Hello. My name is Brett Miller. I'm the Co-Head of Software Investment Banking at JP Morgan. Today, it's my great pleasure to lead a discussion with Julie Iskow, the CEO of Workiva. Workiva provides cloud software that helps enterprises collaboratively prepare, manage, audit, and file complex financial, regulatory, and sustainability reports with connected data and workflow automation. Before joining Workiva in 2019, Julie held various technology and product leadership roles at Medidata, HealthEquity, WageWorks, and she took over the CEO role at Workiva in 2023. So Julie, thanks for being here.
Thank you. Pleasure to be here. Thanks for having me.
To start off, you have over 6,600 customers, including over 85% of the Fortune 1000. What is it about Workiva that resonates with the Office of the CFO, and particularly with these larger, more complex organizations?
Well, you described what we do in the Office of the CFO. We have a number of capabilities, two dozen solutions that we sell within the Office of the CFO. When you are in the Office of the CFO, your data needs to be accurate. You're sending it to investors, and to regulators, and to boards, and your data needs to be data consistency, data accuracy, data integrity. You also need to explain the data to auditors and to investors. There needs to be data traceability. You need to have data lineage. You need to know where it came from, what changes happened to it. At any point, at any time, you need to be able to count on that data being accurate, but also explain the lineage of that data. That is something that resonates strongly in the Office of the CFO.
You need confidence in your data, period, end of the story.
That is a lot of what resonates in the Office of the CFO. There's also, of course, as you rattled off our offerings, this is what the CFO office does. Incredibly important, it is not a nice-to-have. It's mission-critical infrastructure. We are in the office of CFO. We have a platform. That's another area of where we resonate as well. CFOs and CIOs, their counterparts, are looking for platforms where you can leverage data across the platform, one experience for your users, the usual platform consolidation reasons that buyers are interested in it. For a number of reasons, we resonate with the buyers in the Office of the CFO.
The Office of the CFO is a category that I think of as having a ton of companies and products out there. You've talked about customers standardizing on Workiva and consolidating all those point solutions. What is driving that decision, and what is driving it now?
Well, you know a little bit about the reporting landscape. The complexity continues to increase. It's not straightforward anymore. It's not one report here and one report there. There's integrated reporting, getting a more holistic view of your business when you look at your financial factors and your non-financial factors, and then, of course, you want auditability and controls around them. They all tie together nicely, and again, CIOs and CFOs, executives are looking for a platform because of the benefits of that platform. It reduces the complexity of the reporting of all the solutions that we provide. You want to do it on one platform where your data is pulled together, single source of truth, access.
In the world of AI right now, you want that data together to be able to apply that AI, and you want it in a secure, controlled, audit-ready environment, again, to have confidence in that data rather than have them in point solutions.
For a whole host of reasons, the platform is having it's, it's time right now.
Right. I think you bear that out in the numbers. While people think a lot about churn always, I think particular focus right now, you continue to generate 97%+ gross revenue retention quarter- after- quarter and 110%+ net revenue retention. How have you so consistently retained and upsold those customers, and what's driving that going forward?
We'll be at $1 billion this year.
Congrats on that, by the way. It's a big milestone.
Thank you. Just one small financial milestone on the way to bringing a lot of value to our customers.
Right.
An exciting one for us. We've continued to expand our portfolio. We've invested in TAM. We have a lot of offerings for our customers. Just having that portfolio is one answer to your question, but the other is, as we've come to the $1 billion, we've just improved our execution. We focused on account expansion, larger deals, bringing more value to the customer. We just continue to do that. It's a land and expand motion. Even now where we're landing with more solutions, we have plenty of offerings around the portfolio and the platform to bring more value to our customers. Just part of the strategy and the motion.
It's notable at a time when these metrics have, for most software companies, just slowly degraded over the last several years. The consistency of Workiva has been, I think, one of the hallmarks of it, so it's impressive.
Thank you.
Speaking of impressive, you generated 21% subscription revenue growth this last quarter, and which you've done pretty consistently. Talk about how you're able to maintain that growth as you've scaled the business and maintained those high growth rates, and again, 20%+ growth looking pretty good in public software world these days. What segments within the business, because there are many of them, have the most momentum?
A multi-pronged answer, of course, and it is our offerings and the TAM expansion. We again now have so many solutions to offer our customers. It's also geography. We have moved into areas outside of the U.S., and we've invested there, so plenty of opportunity. While we have significant base in the Fortune few thousand and Fortune 100, Fortune 500, and so forth, S&P, 89% of the S&P 500 here in the U.S. We also have begun getting more new logos and wins outside of the U.S., and Europe is a strong example of that. That is a big area of growth for us, so we continue to expand there. Again, it's our own execution, whether it's geography, whether it's number of solutions and TAM expansion for us and our investment there, it's also just execution. We've elevated our sales organization. They're better.
Our partner relationships are stronger. We go to market with our partners. That leads to a number of multi-solution deals as well. We're better at landing with them all. We just continue to expand,
Yeah.
in all areas of the business, just getting disciplined and expanding TAM, but also geographically.
Getting better at all the things and all the places all the time.
Getting better at all the things. Well said.
While you're growing, you've also seen margins inflict quite dramatically in the last year. You reported 18% non-GAAP operating margin in Q1. That's up 1,600 basis points year-over-year. What's changed and where is that leverage coming from?
Probably the same answer that I just gave you for the growth, is just more discipline, more intention, more rigor, just focus on productivity. Sure, AI has something to do with it really is the maturity of a company. You can't operate so inefficiently at $1 billion as you do on the way up to $1 billion. We've just begun being really thoughtful about our operating rigor and discipline, and it's paying off. I've talked a lot in prior, whether our Investor Day or earnings around actions we're taking across the company, specifically of course in sales and marketing.
What we're doing to really improve productivity, and those are paying off. It wasn't just the one quarter.
Right.
It's been a climb there on getting more rigor and more operating leverage and expanding margins.
Well, we just talked about maintaining the high growth, and we've talked about increasing the profitability. The natural question would be as you think about the forward, how do you balance the two and the trade-offs that go with it?
You know, we really to date haven't looked at it as a balance. Productivity gives us more fuels in the innovation and fuels our growth, and we've been getting better on both. As you can see, our growth continues at a strong rate, but also we've been expanding the margins. The more productive we are, the more we have going to the margin expansion, but also we're able to invest in innovation and in our sales and go-to-market organization. We've had a lot of opportunity to improve the way we work and focus on productivity, and that's freed up funds to enable us to grow. It hasn't been a trade-off thus far,
Okay.
for us, continues to not be a trade-off at this point.
Let's talk about AI, which has been the theme of this conference. You've said that Workiva is built for this era. I love that. What do you mean by that, and what makes you believe that Workiva can thrive in this world of AI?
First question started off in what is the advantage of the Workiva or our mode, and it's why do we resonate? It really is giving confidence in the data and that platform of trust, the sacred place for the CFO, where they know that every data point at any point in time, and anywhere narrative is accurate and can be trusted and defensible. I think in the era of AI, where you have just so much more data, unverified data, so many more unverified data sources, AI everywhere, you do want a place, you do want a platform where you know when you apply AI or you're getting your numbers that are, again, going to investors and regulators and boards, you want to know that data is accurate.
You want to be able to explain it, defend it, understand where it came from source system and what's happened to it all along the way until the end of that report. That is what we are made for, and that's been something we have built over the last decade and a half. That's Workiva's core, and we're not leaving it behind in this era. We're leaning into it as we build our AI products. The more AI, the more data, the more critical it is for CFOs and CFO office to have trust in the data that they are using, and when they apply AI and then report to the street.
If I'm hearing you right, that puts a little less risk around being able to trust some vibe coded version of Workiva, but you also want to be integrating AI into your products. Let's talk a little bit about where is AI in your products today. What are the top use cases for AI, and what's that value that customers are getting from it?
Sure. A few years ago when generative AI came out and the large language models came out, we of course were quick to ensure that they were embedded into the platform. They're in every workflow across every solution category, they're available to our customers to leverage, whether it's drafting a report or streamlining work. We've been doing that for a couple of years. We've moved on to, in specific areas and use cases, we've come up with more advanced capabilities for our customers. We have those in the various solution areas. We've noticed an uptick in that. We have over a third of the customer base has enabled it for their use. They need to sign a waiver and so forth and say that they are going to use it and be okay with it, then activate it and leverage it.
We are seeing an uptick, and they're using it in the more advanced tiers of our good, better, best pricing, which no doubt you will ask about.
We'll get there. Let's talk about how you're monetizing AI today and just as importantly, how do you see that changing? Many companies are just embedding it as a way to drive retention and ARPU, but aren't specifically monetizing it. How are you thinking about that journey?
As I mentioned, we have it embedded in the platform available for everyone to use, and we aren't charging for it there. In this good, better, best, we have the essential and the standard, and the advanced offerings for some of our solutions. In the advanced offering we have, for example, for SEC, we have SEC intelligence package, and that would include some of our more advanced capabilities that customers can use. We put it in that premium offering advanced tier with a number of other capabilities, whether it's financial statement automation or some design features or translation capabilities and things like that. We've embedded it in our advanced offerings, and we are seeing an uptick there of both purchase and usage.
Today, that's how we're monetizing it, and we're watching the uptick of it and the usage of it, and we're learning what customers are using and what we will be building next for them and so forth.
Okay. Speaking of what you'll be building next, let's talk about an agentic future. Workiva is in the midst of a fundamental transformation with AI. Those are your words. Talk about how you're thinking about an increasingly agentic future for Workiva.
Sure. Every classic SaaS company that wants to win in the era of AI is going to have to do transformation, and sure, it's transformation around the company, working differently and so forth, but it's primarily focused right now on the product and the technology organization where your product is front and center, of course. We have these classic platforms that were not built for an agentic future. For us, our platform was very document centric, workflow centric, template centric, and what it needs to be is data centric in today's world. What that means is we have to have not just store all the data and store all our documents, we have to be able to understand them and the context around them.
That these kinds of things are what when you transform the platform, you can then have AI access that data in a way in which you can have these agents and AI products truly agentic orchestration as opposed to AI assistance.
That's really the transformation we've been on for the last year and a half and continue to be on. We are transforming the platform so that we can build true AI products, AI native products, as opposed to AI powered, AI assisted. We are making that transition with agents doing work. We see a future where our customers will be able to go in when and where they want to bring review and check and governance, or a future where they can have the agents orchestrate everything and have an end product, right? We want the human to be able to go in and do the work they want to do, put their judgment where they want it, but we also want to just have orchestrated agents to be able to do the work.
Different levels of automation depending on your preference.
That's right. We always want to give our customers the ability to see what's going on. We also want to give the ability to have all the work done not by them. That is where we're going for our suite of products and our capability. It does require this platform transformation. Again, this data-centric, you need the data models.
You need the semantic layering, it's very standard for those companies that are going to make this transition into the agentic future. We are well on our way in leveraging.
Yeah.
The transformation already of the platform capabilities.
Well, you talk about the platform capabilities, but I assume there's something about Workiva's probably architecture and just the way it's built that enables you to seize upon this moment. Is that right?
It is true. While we're transforming the platform to become data centric to be able to build AI products off of it, we are also bringing with us those things that make Workiva. Which is that data accuracy, integrity, and consistency, and that traceability and defensibility, and the data lineage.
The linking and so forth, so that you bring what is important for you, that core, and we continue to evolve our current offerings to the AI future, but we're bringing all that with us. We have the best of both worlds. What made us successful is what will keep us successful in the future, our moat, but we are, of course, transforming the platform so that we can be strong in the AI world as well with true AI native offerings.
On the productivity side, lots of interesting anecdotes from companies about how they're using AI to increase productivity. What about at Workiva? What are some interesting proof points of how it's working?
Of course, we're using it to increase productivity internally. Our employees are leveraging it daily. We've made it available to everyone. They're getting better and better and using it more. We feel the real unlock for productivity with AI is using it cross-teams, cross-functionally within the organization, changing workflows and doing things differently. This is where we see it really bringing productivity gains. Of course, we're doing it at R&D. That is where you're getting a lot of leverage with the models and Claude and so forth, and Cursor, et cetera. We're using it there. We're working differently. Engineers are, of course, leveraging it. We're doing it in sales. We're doing it, of course, in our CFO office and marketing and legal.
Every function around the company is leaning in to leverage it to get better outcomes, to change the way they work, to increase their productivity.
I mean, table stakes now in well-run companies.
I think so, yeah. You've noted that the AI compute is currently sourced through broader infrastructure contracts without any near-term gross margin pressure. This conference, I've heard some interesting answers around impact of, particularly on the gross margin line in the future as costs change, token costs will change. How do you think about AI costs as the usage scales, and how do you avoid surprises on your margins?
We avoid surprises by being on top of things. That's the answer for everything across the company. We're tightly managing our use. We don't use the most expensive models for everything we do. The general population of employees at Workiva is using different models than a coder might use for coding productivity. You don't need those models to get the lift and productivity enhancements. We're making sure we're using the right models in the right places across the organization. We're watching our use of it. As you mentioned, we purchase them through the infrastructure contracts, so we've been able to manage it. We'll continue to monitor it. It's just not been an issue to us to date. Again, we'll continue to watch as we use more and more and as customers start leveraging more of what we're offering.
In the top pricing tiers, and when customers are using it, we're able to charge more in those pricing tiers so we can compensate for the use of the tokens. Some of our metrics are even usage-based.
Our value metrics and usage-based metrics we can charge for.
Okay.
When we see the usage going up.
On the competitive front, if other big platform suites or AI native entrants, if they were to try to automate the CFO workflow, where is Workiva the most defensible? You've talked a little bit about moats. In your view, what are the moats, and what are the strongest ones?
Sure. I think the one we talked about a little earlier is the strongest moat. I mean, are you going to give your, you're an enterprise software company, a re you going to use the startup's agents versus Workiva's trusted data platform to submit to regulators and investors? It's that. We have our customers that have been with us have their data and their documents and 10-Qs and Ks and multi-entity reporting. They're all in our platform, which you can leverage to do AI. You know that they are, again, accurate. You have the right versions. We have all that data in the platform that we can leverage. It truly is that you can trace every data point and all narrative back to source.
That matters, whereas a startup will not have that. We feel very confident in that moat. We have advantages, of course, in other ways, too, where we've been doing regulatory reporting for, again, well over a decade. We have the expertise. When a regulation changes, the day it becomes law, our customers are there ready to be compliant. There are a lot of advantages that we have built up with our trusted customer base over the last 15+ years. We have a lot of advantages just in being who we are and the footprint that we have and the trust that we've built. There is that.
Truly it is we have the platform that CFOs can count on, have confidence in their data. Some of the other startups. The other thing is there is a perception that we're legacy, and we're just going to lean on where we are today and who we are today, and that's not true. Of the last decade and a half, we've also built up a strong innovation arm, and we continue to build new solutions and expand in TAM and invest in that. Our innovation arm is alive and well, and we can innovate, too.
We operate like a startup within Workiva in a number of areas in the business. We are not just standing still and resting on our laurels and our moat. We're also continuing to innovate, and have an ability to quickly innovate and even out-innovate some of the startups with our moat as well. A lot of advantages in already being a trusted enterprise software company that can innovate quickly.
Yeah. Love to hear that. Let's talk about go-to-market. You've made a lot of changes in the go-to-market organization. Can you talk about that area of the business, how that's evolved over the last year or two, and then how you're measuring success going forward?
Sure. We have brought in a couple of new leaders over the past year. One of them was Michael Pinto, our new Chief Revenue Officer. Michael came to us with a track record at AWS, six, seven years there, scaling his area of the business and region from a few hundred million to several billion. He has been through building that go-to-market machine and building that muscle, and just a different level of play. We've brought him in there. He's also been at Databricks for a couple of years, so he knows the data ecosystem.
That's truly what Workiva is becoming, right? We're the platform that manages the data that matters most in the Office of the CFO. We are having those conversations with our customers around the data ecosystem, how our platform plays and connects to the other applications in the architecture for the Office of the CIO and CFO. He brings that as well, very well-networked in that ecosystem. With that, he has come into Workiva and just taken a different perspective, one of scale. He's seen the movie before. He's scaled through the multiple billion dollars, and he understands what it takes to build that machine. He didn't come in and pivot us, but what he did do is come in and refine the strategy that we had and our ability to operate more effectively and efficiently. We're bringing a different level of seller, a different profile, elevating the profile.
We're selling our platform now, not one or two solutions and a transactional sale. It really is that platform play that is resonating,
Yeah.
as we spoke about with the Office of the CFO. That's part of it. These sellers know how to work with partners. They embrace the partner. Look at it as friction. We do selling together. Of course, productivity, and then you asked about the metrics. Of course, we look at efficiency and productivity and win rates and conversions and pipeline and all the standard metrics that you would want to be held accountable for as a Chief Revenue Officer.
He is doing that, but just, it's elevating the level of play in our organization, and we're moving there. We had a very expensive sales model over the years that we had carried with us, and we had started making some changes in that, and he is very much in line with that. He looked in, saw our strategy, to get to a more productive, and effective sales organization, and he's coming in and helping us-
make that transition and bringing a lot and adding a lot at the same time.
Should we expect then, sales and marketing, as a percentage of revenue to then be coming down over time as those changes are made?
You've seen our operating model, and yes, we've put some targets out there, and we believe very strongly we will meet those, and it's not necessarily the upside there, too.
Yeah.
Lots to be improved upon on our sales. Having said that, where there is opportunity as we expand in TAM.
We will be putting resources where they can most effectively help us grow. That is where we want to put our effort, and we'll put our sales team members where we see the most opportunity and where we can continue to grow and allocate them in the right places.
Within the growth algorithm, obviously very fast growth overall, but particularly fast growth on your large ACV customers. I'm sure this is all related to your last couple of answers.
Yes.
What's sort of driving the success with those biggest accounts?
Again, we have become much more effective at multi-solution selling and account expansion, and that platform play is truly resonating. When you buy one, two, a few of our solutions, you realize the value, and you don't want to go to another point solution. You would rather put your data all together in our trusted platform, understanding how it works, and again, the confidence in the data. That play is really working. It is the value we bring to the customer. We continue to roll out more solutions and have the ability to bring value, but it is also, to your point, it is also just our execution getting better and stronger. That's part of our strategy is larger accounts, more solutions, more value. We're just going to continue to do that. It's a land and expand play.
In the truest sense of the word, and particularly in our larger accounts. Yes, Michael Pinto is really focused on those accounts where we can bring more value,
Yeah.
expands significantly across the globe.
In addition to Michael and his team, you've also talked about how partners are playing, I think, an increasingly large role in your large deals. Tell us about the partner strategy.
Sure. We all know when we're talking about these Big 4 and the next tier, they're everywhere we want to be in financial and digital transformation. Companies pay them a lot of money to listen to them and trust them, and when they say a vendor should be in the financial transformation plan and strategy, they listen. We have a good opportunity. They provide the services, high value, high margin services. They are commercially successful when they work with Workiva. We provide the technology, beautiful play. We go to market together and offer the customer more value than each one of us individually. Both sides know that, so we have developed strong plays with our partners, and we provide a lot of value to the customer.
When we talk about how are we successful in expanding accounts in some of these larger customers. Partners is a significant part of that. We continue to do that. Some of the impetuses might be an ERP transformation, and we want to be in those playbooks with those partners when the ERP transformation happens. It's a good time to reevaluate your disclosure and reporting or maybe consolidating on your ERPs, and we can come in globally, you may have a lot of them. We come in and we can help with that. Partnering with our Big 4 and next tier down is a strategy, part of our strategy as well, and an important mechanism for us in terms of our growth and our account expansion.
With apologies for the delay, I feel like you've wanted to talk about pricing since the outset. You were an early adopter of value-based pricing, not seat-based, I repeat, not seat-based. As you evolve that pricing structure into good, better, best in those tiers, what's been the customer response, and what kind of impact do you expect this to see in revenue?
Sure. We've seen pretty good response with our good, better, best pricing. We started in our SEC reporting and intelligent SEC and financial reporting, and we have seen lifts of 20%+ in this motion. I will say we're just getting started, but we've seen good traction. We're very enthusiastic about it, and we'll roll it out to other solutions as well. It's one vector of growth for us. It's not the only, of course, we have all those solutions, but it's definitely a mechanism for us to gain more value when there's value to be gained. I'll say one of the reasons we started doing this good, better, best pricing is because we found ourselves discounting our offerings for customers that weren't quite ready, whether they were more on the SMB side or just not as advanced and mature.
Instead of discounting now, we're giving them a solution more fit for where they are, we can go back and provide more value to them and extract more value. It's been working well. We've been going back at renewal time and even when we're doing new contracts for new solutions or mid-cycle, we're going back to our customers that have been with us for over 10 years and getting more value as they get more value with these good, better, best pricing models. The premium tiers are resonating with the customers, and we are putting our AI capabilities in as we talked. We are seeing good traction. I emphasize again, it's just one mechanism for additional value.
Although you are certainly out in front of a trend, so where the puck is going.
Thank you for highlighting that we are not seat-based, and we have not been seat-based for the last six or seven years. It is based on the value we provide, and in some cases, yes, consumption-based, like our data integration capabilities.
Switching gears, the SEC has put out a proposal that would allow companies to choose semi-annual reporting instead of quarterly. If that were to go through, what sort of impact would that have on your business? What is your view generally of that proposal?
Sure, thank you for using the word proposal because that is what it is. It's a proposal, and what it is is it gives companies the option, the flexibility to report twice a year or quarterly as they have been doing. From the customers that we've talked to, they still want the rigor of the report. They have investors who want data. They want to keep the rigor and the discipline of that action, that momentum. As I said, the CFO office wants confidence in the data. They want data accuracy and integrity and defensibility all year long throughout the quarter and throughout the year. It isn't CFOs going in just once a quarter anymore and reporting or once a year, or in this case, maybe twice. It's all year long. They want to go in and be proactive, solving problems, becoming more strategic.
That's what the job of the CFO is. They don't just do a report every quarter. That's not what Workiva's value proposition is. It is exactly what we've been talking about, the thread here. They want to have confidence in their data. They need to have auditors go in. It needs to be audit ready. They need to explain it, trace it back to source system, explain any changes, and defend it. Regardless of the number of reports, we don't charge by number of reports. That's not the value. Necessarily, the report itself is not the high energy part of this or the high-value part. It's what we do in the platform for our customers that really is the value of Workiva. Again, we don't charge per report, so for us, it's a.