Q3 2021 Workiva Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to work do you have a Q3 2021 conference call. At this time all participants are in a listen only mode.
These forward looking statements are subject to known and unknown risks and uncertainties.
We're kiva cautions that these statements are not guarantees of future performance.
All forward looking statements made today reflect our current expectations only and we undertake no obligation to update any statement to reflect the events that occur after this call.
Please refer to the company's annual report on Form 10-K, and subsequent filings for factors that could cause our actual results to differ materially from any forward looking statements.
Also during the course of today's call, we will refer to certain non-GAAP financial measures Rec.
Reconciliations of non-GAAP to GAAP measures and certain additional information are also included in today's press release.
With that.
We will begin by turning the call over to our CEO Marty Vanderploeg.
Hello, and thank you for joining today's call. There were kiva team delivered another strong quarter, beating third quarter guidance for revenue and operating results, we achieved 30% organic growth in subscription and support revenue and approximately 28% and total revenue.
As a result, we are raising our full year guidance, Joe will provide further details about our financial results and future outlook.
We continue to build on our market leadership and the increased demand for transparent reporting, including financial and ESG reporting solutions that drive digital transformations.
We target being a low to mid 20% growth company.
In Q3 as in the past several quarters, we have benefited from the strong IPO market. The increase in the number of new public companies and enhanced compliance and reporting requirements.
During the quarter, we saw strong bookings in capital markets, FCC, ESG and ESF cat.
Cap markets, ESG and ESF, our three markets, which we believe have high growth potential.
We'll talk more about these fit for purpose solutions are expanding Tam and our outlook for growth during our virtual Investor day on November 18th.
Our differentiated technology and extra ordinary talent are clearly, making an impact on our customers'.
During the quarter, we grew our global customer base to 4146, adding 197 net new customers.
We retained our existing customers, increasing our SNS revenue retention rate to 96, 5%.
And our enhanced ability to cross sell multiple solutions helped increase the number of customers with ACB over 100001 hundred $50000.
We are pleased with the investment that our partners continue to make in growing their where kiva practices. During the quarter. We had a number of large partner related wins. Some examples include.
A big four advisory firm expanded a major health care companies use of our platform to include our ESG solution.
The advisory firm had previously implemented insurance statutory reporting for this company.
Okay.
Our APAC team in partnership with a big four advisory firm signed its largest single opportunity with a global financial services group.
The customer purchased our connected annual and interim financial reporting and tax reporting solutions.
Another key partner related win was with a large building society in Europe, the customer invested in the where kiva platform purchasing our ESF financial reporting and banking solutions.
Our partners also played an important role at our 2021 where kiva amplify conference where they collectively host of 33 of the 70 sessions.
This year's virtual conference held in September was our largest yet we welcomed 10000 attendees from 3700 companies across a 108 countries neck.
Next year's conference, we'll be both virtual and in person. Please.
Please mark your calendars to join US September 12 through 15th 2022 in Las Vegas.
We're chemo was recently named a leader among governance risk and compliance platforms by Forrester research.
Our platform received the highest scores in 12 criteria, including audit management data integration vision and planned enhancements.
We believe this placement validates our position as the global leader in the market to simplify <unk>, most significant challenges and deliver a greater return on investment for our customers.
Looking ahead, the 2022.
We believe now is the right time to strategically invest in our business in order to deliver consistent 20 plus percent growth.
Outside of SCC, we believe penetration of our Tam is still early in all solution areas.
Therefore, we intend to invest to accelerate global growth advance our product roadmap and increased demand generation.
Joe will further discuss the details of our 2022 preliminary guidance.
In closing, we delivered a strong third quarter driven by the focused execution of our strategy. We continue to grow the business by attracting and retaining top talent investing in the innovation of our platform and solutions and consistently delivering an outstanding customer experience.
It continues to be an exciting time for where kiva. We believe we are well positioned and have the right strategy in place to capitalize on the increasing opportunities to power transparent reporting for a better world.
With that I will now turn the call over to Jill.
Thank you Marty and good afternoon, everyone.
We continued to see broad based demand trash deletions in Q3 with strong revenue performance across our solution portfolio.
As Maggie mentioned.
We are raising guidance for full year, 2021 revenue and operating results, which I will discuss later.
I will talk about our results and guidance on a non-GAAP basis.
Our press release for a reconciliation of our non-GAAP and GAAP results and guidance.
We beat Q3, 2021 revenue guidance at the midpoint by $4.2 million.
Higher subscription revenue accounted for the majority of the beat.
We beat guidance on Q3 operating results at the midpoint by $10 million.
The revenue beat mentioned above coupled with lower <unk> expense makes up the majority of the beat on operating income.
Turning to Q3 2021 results versus Q3 the year before.
We generated total revenue in the third quarter at $112.7 million showing growth of 27, 9% from Q3 2020.
Breaking out revenue by reporting line item.
Subscription and support revenue was $98 $9 million up 34% from Q3 2020.
Neither goes in new solutions helped to drive strong revenue growth in Q3 2021.
69% of the increase in SaaS revenue in Q3.
Came from new customers added in the last 12 months.
Higher capital markets revenue was also a factor.
Professional services revenue was $13 $8 million in Q3 2021.
At 12, 5% from the same quarter last year.
This was largely due to higher <unk> services revenue.
Turning to our supplemental metrics.
We finished Q3 with 4146 customers.
Our net growth of 563 customers from Q3, 2020, and a net growth of 197 customers from Q2 2021.
Our revenue retention rates improved.
Subscription and support revenue retention rate was 96, 5% for the third quarter of 2021, an increase compared to 94, 9% for the same period last year.
With add ons, our subscription and support revenue retention rate improved to 111, 1% for the third quarter of 2021.
Page, 110% in Q3 2020.
The strength of this metric is having a positive impact on our revenue.
The number of larger subscription contracts continues to show impressive growth.
In the third quarter of 2021, we had 1043 contracts valued at over $100000 per year.
33% from Q3 of the prior year.
The number of contracts valued at over $150000 per year totaled 541 customers in the third quarter up 41% from Q3 2020.
Moving down the P&L.
Gross profit totaled $87 $4 million in Q3 up 37% from the same quarter a year ago.
Consolidated gross margin was 77, 6% in the latest quarter versus 75, 9% in Q3 2020.
And net expansion of 170 basis points.
Breaking out gross profit.
Subscription and support gross profit totaled $84 million equating to a gross margin of 85% or an SMS revenue and expansion of 30 basis points compared to Q3, 2020, primarily driven by higher net revenue.
Professional services gross profit in the third quarter was $3 4 million up 28% versus Q3 2020.
Gross margin was 24, 6% and net expansion of 300 basis points.
Research and development expense in Q3 totaled $27 2 million.
24, 9% from Q3 2020 due to head count investments.
R&D expense as a percentage of revenue improved to 24, 2% in Q3 2021 from 24, 7% in Q3 2020.
Sales and marketing expense for the quarter increased 27, 8% from Q3 2020 to $41 $9 million as we make investments in support of our go to market strategy.
General and administrative expenses totaled $13 $3 million in Q3 up $4 $7 million compared to Q3 2020.
G&A expenses as a percentage of revenue increased to 11, 8% from nine 8% in Q3 2020.
We posted an operating profit of $5 million in Q3, 2021 compared to an operating profit of $3 $7 million in Q3 2020.
Turning to our balance sheet and cash flow statements.
At September 32021, cash cash equivalence and marketable securities totaled $522 million.
Greece of $29 $3 million compared to the balance at June 32021.
This decrease was driven by the acquisition of one cloud.
Net cash provided from operating activities in Q3, 2021 totaled $16 $3 million compared with cash provided of $79 million in same quarter a year ago.
I will now go over the impact from our one cloud acquisition.
Our reported results contain the full absorption of our one cloud transaction, which was closed on July 32021.
As highlighted on our Q2 earnings call. This strategic acquisition added to our platform the capability to connect harmonize and control data across multiple disparate source systems.
We believe this is a long term competitive differentiator for us.
Please review our financial statements and related footnotes contained in the Q3 2021 10-Q for additional information related to the acquisition.
Turning to our guidance.
We are factoring in the expected impact of the COVID-19 pandemic on our business and results of operations based on information available to us today.
For the fourth quarter of 2021.
We expect total revenue to range from $116 5 million to $117 $5 million.
We expect subscription revenue will continue to grow at a faster rate than services revenue in Q4.
We expect non-GAAP operating loss to range from $2 8 million to $1 $8 million.
We are modeling higher travel costs and investments in growth opportunities and hiring through the remainder of 2021.
For the full year 2021.
We are raising guidance for revenue.
We now expect total revenue to range from $439 million to $440 million.
We expect non-GAAP operating income to range from 15 million to $16 million.
And in 2021, we expect to post positive free cash flow for the fifth consecutive year.
Turning to 2022.
Our current 2022 assumptions are dependent on a variety of factors that are subject to change.
And that we believe are appropriately conservative for the current environment.
We expect to provide formal 2022 guidance on our Q4 2021 call next year.
On a preliminary basis, we expect total revenue to exceed $528 million in 2022.
We expect the growth rate of subscription and support revenue will continue to outpace the growth rate of professional services revenue.
We expect non-GAAP operating loss as a percentage of revenue to be in the low single digits for 2022.
This conservative guidance for operating margin includes new investments in sales and marketing geographic expansion and research and development as we intend to take advantage of growth in new markets and an expanding Tam.
This guidance takes into account the return of expenses that were reduced by Covid, primarily travel costs.
I am very proud of our team's continued performance and we'd like to thank all our employees for their hard work and incredible dedication.
We will now take your questions.
Operator, we are ready to begin the Q&A session.
Thank you, ladies and gentlemen, if I have a question at this time. Please press Star then the number one key on your budget on telephone. If a question has been answered or you wish to remove yourself from the queue. Please press the pound key.
Your first question comes from the line of Matt Stotler from William Blair. Your line is open.
Hey, guys. Thanks for taking the questions.
Great great to see the positive results here in the initial guidance for 2022 as well as the Super helpful, But maybe just starting with that.
Now, we'd like to kind of dive through obviously.
Great business model has a lot of positive things going on in terms of demand drivers, but any kind of key factors that you're.
Im looking at when you think about the confidence and visibility into that 528 plus million for next year.
Hi, Matt question.
Marty go ahead.
Go ahead, Joe go ahead Joe.
Alright, so we.
We are really positive and in thinking about how we want to grow going into next year.
Yeah.
We know that we're going to need investment in order to get there, but and we're really.
Looking forward to growth within across our solution portfolio. So thinking about all the ones that Marty had talked about earlier in this call.
And.
And where we think that those lead us to.
That $528 million in revenue.
What we're willing to put up at that low end of revenue growth.
And we will continue to invest as we talked about towards that growth across the board and across our solution areas and across all of our growth drivers.
Marty.
Well I would just add that.
We're seeing good growth on all our solutions.
Like I always say the portfolio approach gives us a lot of stability and.
And we have pretty good visibility at those at that.
The number that you mentioned the $5 28, obviously, our goal is always to do better.
Our history and track record and we're always going to try to push the envelope and do everything we can but.
We like to put numbers out there that work, but we're very confident in and Oh that's the.
That's the true Mark of a management team you know Noah do what you say and say what you do so that's really what's reflected there.
Got it that's very helpful.
And then maybe just one.
One follow up here on the international expansion, obviously it seems like things are you mentioned continued not only forward investment in growth there, but solid performance currently I mean anything you can speak to in terms of.
Kind of I guess the ESF.
What kind of opportunity or the progress you're seeing there.
You talked about that being maybe a little more kind.
Kind of back end loaded in terms of linearity for this year. So are you continuing to see that play out and then.
In international markets outside of ESF any demand pool for additional solutions at this point.
Well you know.
As said this that the enterprise software business is.
You don't see.
Hockey sticks.
We rarely do you see hockey sticks and so.
ESF as project is going just as we expected we've always talked about how that the bulk of the ESF solution providers at day, one is going to be bolt on solutions that are very inexpensive and just go on the very end of the process.
And then as time goes on our platform Windows, that's what happened in the states. So ESF as a really good market for us it's not overrepresented now and it's just one of all our portfolio, but it hasnt really long tail in terms of growth. So that business will grow for years now just like our FCC business, our FCC business is still growing so.
It's just one of many things that give.
Give us the platform for our growth.
And in terms of other things that we're starting to see some obviously some ESG movement in Europe and.
And we're optimistic about all of our solutions in both.
EMEA and APAC.
Got it got it thanks again.
Thank you.
Thank you next up we have Terry Tillman from <unk>. Your line is open.
Hey, Marty John Mike Congrats from me as well.
Had a couple of questions the first might be a little bit of a multi parter. So bear with me on the capital market side, you did call that out any more kind of quantification you can provide in terms of.
Its contribution to new bookings or billings and then on those transactions is that recurring or is that more of a kind of a onetime thing and then you hope to get them for SEC reporting and other things thereafter, and then I had a follow up.
Yes.
I would say that cap markets was one of our better solutions, but not.
Not something that just over shine to everything else.
You know that there really is a fairly balanced.
Revenue bookings I'm, sorry bookings each quarter.
And they're all the same order of magnitude, they're not wildly different so.
We did see it tick up we.
We still have less than 10% of the market which is.
Which is it gives us a growth window there for that now in terms of the recurring nature of it.
It isn't it's a more complex thing than even that.
A lot of times, we have gotten into the company when it's private.
And so we're already seeing some revenue stream many times.
And that's how it how we get the business other times were not they just call us up for the cap markets in either event.
When you say hope, we almost always get them for SEC reporting.
Very high percentage on Sox. After we do the cap markets work oftentimes they sign up for management reporting and if there are financial services company will sign up for other things too so.
The cap markets does create a bump of sorts, but shortly thereafter, all those other solutions shored up and usually in many instances, we don't even see a drop off just based on how many we sell but so it's complex. It's a it's a really good thing for driving all of our solutions and so for that reason, we're going to continue.
To grow that market share, we're starting to see for the first time.
A real.
A real tipping point, where attorneys realize that we're in the game and we're a very reliable and steady organization to do this and when we have a law firm uses a couple of times. They tend to just keep coming back. So we're very optimistic about it.
That's great. Thank you both your questions Terry there.
You did you did you did a nice job on that and that was great. It sounds like yes.
Quite often you can at least be made whole if not potentially expand with these other built for purpose solutions. So that's great Party.
Follow up question for whoever wants to take it as just on the ESG side.
I'm curious in terms of is it still a lot of kicking the tires or are you now seeing kind of a broad based conversion now to beyond kicking tires, and they're ready to buy a solution and then kind of related to that is is there any parallel with the ease of market, where maybe there's a stop gap or something or just throwing people at the.
The the reporting area or is there any parallels with that thank you.
Oh, what Julie take that she is really deep with all of the solutions. So.
Okay.
We've been out with for about a quarter or so now with our ESG solution and we are absolutely seeing strong momentum and yes.
Thank you probably were in the 2023 filing year there is a.
A regulatory requirement to have ESG and <unk> in the same annual report so that lends to to the to some of the momentum as well. So we aren't we are out in the market with a product we are moving strongly in an absolutely seeing trends and momentum.
Thanks Julie.
Okay.
Thank you next up we have Rob Oliver from Baird. Your line is open Sir.
Great. Thanks, Good evening, Thanks for taking my question.
Question for you guys is on the partner.
Right.
Some really nice deal momentum Marty that you alluded to.
That we're partner driven it sounds like those initiatives are.
Taking hold and you guys spent some time I know profiling that at amplify as well just curious what youre seeing in those partner deals any patterns that might be evolving or are they do they tend to be larger or do they tend to be more multi product on the land are they part of larger digital transformation.
Initiatives, just any color you could provide there would be great and then I just had a quick follow up as well. Thanks.
Julie.
Okay, all right I will take that one certainly part of our strategy is to expand this SAP.
Partner ecosystem and the goal of course is to sell higher some broader sell more.
We want to be everywhere those.
<unk> Advisory partners. Our alliances are they are in financial and digital transformation and certainly our platform is absolutely fit for purpose for those for those financial and digital transformation. So yes to everything you said that is absolutely part of the strategy that we have and we are seeing trends in that.
Action.
Right. Thanks, Julian My follow up was going to be for you. So I appreciate that.
On the ESG side, a follow up to Terry's question up.
Obviously, we've got the mandate in Europe, but it does.
Strike me that we are beginning to see some some thought leaders in the U S.
To pursue with ESG strategies outside of a mandate and just was curious given how strong you guys are in North America kind of just what youre seeing in terms of color on I know, we don't expect that market to kind of inflect away Europe will being mandate driven but just curious if youre seeing any activity levels, there or ESG.
Attach and U S on top of.
The core <unk> platform. Thank you sure and the regulatory is still a ways away and we are just getting started here with ESG.
Are out in the market, but we're working with partners, who are working with customers to them.
Refine our solution, we are adding some development capabilities on it.
And making sure the <unk>.
Solution that we have is fit for purpose for the market. So again, we are just getting started and the market is just getting started around it but we are seeing our pipeline is strong.
And we are seeing.
Traction here as companies are looking at ESG, not because of regulatory north American necessarily but.
Not just stakeholders now shareholders, but.
Communities and employees and customers.
Partners. They are all demanding more transparency and accountability beyond the regulation. So companies are looking to differentiate with their ESG strategies theyre looking to ensure that they are providing there are not just shareholders, but their stakeholders with the information they want to be more transparent and it shows.
And what Theyre doing in the market. So we are seeing momentum pipeline, increasing and so forth, but again. This this is a long play and we are just getting started in the market.
Understood. Okay. Thanks, Julie I'm sorry go ahead, Martin you have to add.
I'd just add that.
Julie point is really well taken I mean, we're seeing as much activity in North America as we are in Europe.
And.
It looks so much like the early days for FCC and <unk> have a close rate thats.
Pretty healthy, but then everyone. We talked to is very interested in it.
Not a matter of if it's generally a matter of when so really.
It's even though it's very very early days North American activity is just as strong as EMEA.
Thank you guys very much look forward to the analyst day I appreciate it.
Thank you.
Next up we have Tom Roderick from Stifel. Your line is open Sir.
Okay, Great, Hi, Martin Hi, Julien Hi, Jill.
Thanks for taking my questions here congratulations on the great results the ongoing momentum here looks fantastic. So I'm hearing some great things coming out of international and I know you don't quantify it typically till the end of the year.
Maybe we can start with APAC.
Marty you highlighted a handful of logo wins in the APAC region I think at a very large global financial services win talk a little bit about what your go to market looks like over there and perhaps what you can say to what the scale of that looks like in APAC or just generally some of the success levels, what's driving that theyre in that.
Part of the World and then and then maybe we can get to Europe after that.
Well you know APAC is by far the most are.
The newest or most immature market, we have a we have a small team of people there, but they've closed some really nice deals over the last year, and we sort of roll with the get in get some really good.
Anchor accounts reference accounts in a territory before we invest heavily and so we've accomplished that we've seen.
A mixture of solutions there and the go to market is very much partner oriented.
Even though the numbers are small they have the highest percentage of partner attachment rate.
So it's we have direct sellers, we have all the same types of people. There we have in any place in terms of you know.
Solution engineers consultants assays, all that stuff, but boy the partners play an outsized role in that and it's it's still early days as far as I'm concerned that's good news because we got a lot of runway left there. So I'm very I'm very bullish about APAC and I'm happy with everything that's going on there.
Wonderful and then EMEA I know, even going back as far as last year, you were ramping up the head count in that region pretty aggressively.
I think even if we go back to this quarter last year, you talked about 25% of your new logo wins, if I remember well.
The EMEA region would love to hear just a little bit more of an update I know ESF you you've mentioned it a little bit more backend loaded this year, that's understandable, but.
Talk a little bit about what youre doing to build pipeline to add head count are you still being as aggressive in adding new heads and.
And just generally again on the go to market and leadership in that region. How you feel about all of those things.
Yes.
I'm real happy with the growth there we've had in terms of putting a team on the ground and getting things going.
Anytime we grow fast there is a learning curve you have to deal with in every everybody understands that in this business, but in general we've been able to hire good people.
We've seen the continued bookings growth.
The numbers are starting to get.
To where theyre actually material in terms of bus achieved.
Achieving our goals and it's very promising.
We're going to continue to add head count there I mean with ESG coming with ESF.
Up and running with financial services, there is tons of financial services there.
And even even FCC reporting so we're going to we're going to continue to invest there and we think that we're going to.
Obviously, we said all along 25% or 30% of our revenues will come from there eventually.
Getting that number to grow has been a challenge because north America has been [laughter] legging, it out and making the denominator bigger all the time, which is a which is a good thing, but as I look in terms of just the.
Not as a percentage, but it is absolute numbers I'm happy with what's going on in EMEA, especially the.
Our ability to.
Hire good people ramp them and get things going so, yes, very very optimistic again.
It's early days I talked about it a lot. The GDP there is pretty commensurate with the U S GDP and so.
And they're even more regulated.
Then we are so lot of opportunity there and so when I look at our growth opportunities.
That's early days too and for me. That's we have a lot of solutions that are early days and we have two of the biggest regions on the planet in early days. So just a lot of runway for us.
That's excellent. Thank you so much I'll jump back in the queue.
Thank you and next we have Alex Sklar from Raymond James Your line is open.
Thanks, Marty your Julia I wanted to ask on the existing customer growth the growth of the 100000 customers.
It's been really strong again this year I'm curious how much of it is being driven by new logos coming in above that level from day, one versus expansion and then as a follow up one of the things we've talked about in the past is you've got 1000 of those 100 gig customers and saying that another way. It still means the 3000 customers that are basically only taking one of your solutions. So can you just remind us.
About your strategy around the expansion motion more broadly thanks.
Sure I'll, let I'll, let Julie take up take.
I'll take the first shot at that one.
Yeah.
Drew I think youre on mute.
I will take the first question.
Last question on the multi solution. We we do continue to increase our effort and our focus around account expansion and while of course, we started out as an individual or a single solution company. We are now selling more and more multi solution deals and we're also selling additional solutions into existing accounts.
And Marty you talked earlier about the the private to public journey, where we can sell multiple solutions to.
To accompany going through that.
Finance private financial reporting solution controls management in S. E. T. So we have bundles that we are focused on so we are putting a lot of attention now to the multi solution that you're right. We did again started out is that a single solution.
Yeah, and I would add that.
Due to the very first question you had.
It's roughly.
50, 50, new solutions.
It could be 40, 60, I didn't look at it to be honest, but.
New solutions.
And the existing solutions that go over that number because of adding solutions. So.
Just like everything we tend to be pretty balanced there and it isn't just one solution either it's all over the board or one one market. So.
It's pretty broad based and we're really pleased to see that.
<unk>, just keeping to keep growing so.
Okay got it very helpful color.
And then just following up on the ESG question from Robyn Perry.
And I do get the death, but that we don't have formal rules in a SEC, but could you just help frame the range of kind of deal sizes that youre seeing today is it going to be looking at something similar to socks, or perhaps that kind of larger than that what are your kind of thing in the market now.
We're seeing it's early days, so it's hard to really quantify it.
<unk>.
On average.
The average deal size is a little bit below our company wide HCV.
But we see big deals that are you know.
Well into six figures and then we see smaller deals for smaller companies. So.
If theres, a pretty big standard deviation, but I think it's going to it's going to come out roughly like our ACB for the entire.
Our entire portfolio. So we're really happy about that and obviously the number of the prospects for the Sam for that market is really healthy because.
To Julie's point of consumers are driving the right behavior, if the capital markets are driving the right behavior.
Than you.
Even private companies are going to have to.
Put their best foot forward and so we think that the beauty of that is just a lot of entities that are going to be looking to do this across not just.
For profit corporations, but the government and nonprofits and everything else is going to have to have ESG. Some type of ESG statement. So.
Probably also worth noting that we are taking a a partner approach and partner first approach with ESG and as we talked about earlier with the transformations like these are higher up in and brought her in.
Larger deals.
The thing.
That is promising as we.
We're starting at a pretty high point, and we will learn how to get it higher over time, as we get better and better at defining our value and adding features to the software to increase value. So.
<unk>.
It's going to be I think it ultimately a little higher than our average ACB, but we're starting a little below it.
Okay, great. Thank you very much.
Thank you next up we have Andrew what I guess Perry from bearing Burke. Your line is open.
Hi, Thanks for taking my question I.
I guess the first one in terms of the 2022 guidance I'm not sure if I caught it but.
Do you include any any capital markets activity or.
Activity from EMEA in that number or is that should we consider that.
Coming out of that would be incremental.
There's very little capital markets activity.
They are currently so.
Think we model much theyre doing Jill.
We include a modest amount of cap market.
<unk>.
In our model generally.
The as it has been if the market is very strong and we do see upside there related to that business. So there would be a modest amount.
And in the 2022 numbers.
And you also added al is that correct.
Yeah, I was just going to say that the.
We.
We have not had any focus on being cap markets.
Business in APAC or EMEA, a couple of deals drifted in but certainly that's something that is not modeled any more than it's traditionally been something we're looking at for potentially investing.
Got it and then just a follow up on that just in terms of your I guess I wouldn't call. It a legacy let's call. It flagship solution your SEC reporting.
High market share numbers. There I was just curious to know like at what point should we see that business mature what do you think you could sustain that level of growth for that product.
For a longer period of time.
Well I had a dip I would add a different answer for you a year ago.
It has become very fashionable to be public again.
They've added.
Six or 700, new public companies in the last year plus.
So that's given a lot of potential to us to.
To attack those customers now typically they go with the cap markets provider initially and so we got some of those but there is a.
The large majority of those to chase. So we anticipate good growth in that market for.
A couple of three or four years, depending how long this.
The whole cap markets and going public stays stays in Vogue.
Got it thank you.
Thank you.
Next up we have sensor lawsky.
Your line is open you may ask your question.
Hi, guys you have done it on from Morgan Stanley here for Sanjay.
Really helpful for us sort of understand how do you guys feel about the balance in terms of the value that you're delivering to your customers.
From your products versus like how much you're able to monetize those products across your customer base.
So I have a second question following up to that.
Oh really.
Thoughtful question, that's always the name of the game right.
If I look back historically, our average FCC deal when we started was 25000.
Now, it's well over three times that so you know as an organization you learn.
Where the value is you learn to communicate it to get the word gets out on the street.
And then you start to learn just what the value is then you start price increase programs and.
And you monitor that carefully and eventually when you start to see.
Nor is about the price increases are our actual churn then you know you're starting to reach that limit. So we've been through that with a couple of solutions that I think we know we know how to do that obviously ESF I think we're pretty good handle on what that value proposition is going to be long term and what we can get for those solutions.
More than we're getting now, but I think we'll get.
We'll run up that same curve ESG is so early and still trying to define the value. There's so many pieces of value in that process and we'll probably have partners not just delivery partners, but technical partners through a very complex process, it's hard to say, but we'll definitely watch that and try to optimize what we monetize.
So.
Okay.
Understood and maybe even building upon that a little bit.
How are you guys about in the capital markets front.
You mean from a value point of view.
Yes.
Yes, I mean, when you were the new Kid on the block you try to use price as a lever, but our price has been steadily going up on that work.
There was a press release from Wilson, Sonsini, which is one of the leading IPO law firms.
We're in a partnership with them, where they are more or less using our tool as a managed service and so we're seeing.
As people start to understand the value in that space, we're starting to see.
You know our ability to charge go up and up it's a different model.
Financial printers charge you.
A certain amount and then they triple it by change orders and so have to get the customer acclimated to the fact that they're going to they're going to charge were to charge them, what a mountain of isn't going to triple. So there's all those dynamics, but we're starting to get.
Higher and higher deal values some of them are.
Two or three times, what we started that so well.
We're starting to understand that and learn it in and getting market acceptance to that's why we're going to invest we always wait until we have critical mass in the market before we scale marketing and sales, which which we're going to do this year on that in that market. So.
Understood great.
And then just for my second question in terms of net revenue retention I know you guys don't guide to it but as we think about Q4 and 2022.
How do you see.
Sort of net revenue retention as we finish up the year and rollover that debarment of it on how we should be thinking about it for our modeling purposes.
So we put a lot of focus on retaining existing customers and as we move through.
Our pricing.
Our pricing change in 2019, moving to solution based licensing and as we put last year, we put our new platform into place across our customer base.
We did see some gaps there.
On both of our retention metrics, but you've seen this year that we've had some nice upticks and we do think that the programs that we put in place around making sure that our customers are engaging with the platform and and getting in there and keeping the functionality and the ability.
You talked about a little bit earlier around adding on additional solutions and looking at ways to bundle different solutions.
You can get customers in and using our platform.
Do you feel like it's a it's going to be a positive message.
We don't have specific guidance around that right now, but we do expect that it will remain strong with the thing that we're that we're putting in place.
Okay. Thank you guys answering my question.
Thank you.
Thank you next we have Mike Grondahl from Northland Capital. Your line is open.
Hi, This is Michael on for Mike. Thanks for taking the question most of mine have been answered, but maybe just briefly on <unk>.
Marketplace is there anything to call their launching earlier this year any traction.
Julie.
Yes, we did launch our marketplace in July so we've been out in the market now with it for just a few months, but we are seeing increased engagement and traffic month over month, and we continue to increase the assets and the content and it's going well we're pleased with the results at this point.
Great. Thanks.
Yeah.
Thank you.
And gentlemen, this concludes today's conference call. Thank you all for joining you may now disconnect.
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