Q1 2025 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 remarks, we will conduct a question and answer session instructions will be provided at that time. Please.
Please note that this call is being recorded on May 1st 2025 at five P. M Eastern time.
I would now like to turn the meeting over to your host for today's call Kitty White Senior director of Investor Relations at <unk>. Please go ahead.
Kitty White: Good afternoon, and thank you for joining <unk> Q1, 'twenty 'twenty five conference call.
Kitty White: During today's call, we will review, our first quarter results and discuss our guidance for the second quarter and full year 'twenty 'twenty five.
Speaker Change: Today's call will include comments from our Chief Executive Officer, Julie Escoe, followed by our Chief Financial Officer, Joe Clayton.
Speaker Change: We will then open up the call for a Q&A session, where we will be joined by Mike Ross, Our Chief strategy Officer.
Speaker Change: After market closed today, we issued a press release, which is available on our Investor Relations website, along with supplemental materials.
Speaker Change: This conference call is being webcast live and following the call an audio replay will be available on our website.
Speaker Change: During today's call, we will be making forward looking statements regarding future events and financial performance, including guidance for the second quarter and full fiscal year 2025.
Speaker Change: These forward looking statements are based on our assumptions as to the macroeconomic political and regulatory environment as of today reflect our best judgment based on factors currently known to US and are subject to significant risks and uncertainties.
Speaker Change: We're kiva cautions that these forward looking statements are not guarantees of future performance.
Speaker Change: We undertake no obligation to update or revise these statements.
Speaker Change: If the call is reviewed after today the information presented during this call may not contain current or accurate information.
Speaker Change: Please refer to the company's annual report on Form 10-K, and subsequent filings with the SEC for factors that may cause our actual results to differ materially from those contained in our forward looking statements.
Speaker Change: Also during the course of today's call, we will refer to certain non-GAAP financial measures.
Speaker Change: Reconciliations of GAAP and non-GAAP measures are included in today's press release.
Speaker Change: With that we'll begin by turning the call over to work he was CEO Julie as Kal.
Speaker Change: Thank you Katie and thank you all for joining us today.
Speaker Change: Jill and I look forward to sharing our Q1 results and our guidance for Q2 and full year 2025.
Speaker Change: We will also provide an update on the regulatory environment and our views on the macro.
Speaker Change: Q1 was another solid quarter.
Speaker Change: A description revenue grew 20% year over year and total revenue grew 17% year over year, beating the high end of our guidance at the same time operating margin came in slightly ahead of our first quarter guidance.
Speaker Change: In Q1, we once again saw broad based demand across our solution portfolio.
Speaker Change: CFO Trustmark Eva to be the platform that drives performance and productivity for their current client and.
Speaker Change: And prepare them for their next digital financial and operational transformation.
Speaker Change: Our portfolio of 20, plus solutions across governance risk and compliance and financial regulatory and nonfinancial reporting continues to resonate in the market.
Speaker Change: Consistent with the past several quarters, we saw outpaced growth in our large contract customers.
Speaker Change: This is driven by both additional fruition sales into our installed base and larger new local Atlanta.
Speaker Change: In Q1, the number of contracts valued over $100000 increased 23%.
Speaker Change: Those over $300000 increased 32% and.
Speaker Change: And contracts valued over $500000 were up 32% as well.
Speaker Change: All compared to Q1 of 2024.
Speaker Change: Although we remain optimistic on our market opportunity, we did see signs of a more cautious buying environment towards the end of Q1.
Speaker Change: The uncertainty of regulatory change in the policies of the New U S administration have put pressure on the bookings momentum that we saw in the previous three quarters.
Speaker Change: As we monitor the current macro in the market turbulence, we remain focused on the execution of both our long term growth strategy and our productivity initiatives.
Speaker Change: We believe that we have the competitive differentiation and focused execution to continue to deliver on our 2025 and longer term targets.
Speaker Change: Our Q1 results highlighted once again that our platform remains a key differentiator for our new logo wins and account expansion deals.
Speaker Change: We offer our customers a platform for trust transparency accountability and efficiency.
Speaker Change: Our relentless focus on customer outcomes has continued to resonate with the office of the CFO.
Speaker Change: I'd like to start off our deal highlights for the quarter with three wins demonstrating the success of our unified platform around the world.
Speaker Change: First we signed a seven figure multi solution expansion deal with a U S Regional bank.
Speaker Change: This 13 year loyal customer purchased two additional solutions and expanded use across other solutions on the platform.
Speaker Change: This customer added management reporting to support their operational data analysis and financial statements processes and added our policy management solution to manage their credit risk and accounting policies.
Speaker Change: The deal also included expanded usage across bank specific reporting, including Basel, three call reports and liquidity and tax reporting.
Speaker Change: This deal was at wholesale with the Big four advisory firm.
Speaker Change: Second we signed a mid six figure new logo deal with the digital and telecommunications company in APAC.
Speaker Change: This new customer purchased seven solutions across the platform.
Management reporting global statutory reporting controls management financial reporting risk management, and carbon and sustainability reporting.
Speaker Change: This company has been on a multiyear digital transformation journey, which included a move to S. Four Hana back in 2022.
Speaker Change: Their investment in more fever supports their vision to achieve greater agility efficiency and competitiveness as an organization.
Speaker Change: The deal was sourced and will be delivered by a big four advisory firm.
Speaker Change: And third a European travel company became a new customer signing a six figure multi solution deal that included financial reporting global statutory reporting management reporting controls management policies and procedures and sustainability reporting.
This venture backed organization has reached over $1 billion and has a long term goal as a public company I P O.
Speaker Change: This was a competitive win which included multiple partners co selling the deal.
Speaker Change: Let's move on now to financial reporting which continues to be the primary revenue driver for our business we.
Speaker Change: We saw broad based demand in our financial reporting solution set includes FCC reporting multi entity reporting private company reporting and management reporting.
Speaker Change: I'd like to highlight three financial reporting specific deals from the quarter.
Speaker Change: First we signed a mid six figure new logo deal with a top five U S based insurance company.
Speaker Change: This customer invested in the work Iva platform to replace a legacy solution and manual processes.
Speaker Change: They purchased work either for insurance reporting investment reporting and management reporting.
Speaker Change: There were multiple partners involved in the co selling and the delivery of the steel.
Speaker Change: Second we signed a mid six figure new logo deal with a top 10 global oil and gas company for global statutory reporting.
Speaker Change: This company invested in work either as part of a broader financial transformation initiative.
Speaker Change: They'll be using the work ive a platform to manage their data and statutory reporting across 250 entities.
Speaker Change: The opportunity was sourced and will be implemented by a big four firm.
Speaker Change: And third we signed a mid six figure new logo deal with a privately held U S spacecraft manufacturer for private company and multi entity reporting.
Speaker Change: This company purchased the work Iva platform to replace manual processes and work done by service providers in support of financial statements data management, and they're reporting for 140 legal entities.
Speaker Change: The deal was a co sell and will be delivered by our regional consulting for all.
Speaker Change: I'll turn now to governance risk and compliance.
Speaker Change: Companies today are faced with an environment of changing risks new compliance requirements and stakeholder oversight.
Speaker Change: All of which require a mature G. R C program.
Speaker Change: In addition to existing macroeconomic and geopolitical risks the policy uncertainty of the new U S administration as well as other emerging risks are on the rise.
Speaker Change: We believe that this ever changing business environment, we will continue to create demand for our G. R C solutions.
Speaker Change: Looking back at Q1 humorous three signature G. R C wins.
Speaker Change: First a European based environmental services provider signed a six figure new logo deal that included controls management and sustainability reporting.
Speaker Change: This company is working with multiple big four firms as a key part of our future reporting and assurance strategy project.
Speaker Change: This was a competitive deal to replace a legacy G. R C platform and with a co sell with multiple need for firms.
Speaker Change: Second a UK based oil and gas company signed a mid six figure new logo deal that included controls management audit management operational risk management, he says and sustainability reporting.
Speaker Change: This was a competitive deal with multiple trc vendors being evaluated.
Speaker Change: The expanded value of the work Iva platform for their reporting use cases was it a competitive differentiator for this G. R C opportunity.
Speaker Change: This deal was sourced and will be delivered by a big four firm.
Speaker Change: Third we close to two solutions six figure account expansion deal with a U S based utility company. This.
Speaker Change: This company purchased controls management and audit management.
Speaker Change: The customer first signed with work even in August of 'twenty 'twenty four for SEC reporting and then quickly followed on with this G. R. C solution expansion.
Speaker Change: The opportunity was a co sell and will be implemented by our regional advisory firm.
Speaker Change: Let's move on now to sustainability management.
Speaker Change: There's been a lot of activity on the regulatory front in Q1.
Speaker Change: As discussed on our Q4 call. The European Union has proposed changes to the CSR deregulation Susie EU omnibus package.
Speaker Change: On February 26 of 2025, the European Commission published its proposed omnibus legislation, which introduces changes to the CSR D.
Speaker Change: These changes include a limited the scope of the CSR D to EU organizations that have more than 1000 employees.
Speaker Change: And an increase to the threshold for U S and other non EU companies those and wave four from 150 million euros in revenue to 450 million yours and revenue generated within the E U.
Speaker Change: More recently the EU Parliament brought the first step of clarity to the omnibus proposal with the vote on April 3rd that confirmed that wave two and wave three companies will now be required to report on their 2027 data in 2028.
Speaker Change: This vote also signaled overwhelming EU support for the passing of the full omnibus package.
Speaker Change: Omnibus outlines a large wave one companies, which is where Keith is primary target market will still be subject to reporting in 2025, I'm 'twenty 'twenty four results with no change in timeline.
Speaker Change: What also remained unchanged is that all companies subject to the CSR D must report using double materiality and in accordance with the EU taxonomy. They also need to comply with the E. S. RF standards and these reports will be subject to limited assurance.
Speaker Change: With the publishing of the EU omnibus companies now have much better clarity I, who will be subject to the C. S. R&D, what will need to be disclosed and when they will need to disclose it.
Speaker Change: But sustainability reporting is not just about complying with regulation.
Speaker Change: Corporations have recognized that sustainability data is not nearly reporting obligations, but a valuable asset that can be leveraged to enhance business performance and drive efficiency.
Speaker Change: A great example of our work Ive a customer that's felt stakeholder trust their sustainability reporting is a European utility company with 36 million customers that focuses on renewable energy.
Speaker Change: This company is one of the largest global investors in wind and solar power projects.
Speaker Change: With our work Iva platform. They have oversight of all financial and Nonfinancial information and these created greater efficiencies and increased data confidence.
Speaker Change: The entire end to end process for connected result is now much quicker with higher quality data being presented during both internal and external reviews.
Speaker Change: By measuring monitoring and tracking their investment projects as they work even platform. This customer has the information it needs to unlock new markets reduced risks and support long term resilience and profitability.
Speaker Change: Another work Ive, a customer a global food manufacturer hit their 'twenty twenty-five emissions target three years early and now sources over 80% of their product volumes sustainably.
Speaker Change: <unk> reported that achieving lower emissions and pursuing sustainable packaging creates efficiencies and ultimately drive profitability.
Speaker Change: At the same time, the company's focus on sustainability transparency aligns with consumer demand and helps distinguish their brand in a competitive market.
Speaker Change: That's not just about reporting our compliance it's about business performance.
Speaker Change: Cross industries companies are using sustainability data to drive operational efficiency mitigate risks increase customer loyalty and ultimately create value.
Speaker Change: The need for organizations to measure monitor and track Nonfinancial information continues to drive market demand for our sustainability reporting solutions.
Speaker Change: Here are two notable wins from the quarter.
Speaker Change: First a fortune 500, global food and beverage company signed a six figure sustainability reporting contract. This long time FCC in global statutory reporting customer has set ambitious goals related to sustainable sourcing in packaging and environmental impact and they chose work either to stream.
Speaker Change: Mine and improve what had previously been a fully manual reporting process.
Speaker Change: For a consumer products company sustainability reporting essential to managing energy waste reduction and the cost of goods for their products.
Speaker Change: By capturing and reporting on this data this companies not only working to improve cost savings and increase operational efficiency, but it is also fostering brand loyalty and creating product differentiation that can open up new market segments, and ultimately drive long term value creation and a stronger more rigs.
Speaker Change: Union Company.
Speaker Change: Second a fortune 500 global investment management company purchased sustainability reporting with assurance to meet their needs for voluntary reporting.
Speaker Change: This existing customer was already using work either for financial reporting and internal controls and after engaging in a competitive RFP led by their sustainability officer, they chose where either because of the connectivity to their existing financial reporting and G. R. C solution.
Speaker Change: The firm has set ambitious environmental targets, such as achieving net zero scope, one and scope two greenhouse gas emissions by 2040.
Speaker Change: This increased focus on sustainability reporting is not only about managing risk and increasing operational efficiency, it's about addressing stakeholder demand enhancing trust and loyalty in the market and attracting new clients.
Speaker Change: We believe that sustainability reporting is a market with a long durable demand and that many corporations will embrace sustainability tracking and disclosure to address multiple stakeholder requirements.
Speaker Change: By bringing both financial and Nonfinancial data together, where give us platform enables our customers to gain insights that drive competitive advantage and informed business decisions.
Speaker Change: I'd like to take a moment to thank the work even team as well as our partners for all of our strong Q1 when.
Speaker Change: They are the result of focusing on customer outcomes and demonstrating the value of our platform.
Speaker Change: Moving on to product innovation in Q1, we delivered a number of advancements to the work iva platform, including new capabilities for FCC reporting and the launch of a fun reporting solution for public funds.
Speaker Change: For SEC reporting all filers are required to go through a mandatory process change driven by an overhaul to the Edgar system.
Speaker Change: On March 24th the FCC launched enrollment for new security requirements for the Edgar system called Edgar next this update impact every SEC filer, including public companies foreign private issuers investment company's directors and officers filing with the SEC.
Speaker Change: Our platform is ready to support filings the day. The Edgar next system went live our ability to quickly adapt to regulatory changes is one of the reasons. We're geyser is the market leader for regulatory and financial reporting.
Speaker Change: In Q1, we also launched a new solution for public funds. This is a new investment reporting solution on the <unk> platform, that's imports the rapidly growing public funds market.
Speaker Change: Includes those firms that managed Etfs.
Speaker Change: This new solution expands our investment reporting market opportunity and supports the unique requirements of public funds, including the ability to create funds summary, prospectuses and reviewing submit hundreds of regulatory filings at lunch.
Speaker Change: We will continue to focus R&D on the pace of product innovation, consistent execution and enhancing our high performing differentiated platform.
Speaker Change: I'll move on now to say a few words about our guide.
Speaker Change: Jim will provide the numbers for our revenue and our profit guidance for Q2 and full year 2025.
Speaker Change: You will see is that while we're pleased with our Q1 growth, we're not raising our full year 2025 expectation.
Speaker Change: We reaffirm our top line outlook for the rest of this year as the current cautious buying environment may persist until customers see clarity in market conditions.
Speaker Change: We are confident in the resiliency of our business and the durable demand for our platform and our solutions.
Speaker Change: And we'll continue to invest in our long term growth opportunity in line with our strategy.
Speaker Change: In closing I'd like to thank all of our employees and our customers for another great quarter.
Speaker Change: We're focused on driving better business outcomes through transparency and accountability and we look forward to meeting the demands of organizations around the world with our best in class platform and solution.
Speaker Change: 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.
Joe Clayton: Over to you Joe.
Joe Clayton: Thank you Julie and good afternoon, everyone. Thank you for joining us to.
Joe Clayton: Today I'll begin by providing an overview of the financials and key metric highlights for the first quarter of 2025.
Joe Clayton: I will then move on and provide guidance for Q2 and the full year 2025.
Joe Clayton: As Julie discussed we had a solid first quarter with execution across our broad portfolio of solutions.
Joe Clayton: We beat the high end of our Q1 revenue guidance by $1 million generating $206 million of total revenue in the first quarter up 17% over Q1 2024.
Joe Clayton: Q1 subscription revenue was $186 million up 20% from Q1 'twenty 'twenty four.
Joe Clayton: New customers and account expansions both contributed to our strong revenue growth.
New customers added in the last 12 months accounted for 49% of the increase in our Q1 subscription revenue.
Joe Clayton: Q1 professional services revenue was $21 million.
Joe Clayton: Flat versus Q1 2024.
Joe Clayton: With higher EXPAREL services offset by a decline in set up in consulting services.
Joe Clayton: Moving on to our Q1 2025 operating results all on a non-GAAP basis.
Joe Clayton: Q1, gross margin improved 100 basis points year over year, increasing to 79%.
Joe Clayton: Operating margin for the quarter was 2.4%.
Joe Clayton: This outperformance over our guidance was the result of our topline beat and our continued focus on leverage as we scale our business.
Joe Clayton: Moving on to performance metrics for the quarter.
Joe Clayton: We had 6385 customers at the end of Q1 2025, a growth of 311 customers from Q1 2024.
Joe Clayton: Our gross retention rate was 97% exceeding our 96% internal target.
Joe Clayton: And our net retention rate was 110% for the quarter.
Joe Clayton: This metrics are pressure from foreign exchange rate headwinds as well as the year over year impact of leap year on the calculation.
Joe Clayton: We generated 69% of our subscription revenue from customers with multiple solutions up from 66% in Q1 'twenty 'twenty four.
Joe Clayton: As Julie discussed we continued expansion in our relationships with our large contract customers.
Joe Clayton: As of the end of the first quarter, we had 2079 contracts valued at over $100000 per year up 23% from Q1 the prior year.
Joe Clayton: The number of contracts valued at over $300000 totaled 439 up.
Joe Clayton: 32% from Q1, 'twenty 'twenty four.
Joe Clayton: And the number of contracts valued over $500000 totaled 191 at 32% from Q1 'twenty 'twenty four.
Joe Clayton: Moving on to the balance sheet.
Joe Clayton: As of March 31, 2025, cash cash equivalence and marketable securities were $767 million, a decrease of $49 million over the prior year.
Joe Clayton: Our primary he says cash in the quarter was our repurchase of approximately 462000 shares of our class a common stock for $40 million as part of the share repurchase program approved by the board in July 2024.
Joe Clayton: As we ended the quarter, we had $60 million remaining of the original 100 million dollar authorization.
Joe Clayton: Turning now to our guidance for Q2 and the full year 2025, while we remain confident in our long term market opportunity and growth strategy as well as in our large relatively unaddressed Tan we did see a move towards a more cautious buying environment at the end of Q1.
Joe Clayton: As such we continue to take a measured approach to setting our guidance assumptions.
Joe Clayton: For the second quarter of 2025, we expect total revenue to range from 208 million to $210 million.
Joe Clayton: We expect services revenue will be down compared to Q2 2024.
Joe Clayton: We expect non-GAAP operating margin to be approximately breakeven, reflecting ongoing investment in our long term growth strategy and the timing of pre planned events.
Joe Clayton: For the full year 2025, we.
Joe Clayton: We continue to expect total revenue to range from 864 million to $868 million.
Joe Clayton: Similar to 'twenty 'twenty four we expect total services revenue will be down year over year, as we moved low margin services to our partners.
Joe Clayton: We expect subscription revenue growth to be approximately 20% at the midpoint.
Joe Clayton: We continue to expect non-GAAP operating margin to range from 5% to 5.5% delivering improved productivity compared to 'twenty 'twenty four.
Joe Clayton: We now expect 2025 free cash flow margin will be 10%.
Joe Clayton: This revised target reflects pressure on bookings expectations for the rest of the year given the macro uncertainty Julian I discussed.
Joe Clayton: We continue to operate our business with our 2027 and 2030 targets in mind, improving productivity and operating leverage as we execute on our long term growth strategy.
Joe Clayton: In closing.
Joe Clayton: I would like to think we're keyed ins around the globe for their hard work and dedication to providing value to our customers.
Joe Clayton: Thank you all for joining the call today.
Joe Clayton: We're now ready to take your questions. Operator, please open the line for Q&A.
Speaker Change: I'll 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. If at anytime. Your question has been addressed and you would like to withdraw your question. Please press Star then two at.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Patrick Scholes: And your first question today will come from Patrick Scholes with Baird. Please go ahead.
Patrick Scholes: Yeah, Yeah. Thanks for taking my question I guess, maybe the first one just on the guidance I know you mentioned the more cautious buying environment towards the end of the quarter, but still maintain the full year revenue guidance can you just help me bridge. The gap there may provide a little more color on confidence in achieving the guidance why not just take the guy a little lower right now.
Patrick Scholes: So that the reason that we kept the guidance the same was.
Patrick Scholes: We really felt.
Patrick Scholes: That.
Patrick Scholes: Q1 was a great quarter, we had 20% SaaS revenue growth.
Patrick Scholes: We're talking about in the guide that we expect to have 20% revenue growth for the full year.
Patrick Scholes: Aetna.
Patrick Scholes: And we really feel like taking.
Patrick Scholes: Taking everything into account that and we're able to them to maintain.
Patrick Scholes:
Patrick Scholes: With our we can maintain a really measured approach on setting our guidance assumption. So it's a really similar approach as to what we took in prior quarters.
Patrick Scholes: But we remain confident in our long term market opportunity and our growth strategy and with our large relatively yet unaddressed.
Patrick Scholes: Unaddressed can that be.
Patrick Scholes: And we felt like it was the right move to Aviva guide flat for the year.
Speaker Change: Okay, maybe one policy maybe for Julie I appreciate your commentary.
Speaker Change: Rd and ESG mandates in your prepared remarks could you maybe just give us a sense on how demand for the ESG and sustainability solutions have been relative to your expectations. Prior to the omnibus legislation I guess, how should we think about the pace of deal for remainder of the year into 2020 now that some of these recently group EU legislation Neocart. Please.
Speaker Change: Sure and.
Speaker Change: Not an unexpected a topic for discussion here today, given what's been going on but I would like to give a little bit of detail here on sustainability, who I provided some in the in the remarks, but it will just take a step back yes, there've been a lot of changes in the past three months.
Speaker Change: But I'll just state highlight here three things right first of art sustainability market continued to grow.
Speaker Change: Sustainability remains a top booking solution for us in Q1.
Speaker Change: And when we think about sustainability, we break it down.
Speaker Change: And the geography and company size.
Speaker Change: And finally as a highlight.
Speaker Change: We've said before.
Speaker Change: Even as far back as when we entered the sustainability market regulation is not the only driver of sustainability initiative and reporting so well just think about the different geos. If we start with Europe as I mentioned with regard to CSR D. In the omnibus I mean, it did bring a lot of clarity companies know what they have to report and by when.
Speaker Change: And that that first a large wave one companies still need to report in 2025, no change to that timeline and actually the large non EU companies still have to report on their same timeline as well and these large companies are our target market and they have they've got a report with Devin.
Speaker Change: Reality, they have to report using taxonomy and ESR RF, they've got limited assurance. So we believe we still have a large opportunity in this market and as I highlighted in Q1 in Europe, we saw multi six figure deals including sustainability.
Speaker Change: I'm gonna be next week.
Speaker Change: With our European customers and partners at our annual Europe customer event.
Speaker Change: Still focusing on sustainability now if you move over to the U S. A change in the administration has influenced some of those companies that were box checkers in compliance.
Speaker Change: Meaning those that we're only reporting are adhering to.
Speaker Change: To the.
Speaker Change: Compliant the regulations.
Speaker Change: Just because there is a regulation they may choose to delay or no longer report. This includes those that would have been subject to the SEC climate disclosure rule and those that were subject to the previous thresholds on CSR D. But the state of California rules are still something that organizations are preparing for are we do see this.
Speaker Change: As of by buying driver today, and then there are of course, there are a number of other state regulations.
Speaker Change: And bills that are coming up in various stages now for the rest of the World. You know, we still got the 20 countries or so that have chosen to align with the I S. S V guidelines and they were now over silver 7600 organizations that are committed to science based targets through S. E T I.
Speaker Change: All of these companies will be measuring monitoring and tracking their sustainability data.
Speaker Change: Final note in Europe.
Speaker Change: You'll note in the U S and everywhere sustainability reporting isn't just about complying with regulations companies are buying it ahead of regulation they have even when there.
Speaker Change: There is no regulation that they need to comply with they're doing it just participate in the global supply chain.
Speaker Change: Enhanced business as I described in my prepared remarks.
Speaker Change: So very helpful.
Speaker Change: The size dependent.
Speaker Change: Excuse me.
Speaker Change: And your next question today will come from Steve Enders with Citi. Please go ahead.
Steve Enders: Okay, great. Thanks for thanks for taking the questions here actually I just wanted to follow up on on the last point that you're making there, but just in terms of.
Steve Enders: What you saw in <unk>, maybe how are things different compared to the deal flow down as you saw from the sustainability portfolio versus I guess the broader.
Steve Enders: The broader wilkie of our portfolio and maybe kind of what's the view here.
Steve Enders: Going forward as well.
Steve Enders: Yeah, I mean continued we had a strong quarter, we saw broad based demand across the portfolio and again sustainability. In Q1 was you know a still one of the top booking solution I did mention in our remarks that you know we saw cautious buying environment.
Steve Enders: But across the portfolio and it really is.
Steve Enders: More in conversations with customers and compared to our 2024, which was yeah, we had stellar bookings quarters in 2024 so.
Again, we are looking at what's happening today with market uncertainty with turbulence in the market, but it's really broad based demand across our portfolio.
Okay got you so.
Steve Enders: So to put a finer point on it there wasn't really there.
Steve Enders: Your friends in the timeline or like I guess, one thing from the slowdown between the ESG side of the equation and the rest of the portfolio.
Steve Enders: This quarter, we had demand for all all are all solutions.
Steve Enders: Yes, okay.
Steve Enders: Okay Alright. Thank you. Thank you for that and then.
Steve Enders: Just in terms of the I guess broader change between the U S opportunity and it seems like the wave four side of it it's kind of moving forward but.
Steve Enders: <unk>.
Steve Enders: How has made me the opportunity.
Steve Enders: Or in terms of like a number of logos or the number of opportunities that was a different now with the changing regulatory landscape and maybe for what you're seeing from the theater CSR deregulation versus you know the things that are coming up on a state level for a U S based companies.
Steve Enders: Yeah.
Steve Enders: As I mentioned in Europe, our target market is alive and well, it's the large companies the large wave one companies.
Steve Enders: The need to report in 2025, many of those in April April 30th was the deadline, but others, depending on geography. So that's our market that market is strong the wave two and three companies some will delay.
Steve Enders: Those are.
Steve Enders: But farther out in the in the timeline, but our target market again is large it is a global opportunity, but as I highlighted in the U S again.
Steve Enders: We've we've got the box checkers complier, and those that will wait for regulation, but again.
Steve Enders: Everything else so much of what we sold was for companies that want to play in a global ecosystem. They want to participate in the global supply chain, they're doing this for stakeholders.
Steve Enders: They're doing this for a number of other reasons beyond regulation, and we're seeing that and we've seen that for multiple years that we've been in the sustainability market.
Speaker Change: Okay perfect. Thanks for taking the questions.
Steve Enders: Hello.
Speaker Change: Again, if you would like to ask a question. Please press Star and then one and your next question today will come from Jake Roberge with William Blair. Please go ahead.
Jake Roberge: Yeah. Thanks for taking the questions and really helpful commentary just around the sustainability business.
Jake Roberge: Of those 7000, or so wave one recorders that are still being regulated under the updated CSR. The proposals I know theres been no change to the regulatory timeline, but do you think there'll be any change to kind of the adoption cadence.
Jake Roberge: Related to CSR do you just falling the updated omnibus proposals.
Jake Roberge: You know we are we do see significant opportunity in that larger market I mean, many of those companies that you mentioned you'd have to comply on April 30th and while we've made significant headway in the market the opportunities there because what's clear when you look at those reports that have come out and we have.
Jake Roberge: Looked at them, there's a lot of complexity because companies have to deal with many are still on the legacy systems there.
Jake Roberge: They're there.
Jake Roberge: Getting through it with muscle and so we believe there are a number of companies.
Jake Roberge: That are still using those core processes that we can help with our platform and the platform brings together the financial data and the nonfinancial data it brings with.
Jake Roberge: With assurance.
Jake Roberge: And we help manage the complexity and I you know I I.
Jake Roberge: I think that is where our opportunity remains in the up market. So it's again significant opportunity and that is our target market.
Speaker Change: Okay. That's helpful. And then could you talk about how the go to market transition has been trending this year I know you were starting to step that up more meaningfully at the start of the year. So it would be great to hear how that's going and whether those plans could change I'll just just given the uncertain macro environment.
Speaker Change: Sure and as you know for the go to market as we've scaled we've been maturing our organization.
Speaker Change: And as we roll into 2025 continue to do so.
Speaker Change: Further expanded our team of major account sellers, we continue to shrink territories, just providing a greater focus on a smaller number of accounts we.
Speaker Change: We are dedicated to do what we've dedicated new logo teams and so forth. So we're maturing that's on the structure side on the staff side, just continue to hire more experienced platform sellers those that can embrace and leverage our partners.
Speaker Change: Just those sellers that have proven experience with scale, so coming off of a successful year out there in the market most of our sellers have a higher quotas and we're pushing hard on the go to market side.
Speaker Change: Strategy again continued focus on better enablement, we're more refinement of sales plays and so forth. So we're continuing to improve continuing to invest and up leveling teams in building out that.
Speaker Change: Go to market team, that's very capable and competent as we scale.
Speaker Change: Great. Thanks for taking the questions and congrats again on the solid Q1 results.
Speaker Change: Thank you.
Speaker Change: And your next question today will come from Adam Hotchkiss with Goldman Sachs. Please go ahead.
Adam Hotchkiss: Great. Thanks, so much for taking the question I guess Julie to start could you maybe just clarify what a soft buying environment means for you is this just deferral of decision, making or something else I'm just coming up in conversations off and is there any way for us to quantify either the number of deals or revenue.
Adam Hotchkiss: Revenue, that's being pushed out of Q1 or future quarters because of that it's just just trying to understand what is going on thank you all thank.
Adam Hotchkiss: Thank you for the question just.
Adam Hotchkiss: Just to clarify our business continues to grow and we've reaffirmed our 20% subscription revenue growth guide for 2025, and that's important when when I talked about signs of the cautious buying environment or change in momentum again, it's really compared to the year that we had in 2024.
Adam Hotchkiss: Very strong stellar bookings quarters for us that's what we're comparing it to but.
Adam Hotchkiss: There's no denying Q1 was a turbulent market and there's market uncertainty and I I hear when I talk to customers right. There, they're just being more thoughtful with spend and the reality is they're dealing with you know.
Adam Hotchkiss: Constant changes new risks to their business and their business models and we do believe that this had an impact on some organization spend behavior.
Adam Hotchkiss: And you know we're again, there's uncertainty there we don't know what's coming our guide is very balanced given the uncertainty that turbulence in the market.
Adam Hotchkiss: And what we're hearing from our customers I E.
Adam Hotchkiss: Some some deals are maybe taking longer even when we're the vendor of choice right, but I will reiterate we've affirmed our guide for 20% subscription growth in 2025, we've got that large unaddressed Tam that I continue to talk about and we believe that with our our broad solution portfolio got that.
Adam Hotchkiss: Platform advantage and proven record of delivering value that we have the opportunity to drive continued growth throughout 2025 and beyond.
Speaker Change: Okay. Thanks, Julie that's really helpful clarification, and then I wanted to talk a little bit about the the press release, you had I think a couple of weeks ago around the mandated financial consolidation order for federal agencies.
Speaker Change: How should we think about the opportunity for you there and have you started to see any conversations around this over the last month.
Speaker Change: Thank you for highlighting that we did have a press release on that opportunity we talked about the requirement that all 24, CFO act agencies need to modernize their systems.
Speaker Change: And probably the most important part of that order as is.
Speaker Change: As soon as practical practical all heads of CFO agent agencies must use standard financial management systems, and they must use what's on that marketplace and we are on that marketplace and we're encouraged that the administration is leaning into tech first approach and we believe this.
Speaker Change: It'll be a.
Speaker Change: An opportunity for us, we're well positioned but we also believe it is a multi year effort. So we're optimistic over the long haul that the federal government is taking that you know again that tech first approach and they're focused on trust and transparency and accountability as we are with our platform and we believe that our platform is a great fit for the.
Speaker Change: These are transformational needs and actions.
Speaker Change: Understood. Thank you Julie.
Speaker Change: And your next question today will come from Ryan Krueger with Wolfe Research. Please go ahead.
Ryan Krueger: Hey, guys. Thanks for taking the question.
Ryan Krueger: I appreciate all the commentary on the macro but I do just want to ask one more.
Ryan Krueger: You guys have a really good purview into a lot of verticals and a lot of major region. So I'm just curious when you talk about this cautious behavior I understand it's just kind of starting but is it more broad based or is it you know.
Ryan Krueger: Related to certain vertical so our regions, while others might be more safe.
Ryan Krueger: I think again, we'll reiterate.
Ryan Krueger: We had a strong Q1.
Ryan Krueger: But it was broad based we're not seeing any particular G O.
Ryan Krueger: I'm not seeing it in any particular segment that we're in a four solutions either it's again conversations with customers and more just a more cautious environment like like we are doing it at work Eva we're thinking about our spend in a more thoughtful way. We're looking at those things that are more important.
Ryan Krueger: We're looking at the dollars, we have in and thinking about our own.
Ryan Krueger: Operational effectiveness, and so forth and our spend.
Ryan Krueger: Okay, Great I appreciate it.
Ryan Krueger: Then also on solution pricing in the prepared remarks, you talked a lot about a lot of innovation coming into the platform.
Ryan Krueger: And we are seeing quite a few software companies kind of lean into the pricing lever. So just wanted.
Ryan Krueger: Wanted to get an update on maybe your pricing philosophy, how you guys think about it.
Ryan Krueger: How you think about that lever going forward.
Ryan Krueger: Sure and this is a philosophy of ours that we've stood by which is we want to bring value to the customer.
Ryan Krueger: And we would rather sell additional solutions and half more impacted than you know get a few more dollars out of the.
Ryan Krueger: We know where the price increase having said that we have.
Ryan Krueger: Putting base price increases are rooting for a rig on our renewals. So we do off of course, we take a risk based approach depending on where the customer is and what has transpired in where they are but again, that's not we're not at the point, where we're squeezing dollars out of the customer for a renewal or pricing price increases there.
Ryan Krueger: It really is about providing value cross selling and up selling and that's the way we've been we've been approaching it. So yes, we're working to optimize our pricing, but the real lever is value and selling more solutions expanding in accounts and bringing more value to our customer.
Ryan Krueger: I appreciate it thank you guys.
Speaker Change: And your next question today will come from Terry Tillman with Truest. Please go ahead.
Speaker Change: Hi, This is Dominic one in Charlotte on for Terry Thanks for taking my questions. So just looking at the capital market side of the business I'm, just wondering how youre thinking about contribution from that side for this year I guess, what the market volatility has your assumption change in terms of pipeline or deal timing for I P. O R. S. One related use cases even.
And thanks for the question, Dan and I, we really have not changed our outlook on cat markets. It's Rick It remained consistent contributor in Q1, and we've modeled that way through the end of the year. So any return on capital markets remains of upside for us.
Speaker Change: Great just one more for me so now that we're keep a carbon has been in the market for several quarters. Just wondering if you may if you've oh, there's a notable noticeable difference in win rates or deal sizes, and maybe even in carbon intensive industries.
Speaker Change: Sure. Thank you for asking about carbon working for carbon as you recall was a strategic addition for us through our platform. Our estimates is stealing ability solutions and overall short and greater reporting platform, even even more marketable and relevant. So yes. It has opened up doors for us in terms of opportunities.
Speaker Change: And we expect that's going to continue to help us win new sustainability reporting deals going forward. If you do think about the regulations. The most consistently consistent part.
Speaker Change: Part of regulations across all right. It's it's the it's the one common thread again around all regulation and a lot of companies do want to go carbon first and one vendor that provides both the reporting and the carbon accounting.
Speaker Change: Together, so it absolutely opened up doors for us.
Speaker Change: Great. Thank you.
Speaker Change: And your next question today will come from Andrew de Gasperi with BNP Paribas. Please go ahead.
Thanks for taking my question I wanted to maybe ask one on the reporting side because.
Speaker Change: You brought it up.
Speaker Change: Third remarks, there just wondered.
Speaker Change: How much of an opportunity this quarter you know youre, obviously, great in that public corporate reporting side, but just wondering in terms of the potential for that market.
Speaker Change: Sure. Thank you for asking the question a new market. We just entered another I would say it fit for purpose you know high value solution and a great example of how our platform can be easily extended and used for multiple regulatory use cases, so I'll just start out by saying when we think about the market size here or there.
Speaker Change: There are over 12000 public funds globally and that includes 9000 or more etfs with assets under management of over 11 trillion dollars. So it's a nice market for us to enter into.
Speaker Change: I there are let's say 139000 regulated funds reported globally. So we're focused on this market as well and.
Speaker Change: Along you know along with the market for public funds. So.
Speaker Change: Good market for us to enter exit thank you.
Speaker Change: Thanks, Ed.
Speaker Change: Joe.
Speaker Change: One follow up on the <unk>, you mentioned FX and leap here and I was just wondering is is this what would it have been excluding that I'm not sure. If you provided that so sorry, if I missed that and then second.
Speaker Change: When do you think about the free cash flow targets you provided.
Speaker Change: Obviously, you didn't take down your subscription target for the year, but I'm. Just wondering is this like a very small change or is it because you expect that weakness to extend into next year. Thanks.
Speaker Change: Eric Thanks for the question of danger, so on in our our I did not ask you did not miss it but it was about a point and a half or so impact but between the leap here and and the currency fluctuations on an hour or so it would have been.
Speaker Change: 11, and a half or so I went to 11 and a half or so.
Speaker Change: Without that impact.
Speaker Change: As far as the free cash flow target, we really were.
Speaker Change: In taking a holistic look at our guide for the full year. This was one area, where we felt like we needed to bring this down a couple points just because of the and the potential impact of any slowing.
Speaker Change: So any impact from from customer buying throughout the year might show up and so that was really the reason that you're only seeing any kind of a pullback is in that free cash flow number.
Speaker Change: And.
Speaker Change: And so that was a consideration.
Got it thank you.
Speaker Change: Yeah of course, thank you.
Speaker Change: And your next question today will come from Brett Huff with Stephens. Please go ahead.
Speaker Change: Good evening and thanks for taking the question congrats on a nice quarter in a tough environment.
Speaker Change: Two quick questions.
Speaker Change: <unk>, one still macro, but maybe a little bit different angle as you all think about your long term guidance, which is super helpful. And how you think about them, helping us think through how you think about the business.
Speaker Change: It's hard to imagine something like the environment. We're in now how do you all sort of factor that in as you still look at your long term guidance and puts and takes and things like that.
Speaker Change: Yeah. Thanks for your comment really appreciate it and thanks for the question.
Speaker Change: As we think about the impact of the current environment and our ability to return long term guide and we we do operate the company in order to reach those numbers just to be really clear be both reiterated our or.
Speaker Change: Let me stand behind the guidance that we've given for 2027 and in 2000 22030, and we continue to operate the business with those.
Speaker Change: Those targets in mind.
Speaker Change: And so we do have ways that we can impact.
Speaker Change: Our our margins in order to reach those goals, but as we saw in Q1.
Speaker Change: We performed and how they are 20% SaaS revenue growth.
Speaker Change: We reiterated that we expect 20% that's nice revenue growth for the full year 2025, and we have a large unaddressed tan.
Speaker Change: And our broad portfolio of solutions to execute against and so we still will invest in that growth, but we know that we can do that while still keeping those targets in mind and so we will continue.
Speaker Change: Continue to move towards that as we operate.
Speaker Change: Great makes sense. Thank you and then just a quick follow up thinking about customer conversations maybe what what about through the lens of partner conversations I know a lot of the big for our key client are key partners of yours.
Speaker Change: <unk> approached the ESG market any differently I mean, we're believers that that's not going away either but I'm. Just curious if they have taken a different tack or if they double down or pulled back or just become a little bit you know different strategies around that.
Speaker Change: The sentiment around ESG, thanks, very much appreciate it.
Speaker Change: Sure Oh, we worked with our partners extensively intimately in the sustainability market and we are committed to.
Speaker Change: Working with our customers from providing the value and again they see it as we do this is about this is regulation, yes, but it's also about performance. It's also about stakeholder.
Speaker Change: Requirements and its about risk mitigation. So we're very much aligned with our partners particular, the consulting and advisory partners and going to market together jointly. So we are aligned in our messaging our aligned and the value that we create for customers as they are moving to their sustainable.
Speaker Change: All of the activities and reporting and disclosure.
Speaker Change: Great. Thanks, so much congrats again.
Speaker Change: And your final question today will come from Alex Sklar with Raymond James. Please go ahead.
Hi, Thanks for taking the question. This is John on for Alex I wanted to start with multi solution deals in the booking environment. Joey you were obviously very focused on selling the broader where kiva platform, but just given the macro backdrop and budgetary pressures any change in the willingness to sell or have you seen any more customers focused on single solution deals and then I have a quick follow.
Speaker Change: No I think that remains a key differentiator for week, either and I think of myself. When I was the CIO and I think of our CIO who's currently buying for work, even when I think about the priority, which is efficiency and effectiveness and consolidation of solution. So I think this is this is an environment where.
Speaker Change: Platform can be very effective and and high performing because it does satisfy those requirements. I mean, you know all of the the platform advantages and it really is about you know.
Speaker Change: Asian, and experience and ensuring the solutions work together, which really is an efficiency and productivity play so no probably the opposite.
Speaker Change: Platforms are.
Speaker Change: Platforms are a key differentiator in a market like this.
Speaker Change: Okay, great great. Thanks, Thanks for the color there and then Joe maybe just a little bit to follow up on the previous question there the guidance for the year mid single digits non.
Speaker Change: non-GAAP op margin that would imply a pretty meaningful ramp in incremental margins in 'twenty six 'twenty seven.
Speaker Change: More medium term targets any update on how youre thinking about the cadence of that ramp and what we would expect more of a more of that inflection to come. Thanks.
Speaker Change: So you can see that and in our guide that we have significant improvement in our margin in the second half of 2025 moving into 2026.
Speaker Change: And we don't expect to have necessarily linear a linear result, but we are starting to move really quickly toward that 2027 timeframe and so we do expect to and we'll be operating towards execution on those targets and you will start to continue to see that that movement as we.
Speaker Change: Move through the end of 2025, what you see in our guide and into 'twenty six 'twenty seven.
Speaker Change: Thank you very much.
Speaker Change: Thank you.
Ladies and gentlemen, this will conclude our question and answer session as well as conference call. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].