Q3 2023 Workiva Inc Earnings Call

October 30, 2023

Operator: Good afternoon, ladies and gentlemen. My name is Sarah, and I will be your host operator on this call. After the prepared comments, we will conduct a question and answer session. Instructions will be provided at that time. If 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 30 October 2023 at 5:00PM Eastern Time. I would now like to turn the meeting over to your host for today's call, Mike Rost, Senior Vice President of Corporate Development and Investor Relations at Workiva. Please go ahead.

Good afternoon, ladies and gentlemen, my name is Sarah and I will be your home.

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 October 32023 at five o'clock P. M. Eastern time, I would now like to turn the meeting over to your host for today's call Mike Ross.

President of corporate development and Investor Relations our Keybanc. Please go ahead.

Mike Rost: Good afternoon, and thank you for joining us for Workiva's Q3 conference call. During today's call, we will review our Q3 results and discuss our guidance for Q4 and full year 2023. Today's call has been pre-recorded and will include comments from our Chief Executive Officer, Julie Iskow, 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 6 November 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 Q4 and full fiscal year 2023.

Good afternoon, and thank you for joining us for <unk> third quarter conference call.

During today's call, we will review, our third quarter results and discuss our guidance for the fourth quarter and full year 2023.

Today's call has been prerecorded and will include comments from our Chief Executive Officer, Julie is co followed by our Chief Financial Officer, Joe Clint.

We will then open the call up for a live Q&A session.

A replay of this webcast will be available until November six 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 fourth quarter and full fiscal year 2023.

Mike Rost: These forward-looking statements are subject to known and unknown risks and uncertainties. Workiva 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 Iskow.

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>.

Julie Iskow: Thank you, Mike. Before I begin my prepared remarks about our quarterly results, I want to take a moment to acknowledge what's going on in our world. This is an extremely tragic, painful, and uncertain time. It's especially so for those who have a connection to the impacted regions, and this may include some of you on our call today. While there's a lot that can be said, it is our hope that resolution is reached and peace will prevail. I'll now move on to our operating results. Workiva delivered another solid quarter, achieving subscription revenue growth of 21% and a non-GAAP operating profit that beat the high end of our guidance by nearly 340 basis points. As highlighted at our September Investor Day, Workiva continues to stand out from the SaaS crowd, given that we solve problems our customers must address.

Thank you Mike.

Before I begin my prepared remarks about our quarterly results I want to take a moment to acknowledge what's going on in our world.

This is an extremely tragic painful and uncertain time.

It's especially share for those who have a connection to the impacted regions.

This may include some of you on our call today.

Well, there's a lot that can be said it is our hope that resolution is reached and pes will prevail.

I'll now move on to our operating results.

Well keep it delivered another solid quarter, achieving subscription revenue growth of 21% and the <unk>.

non-GAAP operating profit to beat the high end of our guidance by nearly 340 basis points.

As highlighted at our September Investor Day will keep it continues to stand out from the SaaS ground given that we solve problems our customers must address <unk>.

Julie Iskow: Companies need transparency, they need to comply with regulation, and they need accuracy in reporting and disclosure. Workiva provides solutions that are necessary in good times and in challenging times. Our opportunity and our technology are such that we are becoming the world's leading platform for transparent reporting and regulatory disclosure. Why? Because our strength is where data consistency and data integrity and accuracy are critical and where narrative is required. This is highlighted by the deals we're winning and the references our customers are providing. We showcase many of these success stories at our Amplify user conference, including companies like Hershey that shared on the main stage the value that they receive from our connected solutions across financial reporting, GRC, and ESG. I'd also like to congratulate Hershey for recently receiving the Innovation Excellence Award for ESG Metrics and Reporting from Verdantix.

Companies need transparency, they need to comply with regulation may need accuracy in reporting and disclosure.

We'll keep it provide solutions that are necessary in good times and in challenging times.

Our opportunity and our technology are such that we are becoming world leading platform for transparent reporting and regulatory disclosure.

Why because our strength is where data consistency and data integrity accuracy are critical and we're narrative as required.

This is highlighted by the deals we're winning and the references our customers are providing.

We showcased many of the success stories that our amplify user conference, including companies like Hershey, that's shared on the main stage the value they receive from our connected solutions across financial reporting DRC and ESG.

I'd also like to congratulate Hershey for recently, receiving the innovation Excellence award for ESG metrics and reporting from <unk>.

Julie Iskow: This is the second consecutive year that a Workiva customer has won in this category. The value our platform provides is also quantified by the continued large contract account expansion that we saw in Q3. We continue to see outpaced growth in our large contract customers. In Q3, the number of contracts valued over $100,000 increased 24%. Those over $150,000 increased 26%. Contracts valued over $300,000 were up 38%, all compared to Q3 2022. Our platform is a strong and key differentiator in the marketplace. Workiva remains the only platform that brings financial reporting, ESG, and GRC together in one secure, controlled, audit-ready environment. We are the platform for assured integrated reporting. I'd like to highlight three assured integrated reporting wins that we signed in Q3.

This is the second consecutive year, where keep a customer just one in this category.

The value. Our platform provides is also qualified like a continued large contract account expansion that we saw in the third quarter.

We continue to see outpaced growth in our large contract customers.

In Q3, the number of contracts valued over $100000 increased 24%.

Those over $150000 increased 26%.

And contracts valued over $300000 were up 38% all.

All compared to the third quarter of 2022.

Our platform is a strong and key differentiator in the marketplace with Kiva remains re platform that brings financial reporting.

S G and GSE together in one secure control audit ready environment.

We are the platform to assured integrated reporting.

I'd like to highlight three assured integrated reporting wins that we signed in Q3.

Julie Iskow: First, a Fortune 500 energy company purchased three GRC solutions, including audit, internal controls, and risk management. This was to complement their previous investment in SEC, management reporting, and ESG. This 11-year loyal SEC customer was engaged with a Big Four advisory firm in transforming their GRC program, and the Big Four advisory firm recommended Workiva as the technology of choice. This firm will also be providing delivery for the project. Second, a North American-based airline that purchased SEC in Q2 of this year went all in on the Workiva platform in Q3. They added a 5-solution account expansion that included ESG and four GRC solutions, SOX, audit, enterprise risk management, and IT risk and controls. This deal was a competitive win over a point solution GRC provider.

First a fortune 500 energy company purchased <unk> solutions, including audit internal controls and risk management.

To complement their previous investment in SEC management reporting and ESG.

11 year loyal FCC customer was engaged with the big four advisory firms and transforming their <unk> program and the Big four advisory firm recommended work either as the technology of choice. This firm will also be providing delivery for the project.

Second North American based airline that purchased SEC in the second quarter of this year with all in on the work Eagle platform in Q3.

Out of the five solution account expansion that included ESG and <unk> solutions Sox audit enterprise risk management and risk and controls. This deal was a competitive win of a point solution JRC provider.

Julie Iskow: The strength of our connected platform and the ability to support both SEC and ESG reporting reinforces Workiva's better together approach. It also contributed to the competitive differentiation in this platform expansion. This assured integrated reporting win was a co-sell with a regional advisory firm that will also be handling the project delivery of both the GRC and ESG solutions. Third, it's not just about account expansion. We're landing with the platform, including a three-solution new logo win with a Spain-headquartered utility who purchased ESEF reporting, ESG, and controls management. This assured integrated reporting win was sourced by a Big Four advisory firm.

The strength of our connected platform and the ability to support the SEC from ESG reporting reinforces work even better together approach is also contributed to the competitive differentiation in this platform expansion.

This is a short integrated reporting win was a co sell with the regional advisory firm.

Also be hearing the project delivery at birth, the JRC and ESG solutions.

And third it's not just about account expansion when landing with the platform, including a three solution new logo win with the Spain headquartered utility who purchased ECF reporting ESG and controls management.

This assures integrated reporting win was sourced by a big four advisory firm there.

Julie Iskow: There were two other Big Four firms involved in this deal competing for the implementation work, and all three had a previous relationship with the client, and all three have established Workiva consulting practices. We win deals like these because our customers see the value in our experience, our ecosystem, and our capabilities. We have unrivaled experience. First, we've been doing investor-grade reporting for more than a decade. Second, we have a quickly maturing ecosystem of over 200 partners. Partners wanna work with us because of the opportunity for commercial success that it creates for them. Third, we are the world's leading platform in XBRL tagging for financial and non-financial data. Finally, our regulatory reporting expertise is unmatched. We have the expertise on staff so that the day regulatory changes go into effect, our customers can be compliant.

There were two other big four firms involved in this deal competing for the implementation work and all three had a previous relationship with the client.

All three have established with Kiva consulting practices.

We win deals like these because our customers see the value in our experience.

Our ecosystem and our capability.

We have unrivaled experience.

We've been doing investor grade reporting for more than a decade.

Second.

We have a quickly maturing ecosystem of over 200 partners.

Partners want to work with us because of the opportunity for commercial success that it creates for them.

Third we are the world's leading platform and ex barrel tagging for financial and Nonfinancial data.

And finally, our regulatory reporting expertise is unmatched we have the expertise on staff. So that the day regulatory changes go into effect our customers can be compliant.

Julie Iskow: We have a diverse and growing portfolio of best-of-breed solutions, and it's all within a true platform. Let's move on to a top booking solution yet again for the quarter, ESG. Companies continue to purchase ESG well ahead of regulations. As highlighted in recent comments by Chair Gensler from the SEC, 81% of the Russell 1000 are currently disclosing their climate risks. With increased stakeholder focus on sustainability, we are seeing a more defined ESG technology purchasing process, including formal RFPs and ESG transformation projects. Our ESG account expansion activity remains strong. Both our differentiated platform and our partner-first strategy are contributing to our win rate in this increasingly competitive environment. I would like to highlight 3 ESG wins for the quarter. First, a Germany-headquartered retail firm purchased our ESG solution to support their broader ESG transformation project that was driven by the CSRD.

And we have a diverse and growing portfolio of best of breed solutions.

All within a true platform.

Let's move on to a top bookings solution, yet again for the quarter ESG.

Companies continue to purchase ESG well ahead of regulations.

As highlighted in recent comments by chair Gensler from the SEC, 81% of the Russell 1000 are currently disclosing their climate risks.

With increased stakeholder focus on sustainability, we are seeing a more defined ESG technology purchasing process, including formal RFP and ESG transformation projects.

Our ESG account expansion activity remained strong in both our differentiated platform and our partner for strategy are contributing to our win rate in this increasingly competitive environment.

I would like to highlight three ESG wins for the quarter.

First at Germany headquartered retail firm purchased our ESG solution to support their broader ESG transformation project was driven by the CSR D.

Julie Iskow: There were multiple ESG solution competitors vying for this deal, with the customer ultimately choosing Workiva in alignment with their broader project scope. This new logo win was sourced by a Big Four advisory firm. Second, a US-based Fortune 500 consumer financial services company expanded their use of our platform during Q3 by purchasing ESG to complement their existing SEC solution. This was a competitive win over an incumbent GRC point solution provider. This opportunity was sourced by a Big Four advisory firm and was also a co-sell with a climate accounting technology partner. This deal will be implemented by the Big Four advisory firm. Third, we signed an account expansion deal with a top US-based private healthcare company. This was a competitive deal that went to RFP with multiple vendors involved.

There were multiple ESG solution competitors volume for this deal with the customer ultimately choosing work either in alignment with their broader project scope.

This new logo win was sourced by a big four advisory firm.

Second a U S based fortune 500, consumer financial services company expanded their use of our platform during Q3 by purchasing ESG to complement their existing SEC solution.

This was a competitive win over an incumbent Trc point solution provider.

This opportunity was sourced by a big four advisory firm and was also a co sell with the climate accounting technology partner.

Steel will be implemented by the big four advisory firm.

And third we signed an account expansion deal with a top U S based private health care company.

Operator: Good afternoon ladies and gentlemen, my name is Sarah, and I will be your host operator on this call. After the prepared comments, we will conduct a question and answer session. Instructions will be provided at that time. If at any time during the conference, you need to reach an operator, please press star followed by zero.

This was a competitive deal that went to RSP multiple vendors involved.

Julie Iskow: This company had purchased and successfully implemented the Workiva private company financial reporting solution back in 2022. Supporting Workiva with a co-sell in the sales process were both a carbon accounting partner and a Big Four advisory firm. This project will be implemented by the Big Four firm. I'll turn now to financial reporting. In Q3, we continue to see demand in financial reporting in both new logo and account expansion activity. While ESG was a much highlighted topic of conversation at our recent Amplify event, many of our longtime customers were there to talk about financial reporting. Financial reporting for Workiva is not just SEC. It also includes, for example, global statutory or multi-entity reporting, private company reporting, management reporting, and our capital markets solution.

This company had purchased and successfully implemented the we're keep a private company financial reporting solution back in 2022.

Supporting work, even with the co sell in the sales process, where both our carbon accounting partner in the Big four advisory firm.

Operator: Please note that this call is being recorded on October 30, 2023 at 5 o'clock PM Eastern time.

This project will be implemented by the big four firm.

Operator: I would now like to turn the meeting over to your host for today's call.

Mike Rost: Mike Rost, Senior Vice President of Corporate Development and Investor Relations at Workiva, please go ahead. Good afternoon, and thank you for joining us for Workiva's third quarter conference call. During today's call, we will review our third quarter results and discuss our guidance for the fourth quarter and full year 2023.

I'll turn now to financial reporting in.

In Q3, we continued to see demand in financial reporting in both new logo and account expansion activity.

ESG with a much highlighted topic of conversation of our recent amplifiers in many of our long time customers were there to talk about financial reporting.

Financial reporting for work Eva is not just SEC. It also includes for example, global statutory or multi entity reporting.

Mike Rost: Today's call has been pre-recorded and will include comments from our Chief Executive Officer, Julie Iskow, followed by our Chief Financial Officer, Joe Clint. We will then open the call up for a live Q&A session. A replay of this webcast will be available until November 6, 2023. Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section.

Company reporting management reporting and our capital market solution.

Julie Iskow: The conversations I had with customers focused on topics including investment fund reporting, finance transformations, Workiva's role in ERP projects, and supporting a company's private to public journey. While we continued to win new logos in SEC this quarter, here are three financial reporting deals that showcase the breadth of our financial reporting solution. First, one of the UK's largest financial services firms purchased our banking solution to address the requirements for setting internal capital targets. This risk reporting use case is their seventh regulatory reporting solution that they've purchased since becoming a customer in 2018. This account expansion pushed them over the $1 million ARR mark, and it highlights how our platform supports many vertical regulatory use cases with standard platform functionality. Workiva supports a wide range of banking-specific use cases, including resolution plans, CCAR, and DFAST, call reports, CECL planning, and Basel Pillar 3.

The conversations I had with customers focused on topics, including investment fund reporting finance transformation were key to his role in ERP projects and supporting a companys private to public journey.

Well, we continue to win new logos and FCC this quarter tier three financial reporting deals that showcase the breadth of our financial reporting solution.

Mike Rost: 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 fourth quarter and full fiscal year 2023. These forward-looking statements are subject to known and unknown risks and uncertainties. Workiva cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and would 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 10K and subsequent filings for factors that could cause our actual results to differ materially from any forward-looking statements.

First one of the Uk's largest financial services firms purchased our banking solution to address the requirements for setting internal capital targets.

This risk reporting use case is theres seven regulatory reporting solution that they purchased since becoming customer in 2018.

This account expansion pushed them over the $1 million, a RR mark and it highlights how our platform supports many vertical regulatory used cases with standard platform functionality.

With Kiva supports a wide range of banking specific use cases, including resolution plans CCAR and DFAST call reports seasonal planning and Basel pillar three.

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

This demonstrates how as I described earlier, we are fast becoming the platform for transparent reporting and regulatory disclosure.

Julie Iskow: This demonstrates how, as I described earlier, we are fast becoming the platform for transparent reporting and regulatory disclosure. Second, we closed a new logo win for fund reporting with a top 10 US-based private equity firm. Workiva was selected based on the comprehensive support for data integration, financial statements, prospectuses, shareholder reporting, and XBRL to support SEC filings. This deal was sourced and will be implemented by a regional advisory firm. Third, we closed a large financial reporting account expansion with a top US public university system. This university system originally purchased the Workiva platform for their annual consolidated financial report back in 2021. This implementation was at the university system level, which consolidated results across its network of institutions. The success of the initial implementation led to the customer expanding the Workiva platform across its network of 9 universities and 5 medical campuses.

Mike Rost: With that, we'll begin by turning the call over to CEO, Julie Iskow. Thank you, Mike.

Second we closed a new logo win for final reporting with the top 10 U S based private equity firm.

Julie Iskow: But before I begin, my prepared remarks about our quarterly results, I want to take a moment to acknowledge what's going on in our world. This is an extremely tragic, painful, and uncertain time. It's especially so for those who have a connection to the impacted regions. And this may include some of you on our call today. Well, there's a lot that can be said. It is our hope that resolution is reached and peace will prevail.

Evo were selected based on the comprehensive support for data integration financial statements prospectuses shareholder reporting.

And ex BRL to support SEC filings.

This deal was sourced and will be implemented by our regional advisory firm.

And third.

We closed a large financial reporting account expansion with the top U S public University system.

Julie Iskow: I'll now move on to our operating results. We'll keep a delivered another solid quarter, achieving subscription revenue growth of 21% in a non-gap operating profit that beat the high end of our guidance by nearly 340 basis points. As highlighted at our September investor day, we'll keep a continuous to stand out from the SAS crowd, given that we solve problems our customers must address. Companies need transparency. They need to comply with regulation and they need accuracy in reporting and disclosure.

This University system originally purchased over Kiva platform further annual consolidated financial report back in 2021.

This implementation was at the University system level, which consolidated results across its network of institutions.

The success of the initial implementation led to the customer expanding or keep a platform across its network of nine universities and five medical campuses. This opportunity was sourced and will be implemented by our regional advisory partner.

Julie Iskow: This opportunity was sourced and will be implemented by a regional advisory partner. I'll talk now about the activity we're seeing in GRC. With increasing stakeholder scrutiny, establishing an integrated enterprise-wide governance, risk, and compliance program is a strategic priority for many organizations. Workiva is a recognized leader in GRC, which is a broad market segment that includes internal audit, controls, risk management, and policy management. I'd like to highlight now two GRC deals that closed during the Q3. First, a European global mobility company purchased three GRC solutions, including audit, controls, and enterprise risk management. This new logo deal was sourced and will be implemented by a Big Four advisory firm. We were ultimately chosen in this competitive deal over four GRC point solution vendors.

I'll talk now about the activity, we're seeing in DRC with increasing stakeholder scrutiny, establishing an integrated enterprise wide governance risk and compliance program is a strategic priority for many organizations.

Julie Iskow: Workiva provides solutions that are necessary in good times and in challenging times. Our opportunity and our technology are such that we are becoming a world reading platform for transparent reporting and regulatory disclosure. Why? Because our strength is where data consistency and data integrity and accuracy are critical and where narrative is required. This is highlighted by the deals we're winning and the references our customers are providing. We showcase many of these success stories that are amplified user conference, including companies like Hershey that shared on the main stage and values they receive from our connected solutions across financial reporting, GRC and ESG.

<unk> is a recognized leader in DRC, which is a broad market segment that includes internal audit controls risk management and policy management.

I'd like to highlight now to DRC deals that closed during the third quarter.

First <unk>.

European Global Mobility company purchased <unk> solutions, including audit controls and enterprise risk management.

This new logo deal was sourced and will be implemented by a big four advisory firm.

We're ultimately chosen in this competitive deal over four <unk> point solution vendors, we were the only solution evaluated by the clients that could provide capabilities that not only address JRC specific requirements, but also supported their ESG in global statutory reporting needs.

Julie Iskow: I'd also like to congratulate Hershey for recently receiving the Innovation Excellence Award for ESG metrics and reporting from Verdantex. This is the second consecutive year that a Workiva customer has won in this category. The value our platform provides is also modified by the continued large contract account expansion that we saw in the third quarter. We continue to see outpaced growth in our large contract customers. In Q3, the number of contracts valued over $100,000 increased 24%.

Julie Iskow: We were the only solution evaluated by the client that could provide capabilities that not only address GRC-specific requirements but also supported their ESG and global statutory reporting needs. This is the power of having an assured integrated reporting platform. Second, a Fortune 1000 financial services company expanded their investment in Workiva with policy management. It was their 10th solution with Workiva. This customer uses solutions across the portfolio, including financial reporting, ESG, and banking-specific solutions. This product expansion was sourced by a regional advisory firm who previously implemented the Workiva controls and audit management solutions earlier in 2023. Moving on to capital markets. The IPO market showed some renewed activity during Q3. While the number of new IPOs remains limited, we did see an increase in interest in those companies preparing for an IPO and those companies investing in their private-to-public journey.

This is the power of having an assured integrated reporting platform.

And second.

Fortune 1000 financial services company expanded their investment didn't work either with policy management. It was their 10th solution with Ricky.

This customer uses solutions across the portfolio, including financial reporting ESG and banking specific solutions.

Julie Iskow: Those of our $150,000 increased 26%. And contracts valued over $300,000 were up 38%. All compared to the third quarter of 2022. Our platform is a strong and key differentiator in the marketplace. Workiva remains the only platform that brings financial reporting, ESG and GRC together in one secure, controlled audit-ready environment. We are the platform for a short integrated reporting.

This product expansion was sourced by our regional advisory firm, who previously implemented the work either controls and audit management solutions earlier in 2023.

Moving onto capital markets IPO market showed some renewed activity during the third quarter.

The number of new Ipos remains limited we did see an increase in interest in those companies preparing for an IPO and those companies investing in their private to public journey.

Julie Iskow: I'd like to highlight three assured integrated reporting wins that we signed in Q3. First, a Fortune 500 energy company purchased three GRC solutions, including audit, internal controls and risk management. This looked to complement their previous investment in SEC Management Reporting and ESG. This 11-year loyal SEC customer was engaged with the Big Four Advisory firms in transforming their GRC program. And the Big Four Advisory firm recommended Workiva as the technology of choice.

Julie Iskow: We're pleased with how we're competing for the IPO deals as they emerge. In Q3, we supported the S-1 process for one of the top tech IPOs of the quarter. This is a great example of how we deliver value to companies on their private-to-public journey. This customer first purchased our private company and management reporting solutions back in 2021. Our capital market solution was initially purchased in late 2022, with the completion of the IPO work in Q3. This company also purchased our SEC solution in Q3 to support their post-IPO process. While we are seeing some signs of the market opening up, we're not yet forecasting a comeback of IPOs in Q4. Moving on to our update on global regulations. Regulators have been very active since our last earnings call.

We're pleased with how we're competing for the IPO deals as they emerge.

In Q3, we supported the S. One process, but one of the top tick ipos of the quarter.

This is a great example of how we deliver value to companies on their private to public journey.

This customer first purchased our private company and management reporting solutions back in 2021.

Our capital market solution was initially purchased in late 2022 with the completion of the IPO work in Q3.

This company also purchased our <unk> solution in Q3 to support their post IPO process.

Julie Iskow: This firm will also be providing delivery for the project. Second, a North American-based airline that purchased SEC in the second quarter of this year went all in on the Workiva platform in Q3. They added a five-solution account expansion that included ESG and four GRC solutions. Socks, audit, enterprise risk management, and IT risk and controls. This deal was a competitive win over point solutions GRC providers. The strength of our connected platform and the ability to support both SEC and ESG reporting reinforces Workiva's better together approach. It also contributed to the competitive differentiation in this platform expansion.

Well, we are seeing some signs of the market opening up we're not yet forecasting a comeback of ipos in the fourth quarter.

Moving entre update on global regulations regulators have been very active since our last earnings call.

Julie Iskow: In Q3, the SEC issued numerous announcements targeted at listed companies and new regulations for private equity firms. First, on 26 July, the SEC issued new cybersecurity disclosure rules, which will significantly increase the pressure on organizations to perform more risk assessments, improve internal controls, and prepare for an increase in external audits. Next, on 23 August, new rules for private equity fund reporting were issued. These rules mandate that investment firms provide quarterly statements detailing information regarding private fund performance, fees, and expenses. The rules also require PE firms to disclose fund reports quarterly and obtain an annual audit for each private fund. On 7 September, the SEC issued a sample comment letter to companies regarding their XBRL disclosures. We believe that this action by the SEC signals that there may be greater scrutiny over XBRL data quality and filings, which impacts all of our SEC-listed customers.

In Q3, the SEC issued numerous announcements targeted at listed companies and new regulations for private equity firms.

First on July 26, the SEC issued new cyber security disclosure rules, which will significantly increase the pressure on organizations to perform more risk assessments improve internal controls and prepare for an increase in external audits.

Julie Iskow: Foundation. This assured integrated reporting win was a co-cell with a regional advisory firm that will also be handling the project delivery of both the GRC and ESG solutions. And third, it's not just about account expansion, we're landing with the platform, including a three solution new logo win with a spane headquartered utility who purchased ESF reporting, ESG and controls management. This assured integrated reporting win was sourced by a big four advisory firm. There were two other big four firms involved in this deal competing for the implementation work and all three had a previous relationship with the client and all three have established workiva consulting practices.

Next on August 23rd New rules for private equity funds reporting were issued.

These rules mandate that investment terms provide quarterly statements detailing information regarding private fund performance fees and expenses.

The rules also require PE firms to disclose fund reports quarterly and obtain an annual audit for each private fund.

And on September seven.

<unk> issued a sample comment letter to companies regarding their ex BRL disclosures.

We believe that this action by the FCC signals that there may be greater scrutiny of our ex Bureau data quality and filings, which impacts all of our SEC listed customers.

Julie Iskow: We win deals like these because our customers see the value in our experience, our ecosystem, and our capabilities. We have unrivaled experience, first, we've been doing investor grade reporting for more than a decade. Second, we have a quickly maturing ecosystem of over 200 partners. Partners want to work with us because of the opportunity for commercial success that it creates for them. Third, we are the world's reading platform and ex-spiral tagging for financial and non-financial data.

Julie Iskow: Both our platform and our XBRL services team will support our customers as they continue to navigate through this heightened regulatory scrutiny. As it relates to the proposed SEC climate disclosure rule, there are no material updates from the past quarter. While there have been some discussion on the SEC providing further guidance on the climate disclosure rule in October, as of the time of this call, no new rules have been communicated. In his September testimony to the House Committee on Financial Services, Chair Gensler was very clear that there was no guaranteed October date, and that the commission will potentially issue new rules once all of the comments have been reviewed and the economic impacts have been documented. We still believe that the SEC is likely to implement climate disclosure rules in the near future.

Both our platform and our <unk> services team will support our customers as they continue to navigate through this heightened regulatory scrutiny.

As it relates to the proposed SEC climate disclosure rule, there are no material updates from the past quarter.

While there has been some discussion on the SEC, providing further guidance on the climate disclosure rule in October as at the time of this call.

No new rules have been communicated.

And his September testimony to the House Financial Services Committee Chair Gensler was very clear that there was no guaranteed October date, not the commission will potentially issue new rules. Once all of the commentary has been reviewed and the economic impacts have been documented.

Julie Iskow: And finally, our regulatory reporting expertise, is unmatched. We have the expertise on staff so that the day of regulatory changes go into effect, our customers can be compliant. And we have a diverse and growing portfolio of best-of-breed solutions, and it's all within a true platform.

We still believe that the SEC is likely to implement climate disclosure rules in the near future.

Julie Iskow: Chair Gensler's House testimony was specific on the number of organizations that already disclose climate risks. He was also clear about the commission's goal to provide consistency and comparability to those disclosures. Standardized climate disclosure rules would enforce this consistency. While the SEC is still in the rulemaking process, there were new climate disclosure laws passed by the state of California that may have national impact on ESG reporting. On 7 October, Governor Newsom signed into law two important climate disclosure regulations. The laws are SB 253 and SB 261. SB 253 is the Climate Corporate Data Accountability Act. It applies to all US companies with total annual revenues in excess of $1 billion doing any business in California. This is predicted to impact over 5,300 business entities operating in California. These companies must annually report scope one, scope two, and scope three emissions.

Sure Gasless house testimony with specific on a number of organizations that already disclosed climate risks.

He was also clear about the commission's goal to provide consistency and comparability to those disclosures.

Julie Iskow: Let's move on to a topicing solution yet again for the quarter, ESG. Companies continue to purchase ESG well ahead of regulations. As highlighted in recent comments by Chair Gunpla from the SEC, 81% of the Russell 1000 are currently disclosing their climate risks. With increased stakeholder focus on sustainability, we are seeing a more defined ESG technology purchasing process, including formal RFPs and ESG transformation projects. Our ESG account expansion activity remains strong, and both our differentiated platform and our partner for strategy are contributing to our win rate in this increasingly competitive environment.

<unk> climate disclosure rules would enforce this consistency.

While the SEC is still in the rulemaking process Theyre warming climate disclosure laws passed by the state of California that may have national impact on ESG reporting on.

On October seven Governor Newsom signed into law two important climate disclosure regulations. The laws are SB $2 53, and SB 261.

SB 253 is the climate corporate data Accountability Act it applies to all U S companies with total annual revenues in excess of $1 billion doing any business in California.

Julie Iskow: I would like to highlight three ESG wins for the quarter. First, a Germany headquartered retail firm purchased our ESG solution to support their broader ESG transformation project that was driven by the CSRD. There were multiple ESG solution competitors vying for this deal with the customer ultimately choosing work EVA in alignment with their broader project scope.

This is predicted impact over 5300 business entities operating in California.

These companies with annual report scope, one scope two and scope three emissions.

Julie Iskow: Reporting is set to begin in 2026. SB 261 is the Climate-Related Financial Risk Act. It applies to US companies with total annual revenues in excess of $500 million and that do business in California. It mandates disclosure of climate-related financial risks and measures for risk reduction, aligning with the internationally recognized TCFD framework. Reporting begins in 2026 with biannual reporting instead of annual. Outside of the US, there was continued regulatory activity around the CSRD. After approving enterprise sustainability reporting standards on 31 July, the standard-setting committee, EFRAG, was busy at work defining interoperability with ISSB related to IFRS S1, S2, and the legacy SASB framework. Interoperability comments were also provided for the frequently used GRI framework. In August, there was further discussion on the draft materiality assessment implementation guidance.

Reporting is set to begin in 2026.

SB 261 is the climate related financial risks.

It applies to U S companies with total annual revenues in excess of $500 million net do business in California.

Julie Iskow: This new logo win was sourced by a big forward advisory firm. Second, a US-based Fortune 500 consumer financial services company expanded their use of our platform during Q3 by purchasing ESG to complement their existing SEC solution. This list competitive win over an incumbent GRC point solution provides. Carter. This opportunity was sourced by a big-for advisory firm and was also a co-cell with the Climate Accounting Technology Partner. This deal will be implemented by the big-for advisory firm.

It mandates disclosure of climate related financial risks and menus for risk production aligning with the internationally recognized Tcf D framework.

Reporting begins in 2026 with biannual reporting instead of annual.

Outside of the U S. It was continued regulatory activity around the CSR D.

After a proofing enterprise sustainability reporting standards on July 31, the standard setting Committee E. Frac was busy at work defining interoperability with ISP related to ifr risk S. One and S too and the legacy SaaS be framework.

Julie Iskow: And third, we signed an account expansion deal with the top US-based private self-care company. This was a competitive deal that went to RFP with multiple vendors involved. This company had purchased and successfully implemented the Workiva Private Company Financial Reporting solution back in 2022. Supporting Workiva with a co-cell in the sales process were both a carbon accounting partner and a big-for advisory firm. This project will be implemented by the big-for firm.

Interoperability comments were also provided through the frequently used G. R I framework.

In August there was further discussion on the draft materiality assessment implementation guidance.

Julie Iskow: This has been a priority topic, given that there will be many first-time filers with this regulation. On 18 October, the European Parliament confirmed in a vote the approval of the ESRS. They also rejected a resolution calling for limitations to be introduced on these standards. The ESRS will now formally be adopted before the end of the year, and shortly after, published in the official journal of the European Union. Large EU companies will start assessing their operations through the ESRS criteria starting January 2024 and disclosing their information accordingly by 2025. Companies are watching these activities closely, and they're waiting for implementation guidance on how established ESG frameworks map to the newly set ESRS standards. They're looking to understand what they'll need to disclose and how they will have to disclose it.

Global priority topic, given that there will be many first time filers with this regulation.

On October 18th the European Parliament confirmed in a vote the approval of the Srs.

Julie Iskow: I'll turn now to financial reporting. In Q3, we continue to see demand and financial reporting in both new logo and account expansion activity.

They also rejected a resolution calling for limitations to be introduced on these standards.

Julie Iskow: While ESG was a much-high-lighted topic of conversation in our recent Amplify event, many of our long-time customers were there to talk about financial reporting. Financial reporting for Workiva is not just SEC. It also includes, for example, global statutory or multi-energy reporting, private company reporting, management reporting, and our capital market solution. The conversations I had with customers focused on topics including investment fund reporting, finance transformations, Workiva's role in ERP projects, and supporting a company's private to public journey.

The Srs will now when would we be adopted before the end of the year and shortly after published in the official journal of the European Union.

Large EU companies will start assessing their operations through the ESR risk criteria, starting January 2024, and disclosing their information accordingly by 2025.

Companies are watching these activities closely and they're waiting for implementation guidance on how established ESG frameworks map to the newly set Srs standards.

Theyre looking to understand what they'll need to disclose and how they will have to disclose it.

Julie Iskow: While we continue to win new logos in SEC this quarter, here are three financial reporting deals that showcase the breadth of our financial reporting solution. First, one of the UK's largest financial services firms purchased our banking solution to address the requirements for setting internal capital targets. This risk reporting use case is their seventh regulatory reporting solution that they've purchased since becoming a customer in 2018.

Julie Iskow: With all this new regulatory activity with the SEC, the state of California's climate rules, with the European CSRD, we believe that we have a large TAM in front of us and future durable demand for our Assured Integrated Reporting Platform. I'll move on now to provide some perspective on the macro and our focus on both growth and productivity. The geopolitical backdrop and economic uncertainty continue to impact our markets. Throughout Q3, we continue to see elongated sales cycles and increased buyer scrutiny across our portfolio. We do remain confident, however, in the many growth opportunities in front of us, driven by the value our platform delivers to our customers. Our teams will continue to work closely with our customers in solving their most complex reporting and compliance requirements.

With all this new regulatory activity with the SEC.

State of California's climate rules with the European CSR D. We believe that we have a large tam in front of us and future durable demand for assured integrated reporting platform.

I'll move on now to provide some perspective on the macro and our focus on both growth and productivity.

The geopolitical backdrop and economic uncertainty continue to impact our markets throughout Q3, we continue to see elongated sales cycles and increased buyer scrutiny across our portfolio.

Julie Iskow: This accounts expansion pushed them over the $1 million ARR mark and it highlights how our platform supports many vertical regulatory use cases with standard platform functionality. Workiva supports a wide range of banking specific use cases, including resolution plans, C-CAR and D-FAST, call reports, legal planning, and Basel Pillars III. This demonstrates how, as I described earlier, we are fast becoming the platform for transparent reporting and regulatory disclosure.

We do remain confident however, and the many growth opportunities in front of us driven by the value our platform delivers to our customers. Our teams will continue to work closely with our customers in solving their most complex reporting and compliance requirements.

Our approach remains to be first and foremost focused on subscription growth and going after are large and expanding Tam.

Julie Iskow: Our approach remains to be first and foremost focused on subscription growth and going after our large and expanding TAM. Across the company, we're focused on driving growth first with a continued eye on productivity and performance. As highlighted by our Q3 operating margin, we're delivering on our improved operating leverage and productivity. We're building strong teams, improving our processes, and incenting the right behaviors to drive this productivity. Areas that contributed to the improvement in our Q3 operating margin were continued strong subscription revenue growth and improved efficiency and productivity across the company. Margins continue to improve throughout the first three quarters, and we're guiding to a non-GAAP operating profit in both 2023 and 2024. We enjoyed seeing many of you last month at Workiva Amplify. It was our largest customer user conference to date.

Across the company, we're focused on driving growth first with a continued I and productivity and performance.

Julie Iskow: Second, we closed a new logo win for fund reporting with a top 10 US-based private equity firm. Workiva was selected based on the comprehensive support for data integration, financial statements, perspectives, shareholder reporting, and XBRL to support SEC filings. This deal was sourced and will be implemented by a regional advisory firm.

As highlighted by our Q3 operating margin, we're delivering on our improved operating leverage and productivity. We're building strong team improving our processes and incentives the right behaviors to drive the productivity.

Areas that contributed to the improvement in our Q3 operating margin were continued strong subscription revenue growth and improved efficiency and productivity across the company.

Julie Iskow: And third, we closed a large financial reporting account expansion with the top US public university system. This university system originally purchased the Workiva platform for their annual consolidated financial report back in 2021. This implementation was at the university system level, which consolidated results across its network of institutions. The success of the initial recommendation led to the customer expanding the workiva platform across its network of nine universities and five medical campuses. This opportunity was sourced and will be implemented by a regional advisory partner.

Margins continue to improve throughout the first three quarters and we're guiding to a non-GAAP operating profit in both 2023 and 2024.

We enjoyed seeing many of you last month at where Keith amplify.

Just customer user conference to date.

Julie Iskow: During the conference, we welcomed 5,800 in-person and virtual attendees from almost 2,000 companies, many of them from new logos. We also welcomed nearly 300 advisory and technology partner attendees at our partner summit. We have loyal and devoted customers who are our biggest brand advocates. We hope you were able to hear directly from them about what makes Workiva so special and relevant. At Amplify, we announced a number of new platform capabilities, including the availability of generative AI to all customers in North America. We received enthusiastic interest and feedback during our standing-room only AI sessions, with over 40% of all attendees participating in at least one of these sessions. We believe that every one of our Workiva solutions can deliver expanded value to our customers with generative AI by harnessing best-in-class large language models embedded directly into our platform.

During the conference we welcomed 5800 in person and virtual attendees from almost 2000 companies many of them from new logos.

We also welcomed nearly 300 advisory and technology partner attendees at our partner summit.

We have loyal and devoted customers who are our biggest brand advocates we hope youre able to hear directly from them about what makes <unk>, so special and relevant.

Julie Iskow: I'll talk now about the activity we're seeing in GRC. With increasing stakeholder scrutiny, establishing an integrated enterprise-wide governance risk and compliance program.

At amplify we announced a number of new platform capabilities, including the availability of generous AI all customers in North America.

Julie Iskow: This is strategic priority for many organizations. Workiva is a recognized leader in GRC, which is a broad market segment that includes internal audit, controls, risk management and policy management.

We received enthusiastic interest and feedback during our standing room, only AI sessions with over 40% of all attendees participating in at least one of these sessions.

Julie Iskow: I'd like to highlight now two GRC deals that close during the third quarter.

Julie Iskow: First, a European global mobility company purchased three GRC solutions, including audit, controls and enterprise risk management. This new logo deal was sourced and will be implemented by a big full advisory firm. We were ultimately chosen in this competitive deal over four GRC point solution vendors. We were the only solution evaluated by the clients that could provide capabilities that not only address GRC specific requirements, but also supported their ESG and global statutory reporting needs. This is the power of having an assured integrated reporting platform.

We believe that every one of our key solutions can deliver expanded value to our customers with generative by harnessing best in class large language models embedded directly into our platform.

Julie Iskow: Our approach to GenAI has been incredibly well received by our peers, our partners, and our early adopters due to our responsible implementation. We provide the assurance that no customer data or prompts within our platform are ever stored or used in any way to train generative AI models. By solving enterprise-grade security, we've eliminated one of the top concerns of using tools like ChatGPT. Our approach to GenAI has been in tight partnership with our vendors, including Google, Microsoft, and Amazon. We believe Workiva is the only provider in the markets that we compete in that offers such a comprehensive delivery of GenAI. In the near term, we believe that monetization of GenAI will come in the form of solution differentiation and higher win rates. In closing, I'll leave you with a few final remarks. Workiva delivered solid Q3 results, including a transition back to non-GAAP operating profits.

Our approach to Gen. AI has been incredibly well received by our peers our partners and our early adopters do a responsible implementation.

We provide the assurance that no customer data or prompts within our platform are ever stored or used in any way to train generative AI models by solving enterprise grade security, we've eliminated one of the top concerns of using tools like Chapped GPT.

Our approach to journey II has been in tight partnership with our vendors, including Google Microsoft and Amazon.

Julie Iskow: And second, a Fortune 1000 financial services company expanded their investment in workiva with policy management. It was their tenth solution with workiva. This customer uses solutions across the portfolio, including financial reporting, ESG and banking specific solutions. This product expansion was sourced by a regional advisory firm who previously implemented the workiva controls and audit management solutions earlier in 2023.

We believe we're keep it is the only provider in the markets that we compete in to offer such a comprehensive delivery of Jennie O. In the near term, we believe that monetization of journey II will come in the form of solution differentiation and higher win rate.

In closing I'll leave you with a few final remarks.

We'll keep it delivered solid third quarter results, including a transition back to non-GAAP operating profit.

Julie Iskow: Moving on to capital markets, the IPO market showed some renewed activity during the third quarter. While the number of new IPOs remains limited, we did see an increase in interest in those companies preparing for an IPO and those companies investing in their private to public during. We're pleased with how we're competing for the IPO deals as they emerge.

We continue to win with the multi solution into capital expansion strategy, resulting in strong growth in large contract customers.

Julie Iskow: We continue to win with the multi-solution and account expansion strategy, resulting in strong growth in large contract customers. We're confident in our ability to execute on our strategy as we become the world's leading platform for transparent reporting and regulatory disclosure. We have a significant edge in experience and expertise with a large install base and a growing partner ecosystem. We have a large, relatively unaddressed TAM with the right team in place to go after it. Our opportunity is growing, and at the same time, we and our platform are getting stronger. Thank you to our fantastic team of dedicated employees. Workivians all over the world didn't just help us achieve the solid results that we delivered last quarter, but they've helped us once again achieve two important third-party recognitions. First, Fortune honored Workiva with the number 10 ranking on their Best Workplaces in Technology list.

We're confident in our ability to execute on our strategy as we become the world's leading platform for transparent reporting and regulatory disclosure.

Julie Iskow: In Q3, we supported the S1 process from one of the top tech IPOs of the quarter. This is a great example of how we deliver value to companies on their private to public journey. This customer first purchased our private company and management reporting solutions back in 2021. Our capital market solution was initially purchased in late 2022 with the completion of the IPO work in Q3. This company also purchased our SEC solution in Q3 to support their post IPO process.

We have a significant edge in experience and expertise with a large installed base and a growing partner ecosystem.

And we have a large relatively unaddressed tam with the right team in place to go after it.

Our opportunity is growing and at the same time, we and our platform are getting stronger.

Thank you to our fantastic team of dedicated employees, we are <unk> all over the world didn't just helped us achieve the solid results that we delivered last quarter, but.

But they've helped us once again achieved two important third party recognition for.

Julie Iskow: While we are seeing some signs of the market opening up, we're not yet forecasting a comeback of IPOs in the fourth quarter.

Fortune honored <unk> with the number 10 ranking on their best workplaces in technology list. This is our seventh year on the list and the third year in the top 10.

Julie Iskow: Moving on to our update on global regulations, regulators have been very active since our last earnings call. In Q3, the SEC issued numerous announcements targeted at listed companies and new regulations for private equity firms. First, on July 26, the SEC issued new cybersecurity disclosure rules, which will significantly increase the pressure on organizations to perform more risk assessments, improve internal controls, and prepare for an increase in external audits. The rules also require PE firms to disclose fund reports quarterly and obtain an annual audit for each private fund.

Julie Iskow: This is our seventh year on the list and the third year in the top ten. Second, MSCI, the top rating tool used by investors to determine which companies are included in ESG investment funds, issued Workiva another AAA rating. This is the highest rating a company can achieve. None of this is possible without the hard work of our entire team, along with their dedication and commitment to our customers and our mission of powering transparent reporting for a better world. With that, I'll turn the call over to you, Jill.

And second MSCI, the top rating tool used by investors to determine which companies are included in ESG investment funds issue book, Eva and another AAA rating. This is the highest rating a company can achieve.

None of this is possible without the hard work of our entire team along with their dedication and commitment to our customers and our mission of powering transparent reporting for a better world.

And with that.

I will turn the call over to you Jill.

Jill Klindt: Thank you, Julie. Let's turn to our results. First, I will give an overview of our key financial highlights for Q3 2023, and then I will provide Q4 and full year 2023 guidance before opening the line for questions. We are pleased to report that we beat the high end of revenue guidance by $2.2 million, primarily due to strong subscription revenue growth along with higher than expected services revenue growth. We beat our breakeven guidance on Q3 operating results, generating $5.3 million of operating profit. As Julie mentioned, stronger revenue coupled with improved efficiency and productivity were the primary drivers of the beat. Our continued focus on growth and operating leverage is showing in our operating results. Now let's go through some key results and highlights for the quarter, starting with revenue.

Thank you Julie.

Let's turn to our results.

First I will give an overview of our key financial highlights for the third quarter 2023.

And then I will provide Q4 and full year 2023 guidance before opening the line for questions.

Julie Iskow: And on September 7, the SEC issued a sample comment letter to companies regarding their exprl disclosures. We believe that this action by the SEC signals that there may be greater scrutiny over exprl data quality and filings, which impacts all of our SEC listed customers. Both our platform and our exprl services team will support our customers as they continue to navigate to this heightened regulatory scrutiny.

We are pleased to report that we beat the high end of revenue guidance by $2 $2 million.

Merely due to strong subscription revenue growth along with higher than expected services revenue growth will be our breakeven guidance on Q3 operating results generating $5 $3 million of operating profit.

As Julie mentioned stronger revenue, coupled with improved efficiency and productivity were the primary drivers of the beat.

Our continued focus on growth and operating leverage is showing in our operating results.

Julie Iskow: As it relates to the proposed SEC climate disclosure rule, there are no material updates from the past quarter. Well, there have been some discussion on the SEC providing further guidance on the climate disclosure rule in October, as at the time of this call, no new rules have been communicated. In his September testimony to the House Financial Services Committee, Chair Gensler was very clear that there was no guarantee October date, and that the commission will potentially issue new rules once all of the comments have been reviewed and the economic impacts have been documented.

Now, let's go through some key results and highlights for the quarter starting with revenue.

Jill Klindt: We generated total revenue in the third quarter of $158.2 million, delivering growth of 19% from Q3 2022. Subscription revenue was $143.4 million, up 21% from Q3 2022. Yet again this quarter, both new logos and account expansions helped drive strong revenue growth, with 43% of the increase in subscription revenue coming from customers added in the last twelve months. Professional services revenue was $14.8 million in Q3 2023, up by 3.5% compared to the same quarter last year. The growth was driven by higher XBRL services revenue, which outpaced the year-over-year decline in setup and consulting revenue.

We generated total revenue in the third quarter of $158 $2 million delivering growth of 19% from Q3 2022.

Subscription revenue was $143 $4 million.

Up 21% from Q3 2022.

Yet again this quarter, both new logos and account expansions helped drive strong revenue growth.

Julie Iskow: We still believe that the SEC is likely to implement climate disclosure rules in the near future. Chair Gensler's House testimony was specific on a number of organizations that already disclosed climate risks. He was also clear about the commission's goal to provide consistency and comparability to those disclosures. Standardized climate disclosure rules would enforce this consistency.

With 43% of the increase in subscription revenue coming from customers added in the last 12 months.

Professional services revenue was $14 $8 million in Q3 2023.

By three 5% compared to the same quarter last year.

The growth was driven by higher X barrels services revenue, which outpaced the year over year decline in setup and consulting revenue.

Julie Iskow: While the SEC is still in the rulemaking process, there will be climate disclosure laws passed by the state of California that may have national impact on ESG reporting. On October 7th, Governor Newsom signed his law to important climate disclosure regulations. The laws are SB 253 and SB 261. SB 253 is a climate corporate data accountability act. It applies to all U.S, companies with total annual revenues in excess of $1 billion doing any business in California.

Jill Klindt: As we mentioned on our previous 2023 earnings calls, we are in the process of transitioning more of our lower margin setup and consulting professional services to our partners. As we execute on this plan, we expect setup and consulting services revenue to decline year-over-year for 2023. Moving to our performance metrics. We added 85 net new customers in Q3 for a total customer count of 5,945, a growth of 404 customers from Q3 2022. Our gross revenue retention rate remained comfortably ahead of our 96% internal target metric. Our net revenue retention rate increased to 112% for Q3 2023, compared to 107% for Q3 2022.

As we mentioned on our previous 2023 earnings calls.

We are in the process of transitioning more of our lower margin set up in consulting professional services to our partners.

As we execute on this plan, we expect setup and consulting services revenue to decline year over year for 2023.

Moving to our performance metrics.

We added 85 net new customers in Q3 for a total customer count to 5945, a growth of 404 customers from Q3 2022.

Julie Iskow: This is predicted to impact over 5,300 business entities operating in California. These companies must annually report scope one, scope two, and scope three emissions. Reporting is set to begin in 2026. SB 261 is the climate related financial risk act. It applies to U.S, companies with total annual revenues in excess of $500 million in the due business in California. It mandates disclosure of climate-related financial risks and measures for risk reduction, aligning with the internationally recognized TCFD framework, reporting begins in 2026 by annual reporting instead of annual.

Our gross revenue retention rate remained comfortably ahead of our 96% internal target metric.

Our net revenue retention rate increased to 112% for the third quarter of 2023 compared to 107% for Q3 2022.

Jill Klindt: We are very pleased with the strong increase we continue to see in net revenue retention, which improved for the fourth straight quarter. The main driver of this improvement is strong account expansion activity led by the addition of new solutions. Account expansions also continue to be a strong contributor to the increase in customers with large contract values. We are seeing momentum and are optimistic that we can continue to expand the number of customers spending over $100,000 per year. In Q3 2023, we had 1,561 contracts valued at over $100,000 per year, up 24% from Q3 the prior year.

We are very pleased with the strong increase we continue to see in net revenue retention, which improved for the fourth straight quarter.

The main driver of this improvement is strong account expansion activity led by the addition of new solutions.

Account expansions also continued to be a strong contributor to the increase in customers with large contract values.

We are seeing momentum and are optimistic that we can continue to expand the number of customers spending over $100000 per year.

Julie Iskow: Outside of the U.S., there was continued regulatory activity around the CSRD. After approving enterprise sustainability reporting standards on July 31st, the standard setting committee E-Frag was busy at work defining interoperability with ISSB related to IFRS S1 and S2 and the Legacy SASB framework. Interoperability comments were also provided for the frequently used GRIs framework. In August, there was further discussion on the draft materiality assessment implementation guidance. This has been a priority topic given that there will be many first-time filers with this regulation.

In the third quarter of 2023, we had 1561 contracts valued at over $100000 per year.

Up 24% from Q3, the prior year.

Jill Klindt: The number of contracts valued at over $150,000 totaled 851 customers in Q3, up 26% from Q3 2022. The number of contracts valued over $300,000 totaled 296, up 38% from Q3 2022. Moving on to our operating metrics. Gross profit totaled $121.7 million in Q3, up 20% from the same quarter a year ago. Gross margin was flat year over year at 77% as higher cloud computing costs were offset by savings in employee-related spending. Operating expenses increased only 6% from Q3 2022. This modest increase is due to efforts we are making towards automation and process efficiency, as well as thoughtful hiring with a focus on skills needed to drive growth and productivity.

The number of contracts valued at over $150000 totaled 851 customers in the third quarter.

Up 26% from Q3 2022.

And the number of contracts valued over $300000 totaled 296 up 38% from Q3 2022.

Moving on to our operating metrics.

Gross profit totaled $121.7 million in Q3 up 20% from the same quarter a year ago.

Julie Iskow: On October 18th, the European Parliament confirmed in a vote the approval of the ESRS. They also rejected a resolution calling for limitations to be introduced on these standards. The ESRS will now formally be adopted before the end of the year and shortly after published in the official journal of the European Union. Large EU companies will start assessing their operations through the ESRS criteria starting January 2024 and disclosing their information accordingly by 2025.

Gross margin was flat year over year at 77% as higher cloud computing costs were offset by savings in employee related spending.

Operating expenses increased only 6% from Q3 2022.

This modest increase is due to efforts, we are making towards automation and process efficiency as well as thoughtful hiring with a focus on skills needed to drive growth and productivity.

Julie Iskow: Companies are watching these activities closely and they're waiting for implementation guidance on how established ESD frameworks map to the newly set ESRS standards. They're looking to understand what they'll need to disclose and how they will have to disclose it. With all this new regulatory activity with the SEC, the state of Californian's climate rules, with the European CSRD, we believe that we have a large term in front of us in future durable demand for a short integrated reporting platform.

We posted an operating profit of $5 $3 million in Q3 2023.

Jill Klindt: We posted an operating profit of $5.3 million in Q3 2023, a continued improvement compared to Q3 2022's operating loss of $8.4 million. As Julie mentioned, we continue to focus on growth and productivity. This focus has helped us improve our operating leverage and stay committed to our goal of delivering improved operating margins and non-GAAP profitability for both 2023 and 2024. At September 30, 2023, cash equivalents, and marketable securities increased $316 million sequentially to a balance of $782 million, primarily driven by our August convertible note offering. Our successful issuance of convertible notes raised $700 million at a 1.25% coupon. We used $397 million of the funds to repurchase about 80% of the convertible notes we originally issued in 2019.

Our continued improvement compared to Q3, 2020, two's operating loss of $8 $4 million.

As Julie mentioned, we continue to focus on growth and productivity.

This focus has helped us improve our operating leverage and stay committed to our goal of delivering improved operating margins and non-GAAP profitability for both 2023 and 2024.

At September 30th 2023, cash cash equivalents and marketable securities increased $316 million sequentially to a balance of $782 million.

Julie Iskow: I'll move on now to provide some perspective on the macro and our focus on both growth and productivity. The geopolitical backdrop and economic uncertainty continue to impact our markets. Throughout Q3, we continue to see elongated sales cycles and increased buyer scrutiny across our portfolio. We do remain confident, however, in the many growth opportunities in front of us driven by the value our platform delivers to our customers. Our teams will continue to work closely with our customers in solving their most complex reporting and compliance requirements.

Primarily driven by our August convertible note offering.

Our successful issuance of convertible notes raised $700 million at a 1.25% coupon.

We used $397 million of the funds to repurchase about 80% of the convertible notes. We originally issued in 2019.

We will use the remainder of the funds primarily for working capital and to support potential future M&A activity.

Jill Klindt: We will use the remainder of the funds primarily for working capital and to support potential future M&A activity. Operating activities in Q3 2023 resulted in cash provided of $15 million, compared with an increase in cash of $5 million in the same quarter a year ago. Turning now to our guidance for Q4 and the full year 2023. As Julie discussed, while we remain encouraged by our opportunities to drive growth, we continue to see elongated sales cycles and increased buyer scrutiny amidst a concerning macro and geopolitical environment. As such, we continue to be prudent with our guidance assumptions. For Q4 2023, we expect total revenue to range from $164 million to $165 million. By design, we expect services revenue will decline in Q4 at a single-digit percent rate.

Julie Iskow: Our approach remains to be first and foremost focused on subscription growth and going after a large and expanding town. Across the company, we're focused on driving growth first with a continued eye on productivity and performance. As highlighted by our Q3 operating margin, we're delivering on our improved operating leverage and productivity. We're building strong teams, improving our processes, and intending the right behaviors to drive this productivity. Areas that contribute to the improvement in our Q3 operating margin were continued strong, subscription revenue growth, and improved efficiency and productivity across the company.

Operating activities in Q3 2023 resulted in cash provided a $15 million compared with an increase in cash of $5 million in the same quarter a year ago.

Turning now to our guidance for Q4 and the full year 2023.

As Julie discussed while we remain encouraged by our opportunities to drive growth. We continue to see elongated sales cycles and increased buyer scrutiny amidst a concerning macro and geopolitical environment.

As such we continue to be prudent with our guidance assumptions.

For the fourth quarter 2023.

We expect total revenue to range from 164 million to $165 million by design, we expect services revenue will decline in Q4 at a single digit percent rate.

Julie Iskow: University. Margins continue to improve throughout the first three quarters and were guiding to a non-gap operating profit in both 2023 and 2024. We enjoyed seeing many of the last months that were key to amplifying as our largest customer user conference today. During the conference, we welcomed 5,800 in-person and virtual attendees from all of 2000 companies, many of them from New 300 advisory and technology partner attendees at our partner summit. We have loyal and devoted customers who are our biggest brand advocates. We hope you're able to hear directly from them about what makes workiva so special and relevant.

Jill Klindt: We expect non-GAAP operating income to range from $5.5 million to $6.5 million, a net income of $0.21 to $0.23 on a per share basis. Our share count will be approximately 54 million weighted average shares. For the full year 2023, we are raising the midpoint of our revenue guidance range, expecting revenue to be between $627 million and $628 million. The high end of revenue guidance remains in line with our previously stated 2023 target. We expect services revenue to decline at a low single-digit % rate. We are raising our guidance for non-GAAP operating results, shifting to an income range of $3 million to $4 million, or a net loss of $0.54 to $0.52 on a per share basis.

We expect non-GAAP operating income to range from $5 $5 million to $6 $5 million.

Net income of 21 cents to <unk> 23 cents on a per share basis.

Our share count will be approximately 54 million weighted average shares.

For the full year 2023, we are raising the midpoint of our revenue guidance range.

<unk> revenue to be between $627 million and $628 million.

I end of revenue guidance remains in line with our previously stated 2023 target.

Julie Iskow: At Amplify, we announced a number of new platform capabilities, including the availability of generous AI to all customers in North America. We received enthusiastic interest and feedback during our standing room only AI sessions with over 40% of all attendees participating in at least one of these sessions. We believe that every one of our workiva solutions can deliver expanded value to our customers with generative AI by harnessing best in-class large language models embedded directly into our platform.

We expect services revenue to decline at a low single digit percent rate.

We are raising our guidance for non-GAAP operating results shifting to an income range of $3 million to $4 million or a net loss of 54 cents to <unk> 52 cents on a per share basis.

Jill Klindt: Our share count will be approximately 54 million weighted average shares. The Q3 interest expense recorded in conjunction with the repurchase of the majority of our 2019 notes is driving the gap between our operating results and loss per share guidance. We continue to expect we will post positive free cash flow for the seventh consecutive year. Now to give some directional modeling information for 2024. As implied in our Q4 2023 guidance, we will be monitoring the current macro headwinds carefully as we exit 2023, as well as the potential impact on our revenue growth rates as we enter 2024. We expect XBRL services revenue to continue to grow at a modest low single-digit rate. We expect setup and consulting revenue to decline from 2023 to 2024. Consistent with our prior statements, we expect non-GAAP operating profit for the full year 2024.

Our share count will be approximately 54 million weighted average shares for Q3 interest expense recorded in conjunction with the repurchase of the majority of our 2019 notes is driving the gap between our operating results and loss per share guidance.

Julie Iskow: Our approach to Gen AI has been incredibly well received by our peers, our partners, and our early adopters through our responsible implementation. We provide the assurance that no customer data or process within our platform are ever stored or used in any way to train gendered AI models. By solving enterprise grade security, we've eliminated one of the top concerns of using tools like CAPTP. Our approach to Gen AI has been in tight partnership with our vendors, including Google, Microsoft, and Amazon. We believe workiva is the only provider in the markets that we compete in to offer such a comprehensive delivery of Gen AI.

We continue to expect we will post positive free cash flow for the seventh consecutive year.

Now to give some directional modeling information for 2024.

As implied in our Q4 2023 guidance, we will be monitoring the current macro headwinds carefully as we exit 2023.

As well as the potential impact on our revenue growth rates as we enter 2024.

We expect EXPAREL services revenue to continue to grow at a modest low single digit rate.

We expect setup and consulting revenue to decline from 2023 to 2024.

Julie Iskow: In the near term, we believe that monetization of Gen AI will come in the form of solution differentiation in higher wing rates.

And consistent with our prior statements, we expect non-GAAP operating profit for the full year 2024.

Julie Iskow: In closing, I'll leave you with a few final remarks. Or even delivered solid third quarter results, including a transition back to non-GAP operating process. We continue to win with the multi-solution and account expansion strategy resulting in strong growth in large contract customers. We've confident in our ability to execute on our strategy as we become the world's leading platform for transparent reporting and regulatory disclosure. We have a significant edge in experience and expertise with a large install base and a growing partner ecosystem. And we have a large, relatively unaddressed ham with the right team in place to go after it. Our opportunity is growing and at the same time, we and our platform are getting stronger.

Jill Klindt: In summary, I want to thank all of 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. First, we are encouraged by the opportunity ahead of us, our large unaddressed TAM, and the value our platform delivers to our customers. Second, we delivered a beat on Q3 operating margin guidance and are focused on continuing the momentum of margin improvement and anticipating a non-GAAP operating profit in fiscal year 2023. Third, we remain committed to our strategy, long-term growth, and improving operating leverage. In closing, I want to echo Julie's thanks to all Workiva employees. You are an amazing team, and I am proud to be working beside you. We will now take your questions. Operator, we are ready to begin the Q&A session.

In summary, I want to thank all of 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.

First we are encouraged by the opportunity ahead of us our large unaddressed tan and the value our platform delivers to our customers.

Second we delivered a beat on Q3 operating margin guidance and are focused on continuing the momentum of margin improvement and anticipating a non-GAAP operating profit in fiscal year 2023.

And third we remain committed to our strategy long term growth and improving operating leverage.

In closing I want to Echo Julie's, thanks to all of our Kiva employees, you are an amazing team and I am proud to be working beside you.

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

Julie Iskow: Thank you to our fantastic team of dedicated employees. Receivians all over the world didn't just help us achieve the solid results that we delivered last quarter, but they've helped us once again achieve two important third-party recognition.

Operator: Thank you. Ladies and gentlemen, if you have a question, please press star one on your telephone keypad. To withdraw your question, simply press star one again.

Thank you ladies and gentlemen, if you have a question. Please press star one on your telephone keypad to withdraw your question simply press Star one again.

Your first question comes from the line of Adam Hotchkiss with Goldman Sachs. Your line is open.

Operator: Your first question comes from the line of Adam Hotchkiss with Goldman Sachs. Your line is open.

Julie Iskow: First, fortune honored with Eva with the number 10 ranking on their best workplaces and technology list. This is our seventh year on the list and the third year on the top 10.

Adam Hotchkiss: Great. Thanks for taking the questions. You know, I guess to start, Julie, I'd love to dig a little deeper on the drivers of outperformance in the quarter. It looked like you had meaningfully higher average ACVs and maybe a little bit slower growth on the net new logo side. I'd just love to understand from a rate of change perspective relative to the H1 of the year, what are driving those two things and, you know, whether you saw a quarter-to-quarter impact from a macro perspective or that, you know, continues to stay stable from a headwind perspective. Just would love to understand those dynamics.

Great. Thanks for taking the questions I guess to start Julie I'd love to dig a little deeper on the drivers of outperformance in the quarter. It looks like you had meaningfully higher average ACB is it maybe a little bit slower growth on the net new logo side and so I'd just love to understand from a rate of change perspective relative to the first half of the year.

Julie Iskow: And second, MSCI, the top rating tool used by investors to determine which companies are included in ESG investment funds, issued with Eva another AAA rating. This is the highest rating a company can achieve. None of this is possible without the hard work of our entire team, along with their dedication and commitment to our customers and our mission of powering transparent reporting for better worlds.

Are what are driving those two things and whether you saw a quarter to quarter impact from a macro perspective or that.

Continues to stay stable from a headwind perspective, just would love to understand those dynamics.

Julie Iskow: Sure. Very pleased with our growth around account expansion, which is probably what is driving it most significantly. Certainly we're seeing the macro as we talked about, both Jill and I, in our requirements. It really is broad-based across the entire portfolio that we're seeing the bookings grow. And again, a focus on multi-solution and account expansion. That really was where we saw the most strength in our results this quarter.

Sure Barry.

Pleased with our our gross around account expansion, which is probably what is driving it most significantly.

Jill Klindt: And with that, I'll turn the call over to you, Jill. Thank you, Julie.

Jill Klindt: Let's turn to our results. First, I will give an overview of our key financial highlights for the third quarter 2023.

Certainly were.

We're seeing the macro as we talked about both Joe and I in our in our requirements, but it really is broad based across the entire portfolio that we're seeing are.

Jill Klindt: And then I will provide Q4 and full year 2023 guidance before opening the line for questions. We are pleased to report that we beat the high end of revenue guidance by $2.2 million. Primarily due to strong subscription revenue growth, along with higher than expected services revenue growth, we beat our break even guidance on Q3 operating results, generating $5.3 million of operating profit. As Julie mentioned, stronger revenue, coupled with improved efficiency and productivity were the primary drivers of the beat. Our continued focus on growth and operating leverages showing in our operating results.

The bookings growth.

And again, our focus on multi solution and account expansion and that really was where where we saw the most strengthened and our results this quarter.

Great. That's helpful. And then just on the guidance I was wondering if you could talk a little bit more about the.

Adam Hotchkiss: Great. That's helpful. Then just on the guidance, you know, I was wondering if you could talk a little bit more about the implied deceleration there. You know, like you said, you've had four or so quarters of improving NRR, and it feels like what needs to happen to get to that, to get to your guidance is for things to fall back to 2022 levels, when I know capital markets was a much more meaningful headwind for you. I guess, you know, my question is this just conservatism combined with a more difficult comp, or is there, you know, something else from a quarter-to-quarter perspective that we all should be aware of, here? Really appreciate that.

Implied deceleration there.

You said, you had four or so quarters of improving IRR and it feels like what needs to happen to get to that to get to your guidance is for things to fall back to 2022 levels. What I know capital markets was a much more meaningful headwind for you. So I guess my question is is this just conservatism components combined with a more difficult comp or is there something else.

Jill Klindt: Now let's go through some key results and highlights for the quarter, starting with revenue. We generated total revenue in the third quarter of $158.2 million, delivering growth of 19% from Q3 2022. Subscription revenue was $143.4 million, up 21% from Q3 2022. Yet again, this quarter, both new logos and account expansions helped drive strong revenue growth, with 43% of the increase in subscription revenue coming from customers added in the last 12 months.

From a quarter to quarter perspective that we all should be aware of here really appreciate that.

Sure.

So this is Jill and really what we were doing for Q4 is we're being very prudent with how we put together our guidance because of the macro factors that we're seeing some elongated deal cycles like we talked about geopolitical factors we didn't feel.

Jill Klindt: This is Jill. Really what we were doing for Q4 is we're being very prudent with how we put together our guidance because of the macro factors that we're seeing, some elongated deal cycles, like we talked about, geopolitical factors. We didn't feel comfortable going outside of where we already were for the full year. You know, we do have a potential for upside, as always. We would just put that together in a way that was very prudent, as we said on the call.

Comfortable going outside of it.

Where we already were for the full year and so we.

We do have a potential for upside as always but we would just put that together.

Jill Klindt: Professional services revenue was $14.8 million in Q3 2023, up by 3.5% compared to the same quarter last year. The growth was driven by higher XBRL services revenue, which outpaced the year-over-year decline in setup and consulting revenue. As we mentioned in our previous 2023 earnings calls, we are in the process of transitioning more of our lower margin setup and consulting professional services to our partners. As we execute on this plan, we expect setup and consulting services revenue to decline year-over-year for 2023.

In a way that was very prudent as we had said on the call.

Adam Hotchkiss: Okay. Really helpful. Thanks, Julie. Thanks, Jill.

Okay very helpful. Thanks, Julian Thanks, Joe.

Your next question comes from the line of Steve Enders with Citi. Your line is open.

Operator: Your next question comes from the line of Steve Enders with Citi. Your line is open.

Steve Enders: Okay, great. Thanks for taking the question here. Maybe we can just dig in a little bit more on what you're, you know, kind of saying or what you're seeing out there in the deal environment. Was there any, I guess, incremental change from this quarter to last quarter or, I guess, so far in October and the scrutiny that you're seeing in the deals or other, you know, other factors that are impacting things there?

Okay, great. Thanks, Ron Thanks for taking my question here, maybe going to dig in a little bit more on what you're kind of saying.

What youre seeing out there in the deal environment was there any I guess incremental change from.

This quarter, the last quarter or I guess, so far in October.

The scrutiny that youre seeing in the deals or other other factors that are impacting things there.

Jill Klindt: Moving to our performance metrics, we added 85 net new customers in Q3 for a total customer count of 5,945, a growth of 404 customers from Q3 2022. Our growth revenue retention rate remained comfortably ahead of our 96% internal target. Patrick. Our net revenue retention rate increased to 112% for the third quarter of 2023 compared to 107% for Q3 2022. We are very pleased with the strong increase we continue to see in net revenue retention, which improved for the fourth straight quarter.

I would say there is not not much change I mean.

Julie Iskow: I would say there is not much change. I mean, the same issues we're seeing. It is that deals are being more scrutinized. It's also in part because we have larger deals, right? Those require more signatures, and so we're going up farther in organizations over the last, you know, couple quarters. We're seeing that more and more. We haven't seen any difference, any decline or increase that's notable. Again, you know, we have a diverse platform. We're seeing strength in bookings across the board. Yes, we're running into the macro challenges and getting on calls with lots of companies that are thinking harder about their purchases. We don't lose deals.

The same same issues, we're saying it is that deals are being more scrutinized.

And it's also in part because we have larger deals right and those require more signatures and so we're going up further in organizations over the last couple of quarters. So we're seeing that more and more we haven't seen.

Any different any decline or increase that's notable.

Again, you know what if we have.

A diverse platform, we're seeing stress.

Strengthened in the bookings on all across the board, but yes, we're running into the macro challenges in getting on calls with lots of companies that are.

Jill Klindt: The main driver of this improvement is strong account expansion activity led by the addition of new solutions. Account expansions also continue to be a strong contributor to the increase in customers with large contract values. We are seeing momentum and are optimistic that we can continue to expand the number of customers spending over $100,000 per year. In the third quarter of 2023, we had 1,561 contracts valued at over $100,000 per year. Up 24% from Q3 the prior year. The number of contracts valued at over $150,000 totaled $851 customers in the third quarter. Up 26% from Q3 2022. And the number of contracts valued over $300,000 totaled $296. Up 38% from Q3 2022.

Thinking harder about their purchases and we don't lose the deal somehow slipped into this this quarter left but theres nothing.

Julie Iskow: Some have slipped into this, and so this quarter or next, but there's nothing significant in the change between last and this quarter.

Nothing significant.

And the change between left in this quarter.

Steve Enders: Okay. All right. That's helpful. Thanks for clarifying that.

Okay Alright.

Paul Thanks for thanks for clarifying that.

Julie Iskow: Sure.

Steve Enders: I think you made a comment in the prepared remarks about the ESG environment becoming increasingly competitive. I guess maybe has something changed there? Has the competitive landscape, you know, shifted here in the past couple of quarters? Or how would you kind of characterize, you know, what that environment in ESG looks like today versus, you know, versus the past?

And then just on I think you made a comment in the prepared remarks about the ESG environment, becoming increasingly competitive so.

I guess, maybe it has something changed there or is the competitive landscape shifted here in the past couple of quarters or how would you kind of characterize what that environment and he or she looks like today.

So versus the past.

Julie Iskow: There are a lot of companies saying they do ESG. There are point solutions that we see out there focused. There are carbon accounting solutions, a lot of legacy providers. There's just a lot of companies out there. None of them, of course, do what we do and have a full comprehensive platform that provides financial reporting, non-financial or ESG and GRC. We are the only provider there. We're just hearing a lot of noise in the market, lot of marketing. I would say, you know, for us, the competition is a validator of the market. Again, large unaddressed TAM. Companies, of course, will be attracted to it, but we feel confident in our position and our value.

There are a lot of companies, saying they do ESG. There are point solutions that we see out there focus there are carbon accounting solutions a lot of legacy providers. So there's just a lot of companies out there none of them of course do what we do and have a plus full comprehensive platform that provides financial.

Jill Klindt: Moving on to our operating metrics. Rose Prophet totaled $121.7 million in Q3. Up 20% from the same quarter a year ago. Rose Margin was flat year over year at 77% as higher cloud computing costs were offset by savings and employee-related spending. Operating expenses increased only 6% from Q3 2022. This modest increase is due to the efforts we are making towards automation and process efficiency as well as thoughtful hiring with a focus on skills needed to drive growth and productivity.

<unk> non finance, our ESG and DRC. So we are the only provider there or just hearing a lot of noise in the market a lot of a lot of marketing but.

I would say.

For us the competition is a validate or of the market and again large large unaddressed Tam companies of course will be attracted to it but we feel confident in our in our position.

And okay perfect. Thank you.

Steve Enders: Okay, perfect. Thanks. Okay, great. Perfect. Thanks for taking the questions.

Okay, great perfect. Thanks for taking the questions.

Jill Klindt: We posted an operating profit of $5.3 million in Q3 2023. A continued improvement compared to Q3 2022's operating loss of $8.4 million. As Julie mentioned, we continue to focus on growth and productivity. This focus has helped us improve our operating leverage and stay committed to our goal of delivering improved operating margins and non-gap profitability for both 2023 and 2024.

Your next question comes from the line of Daniel Jester with BMO capital markets. Your line is open.

Operator: Your next question comes from the line of Daniel Jester with BMO Capital Markets. Your line is open.

Great. Thanks for taking my question.

Daniel Jester: Great. Thanks for taking my question. It was great to hear a couple of the European domiciled company wins in the prepared remarks. Maybe can you just expand on Europe and the trajectory there, how you see it in the pipeline build, and should we expect new logo momentum there to improve as we go into 2024?

To hear a couple of the European Domiciled company wins in the prepared remarks, maybe could you just expand on Europe and the trajectory there how you see it in the pipeline build.

And should we expect new logo momentum there to improve as we go into 2024.

Jill Klindt: At September 30, 2023, cash equivalents and marketable securities increased $316 million sequentially to a balance of $782 million. Primarily driven by our August convertible note offering. Our successful issuance of convertible notes raised $700 million at a 1.25% coupon. We used $397 million of the funds to repurchase about 80% of the convertible notes we originally issued in 2019. We will use the remainder of the funds primarily for working capital and to support potential future M&A activity. Operating activities in Q3 2023 resulted in cash provided of $15 million compared with an increase in cash of $5 million in the same Franco.

Julie Iskow: Sure. I mean, we had a strong quarter in Europe. We're very pleased with our momentum. Again, it was one of our top booking solutions for the quarter. We had some signature wins there, yet again, multi-solution six-figure deals. Importantly for us, our value prop of assured integrated reporting is really resonating. You're aware of the CSRD passed in November, more clear guidance here in July. That is exactly what we have to offer, which is the requirement of financial, non-financial, integrated in one report with assurance. We're seeing some wins driven by these requirements and just a lot of interest there. Yes, we expect more strength in Europe ongoing.

Sure I mean, we had a strong quarter in Europe.

Very pleased with our momentum again, it was one of our top booking solutions for the quarter.

We had some signature wins, there yet again multi solutions six figure deals.

And importantly for us our value prop of assured integrated reporting is really resident resonating.

The CSR D. Pascal in November more clear guidance here in July that is exactly what we have to offer which is that we're quite requirement of financial nonfinancial.

Integrated in one report with assurance and we're seeing some some some wins driven by these requirements and just a lot of interest there. So yes, we expect more strength in Europe ongoing.

Great and then just on the partner ecosystem again, a lot of positive commentary about sourcing from partners and from co selling can you just remind us what percentage of new bookings are sourced or coke coastal today and again as we think about the trajectory into next year.

Daniel Jester: Great. Just on the partner ecosystem, again, a lot of positive commentary about sourcing from partners and from co-selling. Can you just remind us, you know, what percentage of new bookings are sourced or co-sold today? Again, as we think about the trajectory into next year, you know, how should we be thinking about the opportunity to sort of deepen and broaden the partner ecosystem? Thank you.

Jill Klindt: Turning now to our guidance for Q4 and the full year 2023. As Julie discussed, while we remain encouraged by our opportunities to drive growth, we continue to see elongated sales cycles and increased buyer scrutiny amidst a concerning macro and geopolitical environment. As such, we continue to be prudent with our guidance assumptions. For the fourth quarter 2023, we expect total revenue to range from $164 million to $165 million. By design, we expect services revenue will decline in Q4 at a single digit percent rate.

How should we be thinking about the opportunity to sort of deepen and broaden the partner ecosystem. Thank you.

Julie Iskow: You speak about the numbers, Jill, and I'll take them.

Can you speak about the numbers Jill and I'll tell you, yes sure. So we don't give metrics around the portion of our bookings or sales that we have in the quarter that come from our partners.

Jill Klindt: Yeah, sure. We don't give metrics around the portion of our bookings or sales that we have in the quarter that come from our partners. We've been, of course, passing more of our services over to our partners, the setup and consulting services, and that's been going really well. We've talked about that at length. We're pleased at how that's further engaging those partner relationships. Julie, do you wanna take that?

But we've been.

Of course, passing more of our services over to our partners the set up and consulting services and that's been going really well, we talked about that at length and.

Jill Klindt: We expect non-gap operating income to range from $5.5 million to $6.5 million, and that income of 21 cents to 23 cents on a per share basis. Our share count will be approximately 54 million weighted average shares. For the full year 2023, we are raising the midpoint of our revenue guidance range, expecting revenue to be between $627 million and $628 million. The high end of revenue guidance remains in line with our previously stated 2023 target.

And we're pleased at how that's further engaging those partner relationships and Julie do you want to take the key tenet of our growth strategy. We continue to work hard along with our partners. We're doing a lot of cross sell we've done a lot of enablement with our partners and our own internal team as an increasing their expertise in terms of selling with partners partner first of.

Julie Iskow: I mean, key tenet of our growth strategy, we continue to work hard along with our partners. We're doing a lot of co-sell. We've done a lot of enablement with our partners, and our own internal team is increasing their expertise in terms of selling with partners. It's partner first approach on setup and consulting, as Jill has said, but it's also moving that direction for our solutions. We see a lot of room there for growth and acceleration with our partner ecosystem, which continues to strengthen.

On set up in consulting as Bill has said, but it's also moving that direction for our solutions. So we see a lot of room, there for growth and acceleration with our partner ecosystem, which continues to strengthen.

Jill Klindt: We expect services revenue to decline at a low single digit percent rate. We are raising our guidance for non-gap operating results, shifting to an income range of $3 million to $4 million or a net loss of $0.54 to $0.52 on a per share basis. Our share count will be approximately 54 million weighted average shares. The Q3 interest expense recorded in conjunction with the repurchase of the majority of our 2019 notes is driving the gap between our operating results and loss per share guidance. We continue to expect we will post positive free cash flow for the seventh consecutive year.

Daniel Jester: Great. Thank you very much.

Great. Thank you very much.

Your next question comes from the line of Alex Sklar with Raymond James Your line is open.

Operator: Your next question comes from the line of Alex Sklar with Raymond James. Your line is open.

Okay.

Alex Sklar: Thank you, Julie. I wanted to follow up on your answer to Daniel Jester's question right there. Just with the partner-sourced deals, as you're approaching kind of the 2024 planning, does the success you've seen from the partner channel year to date at all change your view on sales and marketing hiring or leverage that you think you can get from your existing team? Thanks.

Thank you.

Julie I wanted to follow up on your answer to Daniel's question right there.

Gartner source deals that youre approaching kind of the 2020 for planning does the success you've seen from the partner channel year to date at all change your view on sales and marketing hiring or levers that you think you can get from your existing team.

I would say not at this time.

Julie Iskow: I would say not at this time. We co-sell along with our partners. We're getting more deals sourced from our partners, but our teams are very much engaged at this time. I don't anticipate reducing spend for that reason. We do see them helping us to expand in accounts, bringing leads our way, and we have good relationships on the sales side on both our partners and our own organization. Continuing to focus on growth. We'll continue to hire where it's necessary to do so to keep the relationships moving and expand our footprint.

We co sell along with our partners.

We're getting more deals sourced from our partners, but our teams are very much engaged at this time I don't anticipate reducing reducing spend for that reason.

Jill Klindt: Now to give some directional modeling information for 2024. As implied in our Q4 2023 guidance, we will be monitoring the current macro headwinds carefully as we exit 2023, as well as the potential impact on our revenue growth rates as we enter 2024. We expect XBRL services revenue to continue to grow at a modest low single digit rate.

We do see them, helping us to expand and account.

Bringing leads our way and we have good relationships on the sales side on both our partners that are in our own organization. So continuing to focus on growth will continue to.

Jill Klindt: We expect setup and consulting revenue to decline from 2023 to 2024. And consistent with our prior statements, we expect non-gap operating profit for the full year 2024.

Higher where it's necessary to do so to keep the relationships moving in.

Expand our footprint.

Okay, Great and Julian just one more follow up one more for you.

Alex Sklar: Okay, great. Julie, just one more follow-up, one more for you. Just wanted to ask about the applicability of the platform, and your own interest levels outside of the current kind of assured integrated reporting strategy. With that kind of, can you just talk about kind of the strategy as far as enabling partners to build on the Workiva platform? Thanks.

Jill Klindt: In summary, I want to thank all of our employees and partners for the continued support and hard work. Before we turn to Q&A, I would like to reiterate three key points. First, we are encouraged by the opportunity ahead of us, our large unaddressed hand and the value our platform delivers to our customers. Second, we deliver the beat on Q3 operating margin guidance and are focused on continuing the momentum of margin improvement and anticipating a non-gap operating profit in fiscal year 2023. And third, we remain committed to our strategy, long-term growth, and improving operating profit.

Just wondering if what the applicability of the platform.

Your own interest levels outside of the current kind of assured integrated reporting strategy.

Kind of.

Can you just talk about kind of the strategy as far as enabling partners to build on the work Evo platform. Thanks.

Julie Iskow: Sure. That is a part of our growth strategy, certainly to enable builders and partners to do that. We're beginning to do that with some of our partners today and our alliances. Our platform, as we talked about here in my remarks, but also at our Investor Day, we talked about moving toward a platform for transparent reporting and regulatory disclosure. We have found as we have built out best-of-breed solutions for financial reporting and best-of-breed solutions for ESG and GRC, that our platform is now suited for a wide variety of regulatory disclosure requirements. You will see us continuing to do that. I gave a few examples on the call this afternoon as well. That is the direction we are moving.

Sure that is a part of our growth strategy is certainly to enable builders and partners to do that and we're beginning to do that with some of our our partners today and our alliances and our platform as we talked about here in my in my remarks, but also in our Investor day, we talked about moving toward a platform for transparent reporting and regulatory.

Disclosure, we have found as we have.

Built out best of breed solutions for financial reporting and best of breed solutions for ESG and <unk> see that our platform is now suited for a wide variety of regulatory disclosure requirement. So you will see us continuing to do that and I gave a few examples on the call.

Jill Klindt: In closing, I want to echo Julie's thanks to all workiva employees. You are an amazing team and I am proud to be working beside you.

Operator: We will now take your questions.

Operator: Operator, we are ready to begin the Q&A session. Thank you, ladies and gentlemen, if you have a question, please press star one on your telephone keypad to withdraw your question, simply press star one again.

This afternoon as well so that is the direction we are moving.

Adam Hotchkiss: Your first question comes from the line of Adam Hotchkiss with gold. Your line is open. Great, thanks for taking the questions. I guess to start, Julie, I would love to dig a little deeper on the drivers of performance in the quarter. It looked like you had meaningfully higher average ACVs and maybe a little bit slower growth on the net the logo side. I would just love to understand from a rate of change perspective relative to the first half of the year what are driving those two things. Whether you saw a quarter to quarter impact from a macro perspective, or that continues to stay stable from a headwind perspective, just would love to understand those dynamics.

Okay, great. Thank you one more squeeze in here on the ESG follow up one of the earlier questions can you can you just referenced kind of the increased competition youre seeing from point solutions and legacy solutions can you just talk about kind of how you stand out.

Alex Sklar: Okay, great. Thank you. Can I one more squeeze in here on the ESG follow-up to one of the earlier questions? Can you just reference kind of with the increased competition you're seeing from point solutions and legacy solutions? Can you just talk about kind of how you stand out in that backdrop? Is it customers looking for the full-fledged Workiva solution? Is it educational? Is it really partners are having to help drive it? Can you just kind of elaborate on your answer to that from earlier? Thank you.

In that backdrop is it customers looking for the.

The solution is it education or is it really partners there or haven't helped drive. It can you just kind of elaborate on your answer that from earlier. Thanks sure well we love. This question because it lets us highlight where we have a competitive advantage and I'll start off by saying look we've been doing investor grade reporting for well over a decade.

Julie Iskow: Sure. We love this question because it lets us highlight where we have a competitive advantage. I'll start off by saying, look, we've been doing investor-grade reporting for well over a decade. We have the partner ecosystem, tremendous partner ecosystem, as you said, and they are very much involved in our solution and can help bring value to customers quickly. We have XBRL tagging, which we are the leader in, and we have been doing regulatory reporting for, again, well over a decade, and we can ensure that our customers will be compliant when regulations change, and they do frequently now. That's just one area that we are in our experience and expertise. We also, again, have that platform for financial, non-financial, and GRC.

We have the partner ecosystem tremendous parcel partner ecosystem as you said and they are.

Julie Iskow: Sure, very pleased with our growth around account expansion, which is probably what is driving it most significantly. Certainly, we are seeing the macro as we talked about with Jill and I in our requirements, but it really is broad-based across the entire portfolio that we are seeing. The bookings grow and again, focus on multi-solution and account expansion. That really was where we saw the most strength in our results this quarter. Great, that's helpful.

Much involved in our solution and it can help bring value to customers quickly.

Ex Bureau, tagging, which we are the leader in and we have been doing regulatory reporting for again, well over a decade and we can ensure that our customers will be compliant.

When regulations change and they do frequently frequently now so that's just one one area that we are in our experience and expertise, but we also again have that platform for financial and nonfinancial in DRC and again the world is moving in that direction and we are the only.

Julie Iskow: Again, the world is moving in that direction, and we are the only technology platform that has all of that in one solution, one capability across the board. Then of course, our fit for purposeness and all of the reporting to be able to ingest the data and certainly map to the frameworks and prepare the data for reporting to regulatory raters and rankers. We have designed reporting as well as part of our platform now. When you look at the comprehensiveness from source to report from end to end, Workiva stands out strong among the competition.

Jill Klindt: Just on the guidance, I was wondering if you could talk a little bit more about the implied deceleration there. Like you said, you've had four or so quarters of improving an RR and it feels like what needs to happen to get to that, your guidance is for things to fall back to 2022 levels. When I know capital markets was a much more meaningful headwind for you. So I guess my question is, is this just conservatism combined with a more difficult comp or is there something else from a quarter to quarter perspective that we all should be aware of here?

The only technology platform that has all of that in one one solution one capability across the board and then of course, our fit for purpose <unk> and all of the reporting and to be able to ingest the data and certainly.

Map to the frameworks and prepare those prepare the data for <unk>.

Reporting to regulatory riders and Rankers and then we have designed reporting as well as part of our platform now so when you look at the comprehensiveness.

Jill Klindt: I really appreciate that. So this is Jill and really what we were doing for Q4 is we're being very prudent with how we put together our guidance because of the macro factors that were seen, some elongated deal cycles like we talked about, geopolitical factors. We didn't feel comfortable going outside of where we already were for the full year. And so, you know, we do have a potential for outside as always, but we would just put that together in a way that was very prudent as we said on the call. Okay, really helpful. Thanks, Julie. Thanks, Jill.

Source to report from end to end, we receive a stand out strong among the competition.

Alex Sklar: All right. Thanks for the extra color. Thank you.

Alright, thanks, Greg the extra color. Thank you.

Your next question comes from the line of Joe mirrors with Truest. Your line is open.

Operator: Your next question comes from the line of Terry Tillman with Truist. Your line is open.

Terry Tillman: Great. Thanks for taking the question. You guys have mentioned that you added 85 customers in the quarter, and I'm just curious, was ESG a big driver here? I think at the analyst day, you called out 185% year-over-year growth in ESG customer count in Q2. Just curious what that metric looked like in Q3. I have a follow-up. Thanks.

Joe Meares: Great. Thanks for taking the question. You guys have mentioned that you added 85 customers in the quarter, and I'm just curious, was ESG a big driver here? I think at the analyst day, you called out 185% year-over-year growth in ESG customer count in Q2. Just curious what that metric looked like in Q3. I have a follow-up. Thanks.

Great. Thanks for taking the question you guys have mentioned that.

You added 85 customers in the quarter and I'm. Just curious was it used to be a big driver here I think at the analyst day, you called out 185% year over year growth in ESG customer count into queue. Just curious what that metric it looked like in the third quarter I have a follow up thanks.

So we are.

Jill Klindt: That's not a metric that we're providing each quarter. We'll keep you updated as we have additional data. We were, as Julie had stated, very pleased with how ESG sales came through in the quarter, and it was our top individual solution.

That's not a metric that we're providing each quarter.

Steve Enders: Your next question comes from the line of Steve Enders with city. Your line is open. Okay, great. Thanks for thinking the question here. Maybe we can just dig in a little bit more on what you're kind of saying or what you're seeing out there in the deal environment. Was there any I guess incremental change from this quarter to the last quarter or I guess so far in October and the scrutiny that you're seeing in the deals or other, you know, other factors that are impacted things there.

We will keep you updated as we have.

Additional data, but we were as Julie had stated we're very pleased with how ESG sales came through in the quarter and it was our.

Top individuals' solution.

Terry Tillman: Great. That's helpful. Then just around the implied guidance for profitability, it was great to see that OpEx only grew 6% in Q3. It looks like the guidance is implying that that growth rate is well higher for OpEx in Q4. I'm just curious if that's just conservatism or if there's anything, any one-time items that are driving that. Thanks again.

Joe Meares: Great. That's helpful. Then just around the implied guidance for profitability, it was great to see that OpEx only grew 6% in Q3. It looks like the guidance is implying that that growth rate is well higher for OpEx in Q4. I'm just curious if that's just conservatism or if there's anything, any one-time items that are driving that. Thanks again.

Great. That's helpful and then just around.

The implied guidance for profitability. It was great to see that Opex only grew 6% in the third quarter. It looks like the guidance is implying that that growth rate as well higher for opex in the fourth quarter. So I'm just curious if that's just conservatism or if there's anything onetime items that are driving that thanks again.

Steve Enders: I would say there is not much change. I mean, the same issues we're seeing, it is that deals are being more scrutinized. And it's also in part because we have larger deals, right? And those require more signatures. And so we're going up farther in organizations over the last, you know, couple quarters. So we're seeing that more and more. We haven't seen any different, any decline or increase that's notable. Again, you know, we have a diverse platform.

Jill Klindt: With our overall guidance for Q4 and for the full year, we are, as I've mentioned, being very prudent with how we put the models together. There's just a lot going on in the global environment with the macro and geopolitically. I would say that we always have the potential to outperform, and we would like to be able to outperform. With the way that our models were built, again, we were just being very prudent with the numbers.

So with the with our overall guidance for Q4 and for the full year, we are as I've mentioned being very prudent with how we put.

And we put our models together.

Theres, just a lot going on in the global environment with the macro and geopolitical Lee.

And if so where.

I'd say that we always have the potential to outperform and we would like to be able to outperform.

Steve Enders: We're seeing strengthen in the bookings on all across the board. But yes, we're running into the macro challenges and getting on calls with lots of companies that are thinking harder about their purchases. And we don't lose deals. Some have slipped into this and this quarter next, but there's nothing significant in the change between last and this quarter. That's helpful. Thanks for clarifying that.

But with the way that our models were built again, we were just being very prudent with the with the numbers.

Alright, thank you.

Terry Tillman: All right. Thank you.

Joe Meares: All right. Thank you.

Your next question comes from the line of Ryan Krieger with Wolfe Research. Your line is open.

Operator: Your next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.

Okay.

Alex Zukin: Hey, guys. Thanks for taking the question. Just a quick one on NRR. You know, it's ticked up now, another point and for the fourth quarter in a row. Can you just talk a little bit about the solutions in your portfolio, what's resonating most with customers from an expansion perspective? And then how do we think about it from here or, based on what you're seeing, how much more room does it still have to run? Thanks.

Ryan Krieger: Hey, guys. Thanks for taking the question. Just a quick one on NRR. You know, it's ticked up now, another point and for the fourth quarter in a row. Can you just talk a little bit about the solutions in your portfolio, what's resonating most with customers from an expansion perspective? And then how do we think about it from here or, based on what you're seeing, how much more room does it still have to run? Thanks.

Hey, guys. Thanks for taking the question just a quick one on <unk>.

Up now.

Another point and for the fourth quarter in a row. So can you just talk a little bit about.

Julie Iskow: And then just on, I think you made a comment in the prepared remarks about the ESC environment becoming increasingly competitive. So I guess maybe it has something changed there as the competitive landscape shifted here in the past couple of quarters or how would you kind of characterize what that environment and ESC looks like today. Versus the past. There are a lot of companies saying they do ESG. There are point solutions that we see out there. Focus. There are carbon accounting solutions. A lot of legacy providers. There's just a lot of companies out there.

The solutions in your portfolio, what's resonating most with customers from an expansion perspective, and then how do we think about it from here based on what Youre seeing how much more room does it still have to run.

Yes.

Julie Iskow: Sure. I mean, our NRR increasing steadily has a lot to do with our account expansion capabilities, and GRC is one area where when we sell, there are multiple solutions. Our ESG, we have very strong success when we have existing customers. So there are a number of solutions that are land and expand, but we've been putting heavy emphasis on account expansion. That's primarily where you're seeing the NRR increase.

Sure I mean, our NR are increasing.

Steadily we have.

A lot to do with our account expansion capabilities.

And <unk> is one area, where when we sell there are multiple solutions. Our ESG, we are very very.

Strong success, when we have existing customers. So there are a number of customers that are another a number of solutions that our land and expand but we've been putting heavy emphasis on account expansion.

Julie Iskow: None of them, of course, do what we do and have a full comprehensive platform that provides financial reporting non finance or ESG and GRC. So we are the only provider there. We're just hearing a lot of noise in the market. A lot of a lot of marketing. But I would say, you know, for us, the competition is a validator of the market. And again, large, large and address tam companies, of course, will be attracted to it. But we feel confident in our in our position. Okay, great. Great. Thank you.

And that's primarily where you're seeing the increase.

Operator: Your next question comes from the line of Brad Reback of Stifel. Your line is open.

Your next question comes from the line of Brad Reback of Stifel. Your line is open.

Brad Reback: That's great. Thanks very much. Julie, I think you had mentioned the potential for some acquisitions post the capital raise. Can you give us a sense of what type of deals you'd be looking at?

That's great thanks very much.

Julia I think you had mentioned.

The potential for some acquisitions post the capital raise can you give us some sense of what type of deals you would be looking at.

Daniel Jester: Your next question comes from the line of Daniel Jester with BMO capital markets. Your line is open. Great. Thanks for taking my question. It was great to hear a couple of the European down the file company wins in the prepared remarks. Maybe you just expand on Europe and the trajectory there. How do you see the pipeline bill? And should we expect new logo moments from there to improve as we go into 2024?

Sure.

Julie Iskow: Sure. Our capital raise, of course, good terms, and we have availability now to go after acquisitions, potentially. They come in a number of forms. It may be something that brings up the platform entirely, as did our prior acquisition of OneCloud, raising all capabilities across the board on the solution. We would be looking for potentially a gap closure on the platform, just added capability. We have plenty of TAM, doesn't necessarily have to be that, but we might find something in adjacent market. I think we're wide open in terms of the acquisition types that we would go after.

Our capital raise of course, good terms and we have.

We have availability now to go after acquisitions potentially they come in a number of forms it may be something that brings up the platform and entirely as did our prior acquisition of one cloud raising all capabilities across the across the board on the solution, we would be looking for.

<unk> a gap closure on the platform.

Julie Iskow: Sure. I mean, we had a strong quarter in Europe. We're very pleased with our momentum. Again, it was one of our top looking solutions for the quarter. We had some signature wins there yet again, multi-solution six figure deals. And importantly for us, our value prop of a short integrated reporting is really resonating. You're where the CSRD passed in November, more clear guidance here in July. That is exactly what we have to offer which is the requirement of financial, non-financial integrated in one report with assurance. And we're seeing some wins risen by these requirements and just a lot of interest there. So yes, we expect more strength in Europe ongoing.

Added added capability, we have plenty of Tam doesn't necessarily have to be that but we might find something in adjacent market. So I think we're wide open in terms of the.

Unknown Executive: Great.

The acquisition types that we would would go after.

Brad Reback: That's great. Jill, given the environment commentary, if it remains challenging out there and the subscription growth is maybe a bit below where it came in this year, would you be more aggressive on the OpEx side next year to manage margin? Thanks.

That's great and then Jill given the environment commentary.

If it remains challenging out there and the sub growth.

Maybe a bit below where it came in this year would you be more aggressive on the Opex side next year to manage margin.

So we are focused on growth.

Jill Klindt: We are focused on growth, and we know that we have our large unaddressed TAM to go after. We would make sure to continue to focus on productivity and getting leverage out of our existing resources. We'll be watching that mix very closely going into next year, as I know you will be, Brad.

And we know that we have our large unaddressed can to go after and.

We would make sure it should be continue to focus on productivity and getting leverage out of our existing resources and we'll be watching that mix very closely going into next year as I know you will be Brad.

Jill Klindt: And then, just on the partner ecosystem, again, a lot of positive commentary about sourcing from partners and from co-selling. Can you just remind us, you know, what percentage of new bookings are sourced or co-sold today? And again, as we think about the trajectory into next year, you know, how should we be thinking about the opportunity to sort of deepen and broaden the partner ecosystem?

Yes.

Rachel Smith: That's great. Thanks very much.

Brad Reback: That's great. Thanks very much.

That's great thanks very much.

Operator: Your next question comes from the line of Mike Grondahl with Northland Securities. Your line is open.

Your next question comes from the line of Mike Grondahl with Northland Securities. Your line is open.

Julie Iskow: Thank you. You speak about the numbers, Jill, and I'll take that. Sure. So we don't give metrics around the portion of our bookings or sales that we have in the quarter that come from our partners. But we've been, of course, passing more of our services over to our partners, the set-up and consulting services. And that's been going really well. We've talked about that at length and we're pleased at how that's further engaging those partner relationships in Julie.

Hey, guys. This is Luke Horton on for Mike.

Louie DiPalma: Hey, guys, this is Louie DiPalma on for Mike. You guys gave some nice insight on the European market, and it's nice to see that momentum building there. Just wanted to touch on the Asia Pacific region and if there's anything to call out here or what sort of the strategy behind this place?

Luke Horton: Hey, guys, this is Louie DiPalma on for Mike. You guys gave some nice insight on the European market, and it's nice to see that momentum building there. Just wanted to touch on the Asia Pacific region and if there's anything to call out here or what sort of the strategy behind this place?

So you guys gave some nice insight on the European market and it's nice to see that.

Momentum building, there, but just wanted to touch.

The APAC region, and if there's anything to call out here, what sort of the strategy behind this place.

Sure.

Julie Iskow: Sure. I mean, we've entered APAC most recently. Our approach there is with our partners, partner first, where we're known less than we are, of course, in North America and even in Europe. We are developing strong relationships and breaking into the market. Lots of opportunity ahead for us.

We've entered APAC. Most recently our approach there is with our our partners' partner first where we're known less than we are of course and in North America and even in Europe, but.

Julie Iskow: Do you want to take that? I mean, key ten of our growth strategy, we continue to work hard along with our partners. We're doing a lot of co-sell. We've done a lot of enablement with our partners and our own internal team is increasing their expertise in terms of selling with partners. It's partner first approach on set-up and consulting, as Jill has said, but it's also moving that direction for our solutions. So we see a lot of room there for growth and acceleration with our partner ecosystem, which continues to strengthen. Great.

Unknown Executive: Thank you very much.

But we are developing strong relationships and breaking into the market.

Lots of lots of opportunity ahead for us.

Louie DiPalma: Great. That's good to hear. That's it for me. Thank you.

Luke Horton: Great. That's good to hear. That's it for me. Thank you.

Alright, thats good to hear that that's it for me.

Thank you.

Okay.

Operator: There are no further questions at this time. This will conclude today's conference. We thank you for joining. You may now disconnect your lines.

There are no further questions at this time this will conclude today's conference. We thank you for joining you may now disconnect your lines.

Please wait the conference will begin shortly.

Operator: Please wait. The conference will begin shortly.

Alex Sacklar: Your next question comes from the line of Alex Sacklar with Raymond James. Your line is open. Thank you.

[music].

Okay.

Julie Iskow: Julie, I want to follow up on your answer to Daniel's question right there. Just so the partner source feels as you're approaching kind of the 2024 planning, does the success you've seen from the partner channel year-to-date at all change your view on sales and marketing hiring or leverage that you think you can get from your existing team? Thanks. I would say not at this time. We co-sell along with our partners. We're getting more deals sourced from our partners, but our teams are very much engaged at this time.

Okay.

Yes.

Okay.

Yes.

Okay.

Yes.

[music].

Julie Iskow: I don't anticipate reducing spend for that reason. We do see them helping us to expand in accounts, bringing leads our way, and we have good relationships on the sales side on both our partners and our own organizations. So continuing to focus on growth will continue to higher where it's necessary to do so to keep the relationships moving and expand our footprint.

Unknown Executive: Okay, great. And Julie, there's one more follow-up. One more for you.

Yes.

[music].

Julie Iskow: Just don't wonder what the applicability of the platform and your own interest levels outside of the current kind of assured integrated reporting strategy. And with that kind of, can you just talk about kind of the strategy as far as enabling partners to build on the work of a platform? Thanks. Sure. That is a part of our growth strategy, certainly, to enable builders and partners to do that. And we're beginning to do that with some of our partners today and our alliances.

Julie Iskow: And our platform, as we talked about here in my remarks, but also in our investor day, we talked about moving toward a platform for transparent reporting and regulatory disclosure. We have found, as we have built out best of breed solutions for financial reporting, investor breed solutions for ESG and GRC, that our platform is now suited for a wide variety of regulatory disclosure requirements. So you will see us continuing to do that. And I gave a few examples on the call this afternoon as well. So that is the direction we are moving.

Unknown Executive: Okay, great. Thank you.

Julie Iskow: Kind of one more squeeze in here on the ESG follow up for one of the earlier questions. Can you use reference kind of with the increased competition you're seeing from point solutions and legacy solutions? Can you just talk about kind of how you stand out in that backdrop? Is it customers looking for those full slides of workiva solution? Is it educational? Is it really partners are having to help drive it? Can you just kind of elaborate on your answer to that from earlier? Sure.

Julie Iskow: We love this question because it lets us highlight where we have competitive advantage. And I'll start off by saying, look, we've been doing investor-grade reporting for well over a decade. We have the partner ecosystem, tremendous partner ecosystem, as you said, and they are very much involved in our solution and can help bring value to customers quickly. We have expiral tag-in, which we are the leader in. And we have been doing regulatory reporting for again well over a decade.

Julie Iskow: And we can ensure that our customers will be compliant when regulations change and they do frequently now. So that's just one area that we are in our experience and expertise. But we also, again, have that platform for financial, non-financial and GRC. And again, the world is moving in that direction. And we are the only technology platform that has all of that in one solution. And one capability across the board. And then, of course, our fit for purposeness and all of the reporting to be able to ingest the data and certainly map to the frameworks and prepare the data for reporting to regulatory raiders and rankers.

Julie Iskow: And then we have designed reporting as well as part of our platform now. So when you look at the comprehensiveness from source to report from end to end, we'll see the standout strong among the competition. All right. Thanks for the great extra color.

Unknown Executive: Thank you.

Joe Mears: Your next question comes from the line of Joe Mears with Truist. Your line is open. Great. Thanks for taking the question. You guys have mentioned that you added 85 customers in the quarter. And I'm just curious, with the ESG, a big driver here, I think at the eye and all of a sudden, you called out 185% near of your growth and ESG customer counting to Q. Just curious what that metric looks like in the third quarter. Really on the follow-up. Thanks.

Jill Klindt: So we are, that's not a metric that we're providing each quarter. We'll keep you updated as we have additional data, but we were as Julie had stated. We're very pleased with how ESG sales came through in the quarter and it was our top individual solution. Great. That's helpful. And then just around the implied guidance for profitability, it was great to see that op-x only grew 6% in the third quarter. It looks like the guidance is implying that that growth rate is well higher for op-x and the fourth quarter.

Jill Klindt: So I'm just curious if that's just conservatism or if there's anything maybe one-time items are driving that. Thanks again. So with our overall guidance for Q4 and for the full year, we are, as I've mentioned, being very prudent with how we put the models together. There's just a lot going on in the global environment with the macro and geopolitically. And so I would say that we always have the potential to outperform and we would like to be able to outperform. But with the way that our models were built again, we were just being very prudent with the numbers. Thank you.

Julie Iskow: Your next question comes from the line of Ryan Krieger with Wolf Research. Your line is open. Hey guys, thanks for taking the question just a quick one on NRR. You know, it's picked up now another point and for the fourth quarter in a row. So can you just talk a little bit about the solutions in your portfolio, what's resonating most with customers from an expansion perspective? And then how do we think about it from here or based on what you're seeing, how much more room does it still have to run? Thanks.

Julie Iskow: Sure, I mean, our NRR increasing steadily. We have a lot to do with our account expansion capabilities and GRC is one area where when we sell there are multiple solutions, our ESG, we have very, very strong success when we have existing customers. So there are a number of customers that are another number of solutions that are our land for an expand, but we've been putting heavy emphasis on account expansion and that's primarily where you're seeing the NRR increase.

Brad Ryback: Your next question comes from the line of Brad Ryback of Steeple. Your line is open. That's great. Thanks very much. Julie, I think you had mentioned the potential for some acquisitions post the capital race. Can you give us a sense of what type of deal you'd be looking at? Sure. Our capital race, of course, good terms, and we have availability now to go after acquisitions potentially. They come in a number of forms.

Brad Ryback: It may be something that brings up the platform entirely as did our prior acquisition of one cloud, raising all capabilities across the board on the solution. We would be looking for potentially a gap closure on the platform, just added capability. We have plenty of tams. It doesn't necessarily have to be that, but we might find something in a adjacent market, setting for wide open in terms of the acquisition types that we would go after.

Brad Ryback: That's great. And then Jill, given the environment commentaries, if it remains challenging out there and the sub-growth is maybe a bit below where it came in this year, would you be more aggressive on the off-ex side next year to manage more? Thanks. So we are focus on growth. And we know that we have our large unaddressed can to go after. And we would make sure to continue to focus on productivity and getting leverage out of our existing resources. And we'll be watching that mix very closely. Going into next year, I know you will be bred. That's great. Thanks very much.

Unknown Executive: Your next question comes from the line of make grandle with Northland securities. Your line is open. Hey guys, this is Lou Cordenon for Mike.

Julie Iskow: So you guys get some nice insight on the European markets, nice to see that moment I'm building there, but just wanted to touch on the APEC region and if there's anything to call out here, what sort of the strategy behind this place? Sure, I mean we've entered APEC most recently. Our approach there is with our partners, partners first, where we're known less than we are of course in North America and even in Europe, but we are developing strong relationships and breaking into the market. Lots of opportunity ahead for us.

Operator: That's good to hear, that's up for me. Thank you. There are no further questions at this time. This will conclude today's conference. We thank you for joining, you may now disconnect your lines.

Please wait, the conference will begin shortly.

Q3 2023 Workiva Inc Earnings Call

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