Workiva (WK) 2 May 232023 Q1 Earnings call transcript

Good afternoon, ladies and gentlemen. My name is Mandeep and I will be your host operator on this call. [Operator Instructions] Please note that this call is being recorded on May 2, 2023 at 5:00 p.m. Eastern.

I would now like to turn the meeting over to your host for today's call, Mike Rost, Senior Vice President of Corporate Development and Investor Relations at Workiva. ahead. go Please

thank Quarter and joining for us Good Call. you First Conference Workiva's afternoon, for

During will quarter Jill Financial call, and Officer, our XXXX. today's Julie we call Klindt. will guidance and quarter Today's by our for discuss include results Iskow, comments the Chief been followed Officer, second has and from year review full pre-recorded our Executive first Chief our

for available a this will May live on session. which Investor We call the then to of be the is Relations under A is today's Information webcast XXXX. up will replay listed until open X, replay available the press website section. Q&A access our in release,

forward-looking begin, remind year future and like Workiva to events subject cautions that I for today's financial guarantees risks everyone performance, we statements and including call, not forward-looking uncertainties. second These would to fiscal regarding be of full statements known quarter performance. and unknown are guidance future during Before are making statements the XXXX. that we these will and

annual Please XX-K made cause to forward-looking forward-looking factors our that expectations undertake differ we from occur and to the update materially our this could to obligation reflect any and statements. to after subsequent call. All filings only, no any company's events Form current the statement today report that statements on reflect refer for actual results

non-GAAP financial press additional of the during Reconciliations information we today's included course will Also, measures. also release. in of certain today's to to and are GAAP refer non-GAAP measures certain call,

Iskow. turning the call With to that, CEO, over by we'll Julie our begin

look our revenue a resulting high our The QX Workiva subscription as my Workiva's drove of guidance. at growth results. joining subscription quarter growth of to team continued in XX%. We'll the our for opportunities level, CEO. forward our continued Jill QX above for high revenue and a growth solid execute call, and you end discuss Accelerating outlook Thank delivered QX. I strong and also earnings sharing to first our

million. beat high guidance our $X.X end results by also We the of for operating

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turn investments which to our R&D, strategy. continue our some of part highlight in I'll of important to now be an

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short-term targets. afternoon, To quarter. and comments this we summarize committed margin Workiva delivering our our improving our growth both on long-term my while leverage, operating operating subscription revenue another solid focused We're delivered to and remain on

a our offering, Integrated is and competition, with unified being underpins value recognized. known of Reporting multi-solution in Workiva. and differentiator from partners apart Our sets as that and going The expansion and key our account is us all strategy. are our platform platform the it unique Assured Businesses

positioned to of execution focused drive our platform, And strategic finally, have investments us in in in productivity greater and our through our initiatives. and solutions our well people performance

world-class the our and trust to opportunities to closing, in our continued award they In way each for, our customers time thank values I'd you, and our power their transparent yet we've on Best right thank reporting capitalize the too, of team for us dedicated to talented commitment celebrates like the have Workiva. right Fortune's fifth work a We at have communities XXX the and list created. spot to And world. partners our better on it's other the This again to support shareholders year. the employees, the team to Companies and consecutive our earned our we a technology our your of right global and customers, for culture believe increasing

I'll to you, that, with it turn Jill. over And

join It's earnings Thank to you first your you, on great as call Julie. CEO.

performance afternoon, I and for provide line This our review XXXX opening will Let's financial guidance the the first before year results. and QX quarter questions. our for turn full XXXX to

we mentioned, midpoint guidance on revenue. Julie $X.X somewhat QX beat which services was growth, by million. As due revenue We subscription at operating accelerating results guidance to the offset our a beat QX decline in revenue by

beat, along employee-related of drove with the remainder T&E Our and operating compensation, expenses revenue the beat. other lower

for through up generated some XXXX. go quarter. was in highlights XX% of We of let's and $XXX.X QX XXXX. QX XX% from revenue quarter total Now the the from million, delivering key first growth $XXX.X million, revenue results Subscription

the QX in increase $XX.X and XXXX, helped last both drive last same account revenue Professional QX logos in quarter million revenue new from revenue in came XX XX% added in the of in from year. While strong down XXXX, customers new QX subscription services the expansions months. growth X% was

I the revenue call discussed We services of forecast, services a for showing our flat expand in However, in services. a on by our want came expect We primarily driven numbers the decline bit QX QX. year-over-year we be to below to revenue timing XBRL more. QX that professional

As year XXXX we've be discussed, professional will in for pivot services. a us

partners. our services Our setup to strategy lower this year to is margin and transition consulting

year-over-year decline the services for Given and year expect this, revenue we consulting setup to full XXXX.

improved revenue year. Alternatively, the that of QX we balance for for services and believe performance will the we show XBRL in

Our strategy that services services and our revenue to through total year, XXXX. higher-margin team. we XBRL the remain to dedicated services deliver these our compared continue flat full is believe talented for to Overall, will

to We customers X,XXX, of from in customer metrics. on Now a customers for net added performance new count of our XX total XXXX. X,XXX QX a QX growth

count total ParesePort Our customer customers. XXX includes

for best-in-class XXX% remaining quarter ahead year. Our internal the for XX% subscription and compared remained rate XXXX, XXXX rate comfortably retention remained revenue the of and support of XX% of quarter first quarter of our subscription add-ons, the support at flat at same With revenue last objective above. or the first our retention to

calculation our have of full This XXXX. that basis fourth rate ParsePort next to Please quarter the when we comparable retention improved in customers note XX year points not of a quarter data. will included until be compared

our The increase in of XX% contracts had quarter to of in first over the expansions QX quarter, valued number the up over larger And valued X,XXX on XXXX. the $XXX,XXX Julie contracts up at up prior number number contracts. from noted, and contracts QX over from valued deals XXX of the of per In XXXX. totaled As led totaled year, XX% XXXX, the $XXX,XXX multi-solution customers XX% XXX, at the subscription from QX focus account first we year. $XXX,XXX

in QX was $XXX.X posted expenses QX to profit loss to operating million XXXX. of Gross $X.X quarter on Gross the The latest XXXX, by our operating return driven XX% versus an higher compensation, XXXX. XXXX $X.X an in Operating from QX metrics. expenses increased due XX.X% same Moving to We loss headcount T&E a versus decrease in to of in XX% QX XX% up in QX is year QX, ago. and server new the operating margin and in from and million quarter investment events. travel totaled XXXX. million compared

we expect improvement in in operating discussed our we call, XXXX. leverage our QX As QX through QX sequential quarterly of

of the profitability are focused XXXX and second full non-GAAP delivering on half We for the year XXXX. for

XXXX, ago. in cash the compared At of Cash equivalents at in December XXXX. totaled XXXX of cash, quarter provided $XXX,XXX from and the $X.X of increase with resulted a an $XXX decrease March balance million to activities marketable cash XX, $X million, same cash XX, QX securities million in in compared flows a operating year

did QX bookings this drivers XXXX healthy had we Although we decrease. XXXX. There decrease QX a in growth were from deferred in couple revenue to QX, see a of to that led

We contracts in And to to historically, the our weighted contract QX revenue deferred XXXX, timing the there the revenue. that heavily is of QX are the largely that QX. revenue annual First, QX. is term in renewals is and QX. several and This led change driven of renewals deferred specifically a second, large seasonal deferred to of by prepayments seasonality invoicing shift with into usually timing see slowest in

have in did believe demand of We in decrease don't of market bookings weakness deferred this a quarters. that between rather revenue we reiterate renewals growth result to is timing the that want indicates healthy contract QX. but I in

revenue For historical for are the remainder we line modeling with to track run rate. our of XXXX, in deferred

Turning now guidance. our to

continue to macro assumptions guidance our the prudent We believe are current for environment.

million For we XXXX, revenue quarter second to expect range $XXX of million. $XXX from to the total

per million, $X basis. $X of operating range to share non-GAAP to expect a loss from We on million $X.XX to loss $X.XX net a

XX.X Our shares. share average count million will be approximately weighted

We a services single-digit revenue growth expect QX be low to percent.

expect which $XXX year million. from revenue full to are million guidance, our raising range we XXXX, full we now the to For year $XXX

$X.XX $X from to our per $X to a non-GAAP basis. to or on loss raising $X.XX share million are a net range guidance million loss for operating of We

shares. million count be approximately average share will Our XX weighted

As revenue and I we year a is revenue. grow by expect highlighted earlier, services decline offset services XBRL consulting to expected setup in revenue full to growth and be to flat. services be continue

for positive cash free For XXXX, we will the post year year. the consecutive to expect seventh flow we full continue

While improved a remainder for are in of projecting we year. we operating are the margins QX, to guiding the loss

be that, remain non-GAAP are we our the QX. second margins for profitable non-GAAP be full XXXX improved breakeven and half of at in in committed XXXX. profitable model outlined operating committed the to will be to expect With XXXX in to We non-GAAP long-term We September and Investor QX in year the Day.

to want employees start all hard I for first and delivering our XXXX. quarter summary, thank continued partners In and and support in for the strong to their work a

strong growth for like would two, one, we growth benefit QX, Before to key XX% points: to highlight in revenue year we subscription we demand to revenue solution portfolio. Q&A, our and XXXX; continue can the from believe delivered turn broad-based we I we full subscription across deliver X

As our continued platform, ESG the momentum and new improved second logo highlighted, to in model. long-term financial account in solid and And XXXX. expansions wins reporting, are delivering performance contributed to three, on of the Julie growth. We in subscription we leverage GRC remain committed half operating profitability all non-GAAP our embrace to and focused in operating

closing, would we placement and the about healthy Work on achievement the in involved: echo Best for reflects row. every nurturing partners, customers, benefits to commitment Fortune's vibrant year you For Julie's I to impact fifth like a To continue all bring to company, In Workivians, and to our excitement By employees. Companies XXX a passion shareholders deliver such everyone work a positive that day. and this

questions. We we the will now Operator, begin session. Q&A are ready take to your

first from William [Operator Matt from Instructions] the Stotler question Our comes Blair. line of

focus the international seeing years. in several growth on to for the for demand here. of of progress international just opportunity in would I you're the love a America. to terms and outside markets Maybe one Obviously update off, what start last on an been North company get

get and days. are out rolling early of approach last bit of there that's update there, little how go-to-market couple of We'd love out they're different then in the rest quarters. a ESET, playing even opportunities to though got the the how ESG and an You geography-specific a

start that one. Sure. will with I

our to improvement workover our buying in QX. QX, had over monitoring Europe. We're, changes QX, approach behavior. at any our Looking there. closely taken course, of I say will some But partner-first both there, we've in we've a pipeline,

We we're teams Assured got again, win, resonating. ground, we customers, on around is messaging And in we've the which can relationships. areas our sales certainly, Reporting, are the strong where leading Integrated with partner referenceable focusing

we and made do? to very we leadership, centralized So our to Have we're know. forth, but so is there teams optimistic around Yes, about work to some changes? as have And there. Yes. execute continue you ability

That's helpful. it. Got And maybe Jill. then for

on billings dynamic. Just following up the

Just of wondering kind to of if you point, double-click kind could there? like, the what's your on It renewal timing. happening more it's sounds

And expect anything as -- in get large what incrementally a Any then the should implication maybe in And cycles well. color for the that? from out anything like that's to if or so the be case, QX? we you're maybe stressed is there if terms macro would there seeing of perspective continuing deal progress helpful

Sure.

deferred X-year So then to, we've and renewals. that, that is little movement we've movement timing away with variability comments might the in some we lumpiness in had quarter, you see pay more given in recall past another and of always on have X-year, of bit And related deferred. does X-year, bit, past, we of a over lumpiness our those the lengths I this with do QX contracts just And the little example that also its payments, with just of the it had prepared upfront, contract in some amount to has have from -- cause some when coming of -- annual that a X-year in that as goes some we some guess, the that revenue in expand time.

back year, is in our do further that that of the billings return as think of a it to better our We question norms it would business. lumpiness. historical more metric always the to your expect RPOs. point for push has far also I and RPO less and you number deferred as To we It goes. back towards

smooth and there out the Although payment result of thing. course, for was us. when -- lumpiness impact, terms you and of like good around feel issue, sort that some of it of amount for we're contract the QX that And length does a is we timing some really have

the Our from next question from Citibank. Steve line comes of Enders

one, on how shifted Great. the and billings there guess, to I if maybe just dynamic, timing XQ the there? much of Okay. way billings that is quantify guess, Or bit RPO a as on there up is last guess, was I dynamics. a I Maybe more well? have side? that comment number from the hit could XQ follow a on little to on I And I timing a then, secondarily, muted it RPO the would on impact, bit that for guess,

to to always delays we and historical think have look QX that at some would going QX amount quarters Steve, been some saw good look contracts larger be to those on we have with of in QX, getting just a way I would there. normalized see of it, closed our at be transitions more renewals QX. what between some to There's add into movement in and particular,

-- so help you. number that for expected the historical same we from at a there have The if direct for I to exact see we those I what have just aside look would would think normalize But hopefully, QX true of QX RPL. hold and what will impacts. some to transitions, larger you And back don't

quite Okay. the you. that much bit ESG look we driving how opportunities in you? partner terms of as front helpful some That's kind partners is in been making of there. are here, And guess just And if a the you've we initiatives investing that on well? those at where impact I an Got of of and the towards at investments

is solution and it and when look ESG, quite that combination work the co-selling, terms at with the delivery. with significant look those you deals, terms partners, influence of of at in so the of comes highest work sourced in our we When plus Sure. comes

ESG. in So we particularly have

next Adam from the comes Hotchkiss question Sachs. from Goldman of Our line

Great.

around your ESG fourth your on follow-up a momentum. comments quarter from the Just

where of in of quarter, were little that the ESG bit around quite I last expectations a think Could more us business. of ahead ahead that on color side to quarter? you relative bookings on out quarter and drove and broadly results mentioned shook this momentum the more that a give XX% bit expected momentum the sort just had ESG your in you trends of the

Sure.

good QX. see the see ESG, the still did to we momentum year, in really about that. in we as talked And to right for ESG solutions. mix last So top in continues all we're excited be bookings

in Yes, top for top the quarter bookings it solutions, for third X again, remains in growth a also row, plus well. as solution

are of as That's that then of How you this ago just activity, were like the things helpful. versus lot began And versus of capital mentioned could you cohort we today think that is we for I the looks are Great. is markets the where you're today talk for private motion tied year a year you we with where and a but outbound? to could bit recognize go-to-market ago traction a companies? what -- you versus about super little much to where seeing that would soften review a just inbound us companies?

especially to say start deals to we that try public as on So would through and price ones are companies, move a we focus to really more moving to to feature looking the close to that an off, and just be -- to so for get are through trying put them to movement, trying think bulk of can come that they we with great on focus public likely I that private continue or continuing moving We be financing. IPO other that really ready. and types to

the a you've there's to anything that. QX. a capital in operators. of was start markets secondary As related for most an seen, process We in help not part, did companies all uptick really But couple

through that you really that about they're know in well. we're that it's business market we is readiness but to they whole all something likely this the preparation as back try with and us So quite we that that just thinking does work just then about And play will go becoming private to is and in companies saw. up, it pick if continue that public.

Absolutely. are and And a financial preparing that. for A companies good focus years has for offering for been private a compelling offering. out you us and with public reporting market a see market as

Raymond next line Sklar question of from the Our James. from Alex comes

Great. of some ESG invested of help Julie, context date? ESG that what published of your a Can percent installed few you company you've reporting of on the had sort frame reporting, weeks technology. XX% that your survey ESG you referenced to to cross-sold you base? color any survey in the own ago, on in And base

for in in momentum they regulation. And certainly There ESG and will base. be I that we're interest I ESG in borne I is offering. what that that mean investing the see of companies demand survey, XX% is seeing our our our regardless installed reported base the Sure. we said by survey. of is for mentioned, out -- in believe momentum as have the that

we're So absolutely survey seeing what the out.

historical Jill, back the you guess, what track deferred revenue will all just with I clarify in mean you then on deferred additional by run rate? And appreciate Can commentary Okay. I revenue. line

trends. we we've of years just to more get the some more you quarter-over-quarter, So to look that, what those normal transition. did expect few quarter-over-quarter historical we of towards expect towards get back back the renewals resolved in We we to more see QX. will would back past if seen But and -- past

it I'm right, will of year? be to interpreting a versus the So the kind normal make just QX rest this what sure QX increases to of additive sequential

Correct. Yes.

-- the So yes. sequential

the from Truist comes Securities. Meares Joe line from of question next Our

Joe. on Passarella Connor is This for

of the on cross-selling side, then the around Workiva to to start maybe products well. other what an the to new update their as with wanted are growth and customers as ParsePort with and it acquisition Just pertains legacy the products dynamics legacy customers upselling to

Sure.

we for a who those aware, providing a XPERL than that's more provider a for decade financial acquired Just is been them And fully ago. ESET software conversion Europe now. leading in reporting year aren't ParsePort

fact, exactly a it was had last week In year -- that were acquired ago we we or them. so

well their program, about happy last actually cross-sell pleased the with and site, over disclosures the celebrated the executing year, we're execution and the anniversary. Was we're integrating very we're momentum XXX just their seeing on X over and a with of your it last we on question, around the completed But with X-year So company. months to there.

Our the of from next of question Montreal. comes from Bank the Jester Daniel line

Kyle Daniel This on for is Jester.

been company time. X seen you've short years, you've the Julie, a and So relatively than lot for that more during with

out as are strategic how like you plan success? point what you're company focused the to really forward, drive some to on drive goals going So on as that you key you're

Sure.

here we've execute strategy been a for I've on. intact. And developed right. that You're It's transition. we years, X.X of the continue the day to

have our and both We on operating of TAM. remains a And large course, focus, leverage. growth

operating execution, and strategy really Assured margin the So and comments opportunity going around I Reporting. after Integrated that described that in earlier growth, improvement

question line from of the DeGasperi Our next Markets. Capital Andrew from Berenberg comes

on there is far differ would quarter have Andrew. demand Stephanie from noticeable any any first been even so QX? the the changes that were trends Wondering if the in demand there This for in of end if in quarter? Or second towards changes

is going macro. pleased our bookings, in as saw, the really QX, a and QX, close were on we do we think we keeping into everybody with of So we said that eye

factors. at more uncertainty. and with we’ll from looking tomorrow, have – how sometimes There factors impact is they Ukraine have a of – of course, in Of a Especially seeing rate they see increase we’re EMEA, a ore that those some significant there’s some been got we’ve out. lot trends more potential the the other if

watching We it very closely. are

– deals, been move still of progress. we it’s a that We’re feel But pressure, to been that sometimes you we’ve able we like do make with feel execute we’ve forward. bit to in something certain you – and maybe but pleased way the little able

we’re just can that along It’s I something the negative seeing we’re it just market. watching with our all But impact and an just from not So vary. macro overall environment. the think of whole customers

next Our question the from comes from Mike of Grondahl line Northland.

there? Mike like for kind Grondahl. that solutions talk It's just Can or different the looks on cross-sell outside what Pochucha ESG you of of CDP, Mike Maybe integration. about

clearly I So few with only certainly, CDP, the mean, is us that old. a quarters is for early. regulation

about that course. for the a a of Assured And it's are sales progress. around still a details of conversation, it's mentioned, it, Although for passed, that us I to is really Integrated of it event as -- resonating, cohort that And -- and use of conversations have the enables message, Reporting. us, law clients more clients great the But it's trigger regulation in all

line next comes question the of Reback Stifel. from from Brad Our

great. That's

into with a now you NRR Carport the to of getting into that Looking sense trend? can calculation, XQ how we give expect should us

that to churn to so They if a customer there going any it's and impact company client small, the do think really retention smaller going see really trend. The individual are impact be at there. sizes don't our you have good overall pretty is base. deal lot I

to you very expect a that overall trends see from wouldn't I So historical large impact we've seen. the just

following up. closed slipped them of is expectation have deals helpful. close then, coming that Perfect. the The or already Jill, That's they will out just And the weeks. of most XQ, in

either maybe Expect them close we here that closed out quickly. very the or would expectation is

final Our question from Schulz Baird. the from comes Patrick of line

It's Can solutions. customers average Or going ESG. in breaking up all strength you over on touch the time? Are provided appreciate ESG just on seeing with color the seeing you're to of that. you're initial I their these the hear in in prices investment? spend they for selling good terms the are what pretty you

ESG and account breakdown versus your the should thinking how mix for And customer of expansion? be about sales the between we growth new pipeline, existing

on touch So both those. I'll

just logos, happening existing average that that seeing within that We still such -- deal for customers, North in new talked business. as strong would last a size, So especially a just strong really deal I lot size But our of trending all aren't have we solutions. our been certainly expansion of getting of about as average we in lot customer say opposed some We of was that general logos it base are within base higher than there's call, that deal the across expansion with account America, it's seeing sizes. have ESG. to there we're not new -- a our

they're customers mature journey. their who strategy in ESG those have that size their are and market. have are doing beginning idea segments emerging also solidified what much and different deal program there place would going, I the very better some in of different have where is and they're a than and There

the moving part some large see lower we're very market also can sizes, we as deal well. the while of So in

conclude your This today's for gentlemen. does ladies call. you, you Thank and Thank participation.

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