal 2020.
When we think about the opportunity the year presents, it falls into two main buckets, the innovation we are bringing to market and the ways we're helping our customers succeed on our platform. Speaking to innovation, this year, we'll see DocuSign continue our journey to simplify life and accelerate the process of doing business. We pioneered the technology and the category of eSignature, and we built an incredibly strong business as a result. Yet we're still only scratching the surface of the $25 billion TAM. As the world leader in this category, we remain 100% committed to it and to consistently innovating in eSignature in the years to come. At our IPO last year, we outlined our broader vision to build on our strength in eSignature and help companies modernize their entire System of Agreement.
That is, the way they prepare, sign, act on, and manage the agreements that are fundamental to their business. That help deliver on that vision, we acquired contract lifecycle management leader SpringCM in September last year. Given that its technologies automated processes before and after the signature, it was a perfect match, validated by the fact that our products were already integrated at more than 100 joint customers. Since completing the acquisition, our Better Together value proposition has been very well-received by the DocuSign customer base. We have closed deals that SpringCM alone would not likely have accessed. For example, with one of the world's largest telephone companies. The presence of SpringCM in our portfolio is also helping to further differentiate the DocuSign eSignature offering. In some cases, we've been able to sell SpringCM along with eSignature to brand new customers.
In other cases, we have achieved a competitive advantage by winning eSignature-only deals because the customer sees the desirability of adding SpringCM later. All of these outcomes have validated our thinking on the attractiveness of acquiring SpringCM. Next, I'd like to highlight some positive developments with one of our most important partners, Salesforce. Just last week, we announced DocuSign for Salesforce Essentials. It's a version of our eSignature technology designed specifically for use with Salesforce's product for small businesses. When you consider there are 125 small businesses in the world, and most of them are still scanning, faxing, and printing documents for signature, you can see our excitement to collaborate with Salesforce to provide an alternative that's faster, more cost-efficient, and better for the environment.
Because DocuSign for Salesforce Essentials is for SMBs, we focused on ease of setup, administration, and document sending, all done from within the Salesforce user interface. In creating this product, we are excited to use Salesforce's latest platform technology, Lightning, which makes the user experience particularly seamless and modern. In a similar vein, we will soon be announcing the general availability of a product I mentioned during our Q2 call when it was in beta, DocuSign Gen for Salesforce. This allows sales reps to automatically generate signature-ready contracts with a few clicks, driven by data from a Salesforce opportunity. It's a great example of how we're expanding into other stages of the agreement process, in this case, preparing agreement. It's also a great example of the leverage we're beginning to see from SpringCM, which brought technology and people to the Gen for Salesforce opportunity.
We expect Gen for Salesforce to provide a great new way for customers to use DocuSign and Salesforce together to accelerate the preparation of their agreement. To summarize my update on innovation, SpringCM value proposition is proving out. Two, with DocuSign for Salesforce Essentials and DocuSign Gen for Salesforce, we have two great new opportunities to accelerate sales process in partnership with Salesforce. Three, we are hard at work on other innovations, both for our core eSignature business and for delivering on our broader system of agreement vision. Lastly, four, we continue to look at opportunities, both internally and externally, to build out on that vision. The next area I want to cover today is our relentless commitment to customer success. As you know, our strategy is to land customers with an initial use case or two and build up from there.
Integral to that process is our customer success organization. That group was initially small and focused primarily on helping our largest customers to streamline processes and drive increased ROI. They have been highly effective at this, growing the number of customers we have with ACVs over $300,000 by 50% in fiscal 2019. With just over 300 customers above that threshold now, plenty of opportunity remains. Now we are expanding the function across our entire customer base. This includes dedicated customer success managers working with our largest customers to those driving adoption in the mid-market, through to the development of automated programs that help our SMB customers. We are also adding new rapid adoption and onboarding programs so that all of our customers are getting the access and assistance they need to be successful.
Now, before I hand over to Mike, I want to spend a moment talking about two more areas that are not only important to me personally, but also to our employees, as they help to make DocuSign a special company to be a part of. The first is DocuSign IMPACT. This is our commitment to harnessing the power of our people, products, and profit for good. Our goal is to make a difference in the global communities where our employees and customers live and work. As part of this effort, we recently unveiled the DocuSign for Forests initiative, where we will commit $1.5 million this year to supporting organizations doing critical work to preserve the world's forests. The first grant was matched by me personally to total $1 million, will be going to the Jane Goodall Legacy Foundation.
I had the privilege of spending time with Jane, a hero of mine, at the World Economic Forum in January this year, where we together outlined our overall commitment to fighting for the world's forests by reducing the global demand for paper. It's an initiative I'm very proud of, and it builds on something every DocuSign customer already does simply by using our product. Consume less paper, which means fewer trees need to be cut down, which clearly translates into a more sustainable environment. The second area I wanted to address is that of culture, which is the bedrock of success for any company, especially one that's growing as rapidly as ours. We want to create a place where people can do the best work of their lives.
Now, while I do love our Glassdoor rating, where we were the 17th best place to work out of over 700,000 this past year, it's about more than that. We track an Employee Success Index, which is a composite rating of our attrition compared to benchmarks, employee referral rates, manager ratings, et cetera. We also measure our employee engagement via short surveys twice a year. I personally read every single comment that's offered by every employee, which is a time investment for sure. It fosters an open culture, and it helps us all to stay connected to each other. With that, I am incredibly proud of what this team has accomplished in our just completed fiscal year. Our finance and legal teams have been a huge part of that success as we completed an IPO, a secondary, a convertible debt offering, and an acquisition in six months.
I can't thank them enough. I wanted to also mention that after over four years at DocuSign, Reggie Davis, our General Counsel, has decided to take some much-deserved time off to spend with his family beginning later this month. Reggie played a key role in our IPO and indeed at the company overall. I wanted to personally thank him for his contribution. With that, I think the entire team DocuSign should be proud of an incredible freshman year as a public company. We beat our financial goals while aggressively investing in the future and never losing our focus on ensuring the success of our customers. I feel so incredibly fortunate to call this group my colleagues and to call this place home. I'd now like to hand over to Mike to walk through our financials. We'll take Q&A after that. Mike?
Thanks, Dan, and good afternoon, everyone. First, let me remind you that all of our financial results reflect the adoption of the 606 accounting standard for current and historical periods. The non-GAAP results I will discuss on this call exclude stock-based compensation, amortization of intangibles, amortization of debt discount, and acquisition-related costs. Fiscal 2019 was a milestone year for DocuSign. In addition to the list of accomplishments Dan laid out, we delivered a year of outstanding financial performance from top to bottom, including continued strong global growth, a full year of profitability, and increased positive cash flow. We ended the year with a strong fourth quarter with significant contributions to growth from all of our global regions. Fourth quarter revenue reached $200 million, a 34% year-over-year increase, bringing total revenue for the year to $701 million, an increase of 35%.
Subscription revenue grew 37% year-over-year in the fourth quarter to $188 million or 94% of total revenue. For the full year, subscription revenue totaled $664 million, an increase of 37%. Fourth quarter billings rose 31% year-over-year to a record $262 million. For the full year, billings increased 34% to $801 million. We added 23,000 new customers to our installed base in the fourth quarter, growing 28% year-over-year to 477,000 customers. The number of our enterprise and commercial customers grew to 56,000 in Q4, an increase of 32% year-over-year. Net dollar retention was 112% in Q4 and remained within our historical range of 112%-119%. Customers with ACVs greater than $300,000 grew 50% year-over-year to 310 customers at year-end.
This was driven primarily by existing customers continuing to increase their volumes and expand their use cases. Our international regions continued to generate strong growth in Q4, with revenues from DocuSign core products growing over 40% year-over-year. Total international revenues grew at 26% year-over-year. This lower percentage growth for total international revenues relates to the sunsetting of legacy acquired products. Gross margin for the fourth quarter was 78%, compared with 80% in last year's fourth quarter, primarily due to the impact of SpringCM's lower margins. For the full year, gross margin was 80%, compared with 79% last year. Fourth quarter subscription gross margin was 85%, consistent with the prior Q4. For the full year, subscription gross margin rose to 86%, compared with 84% last year.
Operating leverage improved in Q4 as sales and marketing had a seasonal decrease as a percentage of revenue and G&A expenses returned to more normalized level after our equity and debt transactions. In total, operating expenses totaled $149 million, or 75% of revenue in Q4, compared with $117 million or 79% of revenue in the prior year. For the full year, operating expenses totaled $544 million, or 78% of revenue, compared with $421 million, or 81% of revenue, in fiscal 2018. This resulted in fourth quarter operating margin of 4% versus 2% in Q4 last year. For the full year, we generated 2% operating margin, up from a 2% operating loss in fiscal 2018. We ended the year with 3,023 employees, an increase of 33%. Fourth quarter net income was $10 million, or $0.06 per share, compared with $500,000, or $0.01 per share in last year's Q4.
Net income for the full year was $18 million, or $0.09 per share, compared with a net loss of $12 million or $0.43 per share in fiscal 2018. Turning to cash flow, we generated record operating cash flow of $34 million in the fourth quarter, compared with $32 million in the same quarter last year. This includes the impact of a one-time payment of $14 million in Q4 for employer payroll taxes related to our RSU settlement. Excluding the impact of this payment, operating cash flows in Q4 were $48 million, a 50% increase year-over-year. Free cash flow was $23 million in the fourth quarter, compared with $29 million in Q4 of last year. Excluding the impact of the one-time tax payment, our Q4 free cash flow was a record $37 million, or 19% of total revenue.
Turning to our guidance for the first quarter and full year of fiscal 2020, we estimate that revenue will range $205 million-$210 million in Q1, and $910 million-$915 million for fiscal 2020. Billings will range $210 million-$220 million in Q1, and $1.01 billion-$1.03 billion for fiscal 2020. We expect gross margin to be 78%-80% for Q1 and the fiscal year. For our operating expenses, we expect sales and marketing in the range of 48%-50% of revenues in Q1 and for fiscal 2020. We expect R&D in the range of 15%-17% for Q1 and fiscal 2020, and G&A in the range of 10%-12% for Q1 and fiscal 2020.
For the first quarter, we expect $3 million-$4 million of interest in other non-operating income, including interest income and expense associated with the convertible debt. For the fiscal year, we expect interest in other non-operating income of $12 million-$16 million. We expect a tax provision of $2.3 million for the first quarter and $8 million-$10 million for the fiscal year. We expect fully diluted weighted average shares outstanding of 185 million-190 million shares for Q1 and 190 million-195 million shares for fiscal 2020. Finally, I'd like to provide some information regarding anticipated capital expenditures in fiscal 2020. We expect to spend $60 million-$70 million on capital investments in fiscal 2020 compared to the $30 million spent in fiscal 2019.
This increased level of investment relates primarily to the continued facility and other infrastructure expansions in our international regions, particularly Dublin, and our expansion of strategic data centers, including a dedicated data center for the federal government vertical. While we don't expect to continue at these levels every year, we do foresee an impact on free cash flow growth rates in fiscal 2020 as we make these investments, and $15 million-$20 million of that investment will occur in the first quarter. In closing, I'm very pleased with our execution this year, our first year as a public company. We are excited to enter fiscal 2020 with strong momentum in our global markets. Thanks again for joining us today, and we can now go to Q&A.
Thank you. At this time, we'll be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Our first question comes from the line of Sterling Auty with JPMorgan. Please proceed with your question.
Yeah, thanks. Hi, guys. Wanted to touch upon one of the last elements you mentioned, the dedicated data center for federal. Given the passage of the legislation, it looks like you're ramping up for that opportunity. Any insight you can give us in terms of what we should expect in terms of the uptake from that vertical in this fiscal year?
Sure. I think the perspective we have, Sterling, is this is, as we've always said, a huge long-term opportunity for us. When we looked at the opportunity getting FedRAMP certified, our perspective was this was an increase to our TAM. This gave us an opportunity to have just simply a bigger opportunity. One of the challenges with the federal government, as I'm sure you'll understand, is the cycle time for getting things done can sometimes be slower than we see with some of our commercial segments. We have a lot of enthusiasm with this opportunity, and the IDEA Act is going to create even more, and I would argue some more urgency, in that agencies have six months to put together their plan. It is put together a plan, and we're not going to assume any significant change to our fiscal year 2020 revenues from this.
We are looking at this again as a further opportunity to be more bullish about the TAM in the long term.
Sterling, I would add, as we've talked about in the past, one thing we are always going to prioritize is growth. Even if in fiscal 2020 we don't see this having enough runway to be a huge contributor in fiscal 2020, we absolutely think that it represents that longer-term opportunity, and we're going to invest accordingly.
Then one follow-up question. In the enterprise and commercial customers, the growth rate through the year kind of mimicked what you saw in terms of your revenue growth. How should we think about that next year? Do we start to get more leverage out of that existing base? Perhaps, maybe the growth rate in customers is not spot on with revenue growth, but we get more contribution per customer?
Well, I would say this, Sterling. I think the relevance of the new customer growth isn't so much in terms of near-term revenue trends, just because as they come on board, they generally start as just the land level of their total account size, and that grows over time. Then on a subscription model, in the near term, they don't contribute as much of a percentage of revenue as the expansion of the installed base does. With that said, it is an important statistic in terms of planting the seeds for those continued expansions going forward. A correlation of that growth rate % to a revenue growth rate probably isn't extremely connected just because of what I just described. Generally speaking, yeah, it should be a good indication of how we continue to penetrate the market.
Yeah. The only other thing I would add is don't forget, we are very early innings of this game. The construct of thinking that we're coming to a sort of a turning point or some sort of plateau is just not right. If you look at the TAM just on eSignature, the one we understand much more clearly, at about $25 billion and growing, and you compare that to where we are in a total revenue standpoint, we're only a few % of the way there. I don't think you'll see any sort of plateauing again of any of those factors.
Got it. Thank you.
Our next question comes from the line of Stan Zlotsky with Morgan Stanley. Please proceed with your question.
All right. Perfect. Let me start off with SpringCM. Sounds like that acquisition is doing very well under the DocuSign umbrella. Dan, how are you thinking about SpringCM and the selling motion and go-to-market there for fiscal 2020? Mike, maybe I missed it, did you give us a contribution from SpringCM in the quarter? I have a quick follow-up.
Okay. I'll start. You can talk about revenues. Yeah. The way we're thinking about it, our goal, Stan, was by the time we got to the field kickoff that I just referred to, our GKO that occurred this week, was we wanted to have the Springers, as I particularly affectionately call them given my name, fully integrated into DocuSign by kickoff, and we've accomplished that. We have integrated the sales plans and the sales organization. We even have a seasoned sales leader from DocuSign that we've had move to Chicago, which is where the Spring headquarters is located, and an opportunity to work closely and really bring the two businesses together. Going forward, we're thinking about it as one integrated business, and we're really bullish that that's gonna set us up for a fantastic 2020.
Yeah. In terms of contribution from Spring, Stan, we're not breaking that out in our guidance going forward. For Q4, it was right in line with what we had guided last quarter.
Okay. Got it. Thank you. A quick follow-up for Mike. When you look at Q4 billings, was there anything unusual in the quarter? The numbers came in ahead of consensus. Was there some deals flowing in and out? Maybe some effects or anything else? Payment term changes, anything like that?
No, all very standard, Stan. The one thing that I point out each quarter is that that particular statistic is gonna be affected by timing of renewals and orders coming in and so forth. Overall, the meaningful percentage increase, I think, is when we look at the fiscal year. If you look at Q3, it was spiked up a little bit higher, and Q4 was a little bit lower. This broader average, I think, is important to look at. In terms of the underlying fundamental strength of the orders that we received and the payment terms and all of that was very consistent with prior quarters.
Got it. All right. Thank you, guys.
From the line of Walter Pritchard with Citi. Please proceed with your question.
Hi. Thanks. Two questions. First, maybe on Spring, you talked about benefits to core signing as well as selling Spring standalone. How do you think that'll play out next year as you go to market more deliberately with the strategy that you set at sales kickoff and so forth, in terms of selling the add-on versus the core as the benefit there? I did have a follow-up.
Sure. Well, I think there's a couple different motions. Look, as we talked about before, this construct of a System of Agreement, every company has one, again, whether they think about it that way or not. Many do, many don't. We have the ability, and we have now trained up our sales team to go and talk about our broader solution set for that overall System of Agreement that they have, and we will lead with that messaging and positioning. At the same time, we realize we're still going to have plenty of customers that, in the marketplace, come out and say, "eSignature is a huge opportunity for us to digitally transform our company," and they want to buy an eSignature solution. They know that DocuSign is the clear and strong leader in that space, and that's what they're going to ask for.
In that situation, we will smile and sell them an eSignature solution, right? As is the only logical thing to do. We will have the opportunity in that process to say, "We're excited to get you started with eSignature. Here's our overall vision for how you should think in the long term about that System of Agreement," and Spring will be a key part to showing them some of the other components of that overall system. I think you're going to see us have both of those sales motions. I think the answer is we're going to be dictated by the individual customer and how they want to buy. The key is, whether we're selling them a broader solution up front or not, we're positioning them for the broader opportunity going forward.
Dan, a follow-up just on international. How are you thinking about 2020 relative to countries that may be inflecting, especially in Europe? Any countries that we should be watching?
A couple of things. We did note the investment with the Toronto office, which we're super excited about. We think Canada is a great opportunity for us within international and North America. I think you're spot on. Europe is the biggest growth opportunity for us outside of North America. From a scale standpoint, it is the biggest theater we have today. I would tell you, I'm also very excited about what we see in Latin America. I also think that the overall APAC opportunity, we've been very Australia-centric, as most software companies are when they head into Asia-Pac. We've seen some great successes moving further north, and I think you're going to see us investing pretty aggressively across the board. You're absolutely right that Europe will be the single largest contributor to that international growth.
Thank you.
Our next question comes from the line of Alex Zukin with Piper Jaffray. Please proceed with your question.
Hey, guys. Thanks for taking my question. I apologize for any background noise. Maybe first, just one more time on Sterling's question about just the magnitude of the TAM expansion from the federal vertical that you see potentially, and maybe how does the average deal size in that vertical that you are looking at in your pipeline compare to the more traditional commercial enterprise deal? I've got a quick follow-up.
Yeah. Well, I think the answer to deal size is a very important differentiator, and I made the comment before that, hey, we expect some of those federal government processes to still take a little bit longer and the cycles to be longer. The visibility to a much larger opportunity in those accounts is very clear. When we think about a typical commercial deal in maybe our largest vertical financial services, we talk about this concept. It's a pretty small land, right? We might just get a couple use cases. It could be a very low MRR start, and we see that being an opportunity to become one of our more than $300,000 ACV customers that we talk about.
When you look at the federal and you just think about some of the individual groups there, we look at those as being able to eclipse that $300,000 ACV on an initial signing, sometimes by a multiple factor of that. We do see the opportunity for some much bigger win, but I still think we're going to see the overall cycle time being a little bit slower.
Perfect. That's helpful. Maybe just one on dollar-based net expansion. I don't know, I may have missed if you called out what it was in the quarter, but maybe just given the success of SpringCM and the cross-selling and the just larger land, how should we be thinking about that metric, fiscal 2020?
Actually, the metric, I lost you. Which metric?
Dollar-based net expansion.
Yeah. It is kind of in fiscal 2020, stay in the same range we've seen historically, which is anywhere from 112%-119%. My expectation is in that midzone is where we'll continue to sustain the business.
Perfect.
Our next question comes from the line of Justin Furby with William Blair. Please proceed with your question.
Thanks, guys. Just, I guess to start out, I was wanting to ask on just rep productivity, what you saw pre and post-IPO, any noticeable change there? When you look out to your sales plans, your hiring plans for fiscal 2020, should we be thinking about it, sort of at a similar rate of sales and marketing OpEx growth or any kind of commentary around fiscal 2020 and your plans there would be helpful. I've got just a quick follow-up.
Sure. Let me talk a little about the rep side, you can talk to me-
Sure
around the impact that will have financial. We didn't have any significant change either way. I think our productivity was relatively consistent from a rep standpoint. There were a couple things that we did last year, which I think turned out to do very well for us, is we hired a little bit ahead of the curve. We used to have a model where we sort of got through a year, we did a whole bunch of hiring at the beginning of the year in our field sales force. Sometimes, when you do that, there's a little bit of a productivity hit until you get them all up to speed. Now what we're trying to do is do that hiring a little more evenly throughout the year.
What that led us to do last year was pull forward some hiring. We pulled forward some costs, and we talked about that throughout the year. That did lead to some very strong revenue growth, particularly in the later parts of the year. I think set us up to be very confident about our fiscal 2020 because we have more folks in seat that have already had several months with us and are up to speed. I think we feel really good about that. I think going forward, you will see us moving to that model of more consistent adds. You will not see kind of the big step changes in that aspect of the business. Maybe a smoother increase in that spending.
Mike can talk about the percentage. We do not see that percentage of sales and marketing changing dramatically through the years.
Well, a couple things, Justin. One, you mentioned the IPO specifically. I do not know that we could generate any specific data on that. Qualitatively, I have heard from our enterprise teams in particular that the IPO has been helpful in terms of their customers understanding the scale and strength of our company. That was something that, as a private company, was not always as evident. In that regard, there is some qualitative benefits that we have gotten from being public. In terms of our hiring plans for fiscal 2020, I think Dan's correct. I went through in the guidance the leverage improvements that we are going to see. Overall, we will be more leveraged and productive in that sense. Some of the aspirations we have with Spring and other new products over time, driving up those productivity statistics, those are certainly part of our vision.
I think in fiscal 2020, they are going to be relatively stable because we are still in the early innings of rolling some of that stuff out.
Okay, got it. That's helpful. Then just Salesforce, just given some of the new announcements, can you just remind us, Dan, what the overlap is today? If you look at Salesforce's base, how much opportunity is there to just go after their existing install base and on the Essentials side, any sense for what the opportunity there is in terms of if the TAM is $25 billion, is that a subset of it, or how do you think about opportunity there? Thanks.
Yeah. Salesforce, you've heard us talk a lot about Salesforce. We have made a dramatic investment in the relationship overall, and it's everything from the product pieces you just alluded to the alignment of our go-to-market efforts, really, quite frankly, to the connections of the company. That we talked about our sort of actions we took on the environmental front. A lot of that had to do with Marc Benioff asking us to come with them effectively to Davos, the World Economic Forum, and try to play a role in having a big impact on the environment. We're really kind of connecting at multiple levels with what I think is a fantastic software company.
From your specific question around the size of the opportunity, we believe that while Salesforce has a large number of customers, and we do have a lot of overlap, and it's a significant driver, it's still a small piece of the overall TAM. We think that there are so many small businesses that they don't have in Essentials or other relationships with, and so many right up through the stack from a mid-market all the way through to enterprise, which is why we sell so aggressively directly. I believe Salesforce is one of our most important go-to-market partners, but any one of them is still a very small percentage of the total TAM market opportunity. We wouldn't be in any way reliant on them, but it sure is a nice turbocharged boost to have that kind of a strong partnership.
Yeah, that's helpful. Then Mike, if I could sneak one more in. When do the headwinds on the international side sort of anniversary, if you will?
Yeah. I think the further away you move from when the acquisitions took place and the revenues were more material to our prior periods, you'll just see each year, like we just completed fiscal 2019, obviously, the percentage of those legacy products made up of our business was smaller, and next year it'll be smaller again. I think that overall, you'll continue to see international now start to turn into a growing percentage of our business. This year, it was about $120 million business, which over the relatively short period of time we've been focused on it, we're really satisfied with it.
Great. Thanks, guys.
Our next question comes from the line of Ted Lin with Goldman Sachs. Please proceed with your question.
Great. Good afternoon, and thank you very much for taking the question. Digging a little bit into your FY 2020 guidance, which I think is for roughly 30% growth, can you maybe help us break that down, maybe qualitatively by the three factors called out by Dan, which I think were acquiring new customers, expanding volumes, and bringing kind of new solutions to market?
Do you want to start?
Yeah. I'll start on the qualitative side. For us, if you do the simple sort of math of it-Ted, the biggest driver in any year is always going to be that second bucket, which is sort of the expansion. Because when we bring in the new customers in our land model, even if some of them are those larger federal government cases we talked about earlier, it's going to be a small portion of our overall revenue growth because we do tend to have that land with a smaller number of use cases. By far, the biggest driver is going to be that middle bucket. I do think we have some nice opportunity with new product introductions. We talked about a couple of those today, and we've got important new ones coming up in the next few weeks. We're excited. Want you to stay tuned.
We're going to have additional fantastic System of Agreement extensions that we want to talk about. At the same time, I still think even those will be overwhelmed by that second bucket of the core growth with that increasingly strong customer base of 477,000 customers that we think can be a huge growth opportunity for us. That's my view on that. Mike, do you have anything quantitative to add or.
Yeah. I think that's spot on. I think for that middle category, that number of customers that is exceeding the 300K threshold, as that continues to grow, I think that's a good way to just measure and see what's happening in that existing installed base of our business. If you think of it from an investment standpoint, while new customers don't make up a large percentage of the guided revenue growth for all the reasons Dan just summarized, if you look at our investments, we're investing aggressively and continuing to expand the number of reps that are out there driving new customer growth. For our overall long-term growth, obviously those, as I mentioned before, are the seeds that we have to keep planting, and we're having great success with that.
Investing in that installed base, our customer success organization on top of our sales organization, really focused on consumption, driving upsells, mitigating churn. We're going to continue to invest aggressively in that. In new products, obviously the movements you've seen around Seal, the significant percentage of our revenues that we're investing in R&D, all targeted at that growth driver. As a business, we're focused on all three. In terms of the guidance, that middle category is the biggest contributor.
Great. Thanks. That's super helpful. On the competitive environment, are you seeing kind of HelloSign anymore these days after the acquisition by Dropbox? Is there any kind of competitive update with respect to Adobe and how much you're seeing that solution? Thanks.
The simple answer to the first question is no. Remember when we had seen in the past HelloSign, it's sort of hard to see in the standpoint that they're the very small customers. We don't see them in a lot of competitive direct deals, rather in the web and mobile. We don't get as much intelligence about those transactions because they're not dealing with an individual here, rather just with our e-commerce solution. We haven't seen any change in what was a smallish impact to begin with. I don't think there's anything else that I've seen different noteworthy at all from a competitive standpoint in this last quarter, really across the year. I think it's pretty consistent with what we shared on the roadshow around the IPO, which was unchanged really when we got to the secondary.
I don't know if you have anything else you picked up, Mike, I think it's pretty consistent.
Great to hear. Thanks for taking the questions.
Yeah. Thank you.
As a reminder, if you would like to ask a question, please press star one on your telephone keypad. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. One moment please as we pull for more questions. Our next question comes from line of Karl Keirstead with Deutsche Bank. Please proceed with your question.
Thank you. I've got two billings questions for Mike. Mike, in the four quarters that DocuSign has been public, as you know, there's been some big variation in the degree of billings outperformance. Q1 and Q3 were huge billing beats, and 2Q and the quarter just reported were more modest. I know it's super tough, obviously, to predict billings, but what are the bigger swing factors driving that? You mentioned in an answer to a prior question, maybe renewal activity. It'd be nice to hear you elaborate on the variation we've seen.
Yeah. I think two things, Karl. First of all, as we've talked about, a lot of SaaS businesses actually don't guide billings because of the variability of the factors that can create some of the effects you're talking about. I think about two of them being pretty key. One is that obviously a big portion of billings is the timing of a renewal order. If a renewal order comes in on the last day of a quarter, it goes into that quarter. If it comes in on the first day of the new quarter, it goes into that quarter. Exact timing of when our renewable book of business comes in can cause one quarter to the next some variability.
I think also those variables that affect the prior year quarter that you're comparing to, you might have a double effect where in the prior quarter you have a tough count because you had a really high billings percentage. For example, Q3 of fiscal 2019, I believe, I don't have it in front of me, but I think it grew something like 40%. Clearly that's a little bit higher than what the underlying growth rate of the business is. This quarter was a little bit lower than that. Next Q3, we're going to be comparing against a 40% growth rate because of some of these timing differences that affected Q3.
I continue to try to remind everybody, I want to guide the billings because I think it's a good transparent way of giving an indication in terms of how we see our future developing. On a quarter-to-quarter basis, it is a statistic that's subject to some of that variability.
Yep, that makes sense. Then maybe my second related question is, I'm just looking at your billings guide for fiscal 2020, $1.03 billion up 29% at the high end. Seems pretty strong to me. Mike, when we go back to when you went public, you initially guided to fiscal 2019 billings of $680 million-$700 million, and you just finished the fiscal year with $801 million. Quite a bit of upside. I don't think anyone's expecting that degree of upside to your new guidance, what I wanted to ask you is whether, A, generally your guidance philosophy has changed at all, and secondly, whether the key factors that drove that upside in fiscal 2019, whether it's renewal activity or other things, are they generally in place to roughly the same degree in fiscal 2020?
Yeah. I would say two things, Karl. First, anytime I think a business goes public, it's always going to be a bit more prudent at the beginning of that new environment than as we mature into that environment. That's always something to keep in mind. I think the underlying drivers of our billings growth are the same ones that we're referring to in our overall revenue growth. Obviously, I think the guidance that we're providing for this upcoming fiscal year indicates that we continue to have really strong confidence in what's going to drive that growth.
Yeah, that makes sense. Okay, great. Congrats on the strong guidance for this fiscal year.
Thanks.
Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the call back to management for closing remarks.
Thank you again for joining us and your support over our first year as a public company. We look forward to seeing many of you out on the road in the coming months and hope we'll have the opportunity to see you all soon. Thank you.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.