All right. Well, sounds good. Thanks everyone for joining here in person and those that are joining live over the webcast. Just to kick things off, my name is Jake Roberge. I'm the research analyst here at William Blair that covers Workiva. And for a full list of research disclosures, please visit our website, williamblair.com. But with that, really excited to have Jill Klindt here, Chief Financial Officer of Workiva. Jill's gonna kick us off with a little bit presentation to get some background and context on the platform, and then following the quick presentation, we'll jump into a fireside chat to dig a little deeper into the business. So Jill, thanks for joining us, and I'll-
turn it over to you.
Thank you, Jake. So very brief presentation. We know that there could be some that are new to the story in the room, so we wanted to just go through a really brief look at a couple of slides to talk about the company. But this is me. So, Jill Klindt, CFO, EVP at Workiva. A little bit on the background of Workiva. So we started in 2008, started selling in 2010. Initially started by accountants and engineers in order to solve the question of how to report better for the SEC, along with at the time, a new XBRL tagging requirement that came into play.
Built out a solution that was used to meet that new requirement, and ever since then, it's been an area where we play really strongly. Any time that there is a regulatory requirement, financial reporting requirement, alongside of an XBRL tagging requirement, it's right where Workiva wants to be. Since then, we've continued to add other solutions alongside of that. So we have also GRC, so the ability to provide audit and controls management wrapped around any of that reporting that's also being completed within our platform. And we also have other ancillary solutions around funds reporting, banking regulation reporting, insurance reporting, state, local, federal reporting. So we have added a lot of new solutions alongside of our base financial reporting over the years.
But what it comes down to is, any time that there's a regulatory reporting requirement, a financial reporting requirement, that's where we live. We're on a mission to, as you can see here, power transparent reporting for a better world. And so what that means is, we are the leading provider of Assured Integrated Reporting in the globe. And what this means is, we provide not only financial, but non-financial or ESG reporting, with that controls management wrapped around it. And we're the only provider that does this within one platform, and we think that that gives us a, a leg up as far as some other point solutions. And it's a way that we also retain really high uhm We have really high customer retention because of this.
And so our strategy, ways that we're driving growth, and I'm sure this will come up in the Q&A as well, so fit-for-purpose solutions, the ability to win across our solution portfolio, not only around financial reporting, but also GRC, risk controls, and other ESG solutions and other ancillary solutions that we provide. Our connected platform, we have a very modern platform that we continue to add functionality to. We don't just sit back and think that what we have is good enough. W e continue to add functionality. We continue to make our platform better, and it's a way that we help to retain our customers and make their lives better. Our partner ecosystem is very important.
Outside of the U.S., this has been the main way that we win and go into the market, is with our partners, and we've continued to accelerate that also within the U.S. But Europe and APAC, and even Latin America, partners are a big way that we win. And when a partner is involved and bringing us into a deal, or if we're even operating alongside of them, the deal sizes are larger, the win rates are higher, and it's better business for us. So that really helps us to retain the customer over time. So partners are a big part of how we win globally. And then global excellence. So expansion outside of the initial area of growth for us, which would have been North America, especially U.S. and Canada.
Last year, we had only 15% of our revenues outside of the Americas, and the majority of that was in Europe. But over time, we think that we can have up to 25%-30% of our total global revenues coming from Europe alone. Not to mention the other growth areas that we have within APAC and within Latin America. We have a lot of room to win globally, and this is one of our main pillars of growth and how we'll do that over the years. We have a large untapped TAM, and this is a global TAM, but you can see the areas of growth that we have.
Thinking about our opportunities, we have the right pieces in place to be able to win across the globe and going into companies with our platform approach, and we have a lot of room to continue to win across all of these areas. But I'm thinking about accounting, the A&F, the GRC, ESG, and different industry verticals. We think that over time, we will continue to expand not only in North America, but also in APAC. But a lot of room to win within this TAM. And then we are the only unified, as I'd mentioned, we're the only unified platform for Assured Integrated Reporting, meaning that we do help companies with their financial reporting, non-financial or ESG reporting, all with controls in place as well.
and so that's a really high-level overview-
Yeah.
-of Workiva and our platform. I'm not sure...
I think we're gonna jump-
There we go, Q&A.
In the Q&A now.
There is a slide.
Jill, thank you. That really helpful overview.
Thanks.
I guess just to kick off the fireside chat portion of this, what does the competitive landscape look like? What were customers using before they said, "Hey, we need Workiva," and what are the typical pain points that actually drive adoption of your platform?
So the competition that we see across. It's different depending on the solution. So if it's a customer that we're talking to about the full suite of our solutions, Assured Integrated Reporting, you might have a few competitors because you probably are moving somebody out related to audit and risk and controls. They're using some kind of a solution there. If it's financial reporting or SEC reporting in the U.S., they are probably using a financial printer to do that work today. And so it's not. There would not be one competitor that we would be ousting. But it really does depend on the solution, since we don't have one competitor that plays in all the areas that we play.
And so, in SEC, as I mentioned, the main competition that we would see would be coming from those financial printers. We would see multiple levels of strength of competition in GRC and risk and controls. What we often see in ESG is actually just the status quo. They're usually using some sort of an office suite solution, doing things within Word and Excel, and not a real true—likely not a true solution, even a point solution. It's just a manual process that they likely have in place, and so that, that's another. The status quo is another com-
Yeah
... piece of competition or area of competition that we might see.
No, that's helpful, and I think that's probably the 98% gross retention rate, just which leads to such strong customer stickiness. But-
Yeah
... on that second part of the question, what are the pain points that people say, "Hey," they wake up, and they're like, "We need Workiva. This, what we're doing right now just isn't working"?
So if it's the manual process that we're ousting, then it would really be the level of risk that they're taking on by having a manual process. It's not as easy to audit something if you're going in and having an auditor review or audit a workbook or an Excel spreadsheet. That can be more costly, so it can be a cost containment. As far as auditability of the data and the process, and putting everything within our platform is a much more auditable prospect.
Yeah.
Being able to track who made changes, when they made the change, which information changed, the source of the data, is an easier proposition. And I think that the other thing that they might be um. The other thing that might drive a change would be, so that risk mitigation, but it could just be that they're looking to consolidate their overall number of solutions.
Yeah.
We do this ourselves in-house. We're looking really carefully at the number of SaaS solutions that we have as a company, and we would prefer to standardize on fewer platforms because it's more efficient, and we're lower cost to support that within our SaaSO ps teams. It's definitely something that our customers are feeling as well. So it might not be that they're having an issue, but they're trying to reduce cost, and they're trying to reduce risk.
Yeah.
And so that can be a way that, something that drives a change.
Yeah, that makes sense. Then you started in financial reporting, SEC reporting, but now the majority of your bookings are actually driven by some of your newer solutions outside of those. So could you talk about kinda the opportunities you're seeing in the pipeline for ESG reporting, for GRC reporting, some of those workflows, and what type of uplift the adoption of those products typically drive for you?
Sure. So we, we've talked about ESG reporting being a top three solution now for seven quarters in a row, and, we often see GRC, you mentioned GRC, participates pretty strongly in, in those top solutions as well. The way that we win, and, and we had mentioned that as our, as our growth drivers, is really the strong solution portfolio. So it's not that we just have- we're- don't have a reliance on one solution in particular. We have a lot of opportunities to win across the portfolio of solutions, and so, you will see a mix in any one quarter, of all of our solutions participating. We're not just selling into ESG. We're not just selling into GRC.
We're selling into the Assured Integrated Reporting story, and our ability to win in that story really is across solutions. And so you will see participation from all those solutions, but also some of our more vertical solutions and financial services. We've talked about, we've had a lot of success, and you've heard us talk about examples of wins with financial services over the past few quarters. So there's a lot of ways that we're continuing to succeed in our bookings across the portfolio solutions.
Yeah, that's helpful. And then, when we think about those core use cases, whether it be financial reporting, SEC reporting, GRC, ESG, how penetrated are those use cases across your entire customer base? Is there still just a lot of white space, or just curious how you think about penetration of those core use cases?
So we have about 75% of our customers spend less than $100K with us. And that being the case, the way that you could think of that is that means approximately that many have only one solution. The way that we would say, if you are spending more than $100K, you probably have multiple solutions. Now, you could have just one solution at that level, depending on the solution, but more than likely than not, you've got multiple solutions. And so the penetration into our base with multiple solutions, I think is something to really pay attention to, because we do have a lot of opportunity within the base of customers.
But a lot of our larger customers are driving revenue to a higher level because we also have talked about the fact that 66% of our revenue, S&S revenue, comes from customers with multiple solutions. So the upside of this is that the majority of our revenue is coming from those multiple solution customers. So our biggest customers hold a larger share of our revenue. The customers of multiple solutions hold a larger share of revenue. But that doesn't. That means we have a lot of room to grow into that 75% of customers that spend less than $100K with us. There's a lot of ways that we can sell into those customers, into that base, to expand into other solutions.
Yeah, that makes sense. And I think one of the interesting things about your products is a lot of this are required because they're driven by a lot of regulatory changes-
Mm-hmm.
that customers need in terms of their reporting requirements. So can you talk about some of the bigger regulatory changes and how those have served as catalysts for your platform?
Sure. So there are a lot of regulations around, especially around ESG reporting more recently, that have driven a lot of our... That is, that will drive a lot of our ongoing growth. The company, as I mentioned before, the company was built on regulation. It's our core competency and the ability to help our customers comply with those reports with required reporting regulation in a really clear and efficient way. And so for ESG, there's the CSRD requirement that's coming into play in Europe with reporting due in 2025 for the 2024 results. Over time, that regulation, which is an integrated report, so integrated data between both financial and non-financial or ESG data, carbon data, over time, that requirement also includes assurance on that data.
So with 2026 and 2028, there's different levels of assurance that you have to place around that information. So you're also building an audit plan around all aspects of this report, of this data that you're reporting on. The State of California has moved forward now with some requirements around carbon and emission reporting. That is going to continue to drive customers to accelerate their motion and get this data in order. The SEC has talked about and provided a, you know... They moved forward with some requirements of reporting. They've been disputed, so those are on hold for now.
But they were very clear that if a company is reporting material information in other venues, so if you're putting science-based targets out into the public realm via an ESG report or some other way, if that's material information to your company, you should be reporting it on your 10-K and 10-Q. It's a material piece of data that should show up somewhere in an SEC reporting. And so, it's unlikely, we feel like it's unlikely they'll back down from that. The timing on that could ebb and flow. But even aside from the regulatory requirement around ESG reporting and putting this data in place, it's really just the demand from various stakeholders that companies are getting to provide this information.
We, as a mid-size company operating at some level in Europe, anytime we're going into a new customer in Europe, there's some kind of a vendor form that we're getting that's asking us about our emissions. It's asking us to tell what our emissions are today, giving Scope 1, 2, 3 emissions. They want to understand if we put science-based targets in place. They want to understand different diversity statistics of our employee base because they have supplier diversity programs that they're tracking. They have the requirement on their side to comply with these different regulatory requirements, that their Scope 3 data is being calculated based on their supplier base. We are one of their suppliers, and so they need to understand our information.
So in order to even operate within that economy, you have to provide the information. If you're going to provide that information anyway, you need to put something in place to make sure that it is complete, that it is repeatable and consistent, that you feel good about the data that you're putting out into these environments. And you're doing that not only for your customers, but you're providing it to your employees, you're providing it to investors.
If this information is out there, companies are more often than not, the regulations are coming because companies are talking about these pieces of information, and the regulators are coming in and saying, similar to what the SEC is saying, "If these are material things for you as a company, you need to make sure that you're consistent in the way that you're reporting them." And, more often than not, there's some level of assurance that you're putting around it, because you need to be able to audit and test that it is consistent, and that the data is true, that you don't have errors in the way that you're reporting it. So it's really multifaceted, and not only the regulations, but just other required places where you have to put this data.
. Yeah, no, that's really helpful. I guess just to double-click into the SEC reporting requirements and the right now, what we have in terms of the stay on the climate disclosure. What are you seeing from actual customers? Like, is this a wait-and-see mode, or are you starting to see people adopt the product regardless because they say, "Hey, at some point, this is gonna come, so we might as well start getting our house in order"?
Back to all these other stakeholders that are asking for the information, a lot of customers are already moving forward, regardless of whether or not the SEC requirement moves forward. If the SEC reporting requirement moves forward, that will drive some customers to comply, whereas otherwise they might not have taken it that seriously, or they might not have bought a solution to maintain that information. So it can drive business for us, but that doesn't mean that no customers are moving forward.
Yeah.
It's because of all these other stakeholder demands and the need to make-
Yeah
... sure that you have really complete, clear data that you're reporting. There's still activity in customers that are moving forward with getting an ESG solution. They're reporting on multiple frameworks, which is what our platform—part of what our platform can provide. They need to manage and maintain this data consistently around the globe. They have a lot of inputs, a lot of different systems that they're pulling this information from, and they need one place to be able to manage that and put some audit assurance around it. So, it's, you know, it's a very valuable way for them to do this, and it's aside from the SEC. When the SEC...
If the SEC moves forward, we do think that can drive our business, but it's not that all customers are waiting and seeing what happens there. Because they might also be doing business in the state of California-
Yeah
... and have a requirement there to report or, have some level to report within CSRD, next year. And so there's all these other things that are driving, especially the really large multinational companies, to comply, aside from the SEC and whatever happens there.
Yeah, that makes sense. I guess if we could just take a step back a little bit-
Sure
... and think about just kinda the macro environment. And would love to get a sense of how you've seen the macro environment impact Workiva over the last few years, how that's changed over the last few quarters, and just kinda get a sense of what our customers. Like, what are their priorities in terms of spending across your platform?
So the past few quarters, we've felt like the macro environment has stayed pretty steady. We've talked about that from 2023 into the first quarter of this year. We haven't noticed a significant change in how that feels. As far as the spending priorities, I touched on this a little bit. You will see companies looking to reduce cost, and in doing that, that might mean that they have fewer resources to move forward with projects. So they might be making a decision, as they look at multiple RFPs, they might be making a decision, "Okay, do we do this project now, or do we do this project now?" And it might not be, "No, Workiva, we're not going to buy you.
We're not gonna do this project." It might be a, "We're gonna do this other one first." And so there is really careful consideration by companies as to the resources that they have in-house and the resources that they're able to afford to be able to move forward with certain projects. And that is something that we, part of these, the deal elongation or this deal cycle elongation that we've been talking about, that's a part of it. Companies are also being really careful about new vendors, so anytime that it's a new logo for us, there's a fairly significant procurement process that we're going through to. Companies are being very careful about the vendors that they take on, asking a lot of questions about security and about the ESG data I mentioned.
And so there's a lot of ways that companies are looking at the projects that they're taking on, the spend that they're going to have on different projects, and in general, are being just more careful about that spend. We're doing it ourselves, even at Workiva. Anytime, if we were going to purchase a new software, we have a group that's inclusive of myself and our CIO, that look at each new vendor that we might bring on. It's a $50,000 spend, we're looking at it.
Yeah.
Because those things have a lot of creep. And you can't assume that, "Oh, well, they only want... It's only 50 people want it, right? Okay, well, until the next 50 want it, and the next 50, and the next 50," and you can pretty quickly get a lot of spend there. But other companies are doing that same thing with a more rigorous process around looking at new vendors, so. And with a preference to expansion within existing vendors, which we've seen in our results, and we've been very successful with selling into our base of customers, and that's something that we think other companies are doing a similar process, and we're feeling that.
Yeah, that makes sense. And then, you've also touched on it in your presentation a little bit about the partner channel and just the success that you're seeing there. Maybe if you could dig a little bit deeper about what are the investments you're making, how has that changed over the past few years in terms of the leads that partners are bringing to you?
Sure. So, we've talked about over the past couple of years, we've been moving our low-margin setup and consulting services to our partners. And a part of that is that we are continuing to try to make ways for our partners to be able to have a successful business, providing services around Workiva and our platform. And we've done a really great job outside of the U.S. building those partner relationships. And it's partner first in Europe, in APAC, Latin America, and it's a way for us to increase the deals, increase the close rates, and, you know, all those things are definitely true. As we move more of our services to those partners, it's a matter of making sure that we have partner enablement in place.
So training them to be able to provide services within our platform, training them to understand how our platform can help them and provide services to their customers, and making sure that then they are building a base of staff that can train and maintain that knowledge in-house, so that we don't have to keep going back and training new groups again as they have new hires, as we go into other geographies. And that's a piece that we pay a lot of attention to, because you often will have, especially if you're looking outside of the US, it's a very different motion in each country. You have different offices, different partners, and so you are building relationships country by country, team by team, and that enablement is significant.
Making sure that you're building this really great base, that you're helping them get started in a really quality way, so that we can succeed together. So it is a really important way that we build our business.
Yeah, that's helpful. And then thinking about the financial model, I'm just curious, as Chief Financial Officer, how you're thinking about the balance of growth and profitability. You've had some solid margin expansion over the past year, but I think when I talk to investors, one of the pushbacks I get is just the level of margin versus the scale of the company. So just curious how you're thinking about the margin expansion profile of the company moving forward.
So we have our long-term operating model looking at margins, 22% non-GAAP margins in 2027. We have made great progress in certain areas. So if we think about G&A, we're there. We've achieved our long-term goal. It's a maintained prospect there. Cost of revenue, as we continue to move these low-margin services over to our partners, we believe that we can continue to make progress there by ramping down the number of the amount that we're spending on providing those services ourselves as the partner enablement is completed. So we have a path to make progress there. R&D, we have made steady progress. We will keep spending on R&D. It shows up there in our model.
It's a very important component of our growth, but we have a path to be able to continue to improve margins. That leaves our sales and marketing, which is the area where we need to spend the most time-
Yeah
... where we have the most room to improve. We have an expensive model. Our model is expensive go-to-market with all of our solutions. It's a portfolio approach, the way that we're selling into multiple geographies, a lot of growth areas, where we're building our name in Europe and in APAC, and to some extent, Latin America and t he way that we go into these markets, partners can help because they can help bring a brand name if a customer is unfamiliar with us, especially in a new geography. But maintaining the teams, the account owners, and then overlay teams to be able to sell across our solutions, it is expensive.
And so we're really carefully monitoring how we spend on those go-to-market activities compared to the returns that we expect to get from those investments that we're making. And we think that we continue to make progress by some of the regulations that are coming into play, continuing to win within ESG, and then the ancillary solutions around that, meaning the GRC, the risk and controls pieces, but that Assured Integrated Reporting message. But also, finding ways to just be more efficient in the way that we provide that, the way that we go to market. So how can we get better with sales training and increase productivity? All these things we think together will help us to achieve those long-term goals, and we hope that it will achieve those long-term goals.
Yeah, that's helpful. And really thinking about building that brand before that regulatory action happens-
Mm-hmm
... so that you can be there when the opportunity arises, and then once you're landed, you're 98% gross retention. So, so pretty long-term-
Mm-hmm
... unit economics attractive. But, I guess just last question on my end. You're thinking about the revenue growth side of the equation. Your guidance implies some growth acceleration throughout the year.
Mm-hmm.
Maybe help us think through what are the building blocks to help drive that growth acceleration throughout the year?
So certainly the ESG growth is a piece of that. We had a really nice Q4. Our expectations on full-year growth across our portfolio, it will be another player in that, but it's really thinking about Q4 being strong, helping to feed into the end of the year, and then the results that we've seen so far. I mean, the further and further that we get through 2024, the less that what we're doing today impacts that.
Yeah.
But we believe that as a company, we can re-accelerate revenue, and we have a path to do that. We think we have the resources in place to help us do that, and we'll keep looking at ways to invest to help accelerate it as well. But we are a growth-focused company, and it's something that we pay a lot of attention to.
Yeah. Well, sounds great. Well, thanks, Jill.
Thanks.
Thanks to everyone in the room for joining those on the webcast. Appreciate the time today.