Q3 2024 Workiva Inc Earnings Call
[inaudible]
Tonya: Afternoon, ladies and gentlemen, my name is Tonya and I will be your host operator on this call. After the prepared remarks.
Tonya: We will conduct a question and answer session. Instructions will be provided at that time. Please note that this call is being recorded on November 6, 2024 at 5 p.m. Eastern.
Tonya: I would now like to turn the meeting over to your host for today's call, Mike Rost, Senior Vice President of Corporate Development in Investor Relations at Workiva. Please go ahead.
Mike Rost: Good afternoon and thank you for joining us for Will Keepers.
Good afternoon and thank you for joining us for Wokewis 3rd 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 2024.
Tonya: 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 Klint.
Tonya: We will then open the call up for a live Q&A session.
Tonya: A replay of this webcast will be available until November 13, 2024.
Tonya: Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section.
Tonya: 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 2024.
Tonya: These forward-looking statements are subject to known and unknown risks and uncertainties.
or Kiva cautions that these statements are not guarantees of future performance.
Tonya: 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.
Tonya: 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.
Tonya: Also, during the course of today's call, we will refer to certain non-GAAP financial measures.
Tonya: Reconciliation of non-gap-to-gap measures and certain additional information are also included in today's press release.
Mike Rost: With that, we'll begin by turning the call over to CEO Julie Iskow.
Julie Iskow: Thank you, Mike, and welcome, everyone, to today's call. Jill and I look forward to sharing our Q3 results.
Tonya: We'll showcase some of our signature customer wins and we'll highlight trends that are driving our momentum. We'll also discuss our outlook for Q4 and our updated guidance for the full year 2024.
Tonya: To kick things off, I'd like to share a few comments on the impact to Workiva of the outcome of the U.S. presidential election.
Tonya: With the Trump administration, we remain bullish on our market opportunity, including sustainability management and reporting.
Tonya: We remain equally confident that our growth strategy continues to be relevant and intact.
Tonya: Why?
Tonya: because the demands on our customers have never been greater.
Tonya: The stakes are high. The impact is massive.
Tonya: And this includes the reporting of both financial and non-financial factors.
Tonya: Reporting on non-financial and sustainability information is a global initiative.
Tonya: It's a topic that goes well beyond any U.S. political talking point, and it's one that's not limited to regulation.
Tonya: We believe that the global momentum and the demand for sustainability management and reporting is not going away and it will not be slowed down by the outcome of this election.
Tonya: For corporations, sustainability reporting is about performance. It's about growth. It's about impact.
Tonya: It's about surfacing risks and managing those risks.
Tonya: It's about addressing the changing requirements of customers, of employees, and of supply chains. And at times, yes, it's about regulation.
Tonya: But sustainability reporting is far from being a trend.
Tonya: It's a generational movement.
Tonya: As highlighted at our Investor Day, over 4,200 companies have committed to science-based targets, along with the Associated reported.
Tonya: and 23,000 companies representing 50% of the global market cap now report their emissions data with the rigor required by the CDP.
Tonya: And although the 2024 proxy season saw a continued rise in anti-ESG proposals, none of these proposals passed, and none of them received more than 10% support.
Speaker Change: Well, we've been selling ESG well ahead of regulation. There are some sustainability regulation deadlines that are fast approaching.
Tonya: Companies are actively preparing for both the EU Corporate Sustainability Reporting Directive or CSRD and the state of California climate rules.
Tonya: These regulatory requirements are not influenced by the U.S. federal government.
Tonya: We believe that the CSRD is a game-changer. It's not simply the next regulatory requirement. It's a step change in the size and the scope of our opportunity.
Tonya: For European companies, the regulations are clear.
Tonya: Large companies will begin reporting starting in Q1 of 2025 and there are over 1,000 new data points that they need to report on. These new disclosures will be subject to external audits starting in 2026 with XBRL disclosure with ESEF being phased in and over time.
Tonya: The impact of the CSRD, though, is not limited to Europe.
Tonya: Global customers are increasingly focused on meeting the requirements of the regulation regardless of whether they're directly governed by it.
Tonya: For these companies, the implications of the CSRB extend to their supply chain and the needs of their customers.
Tonya: Businesses aiming to attract and retain customers as they grow in Europe will have a strong incentive to comply with the CSRD.
Tonya: To operate successfully on a global scale, companies will be compelled to disclose their sustainability metrics.
Speaker Change: As we as a country transition to a new president, we will continue to execute on our strategy and serve our customers' growing set of requirements for sustainability management and reporting.
Speaker Change: I'll now move on to our Q3 results. Wojtyla is once again in a beat-and-raise position.
Tonya: Our results demonstrate an acceleration in both growth and improved operating efficiency.
Tonya: We delivered solid Q3 performance with subscription revenue growing at 19% and total revenue growing at 17%.
Tonya: These results drove a beat to the high end of our revenue guidance, while at the same time delivering a Q3 operating margin above the high point of our guide.
Tonya: In Q3, we saw a repeat of the healthy buying environment that we communicated in our Q2 call.
Tonya: We had another record booking squirter.
Tonya: We saw broad-based demand across the entire solution portfolio and a higher volume of account expansion deals and platform wins across North America, Europe, APAC, and Latin America.
Tonya: We believe that there are several reasons for our improved performance.
Tonya: Key factors include enhanced internal execution and increased customer demand driven by approaching regulatory deadlines, particularly the CSRD.
Tonya: We've also observed a general improvement in the macro.
Tonya: Whether from new logos or account expansions, we're encouraged by our win rates, our deal sizes, and our platform wins.
Tonya: We also delivered in Q3 another standout performance in our sustainability management and reporting solution with an added boost from Workiva Carbon.
Tonya: Sustainability was yet again a top-looking solution.
Tonya: Europe was a highlight for the quarter again as well.
Tonya: We delivered continuing momentum in Europe across all solution categories.
Tonya: The value of our platform continues to resonate, particularly with the CSRD fast approaching.
Tonya: We win with our platform, we win with our partners, and we win with assured integrated reporting, which now includes carbon accounting, the most consistently regulated part of sustainability.
Tonya: I'd like to start off our deal highlights for the quarter with three wins demonstrating the success of our Assured Integrated Reporting platform.
Tonya: First, a U.S.-based Fortune 100 food and beverage company expanded their platform usage with a mid-six-figure deal for ESG reporting and policy management.
Tonya: The purchase of ESG complements this company's previous investment in SEC reporting, controls management, and enterprise risk management.
Tonya: This company purchased ESG to support their current science-based target reporting initiative and to address requirements for the CSRD.
Tonya: The opportunity was a co-sell and will be delivered by a Big Four firm.
Tonya: Second, we signed a multi-six-figure account expansion deal with a North American industrial company. This company has been a loyal customer of Gogeva for 11 years.
Tonya: This quarter, they purchased ESG, controls management, and audit management, and are now utilizing six solutions on our platform.
Tonya: This was a competitive deal with a GRC-specific platform vendor.
Tonya: The ability to handle GRC, financial reporting, and ESG was a differentiator in this deal. The opportunity was to co-sell with a Big Four advisory firm, and the same Big Four firm will be providing delivery for the project.
Tonya: This company purchased their first Workiva solution, Global Statutory Reporting, in Q4 of 2023.
Tonya: Less than a year later, they expanded on the Workiva platform with the addition of five solutions, Management Reporting, Controlled Management, Policies and Procedures, ESG, and Workiva Carbon.
Tonya: This opportunity was sourced and will be implemented by a European regional consulting firm.
Tonya: I'll move on now to financial reporting. In Q3, financial reporting contributed substantially to our growth. I'd like to highlight three financial reporting deals from the quarter.
Tonya: First, we closed a mid-six-figure account expansion deal with a Fortune 50 company for management reporting. This global organization is in the process of an S4HANA upgrade and broader finance transformation.
Tonya: A regional advisory firm partner had been working with the client on other Workiva projects and was hired to replace a legacy mainframe reporting solution that had been in place for years.
Tonya: Workiva offers the power and the flexibility to move this customized reporting solution to the cloud and to work alongside the new S4HANA business processes.
Tonya: The strength of the Workiva financial reporting solution, with the proven trust this customer had in its business partner, was a key differentiator in the deal.
Tonya: ERP upgrades, transitions, and broader finance transformation projects continue to be a valuable market event for us to land new customers and sell new solutions.
Tonya: Second, we closed a mid-six-figure, four-solution, new logo deal with a European Global Payments and Shopping Service provider.
Tonya: This customer purchased our Global Statutory Reporting, Private Company Reporting, SEC Reporting, and Capital Market Solution as this company prepares for a 2025 IPO.
Tonya: The opportunity was to co-sell with a global IT services firm.
Tonya: and third we closed a multi six-figure for solution new logo win with a large European reinsurance company
Tonya: This reinsurance company purchased ESS Global Statutory Reporting, Insurance Reporting, and ESRS XBRL Reporting to support their requirements for CSRD.
Tonya: This was a competitive deal with four Point Solution vendors competing for part of the business.
Tonya: The cloud delivery and comprehensive capabilities of the Workiva platform is the differentiator in this deal. The opportunity was sourced and will be delivered by a Big Four advisory firm.
Tonya: I'll now turn to GRC.
Tonya: GRC programs fundamentally involve managing controls, risks, and policies, and conducting operational audits.
Tonya: Our GRC portfolio closely aligns with our financial reporting and sustainability solutions.
Tonya: This is truly a Better Together value proposition.
Tonya: Let's take a look at three GRC deals that closed in Q3.
Tonya: The company purchased Controls Management, Audit Management, and Policies and Procedures to complement the investment made in the Workiva ESET solution in Q4 of 2023. This opportunity was a co-sell and will be delivered by a Big Four advisory firm.
Tonya: Second, a Canadian consulting firm purchased controls management and audit management in a six-figure account expansion deal.
Tonya: This was a competitive deal with a GRC platform vendor.
Tonya: The value of the platform and the ability to leverage the investments already made in our SEC and ESG solutions were differentiators in this opportunity. The deal was a co-sell and will be delivered by a regional consulting firm.
Tonya: Third, a U.S. regional bank purchased four GRC solutions as an account expansion deal. This 12-year loyal SEC reporting customer purchased audit management, controls management, risk management, and policies and procedures.
Tonya: This was a competitive deal against three GRC platform solution providers.
Tonya: The opportunity was a co-sell and will be delivered by a regional consulting partner.
Tonya: Let's move on now to talk about one of our top booking solutions for nine quarters in a row, sustainability management and reporting.
Tonya: The demand for our sustainability management and reporting solution, which includes ESG reporting and Workiva carbon, continues to grow.
Tonya: Organizations are investing in sustainability programs to enhance their reporting on corporate targets and to comply with regulations such as the CSRD.
Tonya: I'd like to highlight a few of these sustainability management and reporting wins from the quarter.
Tonya: First, we landed a multi-six-figure new logo customer, a Canadian manufacturing company.
Tonya: This company purchased Workiva Carbon and ESG reporting, along with the CDAR reporting, to support their global disclosure requirements, including those of the CSRD.
Tonya: Workiva was differentiated in this opportunity with our fit-for-purpose ESG solution and the capability to support financial reporting.
Tonya: ESG, in combination with CDAR reporting, is a clear, better-together value proposition.
Tonya: This opportunity was a co-sell and will be implemented by a regional consulting firm.
Tonya: Second, we closed a two-solution new logo customer for ESG Reporting and ESEF with a European advertising and PR firm.
Tonya: The opportunity was sourced by a design agency partner that's been working with this company for years.
Tonya: This 10-year loyal SEC customer purchased both ESG and Workiva Carbon after meeting with the Workiva product team and with Workiva ESG customers at our Amplify event in September.
Tonya: This company has been reporting on sustainability for the past two years and will leverage the WorkIpa platform to evolve their sustainability reporting process.
Tonya: As a supplier to many consumer-based companies, reporting on climate and broader sustainability metrics has become a strategic requirement to retain customers and win new business.
Speaker Change: As outlined in a couple of these deal examples, Workeepa Carbon played a new role in our deal activity this quarter. We launched Workeepa Carbon at the end of Q2, and Q3 was a busy and productive quarter for us.
Speaker Change: We trained our sales team, certified our partners, we built our pipeline, and we closed deals.
Speaker Change: Along with ESG Reporting, we deliver to market a comprehensive sustainability management and reporting solution.
Speaker Change: We'll keep a carbon has advanced our ESG and our sustainability platform to support organization's requirements for carbon accounting and the tracking and the disclosure of carbon emissions for scope 1, 2, and 3 and decarbonization.
Speaker Change: As a fit-for-purpose solution, it enables organizations to measure, manage, collaborate, and report on emissions data to support their net-zero supply chain and regulatory reporting requirements.
Speaker Change: This solution combines technology and expertise from the Sustained Life Acquisition with the power of the WorkDepot platform.
Speaker Change: We'll keep a carbon is a platform play. Our results in Q3 have confirmed that this was a strategic addition to our platform that has made our ESG solution an overall assured integrated reporting platform even more relevant.
Speaker Change: The CSRD is not the only regulation that's driving market demand. Sustainability regulations continue to advance in North America.
Speaker Change: On September 27, California's Senate Bill 219 was signed into law.
Speaker Change: Senate Bill 219 introduces key amendments to two existing climate disclosure laws, the Climate Corporate Data Accountability Act or SB 253 and the Climate Related Financial Risk Act SB 261.
Speaker Change: The main impact of SB 219 is that it grants the California Air Resources Board more time to adopt regulations related to these disclosures.
Speaker Change: The Board's deadline has been extended from January 1st of 2025 to July 1st of 2025. However, it's important to note that the original reporting deadlines remain unchanged.
Speaker Change: Companies must still begin reporting Scope 1 and Scope 2 emissions in 2026, with Scope 3 emissions reporting starting in 2027.
Speaker Change: This extension provides the regulator, the California Water Resources Board, with flexibility to better address complex issues like scope 3 emissions.
Speaker Change: Scope 3 emissions involve indirect emissions across a company's value chain.
Speaker Change: With this extension, those corporations subject to the regulation will just have less time to prepare once the board publishes the specifics of what will need to be disclosed.
Speaker Change: Additionally SB 219 offers more leniency in how companies can consolidate emissions reporting at the parent level.
Speaker Change: and it allows the California Air Resources Board to handle reporting duties directly or through third parties.
Speaker Change: Overall, SB 219 aims to ease the implementation of California's ambitious climate reporting requirements, offering companies more flexibility.
Speaker Change: But it does so while maintaining the state's strong commitment to climate transparency and accountability.
Speaker Change: Moving on to our guide. As I highlighted in Investor Day, we're focused on both driving growth and improving operating margin. We'll be raising our full-year guide for both revenue and operating profit.
Speaker Change: We're also achieving margin expansion. In the third quarter, we realized a 170 basis point improvement in gross margin and a 70 basis point improvement in operating margin compared to Q3 of 2023.
Speaker Change: As a result, we'll also be raising our full-year operating margin guidance.
Speaker Change: This guidance factors in the continued investment in sales and marketing that we've previously communicated.
Speaker Change: The vast majority of the sales and marketing spend is the hiring of quota-bearing reps.
Speaker Change: It's an indicator of our confidence in our opportunity.
Speaker Change: We're encouraged by the demand we're seeing in the market, which was also reflected in this quarter's billing numbers.
Speaker Change: Our results and our progress give us confidence that our strategy is working.
Speaker Change: We're focused on the long-term growth of our business by delivering an innovative platform and a set of high-value, fit-for-purpose solutions that solve our customers' increasingly complex and expanding reporting requirements.
Speaker Change: We continue to build Workiva as a durable business with a focus on both growth and profitability.
Speaker Change: I'd like to thank our customers, our partners, and our investors for their continued support.
Speaker Change: I'd also like to thank our talented team of dedicated employees.
Speaker Change: Together we're working to make an even greater impact and accelerate our mission to power transparent reporting for a better world.
Speaker Change: And with that, I'll now turn the call over to you, Jill.
Jill Klint: Thank you, Julie, and good afternoon, everyone. Thank you for joining us. Today, I will cover the financial and key metric highlights for the third quarter of 2024.
Jill Klint: I will also provide guidance for Q4 and for the full year 2024 before opening the line for questions.
Jill Klint: As Julie discussed, the continuation of a healthy buying environment helped us achieve solid results in Q3.
Jill Klint: We beat the high end of our Q3 revenue guidance by $2.6 million, driven by an acceleration of subscription revenue growth.
Jill Klint: We came in at the top of our operating margin guidance.
Jill Klint: Generating $7.6 million of operating profit, a 70 basis point improvement versus Q3 2023.
Jill Klint: We generated $185.6 million of total revenue in the third quarter.
Jill Klint: Subscription revenue was $171 million, up 19% from Q3 2023.
Jill Klint: We continue to see a combination of new customers and account expansions contributing to our strong revenue growth.
Jill Klint: For reference, new customers added in the last 12 months accounted for 45% of the increase in subscription revenue.
Jill Klint: Professional services revenue was fourteen point six million dollars
Jill Klint: Down slightly from Q3 2023 driven by the ongoing execution of our plan to move setup and consulting services to our partners.
Jill Klint: I'll now move on to our performance metrics for the quarter.
Jill Klint: We had 6,237 customers at the end of Q3 2024.
Jill Klint: A growth of 292 customers from Q3 2023.
Jill Klint: Our gross revenue retention rate of 97.5% exceeded our 96% internal target.
Jill Klint: And our net revenue retention rate was 110.5% for the quarter.
Jill Klint: We generated 68% of our subscription revenue from customers with multiple solutions.
Jill Klint: This compares to the 64% reported in Q3 2023.
Jill Klint: We continue to be pleased with this trend and the progress it shows as we focus on expanding relationships with our largest customers.
Jill Klint: As discussed during our Investor Day in September, we have changed the tranches we report related to annual customer contract value.
Jill Klint: We will no longer report the number of contracts over $150,000 per year.
Jill Klint: and instead have added a tier to report the number of contracts valued over $500,000 per year.
Jill Klint: We believe this change will better reflect our progress selling into our largest customers.
Jill Klint: In the quarter, we had 1,926 contracts valued at over $100,000 per year, up 23% from Q3 the prior year.
Jill Klint: The number of contracts valued at over $300,000 totaled 383, up 29% from Q3 2023.
Jill Klint: And, the number of contracts valued over $500,000 totaled 166, up 28% from Q3 2023.
Jill Klint: Moving on to our operating results.
Jill Klint: Gross profit totaled $146 million in Q3.
Jill Klint: Up 20% from the prior year.
Jill Klint: Gross margin improved year-over-year by 170 basis points.
Jill Klint: Increasing to 79%.
Jill Klint: This was driven by continued efficiency gains as we scale our customer and partner experience teams and lower cloud computing costs versus the same quarter a year ago.
Jill Klint: We posted operating profit of $7.6 million compared to the Q3 2023 operating profit of $5.3 million.
Jill Klint: Operating margin improved year-over-year by 70 basis points.
Jill Klint: increasing to 4%.
Jill Klint: Operating activities in Q3 2024 resulted in cash provided of $19,000,000 compared with cash provided of $15,000,000 in the same quarter a year ago.
Jill Klint: Turning now to our guidance for Q4 and the full year 2024.
Jill Klint: We are pleased with the subscription growth acceleration we are driving.
Jill Klint: Our strong near-to-date performance, along with improved sales momentum, gives us the confidence to raise our full-year revenue guide.
Jill Klint: We expect total revenue to range from $194 million to $196 million.
Jill Klint: We expect services revenue will be down slightly compared to Q4 2023.
Jill Klint: Similar to Q3, we expect a decline in setup and consulting services revenue to be partially offset by growth in XBRL services revenue.
Jill Klint: We expect non-GAAP operating income to range from $13 million to $15 million.
Jill Klint: or a non-GAAP net income of $0.31 to $0.34 on a per share basis.
Jill Klint: Our share count will be approximately 56 million weighted average shares.
Jill Klint: For the full year 2024, we are increasing our total revenue guide to between $733 million and $735 million.
Jill Klint: We are encouraged by the demand we're seeing in the market.
Jill Klint: This is a primary driver for the rays.
Jill Klint: We expect total services revenue will be down year over year.
Jill Klint: with XVRL services revenue continuing to grow at a low single-digit rate, while setup and consulting revenue is expected to decline slightly more than the rate we saw in 2023.
Jill Klint: We expect our subscription revenue growth to be over 19% at the midpoint.
Jill Klint: We are increasing our guidance for non-GAAP operating income to range from $30 million to $32 million, or a non-GAAP net profit of $0.93 to $0.96 on a per share basis.
Jill Klint: Our share count will be approximately 55 million weighted average shares.
Jill Klint: We believe we will post a positive free cash flow margin of 11% for the full year 2024. I wanted to provide some early thoughts on 2025.
Jill Klint: However, we do not expect to make linear progress.
Jill Klint: Similar to 2024, we expect operating margin in the back half of 2025 will be stronger than the first half.
Jill Klint: We expect XBRL services revenue will continue to grow at a modest low single-digit rate in 2025.
Jill Klint: We expect Setup and Consulting revenue will decline from 2024 to 2025.
Jill Klint: In closing, I want to reiterate three points.
Jill Klint: First, we are pleased with our acceleration of subscription revenue growth.
Jill Klint: Second, even while we continue to invest in sales and marketing and hiring quota-bearing reps,
Jill Klint: We are focused on margin expansion.
Jill Klint: And finally...
Jill Klint: We are focused on the long term.
Jill Klint: and building a durable business with a commitment to both growth and improving operating margins.
Jill Klint: I would like to thank all Warkivians around the globe for their hard work and dedication to our mission and strategy.
Jill Klint: It's because of you that we are able to continue to execute on the opportunities in front of us.
Jill Klint: Thank you all for joining the call today.
Jill Klint: We're now ready to take your questions.
Jill Klint: Operator, please begin the Q&A session.
Speaker Change: Certainly. As a reminder, to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again. Please stand by while we compile our Q&A roster.
Speaker Change: And one moment for our first question. We'll be coming from Steve Enders of Citi. Your line is open, Steve.
Steve Enders: Okay, great. Thanks for taking the questions here. I guess maybe just to start, I want to get a little bit of a better sense of, you know, what it is that is happening in the digital environment today. And, you know, I think the bookings looks pretty, you know, billions of bookings are looking pretty strong here. So, I guess, what would you characterize as happening in the market? Is this just
Speaker Change: Some of the budget challenges, um, rehearsing and things are getting better and better and the deals are closing and there is something else kind of happening out there in the macro today.
Speaker Change: Thank you.
Speaker Change: Thanks for your question Steve. We really do attribute it to a couple of key factors.
Speaker Change: The first is our own internal execution. I mean, we've been focused on improving
Speaker Change: and go to market and the strength of our teams and the way we're approaching things shift towards the platform play and so forth. So internal execution, of course, is one.
Speaker Change: We also see the CSRD, it's alive and well and the first cohort of companies that need to comply must do so in 2025 with.
Steve Enders: the data of 2024. And it's not just Europe, it's North America as well and we're seeing some momentum there.
Speaker Change: And finally, it's just our broad-use, high-value platform is resonating, assured, integrated reporting, pushing hard to go after that unaddressed TAM, and the strategy is working. So that's what it's about, focused on the growth and going after it.
Speaker Change: Okay, great. That's a, that's that's helpful context there.
Speaker Change: And then, I guess, on the go market changes and kind of the hiring.
Speaker Change: But you've been, you've been, you know, I guess, working on, I guess, kind of, where are we on, on that process? How are kind of the newer reps or some of the newer profile reps that you're hiring? How are they beginning to, to resonate? And what are the kind of productivity look like versus kind of what you've been, you've been targeting for those?
Speaker Change: So we are still ramping on a lot of the reps that we've hired.
Speaker Change: But, again, going after it, investing in it, and we'll continue to invest going after that market opportunity. Again, it has a time element to it, it's right there, and we want to keep our leadership position. So, again, going after the growth and that unaddressed hand.
Speaker Change: Okay, perfect. Thanks for taking the question.
Speaker Change: Thank you. And one moment for our next question.
Speaker Change: Our next question will be coming from Jake Roberge of William Blair. Your line is open.
Jake Roberge: Yeah, thanks for taking the questions and congrats on the results. Great to hear that CSRD is starting to drive more demand to the platform. Could you just give us an update on the competitive environment that you're seeing in the ESG space? And if there are any kind of early inclinations about how Sustained.Life could actually factor into the win rates on that side?
Speaker Change: is increasing, but still, we have a very differentiated platform as well as differentiated solutions. So while we might see some point solutions coming in or some competitors moving into
Steve Enders: Some of the space we are the only unified platform for assured integrated reporting. We did we did acquire
Steve Enders: Sustain LIFE and then roll out Work EcoCarbon on our platform. And we were very open and candid about why, because often in parts of the market we would see sustainability requiring
Steve Enders: a calculation of carbon emissions first. It's the most consistently regulated part of ESG or sustainability. So we wanted to capture that part of the market, make sure we were in deals.
Steve Enders: so that we could again go out and sell the platform, the SG, and then the full platform. It's a platform play for us.
Steve Enders: So we also wanted to make sure that we were answering the market's need for, in some cases, a single vendor.
Steve Enders: to provide both carbon accounting and ESG.
Steve Enders: So...
Steve Enders: We have now Sustainability Management and Reporting, which has both, and we believe that it will be significant for us in the platform play across the board. So we've received great feedback from the market, continue to build pipe, and the value proposition of the ESG platform, including carbon, is resonating.
Speaker Change: Okay, very helpful. And then I know that Europe and California are steady steam ahead, but now that the presidential election has been decided, can you maybe talk about some of the puts and takes that you could see around SEC mandates in the U.S. just under the new administration?
Steve Enders: I'll start with that one.
Speaker Change: Time will tell around the SEC regulations. We've continued to grow under each administration, regardless of who's in charge. Operated now, I think, under eight different SEC chairs during the...
Steve Enders: the time of the company. But we're confident our growth will continue. I mean, we remain confident in our market opportunity, including sustainability management reporting. It's about performance and growth and surfacing risks.
Steve Enders: and managing those risks and
Steve Enders: companies around the globe as we talk to or are building and maturing their sustainability programs and
Steve Enders: They're doing it to build durable growth companies and manage the demands of their stakeholders. So we feel confident, regardless of that SEC regulation, that our platform is continuing to be relevant and our growth strategy is working.
Steve Enders: Thanks for taking the questions.
Speaker Change: And one moment for our next question.
Steve Enders: Our next question will be coming from Rob Oliver of Baird. Your line is open.
Rob Oliver: Great. Good evening. Thank you very much. Julie, my first question is for you. And by the way, thank you to you guys for posting us in Denver. It was really helpful. Just at the analyst portion of the event in Denver, you called out ERP migrations as a trigger event. I noticed in response to Steve's question earlier, you did not list them as one of the drivers of business near term. Maybe it's just not the top one, but just wanted to get a sense since you had previously called out some ERP migration deals. Is that something that's happening right now for Workiva or is that more of a 25-26 event? How significant is it to you guys at the moment and how significant could it be? And then I had a quick follow up for
Speaker Change: Thank you so much, Jill.
Julie Iskow: Sure, yes, we have partnerships with some of the ERP vendors.
Julie Iskow: We work with our big four regional partners who've got dedicated ERP practices and they're frequently driving finance transformation and ERP changes.
Julie Iskow: So, ERP implementations and upgrades for Workiva are absolutely a trigger event, and we continue to be a part of that transformation hub.
Rob Oliver: Great. Helpful. Thank you. And then, Jill, just one for you on the sales investment that just came up a little bit earlier. But, you know, obviously you sort of called out that a fair amount of that investment was going to be focused on Europe, that there is a ramp to hiring time. We just want to make sure that ahead of the CSRB implementation timeline, at least that first tranche, that you guys are adequately staffed, adequately invested to meet that need. How should we think about, you know, the hiring and the investments that you've made? Where are you in that process relative to where you need to be? Thank you.
Speaker Change: Thanks for the question, Rob.
Jill Klint: We are
Steve Enders: Still in the process of hiring quota reps around the globe, actually, but we do have
Steve Enders: Getting good results, and we're feeling good about the progress, but we are not done with the investments that we will make as far as hiring Florida reps in that region, or even in the US and in other areas around the globe as we take advantage of this sustainability reporting opportunity in front of us.
Speaker Change: Great. Helpful. Thanks again.
Speaker Change: Our next question will be coming from Ryan Krieger of Wolf Research. Your line is open, Ryan.
Ryan Krieger: Hey guys, thanks for taking the question. I just want to follow on to Steve's question on the macro environment. You know, it's great to hear that things are getting better or continue to be stable, but were there any verticals or geos, even geos here in the U.S., where buying trends were maybe better or worse than the average?
Speaker Change: You know, as mentioned in my prepared remarks, we continue to see a healthier buying environment that's really marked by the broad-based demand across our entire solution portfolio and even across the geos.
Speaker Change: We saw some great platform deals close in Q3, as I highlighted in the call, but it truly is a broad-based demand for us.
Speaker Change: Thank you. Bye.
Speaker Change: Great. And just on bookings, I think last quarter you also called that record bookings and then just looking at bookings from this quarter far exceeded that. So were there any kind of one-time dynamics this quarter or maybe any pull forward dynamics from 4Q that maybe we should be aware of just like when we're looking at the rest of the year?
Speaker Change: Now, we didn't really see any pull forward. I think it really has just been as Julie discussed on the prepared remarks.
Speaker Change: A combination of performance and execution and what we've seen as a more positive buying environment through Q2 and Q3.
Speaker Change: But we aren't feeling like we're pulling from Q4 or pulling ahead deals, it really is just a good cadence and a clean pipeline and we're really encouraged by what we're seeing there.
Speaker Change: Awesome, thank you guys and congrats on the great quarter. Thank you.
Speaker Change: One moment. And our next question will be coming from Terry Tillman of Truist Securities. Terry, your line is open.
Speaker Change: Thank you for watching!
Terry Tillman: Thank you.
Terry Tillman: Hi, this is Dominique Monticello at Ombre Cary. Thanks for taking my question. So, just wanted to know how you're all viewing the growth potential of your financial reporting business outside of SEC reporting. Just wanted to know what kind of growth you're seeing in other use cases, particularly within capital markets, and maybe what your assumptions are for that part of the business heading into Q4.
Speaker Change: Sure. As we highlighted in the call, our financial reporting business continues to grow. And you may have heard me talk about this multiple times as we did in Investor Day, that financial reporting is...
Speaker Change: Yeah, rewarding beyond SEC when you think about it. So, very strong, and of course, it's.
Speaker Change: fundamental to assured integrated
Speaker Change: The CSRD requirements, it is about an integrated report, financial reporting along with non-financial or sustainability data and assurance. So it is a healthy part of the Workiva platform and continues to be strong for us.
Speaker Change: And just as a follow-on to that, thinking about...
Speaker Change: Thinking about capital markets in particular, we aren't, at this time, stating that we think that there's any kind of a return there. We're, of course, watching it very closely along with the rest of the market, but, and we haven't built any kind of a return to capital markets into our models. We're just keeping that more consistent at this time, but we, like you all, are watching it really closely.
Speaker Change: Thank you for watching!
Speaker Change: Super helpful, thank you.
Speaker Change: And one moment for our next question.
Speaker Change: Our next question will be coming from Daniel Jester of BMO Capital Markets. Your line is open, Daniel.
Speaker Change: Great. Hi, this is Kyle Aberastry on for Dan Jester. Thank you for taking our questions. I guess first, it was nice to hear about the S4 HANA customer deal during the quarter. Could you maybe dig a bit deeper here? I guess, how did that deal progress compared to expectations? And then just more broadly, how do you feel about the S4 HANA customer pipeline heading into 2025?
Speaker Change: that are the big four, but other system integrators with dedicated practices for ERP implementation. They drive a lot of the decisions related to how ERP systems connect with other systems.
Speaker Change: and we have pre-built connectors. We are there when they're looking for disclosure management.
Speaker Change: on these platforms, for example, on S4HANA.
Speaker Change: So, these are typical for us, we get these, whether it's a co-sell or a source deal motion, we work with these partners who, again, have these dedicated e-practices and driving financial and digital transformation.
Speaker Change: Great. And then on the carbon solution, I guess...
Speaker Change: How is sales, if any, of the WorkKiva platform to carbon customers that came with the acquisition?
Speaker Change: Thank you.
Speaker Change: Sure.
Speaker Change: Thank you, Daniel. We don't disclose solution-specific deal activity, but we are pleased with the momentum with our sales team and what they've been generating. Of course, sustainability offering is top of mind for us, and particularly with Workiva Carbon now. We've received some great feedback. We're continuing to build pipe.
Speaker Change: the value of the full sustainability platform including carbon is resonating and the other thing is our partners are very enthusiastic and they're investing around the opportunity so yes as you mentioned we are we are closing deals.
Speaker Change: and we are moving forward with a sustainability management and reporting offering.
Speaker Change: And to follow on to Julie's comments, I wanted to point out that this is really organic growth. The business that we
Speaker Change: brought in as part of the Sustained Life Purchase.
Speaker Change: was pretty immaterial. Where we really are focusing is the ability for us to then use Workiva Carbon and accelerate deals and get in the door, as Julie was talking about, where we otherwise maybe wouldn't have been able to as quickly.
Speaker Change: So, it really is more of that organic business that it's driving.
Speaker Change: One moment for our next question.
Speaker Change: Thank you.
Speaker Change: Our next question will be coming from Alexander Sklar of Raymond James. Your line is open, Alexander.
Speaker Change: Hi, thanks. This is John for Alex. I realize we haven't talked about quite a bit here, but I just wanted to ask about the changes on the go-to-market side. Beyond the hiring commentary, where are we in some of the other initiatives you mentioned at Amplify, like shrinking territories? Has that been completed, or is that still a work in progress? And I have a quick follow-up.
Speaker Change: working to improve our sales again, going to market with partners, working on platform plays, and so forth. So we're in the midst of those changes.
Speaker Change: Okay, thanks. Helpful call there. Maybe just double-click on the carbon commentary that we just had here. Wanted to dig in there. Just curious on some of the early learnings there. Are you finding success building pipe, selling to prospective new ESG customers, like first-time Workiva customers, or has so far as the pipeline success been with existing cross-selling to your ESG base?
Speaker Change: So, we are going after both, but again, I'll remind you and those on the call, this is really a platform play, strategic addition to our platform that we believe will make our ESG solution, an overall assured integrated reporting platform, better.
Speaker Change: This is really what the carbon accounting was about, and it does enable us to get access to more deals and, yes, go after our base as well.
Speaker Change: Okay, thank you very much.
Speaker Change: One moment for our next question.
Speaker Change: Our next question will be coming from Adam Hotchkiss of Goldman Sachs. Your line is open, Adam.
Adam Hotchkiss: Great, thanks so much for taking the question. Julie, could you just remind us, on the go-to-market side, what you're anticipating from a mix-and-channel perspective for ESG in Europe? I know you lead heavily into your partners, but I've also talked about
Speaker Change: presented the new
Speaker Change: more even more so than in North America were less known but
Speaker Change: Partners are everywhere we want to be so we're leaning heavy into that channel with ESG and our platform.
Speaker Change: We are doing, as you said, a mix of both, but with ESG, it is absolutely partner first.
Speaker Change: and it is the play that we're using and yes going to market directly as well but partners play a significant part in our in expediting our growth and executing on our strategy.
Speaker Change: Okay, great. That's really helpful. And then just on the ESG uptake side of things, I think we've talked about this before, but just any new learnings in terms of the actual cohort go-lives through CSRD and how that impacts when
Speaker Change: being impacted for the fiscal 24 reporting year and then subsequent years thereafter. Are you seeing...
Speaker Change: some sensitivity to that timing? Or are you seeing customers sort of front load their early work on getting ESG deals done? Just curious how that's evolved.
Speaker Change: Thanks for that question. It really does depend where they are in their own ESG or sustainability path.
Speaker Change: We've been pretty consistent about communicating that this will be a long, durable demand market.
Speaker Change: with what we believe will be growth over multiple years. But again, there are customers in that first cohort that are needing to comply in 2025, and we are seeing more and more demand.
Speaker Change: for ESG and sustainability based on CSRD, but there are those that are very mature in their programs and there are those that are.
Speaker Change: requirements and needing to meet them as well as where you are in your own journey on on CSRD and sustainability. But we are of course seeing an uptick in companies that are working towards meeting those requirements and many are not waiting.
Speaker Change: Regulation hasn't even been in place whether here or or in Europe yet and again been our fastest growing booking one of our fastest growing booking solution now for nine quarters in a row.
Speaker Change: Okay. Thanks so much, Julie. Appreciate it.
Speaker Change: And this concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: , , , , , , , , , , , , , ,
Speaker Change: Thank you.
Speaker Change: Don't Forget To Subscribe To My Channel
Speaker Change: Rocket V-V V-V V-V V-V V-V V-V
Speaker Change: John
Speaker Change: Music Music Music Music Music Music Music Music Music Music
Speaker Change: Meredith wills she continues to watch him and be a part of his future As that night fell...
Speaker Change: Music Music Music Music Music Music Music Music Music Music
Speaker Change: Author without a single person buys Tsmatr buy a Tshmatr Buy Tshmatr
Speaker Change: and Matthew P. For more information, visit www.FEMA.gov FEMA.gov is a national, independent, non-profit organization. FEMA.gov is a national, independent, non-profit organization. FEMA.gov is a national, independent, non-profit organization.
Speaker Change: Music Music Music Music Music Music Music Music Music Music
Speaker Change: Hi husband, what do you think? Do you love your house now? Is it alright for me to come in here and see you? I'm sitting on your block husband.
Speaker Change: Music Music Music Music Music Music Music Music Music
Speaker Change: And I'm Jill Klindt. Thank you for watching. I hope you enjoyed this video. If you did, please subscribe to my channel. I post weekly. And I will see you in the next video.
Speaker Change: John
Speaker Change: Music Music Music Music Music Music Music Music Music Music
Speaker Change: Best art ever Donate it link in the description
Speaker Change: Do we really have portable batteries??
Speaker Change: Thanks for watching!
Speaker Change: Music Music Music Music Music Music Music Music
Speaker Change: Music Music Music Music Music Music Music Music
Speaker Change: as Nicole DiStefano
Speaker Change: [inaudible]
Speaker Change: Thank you!