Workiva (WK) 1 May 192019 Q1 Earnings call transcript

Good afternoon. My name is Chris, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Workiva Q1 2019 Earnings Call. [Operator Instructions] Thank you. Adam Rogers, Director of Investor Relations, you may begin the conference.

afternoon, good and you, everyone. Thank First Welcome Earnings Call. XXXX to Workiva's Conference Quarter comments we'll Chief our Financial afternoon, begin from followed Chief Miller. Stuart This with Officer, by Vanderploeg; our Marty Executive Officer, over we'll then turn call And to the questions. on Accounting Chief Jill Officer. the line Also is Klindt, today of call X. this replay be available A May until will our is Investor the Relations Information replay today's release, under listed to access which website press in the is available on section.

call is also broadcast reminder, a webcast. today's conference As live being via

we'll information materially over our that, today's call, statements. company's results occur with Vanderploeg. of included non-GAAP additional to of to for current today's to are financial forward-looking the earnings like full - will remind for All the reflect statement GAAP future certain made releases. I'd refer factors call, today to Form unknown our begin, XX-K and refer update financial only, certain report could obligation And also or measures. during regarding expectations and we we turning XXXX. to statements Marty making in will report statements that performance. that occur on call. Also events by our we to known to Form and that Reconciliations these performance, of and statements forward-looking risks the These Before CEO, Workiva subject guarantees during cause measures cautions non-GAAP fiscal forward-looking year our press uncertainties. begin and be we reflect today's - call Please everyone any that guidance to are the that after reflect and differ second XX-Q forward-looking future undertake quarter and that no this not to quarterly events statements from annual any are on actual including course

call. XXXX you, for and the Adam, conference Workiva first to thanks joining Thank quarter everyone

accelerated in our and expenses are increased results, We first quarterly and guidance customer, over CEO are revenue have cut increased exceeded raising became quarter - discuss deal full I revenue in we Stuart throughout call. guidance, our our We new which year the gained detail size, size model. and for efficiencies increased Since operating will pleased XX average the later other with I'm improved XXXX months revenue we revenue results. ago, and average sorry, growth average per company, our deals licensing rate, more

refined We also for examined most our and a potential markets investments. our And have result, growth. the as we focus

closely than before. We with are working partners ever more

more and Our to technical and scale efficiently advisory value deliver our to customers. higher service us partners enable

to tightly to we building of application We APIs ERPs manual It areas of ensure This process. applications. stickiness our with enterprise customers' integrated and core one record our and forward. and customers' and connectors of are data essential that enable connectivity our and other aggressively systems. replace our moving our connectors footprint entire is the in throughout systems other our remain transparency more and investment reporting key of are will ecosystems These and bring and customers larger accuracy amounts increases transfer improve third-party into Wdesk. data integrations integrations with APIs

same Paris, to in to continue footprint offices Europe, and range from the telecommunications, throughout and and that on provides month, way? our I vast including and wide and a spent with transactional How accurate of executives efficient for the problem. countries. these reporting faced aggressively I amounts met platform are us support from some industries, Wdesk stakeholders in including data to demand semiconductors, We the expanding I process Frankfurt many in is statutory by am banking, in and Wdesk. risk, in reports. an attract pleased time shipping, connected are only reporting final reporting data invest customers we and data Europe integrated report analysis cloud entire and and and last mining new of ERP regulators record pharmaceuticals. trusted they, others, like better of systems the their And global to to which position from with

continue to driving me it more As in Miller, reporting world. our that, visit customers and and I transparency am data with will Wdesk I throughout be the Stuart CFO. prospects, to over With that turn confident financial a even force let trusted

I'll guidance XXXX. we'll then questions. you, then, and with your for first quarter Thank call results, start Marty. our And second quarter full with I'll our open comment year and on the up

a guidance results before and As on always, about talk or basis. compensation stock-based non-GAAP I'll our

reconciliation our please to GAAP So and non-GAAP and refer of press a release results our guidance. for

in we comparison. decline in the QX points had some expected and the profit due to increased comparable so QX XXXX to on QX billings mainly XXXX. seasonally at QX posted improved posted to is licensing. pulled this operating using in the in for and to from to for We QX XXX XXXX time. Workiva. basis R&D an QX XXX XXXX first record sequentially leverage XXXX, XXXX first QX ASC relative related other is declined bookings better renewals some QX G&A quarter data. subscription weakest, expense from the margin operating we both lines. XX% XX% forward We strongest billings, So Also seasonally solution-based Operating quarters Billings QX

accelerating we in capitalize the on to operating with opportunities in next with few revenue hiring growth, priority. for to growth our plan number are accelerate margin, on attractive consistent While progress quarters remains Marty's one comments. pleased revenue We subscription our

quarters. over the We expect few expenses, a as operating to percentage revenue, of rise next

for gave investments, cash priority our we our our remains XXXX. flow in compared a last on the basis to Improvement guidance. remains from on in second to So XXXX improve XXXX loss time operating Even terms. OCF highest non-GAAP full we unchanged with in expect significantly operating financial guidance year stepped-up

for outperformed we guidance the quarter. So revenue our

support XXXX. reporting from million, $XX.X of from with out up XXXX. As increase by Marty accelerate mentioned, of Deepening the $XX.X an $XX generated revenue penetration our a XBRL of million first and Breaking XXXX. quarter QX of in revenue professional was XX.X% services subscription we same Professional in from QX helped in overcame revenue conversion XX.X% total existing customers Growth revenue increase nearly XXXX, QX both was the in million, Subscription growth and to revenue other in item. X% XXXX. revenue QX of in an add-on decrease from revenue quarter solution-based solutions line services. services from licensing

to We continue subscription from outpace basis. professional expect on revenue the and growth an rate support revenue services to growth annual from

of team a increase QX we QX Turning supplemental as in comparable our the customers finished existing QX increase to XXX on net XXXX XXXX. XX logos penetrating In logos. contracts quarter year, from QX and fewer with on new from X,XXX our a customers, net with larger focused added this accounts customers metrics. concentrating year, sales of We new than last and

that revenue quarterly ASC rates, retention monthly data. rates through with retention revenue. recall have now ASC reporting because XXXX, using our we XXX are please we QX Starting rates XXX we retention revenue using comparable XXXX, calculated Regarding revenue

new expect measurement this We reduce data. quarterly the to the of variability

strong. Our retention rates to continue be

XXX.X% first and subscription report March XXXX the unchanged year quarter XX.X% With the our a to support first and subscription retention revenue same our the quarter improved for retention support XXXX. to Our compared of for ago. rate rate period from XXX.X% of add-ons, XXXX, was revenue at

in at from $XXX,XXX over is first of contracts XXXX, subscription a larger XXX quarter with valued The up year. last progress number encouraging. the totaled contracts QX year Our of XX%

For customers results. XXXX of $XXX,XXX XXX quarter, value first plus, annual had XX% contract up we the in from QX

X.X% reduction percentage expense in QX XX.X% General QX administrative of of a loss Subscription due QX, talent profit to from in P&L. was to X down in services and expenses operating and $XX.X last of basis pricing. XXXX. to QX with compared $XX.X to million was this of services Gross of moving to Consolidated gross up $XX.X was XXX G&A from basis compared and revenue, compensation. year. the was for year latest in utilization $X.X last line in quarter margin, markets. the improvement QX, XX to as ago. to XX.X% last compensation, expense enhance profit and an revenue, gross $XXX,XXX year points a executive address in S&S equating Development higher marketing growth. new X.X%, QX profit. the a from in primarily million better up last year points Operating increased compared million was $X.X an compared last due was profit a XX.X% to totaled additional support QX, Now gross quarter or revenue, income XX.X% percentage QX million, of $X.X period Professional year XX.X% from Research basis as from improved margin quarter points on investments to bad $XX.X to $X.X Sales percentage a to XX.X% an margin million, rate due million gross QX of and expenses, to due the XXXX debt. points for expense, over revenue improvement and a first $X.X XXX and XXXX down equating same for percentage to R&D XXXX. points in QX million, million, QX quarter, million out gross same higher improved quarter down the Breaking XX to consulting expenses to year. gross

and statement net flow marketable XX, at $X.X QX, XXXX totaled sheet XX, from same $XXX.X million increase balance $XX.X In ago. million XXXX. cash a our compared to million $X.X provided at December of securities with activities cash with Turning provided million at in operating cash, quarter the equivalents year total cash cash an March the balance compared and XXXX,

we operating cash to expected positive we second guidance and range again $XX.X is expect Turning QX quarter XXXX. to in year million to for the revenue now million. the in And range the post million. be of operating expect $X.X total $X.X from to in million full Non-GAAP $XX.X XXXX, to of loss flow to

for XXXX, $XXX revenue million. For guidance total million full of year are a to $XXX raising to we range

to of of rate continue services. growth growth revenue the expect We the rate outpace subscription

from to in XX from guidance. our pursue non-GAAP to attractive is Investing expect operating our loss We growth talent range million necessary new million previous opportunities. $XX to unchanged

ready to please questions Operator, begin take session. your now. Q&A we're So the

[Operator Instructions] with Roderick Your Stifel. comes first question Tom from

open. is line Your

almost out back in I quarter. the the guess growth XX% is XX% jumped in the to the relative that you've here above the rate got subscription thing quarter So P&L

to of outperformance give you potential the So how we us ought lot as stay bookings P&L, XX%. the above for strength sense last to saw the some from to through we quarter a flowing about can that think just the

which serve, to How think through in bit sort of you later now we to for you're function in in digits? more is invest that would suggest sales aggressively presumably of year. on marketing sort and subscription that modeling relative like OpEx, prof going will quite low-single Sounds down trickle the a the about

don't outpace two you on out as other guidance we say know, services So break than growth we expect growth. our to the to revenue subscription streams

sequential keep we're making think the – area, in expecting making to to obviously and certainly you talent continue hope do additional the revenue to rate and in I that are growth up expecting we yeah referenced So see we're the it and are investments in subscription the is on our to aim in show good our growth we're revenue, investments, line XXXX. start to

customer the at XX%, then XXXK up pointed you it ACV XXXK we in ACV your up base looking here the efforts, that numbers can out back And to XX%. see and is

pricing. to some into base, ascribe success much curve can that. to are then, of back you other we solution-based of as Where the how customers sort newer pricing in push kind to tremendous customers what is with the of approach? So, solution-based that the you sort getting, of are the of to And that any, if guess migrate around you along question them from I that pushback

to it's Yes, solution-based than XXXK the still a our on very solution-based of but existing new a the graduated half And over of customers of revenue less you those were know so were some on customers logos, basis, but group those were licensing, ones there. that who sales so well. of certainly got who quite the of half new, going department, of add-on related bit those interestingly, are are clearly to we're graduated were less licensing, some than

Your next SunTrust. question with is from Eric Lemus

open. is line Your

I pricing to you pricing. that move quarter. solution-based that want those the expand measurable looking as anything Tom's customers on those as already? to last there question the as talk about on pricing far can in customers jump at in Nice to as uplift solution-based guys did just Is from far moving

much for easier value more It's So, their flexible it. easier and them and and very definitely an them own we’re makes and getting customers. from frankly administrative we've from to uplift, uplift an organizations giving strong their add reception for job administer good adoption for to It's seats had that throughout broaden them perspective.

differs commented we're to customer. specifically customer not have on I percentage that uplift it We receiving. from mean, a

And then more on the solution-based pricing.

that advantages because there you sales just guys sales give can of talked any cycles about the metric far of of simplifying sort even that have is as the the deal or process. One seen larger you initial shortened pricing? you’ve as guys that solution-based sizes Is

base, don't a Marty, solution-based so thing, important for we selling deal on the our again deal strategic where licensing. in sizes has have And some And it simplified new to seeing in a time definitely as uptick that and seen the in terms their is I process, size. of Yes, it's time thing increased most shortened, to alluded examples an customer pretty there It has has we sales are us Everyone's is, our very it just talk but cycle the new time It enterprises tell the exposure across so a and thing lot reflects we as creates then but I add comments. it’s early about lot more have this product sales opening interconnection users. is but data the lot. more talking lot there they a the definitely is we a of across terms of increase more an of yet. last said And making cycle there. for much because

a I very three to thing we view mentioned. contributing all things So, for those us, of as it strategic

is Rob question from Baird. Oliver with next Your

Your line open. is

It's Thanks on for Matt for Rob. the question. taking Lemenager

to on new sort opening that offices European single coming guys wondering any we one that's mandate, customers pending? there, that are new what had format electronic is XXXX with the kind starting or of of of ahead and over I European starting early So the seeing XBRL the there mandate just are see January you to two that mandate come just

customers larger are we Well definitely reputation. they pretty already I market top certainly to sort with at a they're across would the of our just problem. that how getting going because steady solve XBRL over about, We're that inquiries to and on say of half of basis starting there, talk look our

So stuff we the finance get partially certainly to in but screens offices is definitely only percolate. starting starting to reflection are that are Europe. the Certainly that, partially on those teams that a radar of see -- of reporting

it quick a how of much I ticked monthly those how and was that up sustainable before being how nicely to under on versus is up follow it quarter know, now forward? values, then due just the fluctuate going Is renewal guess that this would And XXX%. to that hard much XXX% or the – was but quarterly is

a to you do on basis actually bit over we did think calculation be was So be sure, volatile same will if the less XXX. a it for monthly comparable year to it last

going a while port So we on forward. to as basis quarterly reporting we're because committed calculation XXX

with question James. is Raymond next Your from Brian Peterson

open. Your is line

theme based of on increase This for you terms Could can about think using Sklar here hit after the any Brian. users, solutions in they're increased the about you is here. you products from how number usage I they of but over? pricing switch talk with Sticking enterprise Alex talk

for it's through Meaning the usage Well remember based or it's for we case. internal of only are it that if only use reporting use case. can licensing the SOX can finance terms SOX if that solution that for workspaces in use use performance it use bracketing you the for of you

more each and which users number know visibility broad an which in throughout course, of we've haven't is seen our get is accomplishing org seen there. of so sense the you sticky we go in we goals more makes within increase workspace that So it the definitely it

for exposure So from more seeing you know that solutions. we the inquiries point that getting we're as that within we're successful org as I of would exposure say see more view other been it's getting you definitely the just know, and more

seeing are the want. we we So effect

following Could growth added provide the initial logo. and new the customers year a versus prepared than And that what ACV on like were logos Stuart just faster with overall you up deal growing remarks your ago? color about looked on sizes over some then logo the the for maybe XXX,XXX your new

Yes.

historically new that you a We tell not in will there's steady deal very sizes. I but disclosed been have growth that nice

Some sort the north of of it's that new on to has - the the solution since but it's to offering XX% do of off the we're more with move in value based know, licensing, deal, up new logos. in you

large logos, quite cases And mix that can use the are other some be depend some can because of on new and that cases use of not. quarter-to-quarter

can vary why historically reasons the we specific a have number that is So that. of one disclosed around which quarter-to-quarter, not numbers

here predominately are sales focus the or last increase just to some maybe a Is ramp still this And well. on in one also one looking you European the as hiring. people U.S.

folks really what other stickiness, want with space is so the theme providing are our building other that we is We and definitely and connections in see of around builds see we really connectors. very their portion and people's places. and the system then good partnerships significant those we've of consultancy with expansions more. partnerships is firms. decided we've also that doubling even adding a with we primarily really so We're nurture us the larger on to decided initial more R&D accelerate and deal European the have also solution see started customers ecosystems our in to down those that the And results the to solution shown and our companies APIs to And good a Certainly around invest it to definitely the that three expansion, help record slightly also really solutions.

mentioned the these the out of primary more will America of investment. North salespeople that uses too. - add are first the some I But in things We in

with Securities. from Grondahl Northland is question Mike next Your

open. Your line is

kind Marty the and team pushing congrats accelerator. on of on

its or partner First sort to to is just, out wins of in question any look you if any new the channels out? at categories mentioned or call XQ, call

really point integrated other been say this it's would our would ahead At we been the it's I further on on partnerships the board. But much across across pretty think say it's risk board. pretty I consistent businesses. I are the the been were than

Yes, are we reporting, financial cases use pretty goods contributing Europe had capital had integrated good closed markets, risk, addition, some broad the of to SEC, specific based. was we

sales, some more the basically firepower then more where partners investment just people channel it little there is any details sort or dollars to going? the and a bit whatnot, are the in And attack of just

I Well, And of as some primarily meaning where activity, revenue in that. salespeople, delivery things people focus more folks. really of and going. a a making some fine and our Europe all of It's of territories where it's is the about investments. alluded the America, to, North That's in then in very significant part it is then investment some in like generation terms little more pre-sales tuning we're

question from Morgan last Stan with our the Zlotsky comes And Stanley.

Your line is open.

question. level to Frankfurt is as companies you up office headquarters? also significance a high expansion the big new of Paris specific and the opposed and into any some other number a being know The we've other lot seen of software other in of Europe. there Maybe that have Is a opened where hubs

were we since I So we're XXXX Amsterdam as you in even are London. I guess that mean late area. in XXXX. that or know in

been and with started there there started had countries a while. English we the speaking we and for So

And you And are GDP. and and Germany as we're the large is really size the know EU, as so after had itself as that France biggest of GDPs market. the U.S. in the the which following

are and you who to have those have culturally local as presence and sales it's there calling a So important have on local companies. people marking know

new be the of you on in customers, the can logos, the existing qualitatively should we of see and the it? retention don't pace should new job you great just as logo obviously, logos on then we are selling its net XX doing how revenue the new how rate the about we through And about we maybe move thinking realize of the year guide. additions think just But rest I

Yes.

at subscription XX%, new and and it forward. so customers helpful XX-XX little expect so this the existing So a historically customers balance has a that upsell don't to new of change logos point existing data been one tilted and forth. revenue XX% tilted that bit quarter might going about whole existing be lot its is toward between but In only customers,

of very be But we to so could had well based existing focused teams there capital solutions on we from and logos and on new pretty like private quarter its on to over We that don't team the And and SEC customers the licensing forth. XX-XX. solution well. whole - from groups customers. was QX This focusing that don't be was it different lot customer and the some to a converting case SOX the good of time, markets expect That in the companies. add call blend as in very different around a team

about just of count I was specifically the logos talking more revenue? pure about of mix rather than

the just on the Well I think better whole and you know, much providing we've we to sizes past in know really that are is a move it that our general with process a in very think brings discipline as that Stan, deal getting our this are focused just it think and I and around done value seeing Again onboarding consistent more number we'll - forward. bounces happy but making quite bit, you them. Marty. of to It substantial. see what deals we new sure so - on customers I

It the organization long we a be talks might in anticipate that little about watch than but similar that totally of And until I logos number that. the added. that see to more new actual lower Stuart’s you'll of logos. the adjusts ratio numbers gross So run

quarter. XX-XX about still I'm That's number You more each about. know the concerned a bookings. It's

customers? for you from new prior I'll, versus ACV to new comp since a way from existing slightly One do logos comes question. the new last just last your ask one different ACV last Within the upselling question. and to question maybe plan, me the differentiate And specifically but sales between

it's it's new or and logo sale. don't, an a ad incremental revenue function on whether we're from whether all it's indifferent a We from of

you the for disconnect. This concludes call. now today's And session Thank Q&A and joining. you may