Workiva Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 1, 2025
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Operator

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 note that this call is being recorded on 05/01/2025 at 5PM Eastern Time.

Operator

I would now like to turn the meeting over to your host for today's call, Katie White, Senior Director of Investor Relations at Workiva. Please go ahead.

Katie White
Katie White
Senior Director - IR at Workiva

Good afternoon, and thank you for joining Workiva's Q1 twenty twenty five conference call. During today's call, we will review our first quarter results and discuss our guidance for the second quarter and full year 2025. Today's call will include comments from our Chief Executive Officer, Julie Isco followed by our Chief Financial Officer, Jill Clint. We will then open up the call for a Q and A session, where we will be joined by Mike Rost, our Chief Strategy Officer. After market closed today, we issued a press release, which is available on our Investor Relations website along with supplemental materials.

Katie White
Katie White
Senior Director - IR at Workiva

This conference call is being webcast live, and following the call, an audio replay will be available on our website. During today's call, we will be making forward looking statements regarding future events and financial performance, including guidance for the second quarter and full fiscal year 2025. 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. Workiva cautions that these forward looking statements are not guarantees of future performance. We undertake no obligation to update or revise these statements.

Katie White
Katie White
Senior Director - IR at Workiva

If the call is reviewed after today, the information presented during this call may not contain current or accurate information. Please refer to the company's annual report on Form 10 ks 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. Also, during the course of today's call, we will refer to certain non GAAP financial measures. Reconciliations of GAAP and non GAAP measures are included in today's press release. With that, we'll begin by turning the call over to Workiva's CEO, Julie Isco.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Thank you, Katie, and thank you all for joining us today. Jill and I look forward to sharing our Q1 results and our guidance for Q2 and full year 2025. We'll also provide an update on the regulatory environment and our views on the macro. Q1 was another solid quarter. Subscription revenue grew 20% year over year and total revenue grew 17% year over year, beating the high end of our guidance.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

At the same time, operating margin came in slightly ahead of our first quarter guide. In Q1, we once again saw broad based demand across our solution portfolio. CFOs trust Workiva to be the platform that drives performance and productivity for their current requirements and prepares them for their next digital, financial and operational transformations. Our portfolio of 20 plus solutions across governance, risk and compliance and financial, regulatory and non financial reporting continues to resonate in the market. Consistent with the past several quarters, we saw outpaced growth in our large contract customers.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

This is driven by both additional solution sales into our installed base and larger new logo lands. In Q1, the number of contracts valued over $100,000 increased 23. Those over $300,000 increased 32% and contracts valued over $500,000 were up 32% as well, all compared to Q1 of twenty twenty four. Although we remain optimistic on our market opportunity, we did see signs of a more cautious buying environment toward the end of Q1. The uncertainties of regulatory change and the policies of the new U.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

S. Administration have put pressure on the bookings momentum that we saw in the previous three quarters. As we monitor the current macro and the market turbulence, we remain focused on the execution of both our long term growth strategy and our productivity initiatives. We believe that we have the competitive differentiation and focused execution to continue to deliver on our twenty twenty five and longer term targets. Our Q1 results highlighted once again that our platform remains a key differentiator for our new logo wins and account expansion deals.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

We offer our customers a platform for trust, transparency, accountability and efficiency. Our relentless focus on customer outcomes has continued to resonate with the office of the CFO. 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. First, we signed a 7 figure multi solution expansion deal with the U. S.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Regional bank. This thirteen year loyal customer purchased two additional solutions and expanded use across other solutions on the platform. This customer added management reporting to support their operational, data analysis and financial statement processes and added our policy management solution to manage their credit risk and accounting policies. The deal also included expanded usage across bank specific reporting, including Basel III, call reports and liquidity and tax reporting. This deal was a co sell with a big four advisory firm.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Second, we signed a mid 6 figure new logo deal with a digital and telecommunications company in APAC. 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. This company has been on a multi year digital transformation journey, which included a move to S4HANA back in 2022. Their investment in Workiva supports their vision to achieve greater agility, efficiency and competitiveness as an organization. The deal was sourced and will be delivered by a big four advisory firm.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

And third, a European travel company became a new customer signing a 6 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 raised over $1,000,000,000 and has the long term goal of a public company IPO. This was a competitive win, which included multiple partners co selling the deal. Let's move on now to financial reporting, which continues to be the primary revenue driver for our business. We saw broad based demand in our financial reporting solution set that includes SEC reporting, multi entity reporting, private company reporting and management reporting.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

I'd like to highlight three financial reporting specific deals from the quarter. First, we signed a mid 6 figure new logo deal with a top five U. S.-based insurance company. This customer invested in the Workiva platform to replace a legacy solution and manual processes. They purchased Workiva for insurance reporting, investment reporting and management reporting.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

There were multiple partners involved in the co selling and the delivery of this deal. Second, we signed a mid 6 figure new logo deal with a top 10 global oil and gas company for global statutory reporting. This company invested in Workiva as part of a broader financial transformation initiative. They'll be using the Workiva platform to manage their data and statutory reporting across two fifty entities. The opportunity was sourced and will be implemented by a big four firm.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

And third, we signed a mid 6 figure new logo deal with a privately held U. S. Spacecraft manufacturer for private company and multi entity reporting. This company purchased the Workiva platform to replace manual processes and work done by service providers in support of financial statements, data management and the reporting for 140 legal entities. The deal was a co sell and will be delivered by a regional consulting firm.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

I'll turn now to governance risk and compliance. Companies today are faced with an environment of changing risks, new compliance requirements and stakeholder oversight, all of which require a mature GRC program. 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.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

We believe that this ever changing business environment will continue to create demand for our GRC solutions. Looking back at Q1, here are three signature GRC wins. First, a European based environmental services provider signed a 6 figure new logo deal that included controls management and sustainability reporting. This company is working with multiple big four firms as a key part of a future of reporting and assurance strategy project. This was a competitive deal to replace a legacy GRC platform and was a co sell with multiple big four firms.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Second, a UK based oil and gas company signed a mid 6 figure new logo deal that included controls management, audit management, operational risk management, ECEF and sustainability reporting. This was a competitive deal with multiple GRC vendors being evaluated. The expanded value of the Workiva platform for the reporting use cases was a competitive differentiator for this GRC opportunity. This deal was sourced and will be delivered by a big four firm. Third, we closed a two solution six figure account expansion deal with a U.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

S.-based utility company. This company purchased controls management and audit management. The customer first signed with Workiva in August of twenty twenty four for SEC reporting and then quickly followed on with his GRC solution expansion. The opportunity was a co sell and will be implemented by a regional advisory firm. Let's move on now to sustainability management.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

There's been a lot of activity on the regulatory front in Q1. As discussed on our Q4 call, the European Union has proposed changes to the CSRD regulation through the EU Omnibus package. On February twenty six of twenty twenty five, the European Commission published its proposed omnibus legislation, which introduces changes to the CSRD. These changes include a limit to the scope of the CSRD to EU organizations that have more than 1,000 employees and an increase to the threshold for U. S.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

And other non EU companies, those in Wave four from EUR 150,000,000 in revenue to EUR $450,000,000 in revenue generated within the EU. More recently, the EU Parliament brought the first step of clarity to the Omnibus proposal with a vote on April 3 that confirmed that Wave two and Wave three companies will now be required to report on their 2027 data in 2028. This vote also signaled overwhelming EU support for the passing of the full Omnibus package. The Omnibus outlines that large Wave one companies, which is Workiva's primary target market will still be subject to reporting in 2025 and 2024 results with no change in timeline. What also remains unchanged is that all companies subject to the CSRD must report using double materiality and in accordance with the EU taxonomy.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

They also need to comply with the ESRS standards and these reports will be subject to limited assurance. With the publishing of the EU Omnibus, companies now have much better clarity on who will be subject to the CSRD, what will need to be disclosed and when they will need to disclose it. But sustainability reporting is not just about complying with regulation. Corporations have recognized that sustainability data is not merely a reporting obligation, but a valuable asset that can be leveraged to enhance business performance and drive efficiency. A great example of a Workiva customer that's built stakeholder trust their sustainability reporting is a European utility company with 36,000,000 customers that focuses on renewable energy.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

This company is one of the largest global investors in wind and solar power projects. With the Workiva platform, they have oversight of all financial and non financial information and they've created greater efficiencies and increased data confidence. The entire end to end process for connected results is now much quicker with higher quality data being presented during both internal and external reviews. By measuring, monitoring and tracking their investment projects through the Workiva platform, this customer has the information it needs to unlock new markets, reduce risks and support long term resilience and profitability. Another Workiva customer, a global food manufacturer hit their 2025 emissions targets three years early and now sources over 80% of their product volume sustainably.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

They've reported that achieving lower emissions and pursuing sustainable packaging creates efficiencies and ultimately drives profitability. At the same time, the company's focus on sustainability transparency aligns with consumer demand and helps distinguish their brand in a competitive market. That's not just about reporting or compliance, it's about business performance. Across industries, companies are using sustainability data to drive operational efficiency, mitigate risks, increase customer loyalty and ultimately create value. The need for organizations to measure, monitor and track non financial information continues to drive market demand for our sustainability reporting solutions.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Here are two notable wins from the quarter. First, a Fortune 500 global food and beverage company signed a 6 figure sustainability reporting contract. This long time SEC and global statutory reporting customer has set ambitious goals related to sustainable sourcing and packaging and environmental impact and they chose Workiva to streamline and improve what had previously been a fully manual reporting process. For a consumer products company, sustainability reporting is central to managing energy, waste reduction and the cost of goods for their products. By capturing and reporting on this data, this company is 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 resilient company.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Second, a Fortune 500 global investment management company purchased sustainability reporting with Assurance to meet their needs for voluntary reporting. This existing customer was already using Workiva for financial reporting and internal controls and after engaging in a competitive RFP led by their sustainability officer, they chose Workiva because of the connectivity to their existing financial reporting and GRC solutions. The firm has set ambitious environmental targets such as achieving net zero scope one and scope two greenhouse gas emissions by 02/1940. 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. 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.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

By bringing both financial and non financial data together, Workiva's platform enables our customers to gain insights that drive competitive advantage and informed business decisions. I'd like to take a moment to thank the Workiva team as well as our partners for all of our strong Q1 wins. They are the result of focusing on customer outcomes and demonstrating the value of our platform. Moving on to product innovation, in Q1, we delivered a number of advancements to the Workiva platform, including new capabilities for SEC reporting and the launch of a fund reporting solution for public funds. For SEC reporting, all filers are required to go through a mandatory process change driven by an overhaul to the EDGAR system.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

On March 24, the SEC launched enrollment for new security requirements for the EDGAR system called EDGAR Next. This update impacts every SEC filer including public companies, foreign private issuers, investment companies, directors and officers filing with the SEC. 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 where Giva is the market leader for regulatory and financial reporting. In Q1, we also launched a new solution for public funds.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

This is a new investment reporting solution on the Workiva platform that supports the rapidly growing public funds market. This includes those firms that manage ETFs. This new solution expands our investment reporting market opportunity and supports the unique requirements of public funds, including the ability to create fund summary prospectuses and review and submit hundreds of regulatory filings at once. We will continue to focus R and D on the pace of product innovation, consistent execution and enhancing our high performing differentiated platform. I'll move on now to say a few words about our guide.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Jill will provide the numbers for our revenue and our profit guidance for Q2 and full year 2025. What you'll see is that while we're pleased with our Q1 growth, we're not raising our full year 2025 expectations. 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. We are confident in the resiliency of our business and the durable demand for our platform and our solutions and we'll continue to invest in the long term growth opportunity in line with our strategy. In closing, I'd like to thank all of our employees and our customers for another great quarter.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

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 solutions. And with that, I'll now turn the call over to Jill to walk you through our financial results and 2025 guidance in more detail. Over to you, Jill.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

Thank you, Julie, and good afternoon, everyone. Thank you for joining us. Today, I'll begin by providing an overview of the financials and key metric highlights for the first quarter of twenty twenty five. I will then move on and provide guidance for Q2 and the full year 2025. As Julie discussed, we had a solid first quarter with execution across our broad portfolio of solutions.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

We beat the high end of our Q1 revenue guidance by $1,000,000 generating $2.00 $6,000,000 of total revenue in the first quarter, up 17% over Q1 twenty twenty four. Q1 subscription revenue was $186,000,000 up 20% from Q1 twenty twenty four. New customers and account expansions both contributed to our strong revenue growth. New customers added in the last twelve months accounted for 49% of the increase in our Q1 subscription revenue. Q1 professional services revenue was $21,000,000 flat versus Q1 twenty twenty four, with higher XBRL services offset by a decline in setup and consulting services.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

Moving on to our Q1 twenty twenty five operating results, all on a non GAAP basis. Q1 gross margin improved 100 basis points year over year, increasing to 79%. Operating margin for the quarter was 2.4%. This outperformance over our guidance was the result of our top line beat and our continued focus on leverage as we scale our business. Moving on to performance metrics for the quarter.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

We had 6,385 customers at the end of Q1 twenty twenty five, a growth of three eleven customers from Q1 twenty twenty four. Our gross retention rate was 97, exceeding our 96% internal target. And our net retention rate was 110% for the quarter. This metric saw pressure from foreign exchange rate headwinds as well as the year over year impact of leap year on the calculation. We generated 69 percent of our subscription revenue from customers with multiple solutions, up from 66% in Q1 twenty twenty four.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

As Julie discussed, we continued to see expansion in the relationships with our large contract customers. As of the end of the first quarter, we had 2,079 contracts valued at over $100,000 per year, up 23% from Q1 the prior year. The number of contracts valued at over $300,000 totaled four thirty nine, up 32% from Q1 twenty twenty four. And the number of contracts valued over $500,000 totaled 191, up 32% from Q1 twenty twenty four. Moving on to the balance sheet.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

As of 03/31/2025, cash, cash equivalents and marketable securities were $767,000,000 a decrease of $49,000,000 over the prior year. Our primary use of cash in the quarter was our repurchase of approximately 462,000 shares of our Class A common stock for $40,000,000 as part of the share repurchase program approved by the Board in July 2024. As of the end of the quarter, we had $60,000,000 remaining of the original $100,000,000 authorization. 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 TAM, we did see a move towards a more cautious buying environment at the end of Q1.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

As such, we continue to take a measured approach to setting our guidance assumptions. For the second quarter of twenty twenty five, we expect total revenue to range from $2.00 $8,000,000 to $210,000,000 We expect services revenue will be down compared to Q2 twenty twenty four. We expect non GAAP operating margin to be approximately breakeven, reflecting ongoing investment in our long term growth strategy and the timing of preplanned events. For the full year 2025, we continue to expect total revenue to range from $864,000,000 to $868,000,000 Similar to 2024, we expect total services revenue will be down year over year as we move low margin services to our partners. We expect subscription revenue growth to be approximately 20% at the midpoint.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

We continue to expect non GAAP operating margin to range from 5% to 5.5%, delivering improved productivity compared to 2024. We now expect 2025 free cash flow margin will be 10%. This revised target reflects pressure on bookings expectations for the rest of the year given the macro uncertainty Julie and I discussed. We continue to operate our business with our 2027 and 02/1930 targets in mind, improving productivity and operating leverage as we execute on our long term growth strategy. In closing, I would like to thank Workedians around the globe for their hard work and dedication to providing value to our customers.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

Thank you all for joining the call today. We're now ready to take your questions. Operator, please open the line for Q and A.

Operator

And your first question today will come from Patrick Scholes with Baird. Please go ahead.

Patrick Schulz
Vice President & Senior Research Associate at Baird

Hey, yeah. Thanks for taking my question. I guess maybe the first one just on the guidance. I know you mentioned they saw a more cautious buying environment towards the end of the quarter, but still maintain the full year revenue guidance. Can you just help bridge the gap there, maybe provide a little more color on confidence achieving the guide?

Patrick Schulz
Vice President & Senior Research Associate at Baird

Why not just take the guide a little lower right now?

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

So the reason that we kept the guide the same was we really felt that Q1 was a great quarter. We had 20% SNS revenue growth. We're talking about in the guide that we expect to have 20% revenue growth for the full year on SNS. And we really feel like taking everything into account that we're able to maintain with our we can maintain a really measured approach on setting our guidance assumptions. So it's a really similar approach as to what we took in prior quarters.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

But we remain confident in our long term market opportunity and our growth strategy. And with our large relatively unaddressed TAM that we felt like it was the right move to leave our guide flat for the year.

Patrick Schulz
Vice President & Senior Research Associate at Baird

Okay, helpful. And maybe one follow-up too maybe for Julie. I appreciate your commentary on CSRD and ESG mandates in your prepared remarks. 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 deals for the remainder of the year into 2026 now that some of these recently approved EU legislation deals are in place?

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Sure. And not an unexpected 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, though I provided some in the remarks, but if we just take a step back, yes, there have been a lot of changes in the past three months, but I'll just highlight here three things. First, our sustainability market continued to grow. Sustainability remained a top booking solution for us in Q1. And when we think about sustainability, we break it down into geography and company size.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Finally, as a highlight, we've said before, even as far back as when we entered the sustainability market, regulation is not the only driver of sustainability initiatives and reporting. So we'll just think about the different geos, if we start with Europe, as I mentioned, with regard to CSRD and the omnibus, it did bring a lot of clarity, companies know what they have to report and by when. That first large Wave one company 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've got a report with double materiality, 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.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

And as I highlighted in Q1, in Europe we saw multi 6 figure deals, including sustainability. I'm going to be next week with our European customers and partners at our annual Europe customer event, still focusing on sustainability. Now, if you move over to The US, change in the administration has influenced some of those companies that were box checkers and compliers, meaning those that were only reporting or adhering to the regulations just because there's 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 CSRD. But the state of California rules are still something that organizations are preparing for.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

We do see this as a buying driver today. And then there are, of course, number of other state regulations bills that are coming up in various stages. Now for the rest of the world, we've still got the 20 countries or so that have chosen to align with the ISSB guidelines, and there are now over 7,600 organizations that have committed to science based targets through SBTI. All of these companies will be measuring, monitoring, and tracking their sustainability data. So final note in Europe, note in The US and everywhere, sustainability reporting isn't just about complying with regulations, companies are buying it ahead of regulation, even when there isn't a regulation that they need to comply with, they're doing it just to participate in the global supply chain and enhance business, as I described in my prepared remarks.

Operator

And your next question today will come from Steve Enders with Citi. Please go ahead.

Steve Enders
Steve Enders
Analyst at Citigroup

Okay, great. Thanks for taking the questions here. Actually, I just want to follow-up on the last point that you were making there. Just in terms of what you saw in 1Q, just maybe how are things different compared to the deal slowdowns you saw from the sustainability portfolio versus, I guess, the broader Wikiva portfolio, and maybe kind of what's the view here moving forward as well?

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Yeah, mean, continued. We had a strong quarter. We saw broad based demand across the portfolio, and again, sustainability in Q1 was still one of the top booking solutions. I did mention in our remarks that we saw a cautious buying environment, but across the portfolio, and it really is more in conversations with customers, and compared to our 2024, which was 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.

Steve Enders
Steve Enders
Analyst at Citigroup

Okay, got you. So, I guess, put a finer point on it, there wasn't really a difference in the timeline or like, I guess, when things started to slow down between the ESG side of the equation and the rest of the portfolio?

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

This quarter, we had demand for all solutions.

Steve Enders
Steve Enders
Analyst at Citigroup

Yes.

Steve Enders
Steve Enders
Analyst at Citigroup

Okay. All right. No, thank you for that. And then just in terms of the, I guess, broader change between, you know, The US opportunity, and it seems like the the way for side of it, it's it's kinda moving forward. How is maybe the the the opportunity for in terms of like a number of logos or the number of opportunities.

Steve Enders
Steve Enders
Analyst at Citigroup

How is it different now with the changing regulatory landscape and maybe for what you're seeing from the CSRD regulations versus the things that are coming from a state level for those US based companies?

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Yeah, as I mentioned, in Europe, our target market is alive and well. It's the large companies, the large wave one companies that need to report in 2025, many of those in April. April thirtieth 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.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Those are farther out in the timeline, but our target market again is large, it is a global opportunity, but as I highlighted, in The US, again, we've got the box checkers, compliers, and those that will wait for regulation. But again, 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, they're doing this for a number of other reasons beyond regulation, and we're seeing that, and we've seen that for the multiple years that we've been in the sustainability market.

Steve Enders
Steve Enders
Analyst at Citigroup

Okay. Perfect. Thanks for taking the questions.

Operator

And

Operator

your next question today will come from Jake Rubberge with William Blair. Please go ahead.

Jake Roberge
Equity Research Analyst at William Blair & Company, L.L.C

Yeah. Thanks for taking the questions and really helpful commentary just around the sustainability business. Julie, of those 7,000 or so Wave one reporters that are still being regulated under the updated CSRD proposals. I know there's been no change to the regulatory timeline, but do you think there will be any change to kind of the adoption cadence related to CSRD just following the updated Omnibus proposals?

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

You know, we do see significant opportunity in that larger market. I mean, many of those companies that you mentioned did have to comply on April 30, and while we've made significant headway in the market, the opportunity is there because what's clear when you look at those reports that have come out and we have looked at them, there's a lot of complexity those companies have to deal with. Many are still on the legacy systems, they're getting through it with muscle, and so we believe there are a number of companies that are still using those current processes that we can help with our platform. And the platform brings together the financial data and the non financial data, it brings together with assurance, and we help manage the complexity. Think that is where our opportunity remains in the upmarket.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

So, it's again, significant opportunity, and that is our target market.

Jake Roberge
Equity Research Analyst at William Blair & Company, L.L.C

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 at all, given the uncertain macro environment.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Sure, and as you know, for the go to market, as we've scaled, we've been maturing our organization. And as we roll into 2025, continue to do so. We've further expanded our team of major account sellers. We continue to shrink territories, just providing greater focus on a smaller number of accounts. We've dedicated new logo teams and so forth, so we're maturing.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

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, just those sellers that have proven experience with scale. So coming off of a successful year out there on the market, most of our sellers have higher quotas and we're pushing hard on the go to market side. Strategy, again, continue to focus on better enablement, more refinement of sales plays and so forth, so we're continuing to improve, continuing to invest in up leveling teams, and building out that go to market team that's very capable and confident as we scale.

Jake Roberge
Equity Research Analyst at William Blair & Company, L.L.C

Great. Thanks for taking the questions, and congrats again on the solid Q1 results. Thank you.

Operator

And your next question today will come from Adam Hotchkiff with Goldman Sachs. Please go ahead.

Adam Hotchkiss
Adam Hotchkiss
Analyst at Goldman Sachs

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, just coming up in conversations offhand? And is there any way for us to quantify either the number of deals or revenue that's being pushed out of Q1 or future quarters because of this?

Adam Hotchkiss
Adam Hotchkiss
Analyst at Goldman Sachs

Just trying to understand what exactly is going Thank you.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Thank you for the question. 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 a cautious buying environment or change in momentum, again, it's really compared to the year that we had in 2024. Again, very strong, stellar bookings quarters for us. That's what we're comparing it to.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

But listen, there's no denying Q1 was a turbulent market, and there's market uncertainty, and I hear it when I talk to customers. They're just being more thoughtful with spend, and the reality is they're dealing with constant changes, new risks to their business and their business models, and we do believe that this had an impact on some organizations' spend behavior. Again, there's uncertainty there. We don't know what's coming, our guide is very balanced given the uncertainty, the turbulence in the market, and what we're hearing from our customers. Some deals are maybe taking longer even when we're the vendor of choice, 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 broad solution portfolio, we've got that platform advantage and proven record of delivering value, that we have the opportunity to drive continued growth throughout 2025 and beyond.

Adam Hotchkiss
Adam Hotchkiss
Analyst at Goldman Sachs

Okay, thanks Julie. That's really helpful clarification. And then I wanted to talk a little bit about the press release you had, I think a couple of weeks ago around the mandated financial consolidation order for federal agencies. How should we think about the opportunity for you there, and have you started to see any conversations around this over the last month?

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Yes, 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. And probably the most important part of that order is, as soon as 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 a tech first approach, and we believe this will be an opportunity for us.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

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, 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 these transformational needs and actions.

Adam Hotchkiss
Adam Hotchkiss
Analyst at Goldman Sachs

Understood. Thank you, Julie.

Operator

And your next question today will come from Ryan Krueger with Wolfe Research. Please go ahead.

Ryan Krieger
VP - Software Equity Research at Wolfe Research, LLC

Hey, guys. Thanks for taking the question. I appreciate all the commentary on the macro, but I do just want to ask one more. You guys have a really good purview into a lot of verticals and a lot of major regions. So I'm just curious, when you talk about cautious behavior, I understand it's just kind of starting, but is it more broad based or is it related to certain verticals or regions while others might be more safe?

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

I think, again, we'll reiterate, we had a strong Q1, and it was broad based. We're not seeing it in any particular geo, not seeing it in any particular segment that we're in for solutions either. It's, again, conversations with customers just a more cautious environment, like we are doing at Workiva, we're thinking about our spend in a more thoughtful way. We're looking at those things that are more important, we're looking at the dollars we have and thinking about our own operational effectiveness and so forth, and our spend.

Ryan Krieger
VP - Software Equity Research at Wolfe Research, LLC

Okay, great. Appreciate it. And then also on solution pricing, in the prepared remarks, talked a lot about a lot of innovation coming into the platform. And we are seeing quite a few software companies kind of lean into the pricing lever. So just wanted to get an update on maybe your pricing philosophy, how you guys think about it, and then maybe how you think about that lever going forward.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Sure. And this is a philosophy of ours that we've stood by, which is we want to bring value to the customer and we would rather sell additional solutions and have more impact than get a few more dollars out of a renewal price increase. Having said that, we have made price increases routine on our renewals, so we do up, of course, take a risk based approach, depending on where the customer is and what's transpired and where they are, But again, we're not at the point where we're squeezing dollars out of a customer for a renewal or price increases there. It really is about providing value, cross selling and up selling. And that's the way we've been approaching it.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

So, we're working to optimize our pricing, but the real lever is value and selling more solutions, expanding an account and bringing more value to our customer.

Ryan Krieger
VP - Software Equity Research at Wolfe Research, LLC

Appreciate it. Thank you, guys.

Operator

And your next question today will come from Terry Tillman with Truist. Please go ahead.

Dominique Manansala
Dominique Manansala
Equity Research Associate at Truist Securities

Hi, this is Dominique Guananzala on for Terry. Thanks for taking my questions. So just looking at the capital markets side of the business, just wondering how you're thinking about contribution from that side for this year. I guess with the market volatility, has your assumption changed in terms of pipeline or deal timing for IPO or S1 related use cases even?

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

Thanks for the question. We really have not changed our outlook on cap markets. It remained consistent contributor in Q1 and we've modeled it that way through the end of the year. So any return on capital markets remains an upside for us.

Dominique Manansala
Dominique Manansala
Equity Research Associate at Truist Securities

Great. Just one more for me. So now that Workiva Carbon has been in the market for several quarters, just wondering if you've if there's a noticeable difference in win rates or deal sizes, maybe even in carbon intensive industries.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Sure. Thank you for asking about carbon.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Workiva Carbon, as you recall, was a a strategic addition for us to our platform that's made sustainability solutions an overall short integrated reporting platform even more marketable and relevant. So yes, it has opened up doors for us in terms of opportunities, 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, it's the most consistent part of regulations across

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

all,

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

It's the one common thread around all regulations, and a lot of companies do want to go carbon first and want a vendor that provides both the reporting and the carbon accounting together, so it absolutely opened up doors for us.

Dominique Manansala
Dominique Manansala
Equity Research Associate at Truist Securities

Great, thank you.

Operator

And your next question today will come from Andrew DeGasperi with BNP Paribas. Please go ahead.

Andrew Degasperi
Director - Senior Software Analyst at BNP Paribas

Thanks for taking my question. I wanted to maybe ask one on the fund reporting side because you brought it up in your prepared remarks. And I just wondered, you know, how much of an opportunity it is for you. I know you're obviously great in the public corporate reporting side, but just wondering in terms of the, potential for that market.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Sure. Thank you for asking the question. New market we just entered. Another, I would say, fit for purpose, 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, there are over 12,000 public funds globally, and that includes 9,000 or more ETFs with assets under management of over $11,000,000,000,000 So it's a nice market for us to enter into.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

There are, let's say, 139,000 regulated funds reported globally, so we're focused on this market as well, and along with the market for public funds. So

Andrew Degasperi
Director - Senior Software Analyst at BNP Paribas

Thanks.

Andrew Degasperi
Director - Senior Software Analyst at BNP Paribas

Maybe, Joe, on the one follow-up on the NRR, you mentioned FX and leap year. And I was just wondering, is this what would it have been excluding that? I'm not sure if you provided that, so sorry if I missed it. And then second, when I think about the free cash flow target you provided, obviously, you didn't take down your subscription target for the year. But I was just wondering, is this like a very small change?

Andrew Degasperi
Director - Senior Software Analyst at BNP Paribas

Or is it because you expect that weakness to extend into next year?

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

Thanks for the questions, Andrew. On NRR, did not miss it, it was about a point and a half or so impact between the leak year and the currency fluctuations on NRR. So it would have been 11.5 or without that impact. As far as the free cash flow target, we really were 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 of points just because of the potential impact of any slowing impact 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.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

So that was our consideration.

Andrew Degasperi
Director - Senior Software Analyst at BNP Paribas

Got it. Thank you.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

Of course. Thank you.

Operator

And your next question today will come from Brett Huff with Stephens. Please go ahead.

Brett Huff
Managing Director at Stephens Inc

Good evening and thanks for taking the question. Congrats on a nice quarter in a tough environment. Two quick questions. 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 and helping us think see how you think about the business, It's hard to have imagined something like the environment we're in now.

Brett Huff
Managing Director at Stephens Inc

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?

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

Yes. Thanks for your comment. Really appreciate it. And thanks for the question. As we think about the impact of the current environment on our ability to reach our long term guide, we do operate the company in order to reach those numbers, just to be really clear.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

We both reiterated that we stand behind the guidance that we have given for 2027 and 02/1930, and we continue to operate the business with those targets in mind. And so we do have ways that we can impact our margins in order to reach those goals. But as we saw in Q1, we performed and had a 20% SNS revenue growth. We reiterated that we expect 20 SNS revenue growth for the full year 2025. And we have a large unaddressed TAM and a broad portfolio of solutions to execute against.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

And so we still will invest in that growth. But know that we can do that while still keeping those targets in mind. And so we will continue to move towards that as we operate.

Brett Huff
Managing Director at Stephens Inc

Great. Makes sense. Thank you. And then just a quick follow-up. Thinking about customer conversations, maybe what about through the lens of partner conversations?

Brett Huff
Managing Director at Stephens Inc

I know a lot of the big four are partners of yours. Have they approached the ESG market any differently? I mean, we're believers that it's not going away either, but I'm just curious if they have taken a different tack or if they've doubled down or pulled back or just become a little bit different strategies around at least the sentiment around ESG? Thanks very much. Appreciate it.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Sure. We work with our partners extensively and intimately in the sustainability market, and we are committed to working with our customers and providing the value, and again, they see it as we do. This regulation, yes, but it's also about performance, it's also about stakeholder requirements, and it's about risk mitigation, so we're very much aligned with our partners, particularly the consulting and advisory partners, and going to market together jointly. So we are aligned in our messaging, we're aligned in the value that we create for customers as they move into their sustainability activities and reporting and disclosure.

Brett Huff
Managing Director at Stephens Inc

Great. Thanks so much. Congrats again.

Operator

And your final question today will come from Alex Sklar with Raymond James. Please go ahead.

John Messina
John Messina
Research Associate at Raymond James

Hi. Thanks for taking the question. This is John on for Alex. I wanted to start with multi solution deals in the booking environment. Julie, you're obviously very focused on selling the broader Workiva platform.

John Messina
John Messina
Research Associate at Raymond James

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

John Messina
John Messina
Research Associate at Raymond James

I have

John Messina
John Messina
Research Associate at Raymond James

a quick follow-up.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

You know, I think that remains a key differentiator for Wikiva. And I think of myself when I was a CIO and I think of our CIO who's currently buying for work even, and I think about the priority, which is efficiency and effectiveness and consolidation of solutions. So I think this is this is an environment where a platform can be very effective and high performing because it does satisfy those requirements. I mean, you know all of the platform advantages, and it really is about consolidation and experience and ensuring the solutions work together, which really is an efficiency and productivity play. So, no, probably the opposite.

Julie Iskow
Julie Iskow
President and Chief Executive Officer at Workiva

Platforms are a key differentiator in a market like this.

John Messina
John Messina
Research Associate at Raymond James

Okay, great. 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, single digits, non GAAP op margin, that would imply a pretty meaningful ramp in incremental margins in 'twenty six and '27 to hit the more medium term targets. Any update on how you're thinking about the cadence of that ramp and when we would expect more of that inflection to come?

John Messina
John Messina
Research Associate at Raymond James

Thanks.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

So, you can see that in our guide that we have significant improvement in our margin in the second half of twenty twenty five moving into 2026. And we don't expect to have necessarily linear results, but we are starting to move really quickly towards that 2027 timeframe. And so we do expect to and will be operating towards execution on those targets and you will start to continue to see that movement as we move through the end of twenty twenty five, which you see in our guide, and into 'twenty six and 'twenty seven.

John Messina
John Messina
Research Associate at Raymond James

Thank you very much.

Jill Klindt
Jill Klindt
Executive VP & CFO at Workiva

Of course, thank you.

Operator

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.

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Key Takeaways

  • Workiva delivered a 20% year-over-year increase in subscription revenue and 17% total revenue growth in Q1, surpassing the high end of guidance and slightly outperforming operating margin expectations.
  • Large-contract momentum remained strong, with contracts over $100K up 23% and those over $300K and $500K each up 32%, driven by both expansions in the installed base and larger new-logo wins.
  • Despite signs of a more cautious buying environment late in Q1 due to regulatory and macro uncertainty, Workiva reaffirmed its full-year 2025 subscription revenue growth target of ~20% and maintained guidance of $864M–$868M in total revenue.
  • The EU’s CSRD Omnibus package provided clearer scope and timelines for sustainability reporting—Wave one companies still report in 2025—bolstering demand for Workiva’s ESG and non-financial reporting solutions.
  • Product innovation accelerated with immediate support for the SEC’s new EDGAR Next requirements at launch and the introduction of a fund reporting solution aimed at the $11 trillion+ public funds and ETF market.
AI Generated. May Contain Errors.
Earnings Conference Call
Workiva Q1 2025
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