Q2 2023 Workiva Inc Earnings Call
Please standby we're about to begin.
Good afternoon, ladies and gentlemen, my name is Phil and I will be your host operator on this call. After the prepared comments, we will conduct a question and answer session and instructions will be provided at that time.
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 August three 2023 at five P M Eastern time.
Now I'd like to turn the meeting over to your host for today's call Mr. Mike Ross Senior Vice President of corporate development and Investor Relations. Please go ahead Sir.
Good afternoon, and thank you for joining us for where he was second quarter conference call.
During today's call, we will review, our second 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 It's co 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 August 10, 2023.
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.
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 CEO Julie <unk>.
Thank you, Mike and good afternoon, everyone.
During today's call, we'll walk you through our Q2 results and we'll discuss what we're winning in the market across our solution portfolio.
We'll also provide our perspective on the current macro environment.
Exciting new platform innovation, and we will provide guidance for Q3.
Q2 was another solid quarter.
Subscription revenue grew at 21% driving a beat to the high end of our revenue guidance.
Q2 operating margin also beat the high end of our guidance by 222 basis points.
This was my first quarter as CEO .
The leadership transition has been smooth and successful.
I've had the opportunity to spend a lot of time over the last few months meeting with employees and customers and partners all around the world I'm more optimistic than ever and the opportunity in front of us.
The challenging macro I am confident in our ability to successfully execute our growth strategy and advance our productivity initiatives.
We're winning with assured integrated reporting or.
<unk> remains the only platform that brings financial reporting ESG.
<unk> together in one secure controlled aren't ready environment.
This is showcased by the growth we're seeing in our large contract customers.
<unk> of contracts valued over $100000 increased 24%.
Those over $150000 increased 28% and <unk>.
Contracts valued over $300000 or up 40% all compared to Q2 of 'twenty ratio.
Along with our best of breed capabilities.
One is strong in key differentiator in the marketplace.
Resonating with our customers.
To highlight three Q2 expansion deals all of which are full assured integrated reporting wins.
First a fortune 100, aerospace and defense company purchased ESG to complement their previous investment in SEC global statutory reporting and Trc.
This 10 year loyal FCC customer, we should engage with the big four firms and transforming their ESG program.
The big four firm recommended work either as the technology of choice now also be providing delivery for the project.
Second a privately held provider of it infrastructure and products and services expanded their existing investment in DRC and ESG by purchasing our suite of financial solutions, consisting of a private company reporting a global statutory reporting and management reporting.
This is a short integrated reporting win was sourced by the same big four advisory firm that delivered the customer's current DRC on ESG solutions.
<unk> will also be handling project delivery of this new financial reporting solution suite.
And third a European based multinational telecommunications company purchased both our ESG <unk> solutions to complement their existing investment in FCC and global statutory reporting.
This deal was a cross sell win with the Big four advisory firm and we'll be partnering with them and the delivery of this project.
These examples showcase the value and the flexibility of our innovative platform and.
They speak to the value of managing financial reporting nonfinancial, ESG reporting and audit risk and controls all in one platform.
They also highlight the important role that our partners play and extending the value of our platform and an account expansion.
The strength of our partner program continues to contribute to both new logos and deal expansions that are sourced by or co sell with what Keith Advisory a technology partner.
Our partner first strategy is also driving results in ESG.
I'd like to highlight a few examples through Q2, but customers invested in and expanded their ESG program, which we're Keith.
First a fortune 500 provider of food facilities and uniform surfaces purchased ESG to complement their existing FCC solution.
This long time FCC customer was looking to expand their program in ESG data management reporting and climb in accounting.
This opportunity was influenced by both the regional advisory firm partner.
And by a climate accounting software partner.
The combination of both Giza ESG data management and reporting along with the partner delivered integrated climate accounting solution will provide this client comprehensive ESG solution.
And second a European based consumer products company with a new logo win with their purchase of ESG.
This opportunity was sourced by a big four advisory firm, who had been engaged on an ESG transformation project.
The driving force behind this project with the customer's future compliance with the new CSR D ESG disclosure requirement.
The software selection went through a formal RFP process and were kiva prevailed as the top solution to address this company's ESG reporting requirements.
While non financial reporting as a new growth driver, we continue to benefit from strong growth in our financial reporting solutions.
This portfolio of solutions goes beyond our well established SEC solution.
In Q2, we had signature wins in our vertical specific solutions for banks investment firms and state and local governments.
We also saw strong momentum in our private company financial reporting solutions, including those companies on a private to public journey.
I'd like to highlight two financial reporting deals that closed during the second quarter.
First a top 20 U S City purchased seven solutions to support their annual comprehensive financial report.
This new logo win with a joint sales pursuit with an ERP technology provider to support our finance transformation project that included a new ERP system.
We're keeping this partner submitted a joint proposal and aligned in supporting the city's financial reporting requirements.
This opportunity was also influenced by our regional consulting partner, who had a previous relationship with the city and this regional partner will be implementing the project.
Our financial reporting suite of solutions provide significant value to finance transformation and ERP selection projects. The complexity of this type of finance transformation is where our platform truly shines.
And second we closed a seven figure solution upsell for fund reporting with a U S based global investment company.
This new purchase expanse of the use of our fund reporting solution across their private equity and credit fund portfolio.
The project will be implemented by our regional accounting advisory firm, who has implemented two other work even solutions for the same client.
I'd like to move on now to talk about our <unk> suite of solutions.
With increasing stakeholder scrutiny, establishing an integrated enterprise wide governance risk and compliance program is a strategic priority for many organizations.
At the core DRC programs include processes for controls risk and audit management.
I'd like to highlight two GSE deals that closed during the second quarter.
First we landed a new logo win with a publicly traded consumer products company that purchased controls management to support their sox process.
This deal was brought to us by a big four firm who is advising the clients accounting team on their controls process.
Once they saw the power of our control testing capabilities the deal was locked in.
And second.
The top 15 U S based mutual insurance company expanded their investment in work either with audit management.
This solution will be the six where kiva solution purchased and expands on their <unk> investment in controls management and enterprise risk management.
This opportunity was sourced by our regional advisory firm, who implemented the controls and the risk management solutions back in 2022.
Now I'd like to shift gears and share perspective on the macro environment.
Not unlike other SaaS companies, we continue to operate to some challenging market conditions.
While our top of funnel activity is growing we do see sales cycles, extending and customer budgets under increased scrutiny.
And it's clear from my conversations with both our customers and our partners that more executives have become involved in the decision making process and budgets are tightening.
And that's regardless of company size or industry sector.
Having been a CIO and a buyer of SaaS software for many years. It's my experience that you become more selective and focused on business critical applications when budgets tightened.
So our focus continues to be on communicating our value and working with our partners to deliver high ROI projects.
We do have some positive news to share on capital markets.
In Q2 secondary offerings remains strong and we saw an uptick in our IPO activity. We're pleased with how we're competing for these IPO deals that are starting to emerge.
In Q2, we supported the successful IPO of a fast casual chain of restaurants.
This company started out with where kiva to the purchase of private company reporting back in Q2 of 2022.
They then purchase capital markets in Q1 added on the work he's a sock solution.
And converted to the FCC solution in Q2.
While it's encouraging to see IPO movement, we're not forecasting a measurable come back in the second half of this year.
We are however, encouraged by our win rates in the larger deals that are going to market.
Another part of the macro environment that impacts where geyser is a fast paced change in the evolving ESG market.
ESG has emerged as an important and sometimes polarizing topic in U S politics, and it's frequently capture the news headlines.
But even with the ongoing political debate stakeholder demands for transparent nonfinancial data continued to grow louder.
What's clear from our experience working with our corporate clients is that new and pending ESG regulations across the U S and Europe are driving the convergence of nonfinancial and financial reporting as well as the requirement that data be audit ready and investor grade.
Other stakeholder groups, such as investors suppliers consumers and employees are also requiring greater disclosure of material non financial information.
And as evidenced by a number of ESG related actions taking place around the world. We still believe there is a generational opportunity in front of US Here's just a short list of regulations and potential legislation that evolved during the second quarter.
On June 9th <unk>, which is the technical advisory to the European Commission under the CSR D issued a draft set of enterprise reporting sustainability standards for providing further clarification on this already passed mandates.
And on Monday July 31, the EU voted on final approval for these reporting standards.
Next on June 18th Swiftboaters accepted a new law that formalizes, Switzerland commitment to climate protection and adoption of new reporting requirements.
Then on June 26, the international Sustainability standards Board launched new ESG standards <unk>.
S S. One and <unk> S to the eye SSP states at the release of these standards will usher in a new era of sustainability related disclosures and capital markets worldwide.
On June 27th the Australian government announced plans to implement mandatory climate related financial disclosure requirements for companies and financial institutions.
And finally here in the U S. There are two important updates.
The SEC reported that they are targeting October 2023 to provide further clarity on the climate disclosure rule.
And second in California to ESG disclosure bills have passed the Senate and are now in Committee review in the Assembly.
These two state bills would require companies operating in California to report their greenhouse gas emissions from our cost their supply and value chains.
And their climate related risks and both in line with T. C F D.
This list speaks to how the regulatory environment continues to expand globally in both scope and complexity regulations are increasing as is the demand for more data and disclosure.
This is what we do and it's why our platform is so relevant.
I'll turn now to R&D and our continuous platform innovation.
We remain focused on innovating and developing new capabilities and furthering the openness and the extensibility of our platform.
We believe we are leading a new wave of innovation in which transformative business value will be achieved through a combination of human expertise.
Textual data and the responsible use of generative AI technology.
Generally the AI has the potential to revolutionize the business reporting market by further boosting productivity and efficiency and by enabling insights that lead to better and faster data driven decisions.
Our platform's open ecosystem approach will let our customers decide which industry, leading large language model best fits their needs, including those models from Google and Microsoft.
Customers will never have to move their data from there, we'll keep a platform to leverage generative AI.
And neither work Eva nor our technology partners will store or use customer data to train models.
It's a capability that brings together, our differentiated technology data security and domain expertise.
We will be discussing generative AI and we'll be providing a business and strategy update at our 2023 analyst day on Tuesday September 19th.
So please mark your calendars. This year's hybrid event will take place in Nashville, Tennessee, and we will also be available via live stream.
We've once again combined our analyst day, which were key to amplify our annual customer conference. We want to ensure that all in person attendees also have an opportunity to meet with our customers and our partners. We look forward to seeing you there.
In closing I will leave you with a few final remarks.
We'll keep it delivered solid second quarter results.
We're winning with our multi solution account expansion strategy, resulting in strong growth in large contract customers.
We remain confident in the resiliency of our business. The continued demand for assured integrated reporting platform and our ability to expand in our large and relatively unaddressed Tam.
Notwithstanding the current macro challenges, we remain committed to both our growth strategy and achieving operating leverage.
Finally, I'd like to thank our global team of dedicated employees, who continue to execute on our strategy take care of our customers and each other and live by our company values.
We were honored to be recognized by fortune, which named or Kiva on its best workplaces for millennials list.
This is our seventh year on the list.
Millennials make up almost 70% of our workforce, which is why this award is so meaningful to us.
And with that I'll now turn the call over to Jill.
Thank you Julie.
Let's turn to our results.
This afternoon I will review our financial performance for the second quarter 2023, and provide Q3 and full year 2023 guidance before opening the line for questions as Julie mentioned, we beat our Q2 revenue guidance at the high end, primarily due to strong subscription revenue growth.
We beat guidance on Q2 operating results at the midpoint by $3 $9 million or.
Our revenue beat coupled with productivity initiatives and a reduction in consulting expenses drove the operating beat the results of the focus on operating leverage we discussed last quarter is evidenced by improved profitability for the first half of 2023 versus 2022.
Let's go through some key results and highlights for the quarter.
We generated total revenue in the second quarter of $155 million delivering growth of 18% from Q2 2022.
Descriptions revenue was $136 $8 million up 21% from Q2, 2022, while new logos and account expansions. Both helped drive strong revenue growth in Q2 2023, 45% of the increase in subscription revenue in Q2 came from new customers added in the last 12 months.
<unk> services revenue was $18 $3 million in Q2, 2023 relatively flat compared to the same quarter last year.
This was consistent with the expectations, we outlined in our Q1 call.
As we have discussed our strategy for professional services is to transition lower margin set up and consulting services to our partners.
Part of building a high performing partner ecosystem is to provide our partners a strong business opportunity delivering professional services to our common customer and promoting the value of the platform.
In doing this we expect setup and consulting services revenue to decline year over year for the full year, 2023, which should be mostly offset by our growth in higher margin ex BRL services.
Now on to our performance metrics.
We added 106 net new customers in Q2 for a total customer count to 5860, a growth of 479 customers from Q2 2022.
Subscription and support revenue retention rate remained at a best in class, 98% for the second quarter of 2023.
This is comfortably ahead of our internal objective of ninety-six or above.
With add ons, our subscription and support revenue retention rate increased to 111% for the second quarter of 2023.
Compared to 108% for Q2 2022.
This rate improved 190 basis points compared to the first quarter of 2023.
We are very pleased with the increase we are seeing in net revenue retention.
Driver of this improvement is the strong account expansion activity we are seeing.
Led by the addition of new solutions and expanding the Hughes and spend for existing solutions. One customer highlight from Q2 was a U S Department of Health agency expanding their use of our <unk> G. R. C via their six figure purchase of our audit management solution.
This government agency initially purchased our controls management solution in Q1, 2021 to support their OMB circular E. One twenty-three requirement for managing risks and establishing a system to assess correct and report on the effectiveness of internal controls.
Account expansions like this are also a strong contributor to the increase in large contract value customers.
As Julie mentioned, we continue to see momentum and are optimistic that we can continue to expand the number of customers spending over $100000.
In the second quarter of 2023, we had 1470 contracts valued at over $100000 per year.
24% from Q2 of the prior year.
The number of contracts valued at over $150000 totaled 823 customers in the second quarter up 28% from Q2 2022.
And the number of contracts valued over $300000 totaled 272 up 40% from Q2 2022.
In addition to account expansion six figure new logo wins, many of which are sourced by or a co sell with our partners are also driving this large contract cohort.
Q2 example of this is a six figure new logo private company financial reporting win with a building products manufacturer.
This deal was sourced by a technology consulting partner, who will also be providing delivery on the project.
This new customer was purchased by private equity in 2022, and we'll be using <unk> to manage more stringent financial reporting requirements.
Moving on to our operating metrics.
Gross profit totaled $117 $6 million in Q2 up 17% from the same quarter a year ago.
Gross margin was 76% in the latest quarter versus 77% in Q2 2022.
The decrease is due to higher cloud computing teeny and compensation expenses versus Q2 2022.
Operating expenses increased by 8% from Q2 2022, we.
We are pleased with the operating leverage we are seeing the trend is improving as operating expense growth is the lowest since 2020 and half the rate of revenue growth year over year.
We posted an operating loss of $600000 in Q2, 2023, a substantial improvement compared to Q2, 2020 two's operating loss of $8 $3 million.
As we discussed in our Q1 call, we expect improvement in our operating leverage in the second half of 2023, and we are focused on delivering non-GAAP profitability for the second half of 2023 and for the full year 2024.
At June 30th 2023, cash cash equivalence and marketable securities totaled $466 million, an increase of $26 $4 million compared to the balance at March 31 2023.
Operating activities in Q2 2023 resulted in cash provided of $26 million compared with an increase in cash of $8 $7 million in the same quarter a year ago.
This was a record addition to cash from operating activities.
The collection of several large multi year customer prepays drove the increase in cash in Q2, we.
We do not expect similar accretions to cash, but do you believe that cash flows will continue to stay positive in the second half of 2023.
Q2 delivered a rebound in our deferred revenue as discussed in our Q1 earnings call Q1 was impacted by seasonality in our deferred revenue and the timing of several large contract renewals and contracts with prepayments.
Our Q2 deferred numbers reflect that those contract renewals have been completed.
Also our cash flow numbers highlight the impact from a few large contract re prepayments.
Turning now to our guidance.
We continue to believe our guidance assumptions are prudent for the current macro environment.
For the third quarter of 2023, we expect total revenue to range from 155 million to $156 million.
We expect revenue growth to be driven by subscription revenue.
Three services revenue growth is expected to be slightly down versus the same period in the prior year.
Growth in higher margin ex BRL services should be offset by reductions in setup and consulting services as we move those towards more partner delivery.
We expect non-GAAP operating loss to range from $1 million to breakeven.
Net income of three cents to five cents on a per share basis.
Our share count will be approximately $54 1 million weighted average shares.
For the full year 2023, we are holding our full year revenue guidance to that reported in our Q1 call a range from $626 million to $628 million.
We are raising our guidance for non-GAAP operating loss to range from $3 million to $1 million or a net income of nine cents to 12 cents on a per share basis.
Our share count will be approximately 54 million weighted average shares.
As I highlighted earlier, we expect the growth from EXPAREL services revenue to be offset by a decline in setup 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.
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.
Before we turn to Q&A I would like to reiterate three key points.
One we delivered 21% subscription revenue growth in Q2, and we continue to believe that we can deliver 20% subscription revenue growth for the full year 2023.
Two we delivered a beat on Q2 operating margin guidance and are focused on continuing the momentum of margin improvement and targeting a non-GAAP operating profit in Q4.
And three we remain committed to our strategy and our long term operating model.
In closing I want to Echo Julie's. Thanks, 12 are kiva employees.
You are an amazing team and I am proud to be working beside you for.
For the analysts and investors listening to our call today I look forward to seeing you next month at our Investor Day event.
We will now take your questions operator, we are ready to begin the Q&A session.
Thank you Ms Clinton, ladies and gentlemen at this time do you have any question simply press Star. One if you do find your question has already been addressed you can remove yourself from the queue by pressing star one again, we will take our first question. This afternoon from Rob Oliver of Baird.
Sure.
Great. Good afternoon, Thanks for taking my questions Julie.
Really stood out to me was.
Very strong large customer growth to large customer metrics, particularly that 40% growth in customers paying over $200000 and I think you did a really nice job in your prepared remarks.
Giving some hints as to the partner in fluids, which is a relatively new thing for Cuba. So just was hoping you could touch on that what what are you seeing when you see say for example.
More partners.
<unk> automatically suggest larger deals and are these the types of deals you're landing that are full assured everybody reporting deal. So FCC trc in ESG.
Let me talk about the components of some of those large deals will be great and then I had a quick follow up for Joe.
Sure Hi, Robyn. Thank you for the question I'm glad we get to highlight that this key tenant of our growth strategy.
Partners are everywhere, we want to be and yes, we sell higher we sell more we sell broader we sell larger deal sizes. Our goal of course is to make them commercially successful left with us and we've been taking a partner first approach and.
And the percent of the deals that are delivered by partners continue to increase and the goal. There is of course, so that we get sourced source deals and co sell with partners more and more so we are seeing high engagement from our partners and as I highlighted in some of those customer examples we are seeing more and more of that and <unk>.
Base demand across the portfolio and yes, the assured integrated reporting concept that platform. We're out with is resonating with customers. So thank you for the question able to highlight that.
I appreciate that thank you and then Jill I think.
Totally better profitability in the second half on the guide.
Investors will welcome that.
Mentioned in your prepared remarks about.
Expense growth running at its lowest rate I think half of revenue growth is what you said.
Where are you finding that leverage can you just point to some things is it is it.
On the sales and marketing side.
Can you just give us a sense of it.
Are you finding that leverage thank you very much.
Yes. Thanks for the question so Rob we're looking at it really across the business, we're being very careful about how we operate and we are looking for leverage throughout the business no matter. What the team is we're looking for it in sales and marketing we're looking for it and R&D, we're looking for it in G&A.
And we're making sure that we're using our resources to the best of their abilities.
In structuring the work and the teams in a way that they can succeed.
Succeed.
In a in a way that is just more efficient and so I wouldn't say that it's it's spread across the business. It would be wrong just call out one team in particular, because we really are looking at it in a very holistic way.
I might jump in there I mean, Robert you know that we're moving from the 500 million to the 1 billion right. Now just requires more automation more rigor more discipline accountability performance management all over so across the board setting goals targets tracking progress and it's also having the right people in the right roles and Lee.
<unk> Ics, so we're focusing all around on the productivity.
Great. Thank you again.
Thank you we'll go next to Alex Sklar at Raymond James.
Great. Thank you Julie lots of info on the prepared remarks, the partner influenced Rob mentioned definitely stood out I wanted to start on your commentary around the macro can you just talk about if this is a change versus what you've called out in the past couple of quarters or are you just kind of reiterating a difficult operating environment.
You know not in familiar question. These days I will say, we did have a solid quarter and we're pleased with our results and we do continue to continue to see the broad based demand for our platform and diverse portfolio of solutions, but yes. The.
The budgets are tightening sales cycles, along getting some and are just seeing a lot more people in the in the procurement process and needing approvals and so forth. So.
It's it's not been a change in continued for the most part.
Will say I do find myself on a lot of customer calls these days talking to C level executives to get deals over the line and it was just on one earlier in the week.
We're just we're hearing not that the values out there that they're not seeing the value theyre just being more thoughtful about their choices, but again as I highlighted in my earlier remarks, we're seeing a lot of large deals six even seven figures.
As the portfolio across industry in G. O. So just general macro continuing on.
Okay I appreciate that color and lots of it was definitely a strong bookings quarter I imagine you an NGL already having those same conversations with some of your suppliers right now too.
Hey, Joe So on the high gross retention that you flagged running at above your internal objective I think that was determined to use up just curious how youre thinking about pricing broadly is a growth lever is there any plans or opportunity to kind of further optimize pricing in the coming quarters as a result of that higher retention.
Yeah, so our pricing something that we pay a lot of engine to of course.
And especially as we've talked about this quite a bit that.
Maybe that metric is even a little bit too high maybe we're not pushing enough and so whenever we come to a renewal inflection point on a contract.
Look at the whole customer relationship and the potential opportunities ongoing for additional solution as an additional value that we might continue to provide to that customer and we absolutely have been pushing more on price increases.
Contract renewals come into play and it's something that we look at very carefully and and so yes, I would say that that that absolutely is the reason that we say that where we expect it to be 96 pluses that we think that maybe as that metric remains the high potentially there's a little bit of room for us to push a little bit harder on price.
Got it understood.
Tactical.
Mexico price increases on renewals more so than kind of blanket across the board.
Correct.
Alright, Thank you both for the color.
Thank you the next now to Andrew <unk>, Barry Byrne burn.
Thanks for taking my question first in terms of the ESG.
Activity in Europe , I know there was a change where they loosened some of the language, particularly for smaller businesses. There I was just wondering if.
If you're at all it changes your view on parts for it and the opportunity there given that what happened.
And I have a follow up.
So I don't think that it really changes our you know how favorably we look at parts for it and that team and what they do there is still ongoing requirements for filing and financial and integrated reports in Europe , and we think that there is still market pressure.
For these customers to continue to provide even more information.
And what's material to their business going forward.
It's something that we're watching of course very closely he thought yeah, Julie mentioned quite a few different things.
Things that are happening in Europe , and that might have potential impacts to our business, but overall, we feel like the market is still driving yes GE.
Reporting and and but we still think that the <unk> acquisition and what they bring is a very valuable piece of our ongoing European.
Strategy.
That's helpful and then maybe.
Joe could you elaborate a little bit on the full year guide.
Given the strength in the metrics I mean.
Is there is there something on the services side potentially holds out.
You mentioned that disconnect.
Good luck guys. Your outsourced partners just wondering if there's something else that is preventing you from raising yet Kevin.
It's real it's where it is in quarterly.
<unk>.
Yeah.
So specifically on or on revenue, we wanted to right now as I mentioned, we're being very prudent with how we provide that full year revenue guide.
We are careful about how the macro might be impacting those results.
We have seen some of that movement of Saturday consulting services moving to our partners that's been a little bit more quick in a couple of quarters.
Talked about that in Q1.
And so we are balancing that potential professional services shift and the macro environment and just being very careful and prudent about how we're guiding for the year.
Thank you very much.
Welcome.
Thank you well go next now to Adam Hotchkiss at Goldman Sachs.
Hey, everybody. This is connor on for Adam Tonight, Thanks for taking the time and the questions you called out a competitive win in Europe with the ESG solution.
Being an RFP process.
Was driven by the CSR deregulation can you talk about.
Some of the things that differentiated where kiva from the competition in that RFP and if the product is starting to gain some more reference ability with each incremental win there.
Sure.
I will tell you we're very pleased with our progress in Europe , a lot of momentum there and we did have some signature wins this quarter multi solution six figure deal and I really think to your question specifically it is the value proposition of assured integrated reporting its resonating.
So again Europe did pass the CSR deal on November and there was much more clarity for us specific requirements just as late as last week. So.
The the companies know, what's coming and we have the platform to serve so bottom line a lot of opportunities for us to go after in Europe , and we're going after it got the right platform right time are ready to serve the market.
I'm, sorry, that's definitely great to hear.
And if I could dig into Europe , a little bit more.
With CSR to you being implemented the timelines for the reporting are coming up.
Are you guys able to kind of better defined the market size, because that's become a little bit more tangible and then if youre looking at both public and private companies given the <unk> impacts both sides of the fence or the opportunity set that you see different are they fairly similar for private and public companies.
So with CSR D. What are we have targeted specific markets to go after where we know we'll win initially well the the rules are being defined even more there are those that are going to need to comply within the 2024 and the 2025 year filing in 'twenty five.
For the 24 year. So we've we're targeting those so we have very specific go to market plans and targets.
Again, CSR D has a long timeline.
Groups of companies will need to comply based on the requirements. So long timeline long tail. So we are of course targeting those early on the ones that are going to need to comply first.
That makes perfect sense, that's very helpful. Thank you.
Thank you well go next to Matt Stotler at William Blair.
Okay.
Hey, there thanks for taking the questions.
Maybe first one just on general AI, obviously still very early but would love to get it.
A sense of how much of your installed base, especially your enterprise customers are actively exploring.
What kind of time Jeremy.
Reporting processes and then if you think about potential penetration within the base.
Are there any incremental monetization opportunities for her Cuba associated with generative AI.
Sure. Thanks for the question seems to be the the Tech innovation question of 2023, we're very excited about our first announcement using generative AI to power new features and capabilities on the platform.
We've been working with a select group of clients right now on feature validation and we're getting early feedback from them and appreciate some of the things I highlighted in my earlier remarks, both convenience and and data security leveraging those large language models.
So we were making it available to customers, we haven't rolled it out entirely to the whole basin globally, but where we're actually making a lot of progress in terms of what is what will bring value to customers and that ties into your question around monetization. So first and foremost it's how do we.
Bring value to customers as we talked about efficiency and productivity and helping them make better better decisions. So we're doing that making sure. We have what we have and what we're releasing for customers really brings the value and then of course, we'll move on to the next phase of monetization, but right now its differentiation and its customer value.
Got it Thats very helpful.
Maybe just one follow up.
Again on the large customer cohort growth.
Just real quick on <unk>.
What's driving the acceleration there right, obviously very nice growth and acceleration in Q2, you touched on an earlier question on the partner influence. There is it largely just the kind of the partner motion wrapping up an enforced or were there other factors in there that are driving the acceleration.
I'd say, it's our focus on multi solution account expansion.
And the concept of in assured integrated reporting we continue to say we are the only platform the only technology platform.
ESG or non financial reporting along with financial reporting and assurance DRC are all on the same platform that is resonating with our customers and our prospects and again multi solution account expansion is.
Where we're focusing and yes, you hit it on the head there with the partners they hope to accelerate that.
Got it very helpful. Thank you.
Thank you.
Okay.
Well go now to Joe Meares extra risks.
Hey, guys. Thanks for taking the questions.
I want to hit the partner topic from a little bit of a different angle last year at amplify you increased your target percentage sales and marketing spend.
So on the 25% of sales to 32 is there any conservatism on that now that you are seeing some real help from our partners as far as the sales motion is concerned.
Plug in near term, but maybe over the next couple of years.
Yeah. So thanks for the question Joe.
I think what we're what you're talking about as our long term operating model is that right.
That's correct.
Yeah.
So as we think about that model.
We believe that.
Even with the partners involved there still is.
We think that that model is inclusive of the impact that we'll see from partners. So even though we will continue to work with partners.
Will sit alongside our partners to help drive some of this growth.
We still will have organic sales that are happening within the within the company and.
And that's what's reflected in that long term model.
Great that's helpful.
Just around ESG, if you could give us an idea generally about how many logos you have now was there any inflection sequentially in bookings, there up or down and I'm.
I'm just curious what your thoughts are there.
Sure. Thank you for the question again, when we'd like we'd love to highlight ESG was yet again, one of our top three booking solutions in Q2, and it's also been a top solution and bookings growth and it was again in Q2.
As I mentioned earlier, we added several fortune 500 clients to our already elite roster of ESG account expansions, we we're not yet giving any numbers around customer.
You know acquisitions in terms of ESG at this point mhm, but a lot of a lot of opportunity there and continue to be very optimistic about the market now and in the longer term and going after the Tam.
Thanks Julien.
Okay.
Well go next now to Marc Ratner at Stifel.
Yeah.
Thanks for taking the question. This is mark on for Brad I wanted to see broad thoughts on hiring in the back half and any areas that you're prioritizing.
And then just a second question on guidance.
So on hiring are you know.
Unlike a lot of companies are we didn't over higher we're busy of course, focusing on growth and executing so we're not taking the time now to right size, we don't need to so we do believe we're operating the company in the right way for our opportunity stage of company that we are ESG in front of US is short integrated reporting in front of us so.
While we've become highly intentional around hiring and focusing on productivity. We will continue to focus on growth and we're going after the opportunity in front of us our town and we will continue to hire.
Great. Thank you for that and then just on guidance.
Having a little bit of difficulty here so.
The 12 lawsuit so so far the seafarer about.
At a time sense of loss.
Three to five.
Q3.
That would imply a 2014 to 16 San Thank you for so just trying to kind of understand if there was something something different in Q4, that's going to drive profitability are much higher.
So when you're looking at that.
Earnings per share.
Number that's inclusive of course, our interest income and we have been pretty intentional about as rates have risen.
Our investment portfolio and so I don't.
I don't have the numbers of the math that you're doing right in front of me at this time, Mark, but we can follow back up with you and clarify them, but we have been seeing quite a bit of a actually improvement in our.
And interest income and that's driving that difference between the operating loss range versus a net income on the per share basis.
Got it okay, alright, great. Thank you.
Youre welcome.
Okay.
And ladies and gentlemen, just a reminder, sawant Lee for any questions and we'll go next now to Mike Grondahl at Northland capital markets.
Hi, This is Mike. Thank you John for Mike Grondahl, most of mine have been answered, but maybe just on that SEC ruling coming in October do you have any insight.
I don't want the final.
Timeline looks like for a ruling like that.
And companies actually after.
By that to their filings.
Yeah.
As we all know it's focused on the <unk>.
Shoring, some modernized comparable reliable disclosures on issues important to investors and of course investment in voting decisions. What we what we know it's gone through the full process and its pending release latest communications are that will be released in the October timeframe.
No.
Timing is a you know it you know as much as I knew if I wish we both had a crystal ball that was accurate, but we don't so we're going with what we're hearing too, but I will tell you. This we are ready to support our customers one of our strengths of course is meeting regulatory requirements as quickly as they emerge and we've been doing this for well over a decade and we.
We are ready wedding and waiting two to support our customers I mean, we're seeing a lot of interest and demand regardless of when this FCC climate disclosure.
Pleasure rule passes there you know companies are ready to ready to go forward with stakeholder demand increasing around all of these topics. So.
Great. Thank you.
Thank you and it appears we have no further questions. This afternoon, so that will bring us to the conclusion of our key this conference call we'd like to thank you all so much for joining us today and wish you all a great rest of your evening Goodbye.
Please wait the conference will begin shortly.
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