Q4 2024 Workiva Inc Earnings Call
Good afternoon, ladies and gentlemen, my name is Nick and I will be your host operator on this call.
After the prepared comments, we will conduct a question and answer session and instructions will be provided at that time.
Please note that this call is being recorded on February 25th 2025 at five P. M Eastern time.
I would now like to turn the meeting over to your host for today's call Katy White Senior director of Investor Relations at where Keith. Please go ahead.
Good afternoon, and thank you for joining <unk> Q4, 'twenty 'twenty four conference call.
During today's call, we will review, our fourth quarter and full year 2024 results and discuss our guidance for the first quarter and full year 2025.
Today's call will include comments from our Chief Executive Officer, Julie Ensco, followed by our Chief Financial Officer, Joe Quinn.
Then open up the call for a Q&A session, where we will be joined by Mike Ross, Our Chief strategy Officer.
After market close today, we issued a press release, which is available on our Investor Relations website, along with supplemental materials.
This conference call is being webcast live and following the call an audio replay will be available on our website.
During today's call, we will be making forward looking statements regarding future events and financial performance, including guidance for the first quarter and full fiscal year 2025.
These forward looking statements are subject to risks and uncertainties and are based on assumptions after the macroeconomic political and regulatory environment today and reflect our best judgment based on factors currently known to us well.
Well keep our cautions that these forward looking statements are not guarantees of future performance. All forward looking statements are made as of today and reflect our current expectations only.
We undertake no obligation to update or revise these statements.
If the call is reviewed after today the information presented during this call may not contain correct or accurate information.
Please refer to the company's annual report on Form 10-K, and subsequent filings with the FCC for factors that may cause our actual results to differ materially from those contained in our forward looking statements.
Also during the course of today's call, we will refer to certain non-GAAP financial measures reckon.
Reconciliations of GAAP and non-GAAP measures are included in today's press release.
With that we'll begin by turning the call over to work he was CEO Julie ESCO.
Julie ESCO: Thank you Katie and welcome to the team.
And thank you all for joining us today.
Let us start to the year, we're operating in an ever changing environment.
And while we look forward to discussing sustainability in the regulatory landscape later in the call well first dive into our results.
The work the team had a strong close to 2024 are.
Our Q4 top line results beat the high end of our guidance.
The value of our platform continue to resonate and we saw broad based demand across our portfolio of solutions.
In Q4, we delivered subscription revenue growth of 22% and total revenue growth of 20% compared to Q4 of 2023.
For the full year 'twenty 'twenty four we exceeded the top end of our revenue guidance, achieving a growth rate of 20% in subscription revenue and 17% in total revenue.
At the same time, we continued to increase productivity delivering non-GAAP operating margin of four 3% that's up from one 6% in 2023.
We also delivered our full year free cash flow margin of 11, 7%.
170 basis points above the guide that we provided in February of 2024.
Our Q4 results are supported by strong underlying business fundamentals.
We exceeded expectations in our account expansion activity showcased by our net retention rate improving to 112%.
Julie ESCO: Our large contract value customers continue to accelerate as well then.
The number of contracts valued over $300000 increased 34% and those over $500000 increased 32%.
All compared to Q4 of 2023.
Whether for new logos or account expansion, we're encouraged by our win rates are increasing deal sizes and the multi solution platform demand from our customers.
Before I jump into some specific deals from the quarter I'd like to share some 'twenty 'twenty four highlights that show our progress as we execute on our strategy first.
First we are consistently winning larger deals multi solution deals are now the expectation not the exception.
Second we're winning with our platform.
<unk> and Cfos are interested in vendor consolidation and efficiencies gained from streamlined operations and we're winning with our assured integrated reporting platform, which now includes carbon accounting the most consistently regulated part of sustainability management.
Third we are effectively executing on global expansion as highlighted in our 10-K, 17.5% of our 'twenty 'twenty four total worldwide revenue now comes from outside the Americas up 280 basis points from 2023.
And finally, our high performing partner ecosystem is extending our value and accelerating our growth.
Partners are engaged in deals of all sizes and the volume and the contribution of partner involve deals has increased throughout 2024.
The market has recognized the significant value of assured integrated reporting and more guida remains the only platform that brings financial reporting sustainability and governance risk and compliance together in one secure controlled and audit ready environment.
I'd like to start off our deal highlights for the quarter with three wins demonstrating the success of our assured integrated reporting platform first.
First we signed a mid six figure three solution new logo deal with a fortune 50 transportation company. This.
This company purchased SEC reporting controls management for Sox and sustainability reporting along with support for CSR D.
The deal included a replacement of a legacy SEC filing solution and the legacy Sox platform.
There were multiple bid for advisory firms co selling with work Eva on this deal and they were all competing for the implementation and broader advisory work for this finance transformation initiative.
Second we closed a mid six figure account expansion deal with a fortune 100 life Sciences company.
This eight year loyal FCC client expanded their use of work even G. R C capability and they purchased management reporting and sustainability reporting as part of this deal.
The CSR D reporting requirements were primary driver of the purchase of sustainability management.
Although a majority of the company's businesses in North America, they have over $6 billion in European sales.
Julie ESCO: This company is now licensed eight work either solutions.
The deal was sourced and will be delivered by a big four advisory firm.
And third we signed a mid six figure five solution new logo deal with a privately held the European services company.
This company purchased E self reporting controls management policy management operational risk management and sustainability reporting.
The business drivers of this platform opportunity included the preparation for a possible IPO and RFP to replace our legacy G. R C platform and compliance with CSR D reporting requirements.
The opportunity was a co sell with the big four advisory firm, who will be delivering on the project.
Let's move on now to one of our top booking solutions for the quarter sustainability.
Sustainability reporting and management.
Before jumping into some deal highlights I'd like to provide an update on the broader sustainability market.
Clearly, there's a lot of discussion around sustainability regulation, including the CSR D and state level regulations in the U S.
The bottom line is this.
We believe that companies will continue their investment in sustainability reporting and management to meet the needs and the demands of their customers their shareholders and there are other stakeholders.
Let's start with the CSR D in.
In the coming days or weeks. The EU is set to release, what is being referred to as the omnibus simplification package.
The purpose of this package as described by the EU Commission is to streamline and reduce administrative and reporting burdens associated with various EU sustainability regulations.
These regulations include the CSR D. The corporate sustainability due diligence directive or C. S. Three D and the EU taxonomy regulation.
Julie ESCO: The omnibus simplification effort has been going on for some time.
Following an informal meeting of the EU Council leadership on November 8th of 'twenty 'twenty four the president of the European Commission announced her intention to modify sustainability regulations to reduce the burden on businesses.
The EU Council and the EU Commission indicated that the omnibus Bill will focus on reducing the impact of multiple overlapping regulations.
The commission has not yet released any specifics on the omnibus proposal as of today a.
A few member states, though have proposed changes to the CSR D in areas such as thresholds for reporting requirement scope of acquired data points and content and timing.
So how would these proposals impact work he was market opportunity.
Well, we've consistently disclosed that we are targeting larger enterprises for CSR D, including those defined as public interest entities.
This segment has thousands of companies that we can sell to in Europe, and North America and in APAC.
We believe that this cohort of companies, who continue to invest in transforming their processes for financial and nonfinancial reporting, including the current and the potentially revised requirements of the CSR D.
We are expecting released from the EU on the CSR D omnibus in the coming days or weeks.
Following its release, it's expected that the proposal will undergo the eu's legislative process.
This process will take some time and it was involved discussions and approval by the European Parliament and the council of the European Union before it can be enacted into law.
While we're waiting for proposed changes to legislation it's important to remember that companies are reporting in alignment with the CSR D. Today.
The largest European companies some of the 11000 plus that are subject to the N. F. R. D are actively preparing and disclosing their first CSR D reports this quarter.
We have received positive feedback from our clients on how the world keep a platform has supported them in this process.
And early review of these published reports has surfaced some observations and trends.
Audit committees are identified as the governing body responsible for overseeing these disclosures.
<unk> by the Big four accounting firms on both financial and sustainability information is a prevailing trend.
And CSR D goes beyond disclosures companies are integrating climate related financial risks into their accounting policies, showing a greater connection of sustainability factors with financial reporting.
All of these trends highlight the need for a platform that brings together financial reporting sustainability reporting and policy and risk processes.
I would also like to highlight that the sustainability market for work either goes well beyond the CSR D.
Looking at the broader sustainability marketing opportunities in Q4 and throughout 2024, we saw a consistent theme organizations, we're purchasing our sustainability management and reporting solutions to address a wide variety of requirements.
This included reporting to show progress towards committed science based targets required reporting for the CDP or the carbon disclosure project addressing regulations beyond the CSR D, including U S state and other global regulations, and most importantly, embracing nonfinancial metrics can.
Manage emerging risks improve business productivity and drive business performance.
One area of growth that I'd like to highlight in more detail is in support of companies that have committed to science based targets.
Julie ESCO: The science based targets initiative or S. E. T. I is a corporate climate action organization.
It develop standards tools and guidance that support companies in setting greenhouse gas emissions reduction targets as they seek to reach net zero in accordance with the Paris agreement by 2050 at the latest.
At our Investor Day in September we highlighted that there were 4200 companies that had set science based targets as of year end 2023.
That number has now increased over 7200 as of January 2025, or more than 70% increase year over year with another 3000 companies who've already committed to setting those targets.
This increased focus on both our commitment to sustainability and the transformation of their processes for disclosure have resulted in increasing demand in the market for work even solutions.
One proof point of this is the successfully seen around work eve of carbon.
This solution, which we launched at the end of Q2 'twenty 'twenty four has advanced our sustainability platform to support organizations requirements for carbon accounting as well as the tracking and the disclosure of carbon emissions for scopes, one two and three and decarbonization.
Our results in Q4 continued to demonstrate the momentum that we've seen since day one of the launch of this solution.
We'll keep a carbon was a strategic addition to our platform that has made our sustainability solution and overall assured integrated reporting platform, even more marketable and relevant.
One of the best ways to articulate the success, we delivered with our sustainability solutions, including more keep a carbon is highlighting some signature customer wins.
Julie ESCO: The three deals I'm about to discuss showcase the types of customers and the size of sustainability deals that we're winning in the market.
First we landed a mid six figure new logo customer a European retailer. This company purchased work Eva from managing their multi entity sustainability reporting process.
This sustainability forward organization has set aggressive science based targets and will also be subject to reporting in accordance with the CSR D. Starting in 2025.
This project was part of a formal RFP process with multiple technology and advisory firms competing for the business. The deal was a co sell and will be delivered by a big four consulting firm.
Second our U S based fortune 100 technology company expanded their usage with a mid six figure deal for sustainability reporting that.
The purchase of sustainability reporting complements this company's previous investment in SEC reporting controls management internal audit enterprise risk management and management reporting.
Julie ESCO: This company purchased sustainability to support their current science based target reporting initiatives and to address requirements for the CSR D. The.
The opportunity was a co sell and will be delivered by a big four firm.
Well CSR D is a strong driver for our sustainability management solution. We continue to see significant business that is not CSR D related we.
We signed a mid six figure new logo deal for sustainability reporting and work even carbon with a U S based fortune 500 transportation company.
This opportunity also included the purchase of the SEC reporting when we replace their legacy financial printer solution.
The project was initiated by an RFP to improve disclosure against their committed to science based targets and to support the upcoming California climate disclosure rules.
This was a competitive opportunity for both the software and professional services five different work even partners provided bids for this opportunity to deliver the work Ive a project.
So although there is a significant amount of dialogue surrounding sustainability. Our commitment remains the same delivering the solutions that our customers are demanding.
As highlighted in the executive Benchmark survey that we released on February 12, 97% of business leaders agree that a strong sustainability reporting program will give businesses a competitive advantage.
For war Kiva, we believed that sustainability reporting is a market with a long durable demand and that many corporations will continue to embrace sustainability reporting and disclosure.
They will continue to do so to address multiple stakeholder requirements those from investors customers and employees and the business imperative to engage with the global supply chain.
Well, we credit our sustainability solutions with driving part of our 'twenty 'twenty four growth acceleration or financial reporting solutions remain the primary revenue driver for the business. We saw broad based demand in our financial reporting solution set including SEC reporting multi entity reporting private company reporting.
And management reporting.
We also have been particularly successful in driving high value deals with financial services firms with our industry specific solutions, which include fund reporting for investment firms regulatory reporting for insurance companies and risk and compliance solutions for banks.
I'd like to highlight three financial services specific deals from the quarter.
First we closed a seven figure account expansion deal with an investment advisory company for fund reporting.
Julie ESCO: We originally landed this company as a customer with the ward Keefe are connected shareholder reports solution back in 2022.
This account expansion for fun reporting aims to transform their current manual process of collecting consolidating validating and reconciling data from documents spreadsheets and email.
This opportunity was sourced and will be delivered by our regional advisory firm.
Second our U S based global insurance company purchased a three solution mid six figure account expansion deal for global statutory reporting insurance reporting and SEC reporting this.
This company now uses seven solutions on the work Iva platform.
Julie ESCO: This deal was part of a formal RFP for a broader financial transformation project.
We're given will be replacing the legacy systems used for SEC and global statutory reporting and the manual processes used for insurance reporting.
This opportunity was a co sell and will be delivered by our regional consulting firm.
And third we closed a high six figure account expansion deal with a privately held financial services company for fund reporting.
This nine year loyal customer uses 12 solutions across the work Ive a platform.
This new opportunity increases their spend with work either by 40%.
Julie ESCO: This opportunity was sourced by an accounting advisory firm and had co sell support from a financial services consulting firm.
I'll now turn to governance risk and compliance.
Julie ESCO: As we enter 2025 organizations are once again faced with an environment of changing risks new compliance requirements and stakeholder oversight that requires a mature G. R. C program.
In addition to the existing macro and geopolitical risks the policy uncertainty of new administrations and emerging risks such as those brought about by innovations like AI or on the rise.
We believe that this ever changing business environment will continue to create demand for our G. R. C solutions looking.
Looking back at Q4, he were three signature G. R C wins.
First a leading crypto currency exchange platform signed a multi six figure three solution GSE account expansion deal.
The company purchased controls management audit management and policies and procedures to replace the legacy G. R. C platform solution that they purchased back in 2020.
This year see opportunity was part of a broader financial transformation deal that included global statutory reporting management reporting and expanded use of their SEC reporting solution.
This opportunity was a co sell and will be delivered by our regional consulting firm.
Second our U S based global risk services firm purchased controls management enterprise risk management and policy management in a multi six figure new logo deal.
This was a competitive deal with five trc vendors being evaluated the.
The expanded value of the work keep a platform was showcased with the addition of insurance reporting as part of this opportunity.
This deal was a co sell and will be delivered by our regional consulting firm.
Third we closed in two solution new logo deal with a European based technology company, who purchased controls management in ECF reporting the ability to address both the financial reporting and GSE requirements for this company with a differentiator in the deal.
This opportunity was sourced by a big four advisory firm, who is working with the company on their IPO journey.
All of these deals highlighted on the call today are just a small representation of the broad based demand that we've seen for will give his platform this past year.
I want to take a moment to thank the work Iva team and our partners for all of their hard work in executing on our opportunity in 2024.
As we entered into 2025 I had the chance to meet with many global leaders key customers and top partners at the World Economic Forum in Davos a.
A key theme in so many of my conversations circled around one topic AI.
AI has shifted from interest to a requirement as teams tackled financial transformation evolving sustainability regulations and investor scrutiny or.
Keith has put AI at the top of our innovation priorities over the past 12 months, we've seen a recent acceleration of adoption of our AI capabilities as customers grow more receptive to adopting this technology.
Customers are leveraging AI capabilities on the platform to create modify and improve content and streamline workflows.
Were he the AI enables clients to use external content and their company specific information that stored in working for documents.
Examples of solutions specific use cases include drafting editing and refining FCC disclosure documents, including 10, Qs 10, Ks S ones 8-K's and press releases.
Creating and editing policies and risks and controls to support Trc processes.
And boosting productivity and efficiently scaling processes across the work Ive a platform by pointing the power of large language models to all work ease of documents and attached files.
We continue to collaborate with our customers on additional AI capabilities that will drive value for them.
We see AI as a reinvention of work.
To that end, we're focusing on delivering usable and useful capabilities all delivered in a secure environment that provide the safety of productive experience with AI on our platform.
As we've already experienced in the first two months of 2025, we believe that this will be a transformative year for AI and the adoption of our current and planned innovations will drive additional value to our customers.
Before I turn it over to Jill to provide you with detailed information for Q1 and full year 2025 guidance I have a couple of comments to set the backdrop for the guide based on what we're seeing in the market.
Our execution and performance in 2024 gave us a lot of confidence it was a year of strong bookings across the globe. We saw substantial new logo growth accelerated account expansion broad based platform deals an increased impact from our expanding partner ecosystem or platform is resonating with our core.
Customers and in the market.
As we enter 2025, however, we find ourselves in a business environment that has some policy and geopolitical uncertainty with impacts that are not yet clear.
All of this leads us to be thoughtful in our 2025 guide, which is 20% subscription revenue growth.
Companies rely on our strategic platform that brings together financial reporting DRC and sustainability management.
Ricky this position as the assured integrated reporting platform to power transparency continues to provide value to customers, helping them to mitigate risk drive growth and power performance all while meeting the needs of their customers their employees and their investors.
Julie ESCO: And with that I'll now turn the call over to Jill to walk you through our financial results and 2025 guidance in more detail.
Over to you Jill.
Thank you Julie and good afternoon, everyone. Thank you for joining us I'll start by providing an overview of the financials and key metric highlights for the fourth quarter and full year 2024, then I will provide guidance for Q1 and the full year 2025.
Really discussed we continued to see solid results in Q4 with execution across our broad portfolio of solutions.
Beat the high end of our Q4 revenue guidance by $4 million generating $200 million of total revenue in the fourth quarter up 20% over Q4 2023.
She for subscription revenue was $181 million up 22% from Q4 2023.
As in past quarters, new customers and account expansions both contributed to our strong revenue growth.
New customers added in the last 12 months accounted for 42% of the increase in Q4 subscription revenue.
Q4 professional services revenue was $19 million up slightly from Q4 of 2023, driven by higher ex BRL services.
Moving onto our Q4 'twenty 'twenty four operating results all on a non-GAAP basis Q4, gross margin improved 80 basis points year over year, increasing to 79%.
We continue to focus on leverage and our cloud computing costs as well as in how we scale, our customer and partner experience teams.
Operating profit was $14.8 million compared to the Q4 2023 operating profit of $12.7 million.
Operating margin for the quarter was seven 4%.
Continuing on to performance metrics for the quarter.
We had 6305 customers at the end of Q4, 'twenty 'twenty four a growth of 271 customers from Q4 of 2023, our gross retention rate was 97% exceeding our 96% internal target and our net retention rate was 112% for the quarter up from one.
110% in Q4 of 2023, reflecting increased account expansion across our platform, we generated 70% of our subscription revenue from customers with multiple solutions.
From 64% in Q4 of 2023 as you heard from examples provided by Julie we continue to show progress on creating and expanding relationships with our largest customers. This trend is also reflected in our large contract customers.
In the fourth quarter, we had 2055 contracts valued at over $100000 per year up 26% from Q4, the prior year the number of contracts valued at over $300000 totaled 416 up 34% from Q4 of 2023 and the number of contracts valued over five.
Hundred thousand dollars totaled 181 up 32% from Q4 of 2023.
Moving on to full year 'twenty 'twenty four results.
We generated $739 million of total revenue up 17% over full year 2023.
'twenty 'twenty four is subscription revenue was $668 million up 20% from 'twenty to 'twenty, three and 'twenty 'twenty four professional services revenue was $71 million as expected down slightly from 2023, reflecting our ongoing efforts to move low margin services to our partners.
Yeah.
Continuing on to full year operating results all on a non-GAAP basis.
Full year 'twenty 'twenty four gross margin improved 180 basis points year over year.
Increasing to 78%.
On a year 'twenty 'twenty four operating profit was $32 million compared to $10 $2 million in 2023.
Operating margin for the year was four 3% up from one 6% in 2023, as we delivered leverage while still investing for growth.
Moving on as of December 31st 2024, cash cash equivalents and marketable securities were $816 million, an increase of $2.7 million over the prior year.
Operating activities for 2024 resulted in cash provided of $88 million compared with cash provided of $71 million in 2023.
For the full year 'twenty 'twenty four we delivered a free cash flow margin of 11.7% 170 basis points above the February 'twenty 'twenty four guide, an 80 basis point improvement year over year.
Turning now to our guidance for Q1 and the full year 2025, as Julie discussed we are optimistic about our market opportunity and encouraged by our large and unaddressed Tam, but we are also mindful of policy uncertainty from a new administration in the U S potential regulatory changes in Europe and possible impact.
Currency exchange rates could have on our results for.
For the first quarter of 2025, we expect total revenue to range from $203 million to $205 million. We expect services revenue will be down slightly compared to Q1 'twenty 'twenty four we expect non-GAAP operating margin to be approximately breakeven, reflecting typical Q1.
<unk> seasonality for.
For the full year 2025, we expect total revenue to range from 864 million to $868 million similar to 2024, we expect total services revenue will continue to be down year over year as we moved low margin services to our partners, we expect 'twenty 'twenty five.
X P. R. L services revenue will grow at a low single digit rate, while setup and consulting revenue will decline more than the rate we saw in 2024 weeks.
We expect subscription revenue growth to be 20% at the midpoint.
We expect non-GAAP operating margin to range from 5% to 5.5% delivering improved productivity compared to 2024.
Similar to 2024, we expect operating margin in the back half of 2025 will be stronger than the first half.
We expect 2025 free cash flow margin will be approximately 12% for the year.
In closing I want to thank all of our employees and partners for delivering a strong 2024 the value of our platform continue to resonate with customers around the globe. We are proud to have delivered 22% subscription revenue growth in Q4 2024.
In 2025, we expect our 20% subscription revenue growth will be driven by broad based demand across our platform and solutions.
Julie ESCO: We operate our business with our 2027 and 2030 targets in mind as we continue to invest in the growth opportunities in front of us.
We remain confident in our ability to achieve these targets as laid out in our Investor day in September 'twenty, 'twenty, four and we're committed to delivering long term durable growth with improved productivity.
Thank you all for joining the call today, we're now ready to take your questions. Operator, Please open up line for Q&A.
Yeah.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
Anytime your question has been addressed and you would like to withdraw your question. Please press Star and then two.
At this time, we will pause for just a moment to assemble our own.
And your first question today will come from Rob Oliver with Baird. Please go ahead.
Great. Thank you good afternoon Julie.
I appreciated your comments towards the end of your prepared remarks about.
The baccarat I don't wanted to probe a little bit where you called out some policy and geopolitical uncertainty.
You you touched on the policy uncertainty around CSR D. In CSD did in Europe.
Wanted to understand was that towards the main policy thing that you were calling out and then.
Julie ESCO: On the geopolitical side wanted to understand what if there's anything new you guys are seeing relative to trade or tariff concerns.
And you know how that informed your 2025.
Got it good your commentary certainly made it seem as if it perhaps would have been higher and then I had a follow up question. Thanks, Yeah, I think I did give some detail on the call around CSR D and everything going on there and policy uncertainty.
And discuss a little bit Ah that likely it's not impacting us because of our are targeting the up market.
Julie ESCO: Oh, God thoughtful and balanced guide truly is around just general uncertainty. There's tariffs there is exchange rate the new administration and so forth. So it wasn't any one thing was just general uncertainty and not like other.
SaaS companies and technology companies.
Julie ESCO: Providing guidance nothing unusual and really got one heavier than the other.
Got it and just a quick follow up I mean, you guys since certainly since your arrival at the company.
Julie ESCO: You've really sort of instilled the platform focus for the company the multi product strategy. It certainly seems in Q4 with the strength.
We saw that sort of the larger customers.
But that is that that is playing out nicely.
Presumably at the right time, so if you could talk about kind of the pipeline that you see for this year.
Because I think investors are all focused on a risk adjusted these pipelines.
Do you think about that multi product strategy and how that both with cross sell and upsell of new lands and how that's helping to perhaps mitigate some of the risk.
Four.
Martin.
Thanks, Rob Thanks for highlighting the strength of our platform and our approach to going to market with it I mean, you know our or building blocks are.
Julie ESCO: In 2025, we will remain remain the same with broad based demand across our platform and we've got dozens of solutions there across the platform lots of white space lots of Unaddressed Ham so I'm feeling feeling confident there around the platform.
Just in general we have the same vectors of growth strategy, it's our mix of new logos account expansion and yes around the platform and the strength of that platform that becomes a significant differentiator a differentiator for us.
<unk> sourced and closed deals with partners.
Broad based around around the platform and you have highlighted that for us. Thank you.
Okay. Thanks very much.
And your next question today will come from Alex Sklar with Raymond James. Please go ahead.
Speaker Change: Great. Thank you.
Just following up on Rob's first question on the subscription growth guide really impressive 20% outlook you talked about being thoughtful there just given some of those risks.
So should we think is the right way to think about the 20% is kind of a floor under any regulatory kind of circumstance.
A little bit more conservatism versus prior years I, just wanted to kind of get a little finer point on that.
Speaker Change: Well I'll just comment briefly.
We havent changed really our approach.
We feel we exited 2024 are feeling strong with a lot of momentum, but again, it's the environment and just taking which is taking a balanced approach and a thoughtful approach on it so no different than our usual.
Speaker Change: Approach to the guide.
Okay, Great and then.
Just maybe one other follow up on on sustainability and mix top booking solution again.
Sitting now 24, I'm wondering if you could update us.
The inability revenues as a percentage of revenue today or any color on what kind of mix. It was in 2020 for bookings and how youre kind of approaching thinking about that for 2025.
Hi, Alex This is Joe Thanks for the question I appreciate it.
We were very pleased with sustainability revenues and bookings last year were still not providing them.
Split of Hum.
Switching base split of revenue, but it has continued to be one of our top booking solution now for 10 quarters in a row and we expect it to play a balanced part of our.
Our plan for 2025 and continued at.
A high level.
Okay. Thank you both.
Yeah. Thanks.
Your next question today will come from Terry Tillman with Truest. Please go ahead.
Speaker Change: Hi, This is Dominic Milan Shah on for Terry Thanks for taking my questions.
So just with more setup and consulting work shifting to partners have you seen a measurable impact on deployment speed and scale scalability so far.
Speaker Change: And have you seen any impact on customer satisfaction and retention or maybe churn rates as we get further along in the transition.
With partners I mean sure. We we continue to work hard to build out those strong alliances work with our partners to deliver we spend a lot of time, ensuring that they are receiving the same experience in implementation and delivery that they would if it was coming from the work Iva team. So.
Yes, we are continuing to get better yes, we moved more quickly. They also developed tools capabilities and accelerators around our our platform to bring more value, but also help to expedite the implementation. So we're seeing a lot of momentum in this direction and.
Speaker Change: Thanks for highlighting it continue to build even more strength with our partners and become more effective in the delivery.
Great and then just as a follow up with ESG sustainability solutions still being a key driver, especially in Europe. I was just curious how that how you expect the mix of partner led versus direct sales to evolve over the year you know maybe any other recent chips or improvements in the partner ecosystem to call out there with sustainability.
Sure I mean, I will say that we have with partners involved in the majority of our deals now, particularly those that are upmarket and we're going after the high end of the market as I mentioned in my prepared remarks, So partners are a very strong and the sustainability.
Please that we have and a big part of our go to market again everywhere, we want to be they help us sell not just sustainable but more broadly across the platform.
We saw higher we get higher deal sizes, I'm, just a big part of our growth strategy and accelerating our growth.
Got it thank you.
Your next question today will come from Adam Hotchkiss with Goldman Sachs. Please go ahead.
Great. Thanks, so much for taking the questions Julien I'd be curious you mentioned all of the non CSR related momentum in sustainability and other reporting categories. In your prepared remarks, but I'd be curious do you see any risk of prospects deferring or delay sustainability related projects in light of some of the dialogue in the market or if that's just something that's not coming up.
In your conversations thanks, so much yeah. You know thank you. Another question I'm sure it's on the minds of others as well.
Always.
Disclose that Q1 is very hard for us to to look at trends in the beginning of the year simply because our customers are heads down in their filing in the first one and two months, but.
Even that aside we've not seen any trends and as you can imagine we're looking but we haven't really seen any trends in that regard at this point.
Okay. No. That's helpful. Thanks, So much and then Jill just on profitability I'd be curious about how the evolving situation impacts your view on it on investment cadence here.
You mentioned your midterm and long term margin targets are intact.
Margins are coming down in Q1, I think the improvement is a little bit less year over year next year in general so I'd be I'd be curious how you're weighing those few issues. Thank you.
Speaker Change: Well thanks for the question you're right. We did reiterate on the call and continue to stand behind our 2027 and 2030 margin goals.
We are we are able to manage our business and manage our expenses.
In order to ship that needed them throughout the year and as we think I think that's your question really is how are we going to be able to execute on that and we ensure that we reach those goals.
You do that is to.
Operator business.
Carefully to ensure that we have a balanced approach to our investments.
And react to how the market is trending and how we're performing.
On a quarterly basis and so we do expect to still be read do you believe we are on track and we're pleased to be continuing.
Continuing to move towards those 2027 and 2030 goals.
Okay, great. Thanks, so much.
Speaker Change: Mhm.
Your next question today will come from Daniel Jester with BMO. Please go ahead.
Great. Thanks for taking my question.
So a couple of times in the prepared remarks, you mentioned sort of a broader digital transformation, helping fuel deals for you and I guess, there's several sort of big publicized trends driving European Digitization I'm. Just wondering are you seeing a broader acceleration.
Backhaul vintage deterioration or is this the.
Speaker Change: The comments on the prepared remarks, consistent with some of the trends that you saw in 2024.
Okay.
Sure good to highlight that as well.
New York He systems and upgrades are a great buying trigger for our platform.
Speaker Change: And we do see a strong demand there and I actually highlighted some in the call.
Just earlier, we closed Q4 deal with a new customer.
Factoring company going through an Oracle implementation and they were preparing for an IPO.
Customer using our work do you have private company reporting and financial statement automation.
So that was one example, another one I gave on the call to large six figure platform deals are.
And that was part of an ERP system upgrade as well client purchased sustainability SEC G. R. A C a T.
To complement the ERP functionality, so we get these deals.
Most significantly through our partners.
We have a big or regional partners that have dedicated ERP practices and they are of course as you know frequently drybulk finance transformations, and we slide right in there and I'll give you a good example, Esperanto transformation playbook are one of the big core has us in there. So these are how we typically.
We find these opportunities and definitely see strong demand on that that area.
Thank you that's very helpful. And then I just wanted to double click on Europe, great call out in terms of the.
The improvement that Youre seeing there I think just just wanted to be clear how much of Europe. The improvement there has been yes.
The related driven and how much are you seeing a broader uptick in the work iva platform outside of sustainability in Europe, and then any difference in the trends that you're seeing there. Thank you very much.
Sure I can certainly see why you asked that question, but the answer is we are we saw broad based demand across the geos in Europe and across our portfolio.
Momentum just continues to build there and we're very pleased with what we're seeing all this great story for us in 2024.
Actually we highlighted in our 10-K that 17% of our revenue now comes from outside.
The Americas and primarily that's Europe 250 basis points of improvement there from 2023, we've just we've just got a lot of greenfield opportunities in Europe.
Speaker Change: Since we don't have a whole lot of penetration in that market. So just a lot of opportunity both for new logo and expansion for them.
So it isn't just about the CSR D or sustainability, it's a it's really about the platform and admittedly too with her own execution. We've made a lot of changes as we've disclosed over the past year or so and we are just executing much better in general in Europe and.
We believe we've built some strong momentum with our teams across the region.
Great. Thanks for the color.
Okay.
Speaker Change: Your next question today will come from Steve Enders with Citi. Please go ahead.
Hi, This is George on for Steve. Thanks for taking the questions I wanted to ask about the gross margin.
Mix and how youre thinking about that framework into 25, obviously, 20% sub Rev growth is really strong.
On the operating margin side, you know getting to 5% for the year, maybe more at seven for Q4 is it right to think about Youre just investing.
Behind strong demand signals that you're seeing kind of put on the gas type of year, how would you frame that.
So when we look at our full year margin and especially I mean, you mentioned coming out of Q4, we do have significant seasonality within our expenses as we roll into Q1, and we've talked about for the past few years, but all of our employee raises hit January.
First and we also have frontloaded expenses around 401, K matches employment taxes.
Those sorts of things and so we do see some seasonality in that in the first part of the year around expenses, but as we look at our full year investments a lot of the investments that we made during 2024 will of course see the full year impact in 2025, but we are looking to see where can we further accelerate.
And ensure that we're taking advantage of the timely opportunity in front of us to really take advantage of our large unaddressed Tam.
And ensuring that were making the right investments across the business across geographies across solutions and across the platform in order to really ensure that we're doing the most that we can accelerate growth.
Excellent.
And then one quick follow up was there any material impact of FX on your metrics in the quarter and anything baked in on FX and the guidance. Thank you.
Oh.
Nothing to call out in particular around FX. It has continued to of course impact our.
Result of that has other size companies.
Speaker Change: We were building our current models using current rates.
Speaker Change: There are they are somebody.
Historical levels right now and so we called that out as a potential risk and part of the reason why we're being very balanced with our guide for the full year.
And Oh alongside of policy uncertainty in some of the other things that Julie highlighted.
Currency potential currency fluctuations definitely weighs in on the on the Max.
Great. Thanks for taking the questions.
Thanks.
Your final question today will come from Jake Roberge with William Blair. Please go ahead.
Yeah, Thanks for taking my questions.
The follow up on the ESG front I know one of the added benefits for some of those new logos are landing in Europe is that it gives you a chance to tell the broader platform. So I'm curious what you're seeing from those new logos in terms of adopting ESG alone versus actually landing with a broader platform that includes.
Financial engineers, you're reporting given that that's much more of a greenfield market for you.
Sure. We we always go out with a platform right, we pitch the platform and it's the value proposition to be able to do your financial reporting your non financial and sustainability reporting along with your auto ability governance risk management and so forth. So that's how we go to market sometimes it is a carbon first or.
Sure sustainability first sometimes we're looking for the controls and audit capability.
Speaker Change: And sometimes it is and he stops for financial reporting so or global statutory or multi entity reporting. So we do both new logos and account expansion, but as you highlighted we're less well known there were less penetrated in the market in Europe. So oftentimes it is with a new logo, but it can come from anywhere.
And our platform and its broad based and we're increasing the amount of multi solution land. So it isn't just one solution that we would land with so teams going out there are trying to fill our pipeline with multi solution deals as opposed to the single solution. So.
Very much focused on the platform play and of course also meeting the customer where they are.
Okay. That's helpful. And then now that it's been under your roof for a little bit more time can you just talk about how the initial feedback for sustained that life has been from customers and then how that solution is it helping with win rates.
Just the overall reception in terms of getting the ESG solution into the door earlier with customers. So would love to just kind of hear sustained out like the reception and how its been impacting win rates or we love. The question because the highlight to sustain life a wonderful team that is very much a part of work even was a long time.
One, but we executed very well there was only six months ago on the launch of <unk> carbon I've mentioned it in my prepared remarks, you know our results in Q4 I'll just continue to demonstrate the momentum that we've seen again since day one of the launch of the solution. So I I do want to remind you that our work even.
Carbon was a strategic addition to our platform made our sustainability solution. Our overall assured integrated reporting platform, even more marketable and even more relevant that was the intent and were certainly seeing that some companies bought won't want to.
Purchase a sustainability first but also carbon first so we are there with that has opened up opportunities for us and we expect the trends to continue to help again, when new sustainability reporting deals going forward and of course platform plays.
Speaker Change: That's helpful. Thanks for taking my questions and congrats on the results.
Thank you. Thank you.
Well conclude our question and answer session as well as conference call. Thank you for attending today's presentation. You may now disconnect your lines.
Okay.