Q1 2023 Workviva Inc Earnings Call
Good afternoon, ladies and gentlemen, my name is Martin deepen I will be your host operator on this call.
After the prepared comments, we will conduct a question answer session.
Instructions will be provided at that time.
At any time during the conference you need to reach an operator. Please press star followed by zero. Please note that this call is being recorded on May <unk> 2023 at five P M. Eastern.
I would now like to turn the meeting over to your host for today's call Mike.
Mike Ross <unk>.
Senior Vice President of corporate development and Investor Relations at work Kiva.
Please go ahead.
Good afternoon, and thank you for joining us for <unk> first quarter conference call.
During today's call, we will review, our first quarter results and discuss our guidance for the second quarter and full year 2023.
Today's call has been prerecorded and will include comments from our Chief Executive Officer, Julie Easco, followed by our Chief Financial Officer Jill Klindt.
We will then open the call up for a live Q&A session.
A replay of this webcast will be available until May nine 2023.
Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section.
Okay.
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, including guidance for the second quarter and full fiscal year 2023.
These forward looking statements are subject to known and unknown risks and uncertainties.
Well keep a 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 Julie S. Cope.
Thank you for joining our earnings call My first as what Keith as CEO .
Jill and I look forward to sharing our strong Q1 results.
Also discuss our continued growth opportunities and our outlook for Q2.
So we'll keep it team delivered a solid quarter and continued to execute at a high level, resulting in subscription revenue growth of 21%.
Accelerating subscription growth drove revenue above the high end of our Q1 guidance.
We also beat the high end of our guidance for operating results by $3 $7 million.
In Q1, we continued to see healthy market demand for our platform and our best of breed solutions, even in an uncertain macro environment.
We believe this is a result of the rapidly evolving market trends and increasing stakeholders scrutiny as both financial data and non financial or ESG data.
And this has made our product offerings and our platform more relevant than ever.
Well Keith I was born in the cloud it established itself in financial reporting and then expand it to a broad portfolio of solutions.
They were Kiva offers only reporting platform that brings financial reporting.
S G and DRC together in one secure controlled on it Randy environment.
This unified platform offering known as assured integrated reporting.
Neat and key differentiator that sets us apart from our competition.
And in Q1, we saw continued momentum as customers expanding their solution portfolio to include all three of our assured integrated reporting solutions.
I'd like to highlight a few examples.
First one of the worlds largest big box retailers, I think ESG to their existing where give or portfolio that included SEC DRC and management reporting.
This long time FCC client began working with the big four advisory firm with their initial purchase and implementation of breakeven management reporting back in 2020.
This same advisory firm led the coastal and the delivery of <unk> in 2022, and then sourced in ESG opportunity for us in Q1 of this year.
As a testament to the breadth of our partner ecosystem.
Big four firm will be providing advisory and implementation services for this ESG project.
That's not all this ESG account expansion with further influenced by one of our climate accounting technology partners to.
The work either ESG solution on our open platform can be complementary any purpose built climate accounting solution on the market.
The second assured integrated reporting customer win was with a fortune 100 diversified healthcare services provider.
During Q1, this existing FCC and GIC customer added ESG that their solution portfolio to a joint deal with two different big four firms.
Both firms have a longstanding relationship with this customer and a robust and growing ESG solution practice, which were geezer.
These two working with our partners competed for the advisory and consulting services on this ESG project.
Also critical to securing this ESG expansion was our platform's ability to connect to the customers already established carbon accounting system.
Because where carbon solution agnostic, meaning our platform has the ability to integrate with any source system, including carbon accounting systems, we're able to set ourselves apart from other ESG reporting solutions.
These two account expansion multi solution stories highlight.
Value and flexibility of our platform is being recognized and that businesses and partners are going all in with work either.
As I mentioned financial reporting has been the historical foundation of our platform.
And 15 years later the market continues to invest in our leading financial disclosure financial statement and industry specific financial reporting solutions.
During the first quarter the work the team booked a number of new financial reporting logo wins and competitive SEC takeaways.
We also landed with financial reporting outside of our FCC solution with a diverse cohort of new private and government reporting customers.
Although the IPO market has yet to rebound we continued to drive account expansion and we closed a record number of capital market follow on offerings.
An important financial reporting wins secured during the quarter with a mid six figure new logo deal with a big four accounting firm.
The firm purchased our fund reporting solution to be used as a managed service to deliver reporting surfaces to their investment firm clients.
We believe the continued trust at the world's top accounting firms, placing work Eva as the platform nature standard iPhone is a testament to the power of our solutions.
I'll now turn to J S C.
During the first quarter, we saw strong demand and momentum for our <unk> suite of solutions in both the U S and in Europe .
Our R&D investments in new functionality and an enhanced user experience continued to support our solid growth in this market.
A few key JRC highlights during the quarter include a mid six figure deal with a British multinational bank for controls management to replace the legacy G. R C platform.
This longstanding customer had already invested in SEC, ESF, ESG and our financial services solutions.
This UK Sox opportunity than it was a joint pursuit with the big four advisory partner they had an existing relationship with the Bank Sox team.
This partner will be providing both advisory and implementation surfaces for this deal.
Another notable JRC win was with a European based global airline that purchased our controls management solution.
This new logo win with a competitive replacement of a legacy on premise Trc platform.
This deal was a joint pursuit with a regional advisory firm, who will be providing the implementation and advisory services.
Landing with DRC provides a great future account expansion opportunity for both financial reporting and ESG.
Now I'll cover some ESG highlights E.
ESG remains one of our top solution bookings in Q1.
We added several fortune 500 clients, who are already Ob roster and ESG account expansions.
Best of the best are investing in work either for their ESG reporting and our partner first strategy is driving results. The vast majority of our ESG opportunities continue to be either sourced or a co sell with a work keeps advisory or technology partner, yes.
Yes, theres ongoing political debate in the U S and there is an extended evaluation period for the proposed SEC climate disclosure regulation.
We continue to see strong demand for their work even ESG solution.
This observation is supported by a joint Pwc work Ive a survey published in March.
70% of business leaders report their companies will proceed with ESG compliance regardless of when the SEC climate disclosure rule becomes law.
This survey also reported that 96% of executives say they'll proceed with independent assurance, whether its required in the final rule or not.
We're hearing from our ESG customers and prospects that ESG reporting is a board level mandate, it's driven by a number of stakeholders, including investors customers vendors and employees.
Organizations that have made public ESG commitments or have published science based targets have set their own standards for what they've committed to report on and disclose.
More than 3000 businesses and financial institutions are working with the science based targets initiative to reduce their emissions in line with climate Science.
With this market momentum, we anticipate that companies will continue to consider their investment in ESG, a critical factor in driving sustainable long term value creation for their enterprises, regardless of politics.
I'll turn now to highlight some of our investments in R&D, which continue to be an important part of our strategy.
Our ongoing innovate and expand the capabilities of our platform keeps our solutions differentiated and opens up new Tam.
At work Eva we continue to provide new functionality that prioritizes, our customers experience and success and plays a significant role in driving strong gross retention and long term subscription growth.
Our R&D team released several platform and solution enhancements during Q1.
We updated the capabilities for regulatory disclosure, including the release of full featured in platform access for the 2023 U S. GAAP EXPAREL taxonomy, and we released at the same date was published by the S. E C.
Our customers SEC reporting teams are on the clock with locked in reporting deadlines by providing instant access to a new taxonomy within our solutions. It allows them the valuable time to explore assess and implement changes to their EXPAREL tags and deliver on time validated quality disclose.
As yours.
For our European customers, we released important enhancements for designed reporting to better support assured integrated reporting.
We worked with both our design agency partners and our current customers to provide highly stylized and design reports, they're also on it ready and can deliver X BRL output.
For our <unk> customers, we released meaningful new features supporting more advanced risk assessments enhanced navigation for audit management and a fully enabled modernized user experience for all JRC solutions.
To support rapidly evolving ESG reporting requirements, including the Eu's corporate sustainability reporting directive, we released important new enhancements, including the support for and the integration with CDP, which was cited as the gold standard of environmental reporting.
More than 13000 companies disclose to CDP.
As an accredited CDP solution provider, where kiva was also selected to pilot the new CDP API.
It's a P. I will support automated data transfer, which provides an enhanced and streamlined disclosure experience, reducing the need for manual data entry.
We also released enhancements in our ESG explorer to better enable new versions of frameworks and standards.
This included the addition of <unk> sector standards more than 10000 companies around the world Communicator impacts using G. R ice standards.
These examples are just a few of many enhancements that we released that demonstrate our commitment to enable our customers to optimize their investments with us.
We believe that we will see improved R&D operating leverage over time and remain committed to our long term operating model.
To summarize my comments this afternoon or keep it delivered another solid quarter.
We're focused on subscription revenue growth, while improving our operating leverage and we remain committed to delivering on both our short term and our long term operating margin targets.
Our unified platform offering known as assured integrated reporting is a unique and key differentiator that sets us apart from the competition and it underpins our multi solution and account expansion strategy.
The value of our platform is being recognized businesses and our partners are going all in with work Eva and finally investments in our platform and our solutions and in our people have positioned us well to drive greater performance and productivity to focused execution of our strategic initiatives.
In closing I'd like to thank our talented team of dedicated employees their commitment to our values and the way they support our customers and our communities and each other have yet again earned us a spot on the list of Fortune's 100 best companies to work for.
And it's our fifth consecutive year.
This award celebrates the World class culture, we've created.
And thank you to our customers our partners and our shareholders for your continued trust in Waukesha.
We believe we have the right team the right technology, the right time to capitalize on the increasing global opportunities to powertrains parent reporting for a better world.
And with that I'll turn it over to you Joe.
Thank you Julie it's great to join you on your first earnings call as CEO .
Let's turn to our results.
This afternoon I will review our financial performance for the first quarter 2023, and provide Q2 and full year 2023 guidance before opening the line for questions.
As Julie mentioned, we beat our Q1 revenue guidance due to accelerating subscription revenue growth, which was somewhat offset by a decline in services revenue.
We beat guidance on Q1 operating results at the midpoint by $4 $2 million.
Our revenue be along with lower compensation teeny and other employee related expenses drove the remainder of the operating needs.
Now, let's go through some key results and highlights for the quarter.
We generated total revenue in the first quarter of $152 million delivering growth of 16% from Q1 2022.
Subscription revenue was $129 $7 million up 21% from Q1 2022.
While new logos and account expansions both helped to drive strong revenue growth in Q1 2023.
58% of the increase in subscription revenue in Q1 came from new customers added in the last 12 months.
Professional services revenue was $25 million in Q1 2023.
Down 9% from the same quarter last year.
We discussed in our Q4 call that we expect services revenue to be flat for Q1.
However, the Q1 numbers came in below our forecast showing a year over year decline, primarily driven by the timing of EXPAREL services.
I want to expand on professional services revenue a bit more.
As we've discussed 2023 will be a pivot year for us in professional services our.
Our strategy. This year is to transition lower margin setup and consulting services to our partners.
Given this we expect setup and consulting services revenue to decline year over year for the full year 2023.
Alternatively, we believe that we will show improved performance for EXPAREL services revenue in Q2 and for the balance of the year.
Our strategy is to continue to deliver these higher margin ex payroll services through our dedicated and talented services team overall.
Overall, we believe that for the full year, our total services revenue will remain flat compared to 2022.
Now onto our performance metrics.
We added 19 net new customers in Q1 for a total customer count to 5754 are <unk>.
Growth of 1346 customers from Q1 2022.
Our total customer count includes 919 parse part customers.
Our subscription and support revenue retention rate remained at a best in class, 98% for the first quarter of 2023 remaining comfortably ahead of our internal objective of 96% or above with add ons, our subscription and support revenue retention rate remained flat at 109% for the first quarter of 2023 compared to the same quarter last year.
This rate improved 70 basis points compared to the fourth quarter of 2022.
Please note that parse part customers will not be included in our retention calculation until next quarter. When we have a full year of comparable data.
In the first quarter of 2023, we had 1363 contracts valued at over $100000 per year.
21% from Q1 in the prior year.
The number of contracts valued at over $150000 totaled 746 customers in the first quarter.
24% from Q1 2022.
And the number of contracts valued over $300000 totaled 247 up 33% from Q1 2022.
Moving on to our operating metrics.
Gross profit totaled $113 $4 million in Q1 up 13% from the same quarter a year ago.
Gross margin was 75, 5% in the latest quarter versus 77% in Q1 2022.
The decrease was due to higher compensation server and T&D expenses versus Q1 2022.
Operating expenses increased 19% from Q1 2022, driven by investment in new head count and returned to travel and events.
We posted an operating loss of $7 $3 million in Q1, 2023 compared to an operating loss of $1 $2 million in Q1 2022.
As we discussed in our Q4 call, we expect sequential quarterly improvement in our operating leverage Q2 through Q4 of 2023.
We are focused on delivering non-GAAP profitability for the second half of 2023 and for the full year 2024.
At March 31, 2023, cash cash equivalents and marketable securities totaled $440 million.
An increase of $9 million compared to the balance at December 31, 2022.
Cash flows from operating activities in Q1, 'twenty twenty-three resulted in cash provided of $5 $6 million compared with a decrease in cash of $937000 in the same quarter a year ago.
Although we had healthy bookings growth in Q1, we did see a decrease in deferred revenue from Q4 2022 to Q1 2023.
There were a couple of drivers that led to this decrease.
First historically there is seasonality in our deferred revenue we.
We see that the change in deferred revenue is usually the slowest from Q4 to Q1.
This is largely driven by the seasonal timing of annual renewals that are heavily weighted to Q4.
And second specifically in Q1 2023, the timing of several large contract renewals and contracts with the payments led to a shift of invoicing and deferred revenue into Q2.
I want to reiterate that we did have healthy bookings growth in Q1.
We don't believe that this decrease in deferred revenue indicates weakness in market demand, but rather as a result of the timing of contract renewals between quarters.
For the remainder of 2023, we are modeling for deferred revenue to track in line with our historical run rate.
Turning now to our guidance.
We continue to believe our guidance assumptions are prudent for the current macro environment.
For the second quarter of 2023.
We expect total revenue to range from 153 million to $154 million.
We expect non-GAAP operating loss to range from 5 million to $4 million, a net loss of nine cents to seven cents on a per share basis.
Our share count will be approximately $53 8 million weighted average shares.
We expect Q2 services revenue growth to be a low single digit percent.
For the full year 2023, we are raising our full year revenue guidance, which we now expect to range from 626 million to $628 million, we are raising our guidance for non-GAAP operating loss to range from $7 million to $5 million or a net loss of 13 cents to nine cents on a per share.
He says.
Our share count will be approximately 54 million weighted average shares.
As I highlighted earlier, we expect full year services revenue growth to be flat.
EXPAREL Services' revenue is expected to continue to grow and be offset by a decline in set up and consulting services revenue for the full year 2023, we continue to expect we will post positive free cash flow for the seventh consecutive year.
While we are guiding to a loss in Q2, we are projecting improved operating margins for the remainder of the year.
We expect to be non-GAAP breakeven in Q3 and be non-GAAP profitable in Q4.
With that we will be non-GAAP profitable in the second half of 2023 and are committed to improved margins for the full year in 2024, we remain committed to the long term operating model outlined at our September 2022 Investor Day.
In summary, I want to thank all our employees and partners for their continued support and hard work in the first quarter and for delivering a strong start to 2023.
Before we turn to Q&A I would like to highlight three key points.
One we delivered strong subscription revenue growth in Q1, and we believe we can deliver 20% subscription revenue growth for the full year 2023.
Two we continued to benefit from broad based demand across our solution portfolio.
As Julie highlighted new logo wins in financial reporting solid performance in G. R. C continued momentum in E. S. G and account expansions to embrace the platform all contributed to our subscription growth.
And three we are focused on improved operating leverage and delivering non-GAAP profitability in the second half of 2023.
We remain committed to our long term operating model.
In closing I would like to Echo Julie's excitement about our placement on Fortune's 100, best companies to work for for the fifth year in a row.
So all we're keyed ins. This achievement reflects the passion and commitment you bring to work every day.
By nurturing such a healthy and vibrant company, we continued to deliver a positive impact that benefits everyone involved customers partners shareholders and employees.
We will now take your questions operator, we are ready to begin the Q&A session.
Okay.
The floor is now open for your questions to ask a question at this time. Please press star one or telephone keypad, if any point you'd like to withdraw from the queue. Please press star one again.
The opportunity to ask one question and one further follow up question, we will now take a moment to compile a roster.
Our first question comes from the line of Matt Stotler from William Blair. Please proceed.
Okay.
Thank you for taking the questions maybe just to start off went on on the international opportunity here would love to get an update on what Youre seeing in terms of demand and progress in international markets.
Outside of North America.
This is a focus for the company for the last several years.
You've got a little bit of a different.
A different go to market approach in the last couple of quarters I would love to get an update there how that's rolling out and then how you serve ESG and the rest of the.
Geography specific opportunities there are playing out even though the early days.
Okay.
Sure I will I will start with that one I'm looking at our Workover in Europe , I will say, we've had some improvement over there both in Q3 Q4 Q1.
We're of course closely monitoring our pipeline any any changes to our buying behavior, but we've taken a partner first approach. There are we are focusing in the areas we can win.
Where we've got sales teams on the ground reference of all customers against strong partner relationships and certainly we're leading with our messaging around our assured integrated reporting which is which is resonating. So is there work to do yet or we may have we made some changes.
Yes around leadership as you know and.
We've centralized teams and so forth, but we're very optimistic about our ability to continue to execute there.
Got it Thats helpful.
Then maybe one for Joe just following up on the billings dynamics, just wondering if you could kind of double click on.
What's happening there it sounds like to your point, it's more kind of the renewed.
The renewal timing and so if that's the case, maybe what the implication there as for what we should expect some progress in Q2.
Then maybe if youre seeing anything from a macro perspective in terms of large deals cycles continuing to get incrementally.
Out or anything like that any color there would be helpful as well.
Sure.
Just to expand on the prepared comments a little bit.
You might recall that we do have some amount of variability in contract lengths that we've had over time and that goes that has in the past given little bit of it.
We've had some lumpiness in our deferred revenue in the past and this is just another example of that quarter.
Q1 coming in with.
Some movement related to timing of renewals and.
And as we always see then also it's a movement away from those contracts with the three year pay upfront more of a three year one year three year with annual payments and when we have that it does cause some lumpiness in deferred.
To your question further in the year, we do expect to return more to our.
Historical norms in the as far as billings and deferred as it goes.
We'd also always push you back and quite back towards <unk>, We think that the RPM number is a better metric for our business. It has less of that lumpiness.
Although there is some amount of impact of course, when you have the timing issues.
It does smooth out some of the lumpiness around contract length, and payment terms and that sort of thing.
We feel like that was a really good result for Q1 for us.
That's very helpful. Thank you again.
Okay.
Our next question comes from the line of Steve Enders from Citibank. Please proceed.
Okay, great. Thanks for taking the question, maybe if I can just follow up on the on the last comment on on the RPI and billings dynamics I guess for one I guess is there a way to quantify how much of billions, maybe shifting from <unk> on the timing there.
And then I guess secondarily on the IPO dynamic.
Dynamic I guess will there be a timing impact we would have hit that number as.
As well or is that a little bit more more muted on that side.
I think a good way to look at it Steve would be to look at some of our historical Q4 to Q1 transitions and and see what would've been in a more normalized there there's always going to be some amount of movement between quarters. We just saw in Q1 in particular, we had some larger contracts that add delays.
With getting closed on those renewals into Q2.
And so we don't have a direct an exact number for you, but I think if you just look back at some of the historical Q4 to Q1 transitions Ah hopefully that'll help normalize what what we would have expected to see there aside from those larger impacts.
And the same holds true for RPM.
Okay got you.
That's helpful. There.
And I guess, if we look at some of the partner investments in those initiatives that you've been.
<unk> invested in quite a bit here, just where we are kind of in terms of the partners driving opportunities towards you and how much of that is making an impact on the.
The ESG front as well.
Sure when we when we look at ESG. It is the solution with the highest.
Highest work with our partners and that work was comes in terms of co selling in terms of sourced and influence deals so quite significant when you look at the.
The combination of those plus delivery. So we have strong ecosystem of partners, particularly in ESG.
Okay perfect I appreciate you taking the questions.
Our next question comes from the line of Adam Hotchkiss from Goldman Sachs. Please proceed.
Great. Thanks, very much for the questions just to follow up on your comments from the fourth quarter around your ESG momentum I think you had mentioned ESG bookings were 85% ahead of your expectations in that quarter and that drove quite a bit of momentum in the business could you just give us a little bit more color on.
The sort of trends more broadly around momentum and where that shook out this quarter on the ESG side relative to <unk>.
The ahead of expected results last quarter.
Sure. So we did see good momentum filling key one E. S. G. As we talked about all last year ESG continues to be right in the in the you know in the mix for top bookings solutions and we're really excited to see that.
Yeah. It remains in the in the top three solutions again for the third quarter in a row.
Because also you know top for bookings growth solution as well.
Great.
Super Helpful. And then could you just talk a little bit about the traction that you mentioned youre seeing with the private companies I recognize a lot of that is tied to capital markets activity, but where we are today versus a year ago, where would you think we are.
Today and versus where you were a year ago as things began to soften in could you just review for US what the go to market motion looks like for this cohort of companies how much of that is inbound versus outbound.
So just to start off I would say that we continue to really focus on trying to.
To get that private to public.
Movement, and so we are continuing to focus on moving.
Trying to.
But closed deals with private companies, especially ones that are more likelihood of being moving through.
<unk> and <unk> are looking for other types of financing and we think that we can be.
Really grateful to them as they move through that and tried to come public ready.
As you've seen there's not really an uptick in that we did helped a couple of companies startup process.
In Q1, but for the most part anything related capital markets is all secondary operating so it's really the business that we saw.
And.
This is something that you all know about us is that if that market does pick back up then we're likely to see playing it quite well, but we will continue to try and work with private companies.
And that whole readiness preparation that they that they go through as they're thinking about becoming public absolutely in financial reporting.
That market has been a focus for us with a compelling offering and as Joe says companies are preparing years out for a public offering.
Good morning.
Thanks, Julien Thanks Jill.
Thanks, Adam.
Our next question comes from the line of Alex Sklar from Raymond James. Please proceed.
Great. Thank you Julia ESG reporting.
You referenced the survey that you published a few weeks ago.
40% of the company's servers and invested in some sort of ESG reporting technology can you help frame that in the context of your own installed base and any color on what percent of your base you have cross sold to ESG to to date. Thanks.
Sure sure I mean, we we see in our install bases what that is borne out by that survey that I believe in the survey as I had mentioned said, 70% of the Companys reported that they will be investing in ESG, regardless of regulation and we're seeing that certainly in our <unk>.
Our base. There is there is momentum for interest and the momentum and demand for our ESG offering so absolutely seeing what the survey boral.
Okay.
And then I guess Jill.
All the additional commentary and deferred revenue can you just clarify what you mean by deferred revenue will track in line with historical run rate.
So if you look back to the past few years, and what we've seen quarter over quarter.
We expect to get back towards more of the.
Marc historical trends.
And we didn't we will see some of those renewals resolve in Q2, but past that we would expect to get back more towards normal quarter over quarter transitions.
So just to make sure I'm interpreting it right.
What a normal Q1 sequential increases.
Versus this Q1 will be kind of additive to the rest of the year.
Correct, yes, so the sequential yes.
Yes.
Okay. Thank you very much.
Thanks.
Our next question comes from the line of Joe Meares Futurists Securities. Please proceed.
Oh, great. Thank you for taking my question. This is Conor pasteurella on for Joe just wanted to start with an update on the <unk> acquisition as it pertains to cross selling and Upselling legacy customers were keto products and then maybe the other side what are the dynamics around the growth of their legacy products to new customers as well.
Sure just for those who aren't fully where par sports, leading ESF financial reporting provider, that's been providing EXPAREL conversion software in Europe for for more than a decade now.
And we acquired them a year ago. In fact, it was exactly a year ago last week or so that we were when we had acquired them, Sweden celebrated their one year anniversary with just their on site. They actually completed about 900 disclosures over the last four months and are.
Integrating well with the company, but we're pleased with the execution of it over the last year and we're executing on a program to your question around the cross sell and very happy with the momentum we're seeing there.
Great. Thank you.
Thanks, guys.
Our next question comes from the line of Jan Daniel Jester from the Bank of Montreal. Please proceed.
Hi, This is Kyle on for Daniel Jester, Thanks for taking the questions. So Julia you've been with the company for more than three years and you've seen a lot during that relatively short time. So as you plan on.
One on how you are going to drive the company forward.
Key strategic goals, you're focused on to really drive that success.
Sure you're right I've been here, three and a half years the day of the transition.
And we've developed a strategy that we are.
It will continue to execute on its intact, we have a large tam.
And our focus of course remains both on growth and operating leverage so strategy execution operating margin improvement and growth and really going after that opportunity that I described in the comments earlier around assured integrated reporting.
Our next question comes from the line of Andrew.
Yes.
Gas Fireeye from bear Baird capital markets. Please proceed.
Hi, This is Stephanie on for Andrew Thank you for taking the question.
I'm wondering if there have been any noticeable changes in demand trends so far in the second quarter that would differ from the first quarter or even if there were any changes in demand towards the end of Q1. Thank you.
Okay.
So we saw as we said in Q1, we are pleased with our bookings and going into Q2.
We do think that the everybody is keeping a really close on the macro of course, we've got a potential rate increase tomorrow, we will see how that turns out there is some uncertainty.
Especially as we're looking at a man there is they have a lot of factories with the war in the Ukraine and other more.
Sometimes I've been seeing a more significant impact on some of those factors.
We're watching it very closely we're pleased with the way that we've been able to execute and it's something that we feel like we've still been able to make progress.
But you.
And in certain deals you, maybe do feel a little bit of.
Pressure, but.
Sometimes we move forward. So I think that it's it can just vary but we're not seeing an overall negative impact from the macro environment is just something we are watching along with all of our customers.
And just the whole market.
Thank you.
Thank you Stephanie.
Our next question comes from the line of Mike Grondahl from Northland. Please proceed.
Hi, This is Mike the two Jonathan Mike Grondahl, Thanks for taking my question.
Maybe just on GDP that integration can you talk about what the kind of cross sell different solutions outside the ESG it looks like there.
So with the CDP are certainly that.
That for Us is.
Clearly early I mean regulation is only a few quarters old although the law passed details of the regulation or are still in progress.
But for US it's really it's more of a trigger event for a sales conversation and it enables us to have conversations around assured integrated reporting.
That message as I mentioned is resonating of course, and it's all about the clients that use it is a great cohort of clients are that.
Thank you.
Our next question comes from the line of Brad Reback from Stifel. Please proceed.
That's great. Thanks, very much looking into two key with cars court now getting into the NR. Our calculation can you give us a sense of how we should expect that to trend.
You know I don't really think that it's going to impact our overall company trend.
The young kinds of there are pretty small and so any individual customer impact is going to be a lot smaller.
If you do see churn there.
They have really good retention, though.
So I wouldn't expect you're going to see a very large impact from the overall just historical trends that we see.
Perfect. That's helpful and then Jim just following up.
The deals that slipped out of one you have most of them already closed or the expectation is they will close in.
In the coming weeks, you're expecting they've either closer to the expectation is it needed to close them out here very quickly.
Okay. Thanks very much.
Yeah. Thank you thanks for the question Matt.
Yeah.
Our final question comes from the line of Patrick Schultz from Baird. Please proceed.
Great. Thanks for taking my question and I. Appreciate the color you provided on the strength youre seeing in ESG, it's pretty good to hear that can you just touch on what youre seeing in terms of the average selling prices for ESG solutions are these customers going all in with their initial investment or are they breaking the spend up over time and for your ESG sales and pipeline how should we be thinking about the breakdown between the mix of new account growth versus existing.
And customer expansion.
So.
I'll I'll touch on both of those so I would say that our average deal size as we talked about on the last call.
Was trending higher than or just general average deal size for our cross sell solutions.
We still have been seeing that there is a lot of expansion within our existing customer base as opposed to new logos not that new logos are happening within ESG. We certainly are getting some of that business, but we just have such a really strong base of customers, especially in North America, but it's we are seeing a lot of accounting <unk>.
And there with strong deal sizes.
And I would I would say, we also have different segments in the market there are some mature.
Customers, who have their E S T program.
Solidified and having a much better idea of where they're going what they're doing and strategy in place and deal size. There is very different than those that are emerging and beginning their journey. So while we can see some very large deal sizes were also moving in.
The lower part of the market as well.
Awesome. Thank you appreciate for taking my question.
Thanks.
Thank you ladies and gentlemen, this does conclude today's call. Thank you for your participation you may now disconnect.
Please wait the conference will begin shortly.
Okay.
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