All right. Good to go? All right, awesome. Thanks everybody for joining this afternoon for day two of the Citi Global TMT Conference. Very excited to have Mike from Workiva with us today. Mike, thank you for joining.
Thanks for having us.
Maybe just to start, maybe just for those who might not know Workiva, just walk us through how the strategy has evolved, where we are today, and how you're thinking about the high-level opportunity for the company.
Yeah. Excellent. For those not familiar with the story, we are a cloud software provider. Solutions that cover financial reporting, broader regulatory reporting, Governance, Risk, and Compliance, and sustainability. We have a couple dozen solutions, a wide portfolio of things we can sell. 6,700+ customers. Many of the largest companies in the world that utilize our software. We've been a very strong, durable growth story over the years. We are crossing the billion-dollar mark as guided this year in revenue. So, great growth story with a lot of room for opportunity to grow.
All right. No, that's great to hear. Maybe we can just talk about the demand picture today. I know you have a broad platform, a lot of use cases you called out, but maybe what's most resonating right now for customers, and what's driving the incremental ARR that's coming through today?
Yeah. As disclosed, if you go look back at our most recent earnings, last couple of quarters, even go back the last couple of years, we talk about our demand being very broad-based. So we have a lot of different things that we sell and have seen some interesting trends. This gets back into, I would say, the broader growth algorithm for us.
Which is it is landing new customers. We continue to land new customers. In fact, we had our largest number of net new logos from the last seven quarters this last quarter as reported. As well as selling into the install base. As we disclosed at our investor day last year, 55% of our customers only have one solution. We believe there's opportunity to sell, what, three, four, five solutions to every customer, which means we have a lot of opportunity to grow into that.
We've seen good traction in our large contract customers or those customers at over $300,000, over $500,000. Those cohorts are growing over 30% each, and have been for a sustained time. And we think we have a lot of opportunity there and seen a good uptick in our deal size. And that comes from selling the platform. We're landing bigger, landing larger, and also very successful in selling back into that installed base.
Okay. No, that's great to hear. Maybe kind of peeling that back a little bit further. I think when people think about Workiva, they think about going after regulated opportunities or things that come from new regulations or mandates coming through. I guess when you look at the opportunities that come through, how much of that is driven off of there is a regulatory-driven mandate that is creating that new opportunity versus something that's a little bit more discretionary, or a consolidation opportunity for you all?
Yeah. If we look at the different use cases, one of the themes that we have across our use cases is a good percentage of those have something to do with something that could be deemed as regulatory. I'd say it's oftentimes something that I would call something that is required. So think about a couple of our use cases. Our heritage is in SEC Reporting, so that is what we call them '34 Act or Qs and Ks. And that is something if you're a listed company, you must report your Qs and Ks. We also support that for European-listed companies with ESEF. We support use cases beyond that for financial reporting, including selling to private companies. You could say, well, gee, they're not regulated. But yes, they are.
Anybody that has debt financing, anybody that has an owner, whether it's private equity or even a family business, you just have a different type of regulation, which means you have to report something to those owners of the shares of the capital. So regulator or not, we are doing those things. We support use cases for Multi-Entity Financial Reporting, which is multinationals reporting to their tax authorities. If you look at Governance, Risk, and Compliance, that is both regulated by things like the Sarbanes-Oxley Act or just by discipline. Anybody that goes through an audit from an external auditor, there are certain standards that your external auditor's looking for, and we help organizations through that governance, whether it's around internal audit or Internal Controls Management. We also support sustainability, which some of that's regulated, some of that is voluntary.
Science Based Targets initiative is an initiative that tens of thousands organizations have voluntary complied to. Is it regulated? No, it is discretionary, but it is something people choose to do.
In our vertical specific use cases, whether it's government or financial services or energy, we support them and their disclosures of that information as well. Some are guided by regulators, some by broader just general practice.
Okay. I think a few things I want to touch on in there. I think as we think about the regulatory landscape, there's always new initiatives coming out or new news that's impacting how people are thinking about the opportunity. I guess as you think about sustainability today, I think that's probably been a bigger point of investor scrutiny over the past year and a half or two. Just how are you thinking about what that means going forward and maybe the regulatory nature or the new initiatives that are coming out globally that still provides incremental demand or tailwinds for you moving forward?
Yeah. Sustainability has been part of the narrative the last 18 months. If you go back and look at 2023 into 2024, we had very strong growth in that area. The sentiment in that market changed with some political changes that happened in 2025 that wasn't front and center yet. I would say, if you talk to large multinationals, it has not gone away. All the discussion that was around the European regulations. The regulations are there, and yeah, some of the delays that have happened, those organizations are going to have to start reporting on some in 2027 and some in 2028. So it didn't go away. They were just pushed down the road a little bit.
It remains a growth driver of our business. As I'd say, it's normalized into what I'd say a regular software market. Yes, there are competitors out there. Yes, there are buying drivers. People are going off a manual process and looking at other ways to automate that, and it's just a good part of our business across our entire portfolio of solutions.
Okay. Maybe last one on the regulatory side.
Okay
I swear we'll move on. But I think also news out there about semi-annual reporting and that shift in the U.S. I guess two questions. One, I guess what are your thoughts about how that might play out from here and the likelihood that we see any change? And I guess secondarily, if there is a change, is there any read-through from some of your other customers who might already be on semi-annual reporting in other geographies in terms of what that could mean for the price that people might pay or if there'd be any impact in terms of your core SEC Reporting business?
Yeah. So just for those that haven't been following the story, this year, the SEC came out with a proposal of a suggestion to make it optional for companies to report not quarterly, but just report twice a year. They put that out for comment, so it went through the standard SEC comment period. I'll encourage you to go look and investigate what the results of that comment period are. If you go look at that, what you'll find is what I've seen published out there is, 90%-plus of the comments were not in favor of it. So the market did give a It was one of the highest commented things out there ever by the SEC.
It generated a lot of response, and most of it was, "No, we're not necessarily interested in that." We also have seen there's been a number of surveys out there that many companies, even if provided the option, would continue to report on a quarterly basis. And I think that gets back down to just the basics of publicly traded companies need to find investors, and disclosing more provides you the opportunity to be at events like this, to have conversations with investors. And if you reported less, you might not have as much investment and/or liquidity around your stock. I think that's how people are doing the math on that. Now, I think what's more interesting for us is whether we move to that or not, we believe there will be minimal impact for us because people utilize our platform throughout their financial reporting cycle.
Whether that's on a daily basis, on a monthly close basis, on a quarterly close basis. In speaking to customers, even if a customer were to decide that they were going to go and report semi-annually, most will still close their books monthly and quarterly with a hard close because of a lot of other reasons. Whether that be reporting to your lenders, whether reporting to other authorities, quarterly reporting still has a lot of other reasons to exist besides just reporting to an exchange.
Right.
It's not like that just goes away automatically. We think even if we were to move that, we'd have minimal impact on the usage of our platform.
Okay. All right. That's very clear there. We do want this to be interactive, so there are questions in the room. We'll make sure to get to those. I do want to ask on just the overall demand and deal environment today. I think the past quarter you called out, seeing some level of AI decision making come through and maybe creating a little bit more conversations around that, but didn't have an impact on deal cycles or anything. Just maybe can you walk through why you feel like that didn't actually impact anything? What was it that maybe you guys did something well to offset that, and just how you're viewing the impact that AI is having through customers' decision making right now?
Yeah. The way I frame up AI is it is a disruption. And it 's not the first disruption that has happened in a software market. We have seen these trends before. This movie has played out before. Every disruption that I have been part of creates opportunity.
It creates risk, it creates opportunity. We believe that the opportunity here is with AI, it has a lot of companies reevaluating their software stacks. It has company re-looking at what they are doing, especially in the areas we play in. There is a lot of legacy software out there. They are still on-prem, a lot of manual process, things like that. For us, we believe the disruption provides that opportunity to have a conversation about what we sell. We still have to execute and take advantage of that, but we think that is part of the great opportunity that AI has brought into the broader software markets. As part of that we also have to communicate our relevancy in AI, and I think we are doing a good job of that.
Again, there will be winners and losers to this, and we think that we can come out on the winner column of that if we execute well. I think that is one part of it. I think the other part that I think there has been some other talk in the market, we had this in our last earnings call that potentially deal headwinds. For us, what we have seen is, yes, there might be greater scrutiny about buying things and maybe more legal or operational processes or hoops we have to go through. We think we are just executing well on that. Even though there may be some headwinds there in getting deals done, we think we are athletic enough to go through that and have been executing well against that.
Okay. Very clear. Maybe we can take the opposite side of it. I think about the risks that are out there in the market from AI. I think we hear about the build versus buy decision changing for a lot of organizations and a lot of enterprises. Have you seen any movement within your customer base for how they think about what use cases might make sense to buy? What might make sense to internalize and try to build themselves? Any kind of shift in that from your perspective?
Yeah. It's interesting. We sell into the office of the CFO for a majority of our solutions. In that audience, the build scenario has always been there. It's been there since the advent of office productivity tools. Many of these users have in the past tried to build a thing with a spreadsheet or the first generation of agents, which we called macros. What they found is that is not industrial strength solutions for the activities they need to do.
I think we have that advantage into selling to that base that has had that ability to build in the past and understands the mechanics of utilizing truly fit-for-purpose industrial strength software for doing some of these more repeatable mission critical processes. We haven't seen that necessarily there. We also are embracing AI. Most recently we, for example, announced an MCP capability as part of our platform. We look at our customers utilizing desktop LLMs or frontier models similar to how they use office productivity tools.
It's just another thing on the desktop they're going to utilize alongside of our platform. Our customers have utilized office productivity tools alongside our platform forever. We also believe they're going to utilize desktop LLMs. For us, it's about working well and playing well. I look at it as an or conversation, not an and. It's not like I'm going to utilize the Workiva platform or this other thing. It's I'm going to use both.
Yeah.
I'm going to use, yeah, for certain things, I'm going to utilize Workiva data through an MCP to do some automation potentially outside the platform. But oh, by the way, the trusted source of data, the repository for all this mission-critical information and where I've already stored quarters and years of information around my filings is already in the platform. That becomes that great asset for an LLM to leverage.
Okay. As you think about the product moving forward and the ability to leverage AI within it, I think you already called out a couple of quarters ago that a third of customers are leveraging your AI capabilities already. I guess, what does that look like or what does that mean? How are your customers leveraging the AI within Workiva? Then we'll, I guess, dig down further on the opportunity for you all.
Yeah. When you look at it, we've had AI in our platform now well over two years. There are standard features of our platform that our customers utilize that AI is throughout. For example, a lot of our use cases include a lot of narrative, and our customers are utilizing that just like and if you may be utilizing AI as part of a document editor or things like that.
Just on all the instant productivity you can get with these types of tools. We also are delivering fit-for-purpose agents. Most recently we announced, for example, a Tie-Out Agent, a Benchmarking Agent, some enhanced Sustainability Agents. These agents are to automate some of those repetitive tasks. Think about it in the case of going through a quarterly earnings process, making sure all of your documents tie out, your press release to your Q to maybe any other communication internally. You can run a Tie-Out Agent that's going to go look at a bunch of your artifacts in the system and figure out where all those numbers exist, do they tie out? And give you the variances.
Sometimes it's even the rounding variances of one might be in actual numbers, one might be rounded to the thousands, then we come back and say, "Hey, this is off by $340. Did you mean to do that?" Those are important things for the accountants and other finance professionals we sell to. Those are another area. Those are typically priced as part of our premium offerings. As we talked about, we are coming out with more builder type of tools like the MCP that allow people to extend the value of the Workiva platform outside, still trusting that connected data inside the platform with all the permissions enforced.
I think it's another key aspect of this is how do people utilize Workiva AI while still maintaining that permissions. Once you download something out of the system and upload it somewhere else, you've lost all your authorization on that information. If I'm utilizing MCP, all the permissions and security is still enforced with that data, at least on the connectivity side of it.
Okay. I guess, what does the monetization model look like? What have you done already to, I guess, find incremental opportunities for that third that's already using it? As we move forward and there's more agentic capabilities, you have the MCP capabilities roll out. What does the kind of incremental monetization lever look like for you all?
Yeah. Well, the first direct monetization is, first let's maybe talk about pricing first. Take a step back.
Yeah.
We are a metric-based pricing model. We have not been seat-based for the last six, seven years. That is a thing that is first and foremost where we have it. Our pricing model is based on some metric around that solution, which gives us a couple interesting aspects here. First off, the fact that it's not seat-based, we're not based on users. You buy a solution, it's unlimited users on that solution, but we're going to charge you, for example, if it's Multi-Entity Financial Reporting, we're going to charge you based on the number of entities. If it's Investment Reporting, we're going to charge you based on the number of funds. That gives us that flexibility there. The other piece it gives us is that when you use more of that product, you may spend more.
We've highlighted this, even our most recent earnings call, we talked about a deal where somebody bought our Investment Reporting for one tranche of funds, and then they decided they could utilize it for more funds, and they've spent two times more on that single solution. So they consumed more and therefore are paying more in that given solution. That flexibility and that pricing model has served us very well.
We also have introduced pricing tiers. We have an essential, standard, and advanced version inside of a given solution for many of our solutions. As we've discussed over the past year, for example, if you look at SEC, we've packaged some of our premium AI capabilities in an advanced version. We are getting an upcharge when people move from that standard version to that advanced version, and that is one of the mechanisms of how we're monetizing that AI. Finally, I think taking a step back and looking at how software purchasing has evolved, pretty much every RFP now that we see has AI in it. The simplest way I look at this is moving forward, every incremental unit of software we sell will have an AI component to it. Now, it's a question of zero units or one unit.
You don't get incremental units of selling software now without having AI, right? To some degree, every incremental unit is an AI sale. Now, can I parse out exactly what was the single slice of some AI piece of that? No, but I think the way you need to think about this is for us to sell software moving forward, AI is part of it.
Okay. It just becomes innate, and you find ways through the incremental consumption or the incremental use case/tiering.
I believe what investors should be asking me is, how many more units are you selling? This is not about the monetization of a single slice of this. This is about units times price.
Okay. How do you think about the incremental units you're going to be selling now?
I think you need to have AI to be competitive. Yes, for every software vendor out there, if they're not thinking about that, they probably should be, right? This is about how do you have AI to sell incremental units? How do you displace all the legacy? How do you remain competitive against new incumbents? It is about being relevant with the entire platform you're selling, of which AI is a component of it.
Okay. All right. That makes sense. I guess with AI and the capabilities that it enables, how do you find the TAM opportunity? Do you see new areas that Workiva can move into to potentially create new revenue streams? How do you think about the innovation that can come from this and the potential revenue that unlocks from the new use cases?
Yeah, that's a great question. If you look at the history of Workiva, one of the repeating themes is we've been able to successfully invest in expanding our TAM. And i t's how we went from one solution to a couple dozen solutions. Yes, we've been willing and successfully have been able to invest in R&D and innovation to expand our TAM. We don't see that stopping. We're always on the lookout for net new solutions we should be focused on and where we can expand into, and it's been part of that growth story throughout. Yes, we think AI unlocks that. It's easier to rapidly prototype and go after new solution areas. Yeah, we believe that'll be part of the story moving forward.
Okay. As we think about the tiering opportunity and that model rolling out more broadly, what kind of proof points have you seen so far that that strategy is resonating, and how should we think about the incremental opportunity that creates on the revenue model today?
Yeah, I think it's just one of the many components of that growth story. It's still early days. So for SEC, we're about six quarters into that tiering. For some of the other solutions, it's even less than that. So, we have a large cohort of our customers to still go after with that opportunity, and we think that's just one of those long, durable growth drivers. I think the selling of incremental solutions is probably a greater growth driver. I think that's the greater opportunity, as I've highlighted earlier. Across our customer base, we have the ability to sell those incremental solutions and yes, new customers as well, as we also talked about. That's all part of the mix.
Okay. Maybe we'll pause there, see if there's any questions in the room right now. I think we have a mic coming, so just give it one second, please. Let's go in the back first.
Hi. Thank you. I guess to what extent does a stronger IPO market feed your reporting solution, if at all?
Yeah. The question on capital markets and selling that. There are three ways that we look at a healthy IPO market benefiting us. The first is a healthy IPO market, I call it the dream of going public, enables us to sell into private companies. In a healthy IPO market, private companies look at IPO as one of their options for exit, and that allows us to go sell into that and saying, "Hey, 18 months, 24 months you go public, you think about buying our private company reporting, our internal control solutions," and things like that. A healthy IPO gives us a good market to sell into private companies pre-IPO. Yes, we support the S1, so a greater number, for example, of the U.S. listings we've seen this year gives us a greater base to sell into, so we can sell more S1s.
Finally, even if we do not help the company with the S1, based on the last 15 years of history, we will win our fair share of new SEC filers. The creation of new SEC filers gives us, one, a base to sell into SEC reporting. What is interesting about this most recent cycle is we are seeing much larger companies go public. In that case, these much more complex organizations are likely to buy more than just SEC. They might buy internal controls or multi-entity reporting or many of the other solutions that we have. So these more mature companies going public, even if we have SEC as part of it, they become multi-solution platform deals because there are large enterprises.
My understanding-
Sorry?
My understanding of Workiva is that your technology is pretty integrated with the more complex your customer, the more integrated it is with the tech stack of the customer because you needed to be able to glean data and information from different parts of the organization, and then that is used for the compliance. To the extent that there is this race to adopt AI and that changes the tech stack of your customers, how much of a tech debt would that create for Workiva to continue to do what you are doing for them? Is there an implication to margins?
Yeah. So, maybe answer it this way, getting specifics. Oftentimes the source of data that starts a process in our platform would be the ERP system, that system of record of transactional data. To date, we haven't seen that changing. The LLMs are not repositories of data. They are actors on top of data that sits somewhere else. So the source of data to date has not been disrupted of what we pull from. So whether it's an SAP or an Oracle or a NetSuite, that data will come in. If that somehow changes to a newer vendor that's a source of record like a Rillet, that is just a different source of data and our source of data change over time. So we don't see that necessarily changing.
I think it does bring back to the forefront of a system like Workiva that is this system of as-reported data. It also shows the value that we have. So as you highlighted, one, we're part of the ecosystem, which gives us some strength in inertia and disruption. We have also this platform where we have all this data and this trusted data, all this pre-release data with all the permissions and security established that gives us a strong foothold there on the platform of data we have. And we have these customers.
We have 6,700 customers that are there. And to assume that somehow you're just going to [vibe code] that away, that's a tough hill to climb there. So you're going to [vibe code] away the ecosystem, the platform of historical data, and this strong customer allegiance and support and all that. That is the power that we believe we have as an incumbent.
Any other questions in the room? All right. Thank you for those questions. Those are great. Maybe shifting gears a little bit just on the financial model at this point. I think you've shown a ton of leverage over the past couple of years. I think it's 14 points of operating margin expansion in two years. Maybe the question is, I guess two-part. One, as we think about the go-forward investments that you're making, how are you thinking about the balance now between investing either in the R&D opportunity for AI or the go-to-market opportunity around that? And then secondly, just where do you view the incremental leverage points at this time?
Yeah. Well, first, thanks for asking the question. As I sat here a year ago, there was a lot of questioning whether or not we would even be able to achieve our 2027 targets that we had out there. As you highlighted, as we reported in Q2, we had a 1,300 basis point improvement in margin as reported in Q2. We also discussed that we, as guided for our year-end this year, are pretty much at those 2027 targets. We've approached those a year early. Hopefully, we've demonstrated some progress and some capability to convince the broader world that we can drive leverage in this business. Where does that go? We have a 2030 model out there that does show a path to some incremental improvement.
I think given all the disruption that's happened this year, our focus right now immediately is still yes, on both growth and on performance and productivity, and that dual focus, we believe, will continue. This becomes as much a growth as a margin piece. It's relatively, I think proven, if you look at how we got to our margin improvement. It's primarily people in a software company, and we are looking how we optimize that equation moving forward and are optimistic we can do both, that we can continue to show this durable growth and at the same time drive some incremental leverage.
Okay. Is there a way to think about the path now from where we are today to that 2030 target? Is it a bit more of a glide path? Is there some maybe processing of the investment shifts? How should we think about that?
Yeah. I think if you look at the most recent three, four-quarter trend, the glide path should hopefully be fairly evident. Again, how that materializes over time, you start looking at all the different levers in there between gross margin, between R&D, how much productivity are we going to get out of AI in four years on R&D, and is there any impact to gross margin? There's a lot of moving parts in the equation.
Sure.
We believe we have strong command and control over those levers and are monitoring all that. Our ultimate goal is to show increased productivity, to drive incremental cash flow, and to drive that leverage in the business.
Okay. I think we are running up on time. Maybe in the last minute, have the Investor Day and conference next week. Maybe we can get a little preview for what folks should look forward to next week.
Yeah. We are a software company. Thanks for mentioning it. We have an Investor Day next Tuesday. We have a user conference in Las Vegas. You can join online for both the Investor Day and the product keynote that we are doing Tuesday morning. So encourage you to do that. Yes, as a software company, we do a product keynote, so we will be talking about new products. AI might be mentioned in there. So yeah, stay tuned for a bunch of exciting things that we believe are going to happen next week and can't wait to join, what is it, 2,500 + of our customers next week at that event.
Awesome. Well, Mike, thank you so much for being here and the rest of the Workiva team, and want to thank everybody in the room for joining us as well. Thanks again.
Thank you.