Q4 2021 Workiva Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to breakeven fourth quarter fiscal 2021 earnings call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time. Please press star followed by the number one on your telephone keypad.
Would like to withdraw your question Press Star one again, thank you Mike.
Mike Bruff Senior Vice President Investor Relations you May begin your conference.
Good afternoon, and thank you for joining us for <unk> fourth quarter and full year 2021 earnings conference call.
During today's call, we will review our fourth quarter 2021 results and discuss our guidance for the first quarter and full year 2022.
Today's call has been prerecorded and will include comments from our Chief Executive Officer, Marty Vanderploeg, followed by our Chief Financial Officer Gill Quint.
We will then open the call up for a live Q&A session.
Julie is Ko our Chief operating officer is also on the call.
A replay of this webcast will be available until March one 2022.
Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section.
Before we begin I would like to remind everyone that during today's call, we will be making forward looking statements regarding future events and financial performance.
<unk> guidance for the first quarter and full fiscal year 2022.
These forward looking statements are subject to known and unknown risks and uncertainties.
Well keep it 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.
Reconciliations of non-GAAP to GAAP measures and certain additional information are also included in today's press release.
With that we'll begin by turning the call over to our CEO Marty Vanderploeg.
Hello, and thank you for joining today's call.
So we're keep it team once again delivered strong financial results.
In both the fourth quarter and full year, we beat the high end of our guidance in revenue and operating profit.
We generated record revenue during Q4, which resulted in growth of over 28% in subscription and support revenue and total revenue.
Our results reflect our market leadership and transparent connected reporting and the significant increases we're seeing in macro trends such as digital transformations increased compliance and reporting requirements and stakeholder demand for ESG data.
Yeah.
In Q4, we outperformed in multiple solution areas, including ESG.
We continue to see substantial upside in this growing and exciting solution area and plan to invest heavily to secure more of the ESG market.
I will discuss our ESG strategy later in this call.
Okay.
We're kiva continues to perform with our extraordinary talent and our innovative reporting platform.
In Q4, we had strong new logo growth, adding 169 net new logos.
We delivered a 32% increase in the number of customers with contract values over $100000.
We also achieved our highest revenue retention rate of 97%.
In 2021, we continued to expand our partner ecosystem, which now includes over 200 entities are partners are an important part of our growth strategy.
I extend our geographic reach and accelerate the usage and adoption of our platform and enable more efficient delivery of professional services.
Most recently, we announced new partnership relationships to support our ESG growth.
In Q4, we announced that we are expanding our alliance with Pwc to bring a people led and tech powered approach to ESG strategy and reporting.
We are aligned in our belief that the convergence of both regulatory pressure and investor demand will dramatically impact Tao and the level at which companies disclose their ESG data.
Working together, we plan to build purpose driven ESG strategies for our mutual customers.
Okay.
We also expanded our relationship with the KPMG ESG practice or.
We're kiva and KPMG are collaborating in the marketplace and have engaged in discussions with executives from leading financial institutions about how their organizations are addressing ESG in light of stakeholder investor and government expectations.
Okay.
On the ESG technology side, we announced last week, a new partnership with Persephone.
Carbon accounting platform that enables users to turn financial operational and supply chain data and the certified carbon footprint data.
The Persephone partnership will enable customers to integrate and transfer data between our respective platforms and will provide access to the carbon benchmarking and a carbon offsets marketplace.
We have also been busy on the M&A front in the fourth quarter, we completed two tuck in acquisitions that we believe will further support the competitiveness of our platform.
On December 21, we announced the acquisition of audit net.
And Thats cloud platform serves as a primary communications resource and digital network, where over 160000 audit practitioners access and share content resources tools and templates.
This strategic acquisition supports our investment in the future of audit transformation adds to our customer offering and helps to grow our marketplace.
We also announced the December acquisition of <unk>, The global Standard X BRL validation engine RL is used by a community of over 50 global regulators banks and technology companies, including where kiva that depend on it for data quality in comparison.
We believe transparency will bring about a better world in our rail helps make that happen.
Moving onto 2022.
We entered the year with great momentum and are now strategically investing in our E. S T offering to accelerate global growth advance our product roadmap and increased pipeline.
We believe that we have a large tam and we continue to invest to expand our Tam at our Investor day in November we discussed that outside of the FCC solution. We believe our penetration is still early and all other solution areas.
With new markets and expanded opportunities, we communicated a revised conservative Tam estimate of 25 billion, including ESG.
ESG reporting is complex, making it a natural fit for our platform and a compelling market for us.
We have over a decade of experience and have invested over 600 million to deliver a cloud platform that supports investor grade reporting for the world's largest organizations.
We are highly encouraged by our customers and partners initial response to our ESG solution. It is still early but the global market is moving fast. This year, we are strategically investing in our people technology partners and go to market strategy in order to capture this significant E.
<unk> market opportunity.
The majority of our new investments are being leveraged in support of ESG.
We believe the investments we are making in ESG, along with our other solutions will position us to deliver durable low to mid 20% revenue growth.
To support our growth and scale I am pleased to share that Julie ESCO has been promoted to president and Chief operating officer.
And her expanded role Julia will be responsible for where he was global growth strategy and commercial operations, including enterprise wide product development platform innovation sales marketing service delivery and customer success, congratulations to Julie on this well deserved promotion.
Looking forward to working closely with her as we advance we're keep his mission of powering transparent reporting for a better world.
In closing we delivered very strong results in 2021, driven by the focused execution of our strategy.
We continue to grow the business by attracting and retaining top talent.
Investing in the development and innovation of our platform and fit for purpose 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 global opportunities to power transparent reporting for a better world.
With that I will turn the call over to Jill.
Thank you Marty and good afternoon, everyone.
Q4 was a great quarter, providing a strong finish to what was an outstanding year for <unk>.
We continue to see broad based demand with revenue performance across our solution portfolio.
Today, we are providing guidance for Q1, and an update to our full year guidance for 2020.
I'll discuss later.
I will talk about our results and guidance on a non-GAAP basis.
Refer to our press release for a reconciliation of our non-GAAP and GAAP results and guidance.
We beat Q4, 2021 revenue guidance at the midpoint by $3 $8 million.
Solid market demand at higher services revenue accounted for the beat.
We beat guidance, our Q4 operating results at the midpoint by $4 $5 million.
Can you be coupled with lower consulting fee expense and teeny makes up the majority of the beat on operating income.
Turning to Q4 2021 results versus Q4 the year before.
We generated total revenue in the fourth quarter of $128 million showing growth of 28, 7% from Q4 2020.
Breaking out revenue by reporting line item.
Subscription and support revenue was $104 3 million up 28, 8% from Q4 2020.
New logos and east regions helped drive strong revenue growth from Q4 2021.
72% of the increase in SaaS revenue in Q4 came from new customers added in the last 12 months.
<unk> services revenue was $16 $5 million in Q4 2021 at.
28, 2% from the same quarter last year.
This was largely due to higher ex BRL services revenue and expanding FCC customer base combined with the introduction of FERC ex BRL services were the primary drivers in one place.
Turning to our supplemental metrics.
We finished Q4 with 4315 customers and net growth of 592 customers from Q4, 2020, and a net growth of 169 customers from Q3 2021.
This performance capped off a fantastic year for new customer growth as Q3, and Q4 represented the two highest net increases to customer count we have had as a public company.
Our revenue retention rates compared to prior year.
Our subscription and support revenue retention rate was 97% for the fourth quarter of 2021, an increase compared to 95% for the same period last year.
These numbers reflect our focus on customer experience and continued investments in our platform.
With that on our subscription and support revenue retention rate improved to 110% for the fourth quarter of 2021 as compared to 109, 5% in Q4 2020.
The number of larger subscription contracts continues to show impressive growth.
In the fourth quarter of 2021, we had 1121 contracts valued at over $100000 per year.
32% from Q4, the prior year.
The number of contracts valued at about $150000 totaled 578 customers in the fourth quarter up 38% from Q4 2020.
At our November 2021, Investor Day, we introduced the disclosure of subscription contract value over $300000.
This contract value segment showed the highest growth of the 350.
54% from Q4, 2020, with a number of contracts valued at over $300000 totaling 183.
Moving down the P&L.
Gross profit totaled $93 $2 million in Q4 at 31, 3% from the same quarter a year ago.
Consolidated gross margin was 77, 2% in the latest quarter versus 75, 6% in Q4, 2020, and net expansion of 160 basis points.
Breaking out gross profit.
Subscription and support gross profit totaled $87 7 million.
<unk> gross margin of 84, 1% on a Smith's revenue.
Traction at 10 basis points compared to Q4 2020.
Professional services gross profit in the fourth quarter was $5 5 million up 95, 7% versus Q4 2020, equating to a 33, 5% gross margin.
Q4, gross margin was particularly high as substantial professional services revenue growth coupled with a modest increase in compensation led to strong year over year performance.
Research and development expense in Q4 totaled $28 $6 million up 29, 6% from Q4 2020 due to new head count investments.
R&D expense as a percentage of revenue increased to 23, 7% in Q4 2021 from 23, 5% in Q4 2020.
Sales and marketing expense for the quarter increased 33, 1% from Q4 2020 to $46 $8 million as we continued to make go to market investments in support of our growth objectives.
General and administrative expenses totaled $15 $6 million in Q4 of $7 million compared to Q4 2020.
G&A expenses as a percentage of revenue increased to 12, 9% from nine 1% and keep our 2020.
This increase was driven primarily by investment in headcount, coupled with higher T&D and software expenses as we scale our business for growth.
We posted an operating profit of $2 $2 million in Q4, 2021 compared to an operating profit of $5 $2 million in Q4 2020.
Turning to our balance sheet and cash flow statements.
At December 31, 2021, cash cash equivalence and marketable securities totaled $530 million, an increase of $8 $1 million compared to the balance at September 32021.
Net cash provided from operating activities in Q4, 2021 totaled $9 $3 million compared with cash provided of $13 $4 million for the same quarter a year ago.
Impact from audit net and RL acquisitions.
Our reported results contain the full absorption of the audit and Earl transactions, which were both closed in December 2021.
These two strategic tuck in acquisitions will not have direct material impact on revenue or operating profit.
Turning to our guidance for.
For the first quarter of 2022, we expect total revenues to range from $127 million to $128 million.
We expect subscription revenue will continue to grow at a faster rate than services revenue in Q1.
We expect non-GAAP operating loss to range from 7 million to $6 million and net loss of 16 to 14 cents on a per share basis.
Our share count will be approximately $52 6 million weighted average shares.
For the full year 2022.
We are raising guidance for revenue.
We now expect total revenue to range from 532 million to $534 million.
We expect non-GAAP operating loss to range from 37 million to $35 million or a net loss of 80 276 cents on a per share basis.
Our share count will be approximately 53 million weighted average shares.
And in 2022, we expect to post positive free cash flow for the sixth consecutive year.
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.
This guidance for operating margin includes new investments in sales and marketing.
Geographic expansion investments in research and development and ESG 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 cost and in person events as well as the market pressures, we are experiencing related to attracting and retaining top talent.
In closing I would like to thank the more than 2100 global <unk>, who have enabled us to drive record breaking results in Q4, and the full year 2021.
You are the key to our key to success.
With this great team, we are very well positioned to execute on our 2022 strategy.
We will now take your questions operator, we are ready to begin the Q&A session.
At this time, operator remind everybody we're ready to begin Q&A session.
At this time I would like to remind everyone in order to ask a question. Please press star followed by the number one on your telephone keypad.
Your first question comes from the line of Matt Stotler with William Blair. Your line is open.
Hi, everybody thanks for taking the questions.
Maybe I'll just start off with one on <unk>.
ESG and the plans to increase spending there in the coming year, obviously, a massive multibillion dollar opportunity.
It seems like you guys are.
Obviously really laying into that given the early days there and then.
Leadership position, where we help maybe to put a finer point on how youre thinking through those expenses.
As we go into 2022.
Whether that's more on the direct sales partnership side sales marketing whether there is.
The amount of additional product investment that's embedded in that guidance or across the board any color there would be helpful.
Hey, Matt Thanks for the question.
Probably one of the more relevant question in my brain Nowadays is attacking this ESG market and.
Since the last time I talked to you or even since we gave our guidance.
For 2022 that the opportunities even becoming more compelling.
And so to answer your question specifically the the majority of the largest portion of that is sales and marketing.
We're expanding our sales team.
With a focus on ESG and we're going to do that aggressively.
We're also making significant R&D investments.
Things, we had to enhance on our platform Luckily all these things play into our other.
Most of them play into our other products as well so even though they are specifically for ESG.
They do support and improve the other solutions.
Things like workflow.
And better connectivity and then some of the more specific things like.
Supporting all of the different frameworks that you have to report in ESG, So ESG data and so.
A mixture of both of those.
We're also going to put more effort into.
Our go to market in terms of PR and building on our brand.
So those are the main areas and like I said this is becoming so compelling it's a really generational opportunity for where kiva.
For our employees and shareholders. So.
No how careful we are with capital we built this company with very little capital.
We're still going to remain cash flow positive, but we were compelled to make a really meaningful investment.
And of this market. So that's really the reason for what you see in terms of the.
Reduction in margin.
Got it got it that's very helpful.
And then maybe just one quick follow up on the capital markets product, obviously, it's something that had seen some strength last year.
From what I recall, there wasn't much baked into the original commentary on 2022, but.
I would love to just get an update on.
What youre seeing there and how you how that layers into 2022 and thoughts on.
And you talked about that as being kind of a leading indicator. So you know what the thought is about how the current slowness in that segment of market.
It's going to kind of layer into the rest of the year would be helpful.
Sure.
First off I, just want to say, we baked all that into our guidance.
Clearly theres a lot of uncertainty politically right now globally.
With all the stuff that's happening in <unk>.
And with inflation around so we realize it's going to be a tougher year in capital markets. As I indicated last time, we had single digit percentage of that market already.
And we have about tripled the size of our sales team. There. So I think we're going to offset any slowness.
In the terms of the whole year, we are going to offset that slowness with just picking up a bigger market share.
We're already seeing that a lot of the people are companies that plan to go public or still.
Repairing to go public which is whats relevant to us will they delay the ipos will obviously that hasnt been.
Hotbed of Ipos, so far this year, but.
We are seeing some slowdown, but not a lot, but we've also baked it in and like I said.
Are going to take a bigger percentage of the market this year.
On top of that other solutions tend to always step up I've talked about our multi solution strategy.
And we've had this quarter's solutions that were very strong I am sorry, Q4 that were very strong and look good going into this quarter.
<unk> has been outperforming relative to historical trends, we've really started to get to critical mass on our DRC integrated risk product line.
The multi solutions for private to public is still very strong so the portfolio approach tends to mitigate these.
These segments of our business that have slowed down so it's all baked in and we feel really good about about 2022 in general.
Got it that's helpful. Thanks again.
Yes. Thank you.
Your next question comes from the line of Daniel Jester with BMO capital markets. Your line is open.
Oh, great. Thanks for taking my question, maybe just sticking with ESG can you expand.
Give us some more color on sort of the pipeline creation, how is that evolving.
And maybe compare and contrast.
Your conversations with current customers on ESG versus potentially brand new net new adds on the ESG side. Thanks.
Sure that's a good question.
Many many different ways.
I would first characterize that.
Q4, our performance in ESG surprised everyone in the company to be honest, we had a really good quarter on ESG sales.
Okay immediately become a material part of our portfolio.
Faster than any other solution has done that.
We're also seeing good type growth.
And we're very encouraged and but we're still dealing with a fairly small number of salespeople selling this and we're in the midst of ramping that significantly.
Thats part of obviously, our biggest part of our investment is ramping the sales team.
So the majority of the customers, so barb and our customers that are looking at it we've had new logos come in through the ESP solution, but that.
It's mostly a reflection of where we go first the first people we call with our new solutions are existing customers.
Just to expand on that.
It's becoming clearer from not only the SEC, but the EU authorities and other people that these ESG metrics are going to be messed right in with the financial metrics over time, they're going to even use the same reporting requirements. The same EXPAREL technology to tag them over time and so.
One of the huge one of the biggest advantages we have in the market right now as we already own a big percentage of that financial reporting segment and those companies. So.
It's only natural theyre going to go to a provider that they trust already and have a relationship and add capability too.
To report those different.
Those different data points I have two for their ESG metrics. So we feel we're really well positioned.
Take a very sizeable chunk of the market and in terms of reporting for ESG, both in the EU and in the U S. Just based on our market share in the in the financial reporting so.
That's where we naturally go there.
Some of the <unk> sales teams are spooling up we're going to focus on more non customers, but again, we've already had.
A good spattering of new logos, but the majority are existing customers for the reasons I outlined.
Got it that's helpful and then on the revenue retention metric is 97% excluding add on that's been improving sequentially for a while now just can you dive in a little bit as to what specifically you think is driving that and do you have further improvement there baked into it.
Through 2022 outlook. Thanks.
I don't know if you can improve on that number.
It's like diminishing returns you can spend a lot of capital and get a small amount back.
I think that number reflects.
The new platform as being widely.
Everyone likes it is a better way to put it and.
The customer sat numbers are up now and.
Even higher than the old platform, we continue to add value into the platform.
And people feel and realize that.
We also have just spent a lot of time.
As we take.
Taken these customers to the new platform developing relationships, helping them and that adds to our add on sales. After the fact, so it's a combination of berry.
We executed strategies to reduce that I don't see it going up much more and but I think I think we could drive it higher but like I said, it's not a good use of.
Of our of our budget right now so but the customers are extremely happy.
Almost all of them that leave our because of <unk>.
M&A and.
And bankruptcies and four cause stuff is very rare very rare.
Great I appreciate the context. Thank you.
Your next question comes from the line of Terry Tillman with <unk> Securities. Your line is open.
Hi, everyone. This is Joe Meares on for Terry Thanks for taking the question.
Just wondering if you can comment on recent hiring in international markets that you play in both management hires as well as sales and go to market hiring I'm, just wondering what regions you're drilling head count the fastest.
Well thanks for the question Joe.
I mean growing fastest as a percentage are growing fastest in raw numbers obviously.
EMEA is further ahead in terms of its development.
Yeah.
We're getting up to the size where several.
Several hundred people in EMEA.
And like I mentioned before a significant number of our sellers.
We're adding sellers there, we're recruiting and hiring obviously, that's a slower process than in EMEA than it is in the U S.
We're also adding from a percentage point of view actually more sellers in APAC off a smaller number so in terms of the lifecycle of those regions EMEA is.
About halfway between APAC, and North America, and we're adding sellers in all those regions being driven by the fact that.
So many of our solutions now like global statutory reporting.
And ESG our global activities.
And our customers are asking us to have.
Presence in all of their major markets at some level and so we really need.
Strong teams covering APAC and EMEA, and we're making really good progress building those teams out and it's a significant part of the.
The spend build as we as we expand.
Super helpful color I appreciate it just as a follow up.
I think you've said in the past that average selling deals start at around 25000 and are now well over three ex that acknowledging ESG is like a super new products, how should we think about the cadence of price increases for newer products.
Well I think I said this last time all helpful. My memory is not.
It used to be the.
Our average deal size the initial.
Deals we've been selling have a pretty big standard deviation and their average is just a little bit below our ABS.
Very much and.
As we expand.
You look to how you approach the larger companies the mid market and the smaller companies and we're going to have a differently priced product for those markets as we go out and we haven't figured all that out yet we're learning very fast.
But I imagine that the average deal size will start a little lower than our current product mix.
And over time grow beyond that as we add more value and getting more usage. So I think it is kind of a pretty similar lifecycle I don't think it will be quite as severe as when you're a startup and youre just trying to get logos in <unk>.
Some relevant and stand the business up so I think youll see some of that trend, but you won't see it as dramatically as we did with the SEC numbers. So.
But the same trend.
Thank you guys.
Yes, Thanks, Joe.
Your next question comes from the line of Stan Lawsky with Morgan Stanley . Your line is open.
Perfect. Thank you so much.
Congratulations on good results and strong finish to the year.
Wanted to dig in on the partner side of the business.
And how our partners playing into your international expansion, especially in Europe , and maybe even in Asia Pacific.
Then a quick follow up.
Well that's.
A good question Stan.
Appreciate that.
The partners are.
I would say even more important in EMEA and APAC.
We see close rates that are much higher with partners and we see deal sizes that are better hiring is slower in APAC and EMEA.
So we're putting a lot of focus on partners and it's going to be even more important. It is in North America, and that's very important there too.
But when youre starting in new.
New areas.
And you can get the attention of partners that really moves the needle in APAC. It's been we wouldn't be anywhere without partners in APAC right now.
And EMEA, it's a very.
Material part of our business there. So yes, it is very important.
Okay got it.
And then.
A quick follow up on.
On billings.
They came in a little bit less than consensus numbers in the quarter is there anything that means you're mindful of as far as like was there or was there something maybe around like billing duration or.
The cadence in the quarter anything any anything that pulled into Q3 or maybe fell out of the quarter to highlight specifically on the billing side.
Well I'm going to let Dan I'm going to let I'm going to let Joel answer that so go ahead Jill.
Alright.
Thanks for the question and I think that we've talked about in the fac.
For billings for Us and we do have some variability in the contract wins that we have and and.
And we do have some two and three year deals that are.
That are prepaid.
Sometimes there are some fluctuations into the mix on our billings number.
But we didn't see anything that causes us concern related to Q4 billing.
It continues to move around a little bit, but we had and we thought we had good growth in Q4 and are really encouraged going into the new year.
Yes, I would add Dan that.
We've been very consistent on that or bill.
Billings numbers are just not good indicators of our bookings numbers.
<unk>.
We were very happy with our Q4 bookings.
Okay perfect very helpful. Thank you guys.
Your next question comes from the line of Rob Oliver with Baird. Your line is open.
Great Hi, good evening, where Keith and team.
I think I'll try to get Julian the mix here Julie congratulations on your promotion.
My question is obviously big focus on ESG here.
Rightfully so given the magnitude of the opportunity and the early strength you guys have shown you.
Guys did make reference to.
Some other fit for purpose solutions, which are getting investment in 'twenty, two, albeit a smaller portion of the investment, but I'd be curious to hear from you which of those you are most excited about in which we can expect to maybe start to hear you guys talk about on calls like this first and then I had a follow up thanks.
Sure Hello, everyone and thank you for the congratulations.
And honoring enthusiasts Disney asking about our opportunity.
And where we're headed our strong team and helping contribute going forward.
I think as we typically talk about when we have higher incubation solutions and our glass solutions.
And we talk about the best solution is more more broadly we don't really disclose that information.
We're working through that.
We again, we work we are continuing to invest in <unk>.
Some of our solutions continue to make them more fit for purpose.
At some level, but we're also investing in some work around MSP.
Managed service provider. So we are investing in technology, there and some of our solutions fit very nicely in that space with our partners.
Areas.
Where you'll see some continued airfreight.
Great. Thanks.
Helpful and then.
Joe just for you in just a book.
<unk> on the question that came earlier, but.
In your prepared remarks, you gave us a really nice color around all of the attributes and variables to consider around the bottom line, but not around the top line. So I just would be interesting to hear from you again.
Someone has already asked about capital markets and that's clear.
But just some of the factors that you Wade.
On your.
Your topline guidance for this year when you look at that that number. Thank you.
Absolutely.
Yeah.
And I did give some color on that I'm happy to talk to you in a bit more but we really do feel like those assumptions or.
Where we're at right now there's a lot going on obviously in the current environment and so we are being conservative to the extent that we think of that and we think that that makes sense for us right now there's no sense in getting out ahead of ourselves.
We have a lot of.
And.
A lot of investment for growth happening.
And while as you would expect not all of that investment will result in top line growth this year.
Do you have.
A lot of optimism around how we came into the year with the current pipeline the bookings that we saw towards the end of last year to impact 2022 revenue.
And so thats why youre seeing in the in Q1 did you have a higher growth.
In the guidance and then what the.
Shown based on the total year.
Guidance number.
Now we are a company that always wants to outperform guidance and so we think where we're at right now for our full year guidance is the right spot.
And we look forward Q2.
Thank you outperformed that guidance throughout the rest of the year not only with our existing solutions that working through the ESG opportunity that we have in front of us and continuing to work with our existing customers our partners and expanding all of those relationships across our broad based solution portfolio.
Great.
Rob I would I would.
This is just I just wanted to add a little on that too. Thanks Marty.
Just from my perspective.
No. This isn't my first rodeo I got a lot of miles on me.
As a management team.
Our credibility is very much determined by how well we predict the future.
That's not.
That's not an enviable place to be.
And so we're always going to.
Take the position that we're going to we're going to beat and raise and with all the uncertainty Jill and I and Julie and our finance team and a whole bunch of people got together and we said where you know where are we looking at I mean last year we.
We are.
The consensus guidance was between 16 and 17%.
I'm not saying that we're going to beat these numbers this year as much as last at all but I'm going to make darn sure on a baseline that we are not going to be.
Viewed as someone that can't predict their own business, we're going to predict our business and be conservative.
And remain relevant as good managers and so we always are going to beat our quarters.
On a road to $1 billion and we see that clearly now we know we can get there.
So that's really our mentality we're in this for the long run.
And when we put our guidance numbers out people are always disappointed in the end of the year Theyre not so thats just how we operate.
That's helpful. Thanks, Marty Thanks, everybody appreciate it.
Yes.
Your next question comes from the line of Mike Grondahl with Northland Securities. Your line is open.
Yes, thanks, and congratulations on the quarter.
Just listening to the call reading the press release, I mean, ESG sounds like.
Probably roughly your number one priority for 'twenty two.
Would you describe as your second priority and third priority.
Okay.
Thanks, Thanks for the question, Mike I hope that came across pretty strong ESG is by far our top priority this year.
I think that.
Like I've said in the past.
I've spent so much time talking to ESG experts regulators people on all of these different.
Regulatory positions.
<unk> in the U S. I've just spent a ton of time fueling out this market and its.
It's clear this is going to happen.
It's also clear that it is a very big market and what's amazing and we have a platform that we've invested.
From its inception over $600 million ready to go now.
Like I've said earlier that so.
It's better to be lucky than good sometimes I think we're both.
We're very lucky and we have a platform all I mean, 90% there to take on this task. So yes, we are leaning in heavily.
And.
Everyone's, saying these numbers have to be have assurance wrapped around them that means controls and audit and we're going to integrate our controls and audit product in so that we can assure all the ESG numbers and we know how to report them to the jurisdictions like the SEC in the EU. So.
If there has ever been.
A time when we're kiva can have a very large tam and take a big chunk of the market. This is ed.
Now other things that we're doing are primarily platform focused.
When we can when we can make our platform better.
It affects all of our use cases are annual and interim reporting for private companies, our management reporting our global statutory reporting.
All of our financial reporting it impacts all of those things. So in terms of R&D. We're leaning in there in terms of sales, we're continuing to enable and keep those salespeople focused and working to keep all those other bookings and revenue streams healthy but yes.
<unk> is getting the lion's share of attention and investment right now because like I said, it's generational for us It really is and we're just in the driver's seat I was accused of being getting a couple of calls ago. So I'm not going to be good. But this is just fell in our lap and we're not going to Miss it I think I would be.
Remiss in my do disappear.
Fiduciary.
<unk> responsibilities as running this company if we didn't make this investment so.
Sounds good thank you.
Yeah.
Your next question comes from the line of Andrew de Gasperi with Baron Baird. Your line is open.
Thanks for taking my question I guess first on the.
The partnership you have a persephone I just had a question in terms of the.
<unk> data integration.
What other data sets do you think you would need to really make the product.
More to your liking what regulators are likely to ask in the future on these reporting requirements.
Do you think there's any other tech partnerships you could sign that.
Actually help.
Improve the product.
There is no doubt about that.
Persephone, everyone know thank everyone knows the story there is startup they raised a ton of capital Theyre doing carbon accounting, we don't do carbon accounting, we do reporting of ESG metrics.
And we bring all that data together, we will integrate with lots and lots of companies remember our first acquisition was all about.
Integrations and we have north of 150 integrations now and for example.
The Eni metrics, we pull those right out of workday.
And you can populate whatever things you have to report right out of Workday, and we will integrate with other HR systems.
When we look at carbon I'm sure, we're going to have lots and lots of companies that we can integrate with we have really nice open AP is so we can do the integration or the customer the customer can do the integration or the other tech partner can do the integration so.
We're in conversations with a lot of tech part potential Tech partners right now.
It's not lost on them that we sort of have the sort of the.
Our reporting and disclosure pipeline for them to get their data in an into these different documents that are required and thats not lost on people at all so we're having very good conversations with people and Youll see a host of those integrations over time.
Thanks, that's helpful and then secondly.
There was clearly.
Clearly announced a breach of your some of your competitors in the financial reporting side I was just wondering if.
There is more conversations you're having with with customers or potential customers on the security aspect of where key is platform.
And how is.
As that activity kind of picks up in the last few weeks.
Well.
The discussions with people not on our platform has picked up that's for sure, but yeah I mean.
The conversations around security never stop we get audited by the by our big customers. They do onsite audits with just a day's notice.
We're asked to do pen testing all the time for big banks and other big customers.
We are a tech company, okay and.
We're all about producing software tools.
And we come from that lineage that culture.
And we have large teams focused on security not only from a software point of view, but I mean, if we were to ever get hacked Heaven forbid it would and they got the credentials of someone's laptop. They don't have access to a very small number of customers. We have it all segmented so breach does happen they only get the five or 10.
<unk>, it's not like they're going to get to.
Are all of our.
4000, plus customers, we do all sorts of preventative things like that we monitor logins, we demand two factor authentication, we train employees about fishing.
Run tests and try to trick ourselves all the time.
We put analysts effort into it and so that's a cultural thing now could we get hacked I mean anyone can get hacked, but I'd tell you what.
It's certainly something we put as much energy into as anybody.
And and we feel very comfortable with our security and we feel very comfortable and we get our customers comfortable with it since the day we started.
Our documentation of security practices fed ramp everything else is.
Is just top flight. So we're very proud of that we spent a lot of money on it and.
Even though we have by far the largest we represent by far the largest amount of market cap.
<unk>.
The U S exchanges they.
They didn't hack us so.
Thanks Marty.
Your next question comes from the line of Alex Sklar with Raymond James Your line is open.
Yeah.
Thanks, and I'll add my congratulations Julia on the new role as well.
Jill.
We saw on the sales efficiency metrics really pick up nicely in 2021, I know part of that is the lower <unk> around around the pandemic.
But given the ESG demand comment all the partner investments that have gone into place some of the regulatory catalysts is still out there I'm curious if you think that 2021 levels are sustainable going forward.
And.
And then you hit the nail on the head, we're definitely making investments in sales and marketing heavy investments.
Ann.
Along with that we're going to have return of in person events. So not only are making investments, which largely can mean hiring at the go to market activities.
We're going to have the return of travel we think.
So 2022 and in person events as well so I do think that we will be driving sales growth through.
Not only new reps.
And we hope can drive more efficiency, but there will be some pressure on those expenses, just because we're going to be hiring.
And congrats.
The return at those other expenses.
Okay got it so maybe some short term pressure for longer.
I was just going to add that.
And I think julie's talked about it in the past and we're doing a lot of investment and enablement.
Training, our sales force and so on and so forth, but your point is well taken when you ramp a sales team to get a lot of <unk>.
Greener salespeople and so youre going to see a dip and then things like amplifier coming back. So yes, we're going to continue to improve sales efficiency over time, the trend will be upward, but I think there'll be an adjustment this year.
Okay, Great. That's really helpful color and then obviously some really exciting ESG comments, both in the prepared remarks and in response to the Q&A so far.
Curious, it's about 12% of your Tam, which I think you've said as conservative but can you just provide some <unk>.
Horizon framework on how much you think that could contribute to revenue in 2022 or within that $1 billion revenue target.
We usually don't break that out in numbers I will tell you. This it will be a material part of our bookings this year it'll be one of the top several categories already and we've never seen anything come up that fast.
The thing that's compelling about it as you know our financial reporting platform is very well adopted by public companies for obvious reasons, we're making great roads inroads on private companies and some government stuff, but ESG ultimately will will fall into every.
Human organization, so to speak it'll be Ngos, although nonprofits all.
Government agencies water districts.
And all companies I mean, the EU has publicly said there's 50000 companies I don't know if there's that many but that's how many they say we will have to report so.
The real compelling thing for this is.
When you look at how much you can sell to each customer and how many customers are out there P times Q is it something sometimes called.
The number of places we can sell this is the largest that we've ever had in our lifecycle. So that's what's really exciting about it.
Got it thanks for the color.
Mhm.
There are no further questions at this time and this does conclude today's conference call. Thank you for participating you may now disconnect.
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