Title

Presentation

Workiva Inc. misses on earnings expectations. Reported EPS is $0.21 EPS, expectations were $0.23.

Operator: Good afternoon, ladies and gentlemen. My name is Tanya, 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 November 6, 2024 at 5:00 p.m. Eastern. I would now like to turn the meeting over to your host for today’s call, Mike Rost, Senior Vice President of Corporate Development and Investor Relations at Workiva. Please go ahead.

Mike Rost: Good afternoon and thank you for joining us for Workiva’s third quarter conference call. During today’s call, we will review our third quarter results and discuss our guidance for the fourth quarter and full-year 2024. Today’s call has been prerecorded and will include comments from our Chief Executive Officer, Julie Iskow; followed by our Chief Financial Officer, Jill Klindt. We will then open the call up for a live Q&A session. A replay of this webcast will be available until November 13, 2024. Information to access the replay is listed in today’s press release, which is available on our website under the Investor Relations section. Before we begin, I would like to remind everyone that during today’s call, we will be making forward-looking statements regarding future events and financial performance, including guidance for the fourth quarter and full fiscal year 2024.

These forward-looking statements are subject to known and unknown risks and uncertainties. Workiva cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the company’s annual report on Form 10-K and subsequent filings for factors that could cause our actual results to differ materially from any forward-looking statements. Also, during the course of today’s call, we will refer to certain non-GAAP financial measures. Reconciliation of non-GAAP to GAAP measures and certain additional information are also included in today’s press release.

With that, we’ll begin by turning the call over to CEO, Julie Iskow.

Julie Iskow: Thank you, Mike, and welcome, everyone, to today’s call. Joe and I look forward to sharing our Q3 results. We’ll showcase some of our signature customer wins and will highlight trends that are driving our momentum. We’ll also discuss our outlook for Q4 and our updated guidance for the full-year 2024. To kick things off, I’d like to share a few comments on the impact to Workiva of the outcome of the U.S. presidential election. With the Trump administration, we remain bullish on our market opportunity, including sustainability management and reporting. We remain equally confident that our growth strategy continues to be relevant and intact. Why? Because the demands on our customers has never been greater. The stakes are high, the impact is massive and accuracy, speed and productivity are not optional and this includes the reporting of both financial and nonfinancial factors.

Reporting on nonfinancial and sustainability information is a global initiative. It’s a topic that goes well beyond any U.S. political talking point, and it’s one that’s not limited to regulation. We believe that the global momentum and the demand for sustainability management and reporting is not going away, and it will not be slowed down by the outcome of this election. For corporations, sustainability reporting is about performance. It’s about growth. It’s about impact. It’s about surfacing risks and managing those risks. It’s about addressing the changing requirements of customers, of employees and supply chains. And at times, yes, it’s about regulation, but sustainability reporting is far from being a trend. It’s a generational movement.

As highlighted at our Investor Day, over 4,200 companies have committed to science-based targets along with the associated reported and 23,000 companies representing 50% of the global market cap now report their emissions data with the rigor required by the CDP. And although the 2024 proxy season saw a continued rise in anti-ESG proposals, none of these proposals passed and none of them received more than 10% support. Well, we’ve been selling ESG well ahead of regulation. There are some sustainability regulation deadlines that are fast approaching. Companies are actively preparing for both the EU Corporate Sustainability Reporting directive, or CSRD, and the State of California Climate Rules. These regulatory requirements are not influenced by the U.S. Federal government.

We believe that the CSRD is a game changer. It’s not simply the next regulatory requirement. It’s a step change in the size and the scope of our opportunity. For European companies, the regulations are clear. Large companies will begin reporting starting in Q1 of 2025, and there are over 1,000 new data points that they need to report on. These new disclosures will be subject to external audit starting in 2026 with XBRL disclosure with ESEF being phased in over time. The impact of the CSRD though is not limited to Europe. Global customers are increasingly focused on meeting the requirements of the regulation regardless of whether they’re directly governed by it. For these companies, the implications of the CSRD extend to their supply chain and the needs of their customers.

Business is aiming to attract and retain customers as they grow in Europe will have a strong incentive to comply with the CSRD. To operate successfully on a global scale, companies will be compelled to disclose their sustainability metrics. As we, as a country, transition to a new president, we will continue to execute on our strategy and serve our customers’ growing set of requirements for sustainability management and reporting. I’ll now move on to our Q3 results. Workiva is once again in a beat and raise position. Our results demonstrate an acceleration in both growth and improved operating efficiency. We delivered solid Q3 performance with subscription revenue growing at 19% and total revenue growing at 17%. These results drove a beat to the high end of our revenue guidance while at the same time delivering a Q3 operating margin above the high point of our guide.

In Q3, we saw a repeat of the healthy buying environment that we communicated in our Q2 call. We had another record bookings quarter. We saw broad-based demand across the entire solution portfolio and higher volume of account expansion deals and platform wins across North America, Europe, APAC and Latin America. We believe that there are several reasons for our improved performance. Key factors include enhanced internal execution and increased customer demand driven by approaching regulatory deadlines particularly the CSRD. We’ve also observed a general improvement in the macro. Whether from new logos or account expansions, we were encouraged by our win rates, our deal sizes and our platform wins. We also delivered in Q3 another standout performance in our sustainability management and reporting solution with an added boost for Workiva Carbon.

Sustainability was yet again a top booking solution. Europe was a highlight for the quarter, again as well. We delivered continued momentum in Europe across all solution categories. The value of our platform continues to resonate, particularly with the CSRD fast approaching. We win with our platform, we win with our partners and we win with assured integrated reporting, which now includes carbon accounting, the most consistently regulated part of sustainability. I’d like to start off our deal highlights for the quarter with three wins demonstrating the success of our assured integrated reporting platform. First, a U.S.-based Fortune 100 food and beverage company expanded their platform usage with a mid six-figure deal for ESG reporting and policy management.

The purchase of ESG complements this company’s previous investment in SEC reporting, controls management and enterprise risk management. This company purchased ESG to support their current science-based target reporting initiative and to address requirements for the CSRD. The opportunity was a co-sell and will be delivered by a big four firm. Second, we signed a multi six-figure account expansion deal with a North American industrial company. This company has been a loyal customer of Workiva for 11 years. This quarter, they purchased ESG, Controls Management and Audit Management and are now utilizing six solutions on our platform. This was a competitive deal with the GRC-specific platform vendor. The ability to handle GRC, financial reporting and ESG was a differentiator in this deal.

The opportunity was a co-sell with the big four advisory firm and the same big four firm will be providing delivery for the project. And third, we signed a mid six-figure five solution account expansion deal with a UK based IT services company. This company purchased their first Workiva solution, global statutory reporting in Q4 of 2023. Less than a year later, they expanded on the Workiva platform with the addition of five solutions: Management Reporting, Controls Management, Policies and Procedures, ESG and Workiva Carbon. This opportunity was sourced and will be implemented by a European regional consulting firm. I’ll move on now to financial reporting. In Q3, financial reporting contributed substantially to our growth. I’d like to highlight three financial reporting deals from the quarter.

First, we closed a mid six-figure account expansion deal with a Fortune 50 company for management reporting. This global organization is in the process of an S/4HANA upgrade and broader finance transformation. A regional advisory firm partner had been working with the client on other Workiva projects and was hired to replace a legacy mainframe reporting solution that had been in place for years. Workiva offered the power and the flexibility to move this customized reporting solution to the cloud and to work alongside the new S/4HANA business processes. The strength of the Workiva financial reporting solution with the proven trust this customer had in its business partner was a key differentiator in the deal. ERP upgrades, transitions and broader finance transformation projects continue to be a valuable market event for us to land new customers and sell new solutions.

Second, we closed a mid six-figure solution new logo deal with a European global payments and shopping service provider. This customer purchased our global statutory reporting, private company reporting, SEC reporting and capital market solution as this company prepares for a 2025 IPO. The opportunity was a co-sell with a global IT services firm. And third, we closed a multi six-figure four solution new logo win with a large European reinsurance company. This reinsurance company purchased ESEF global statutory reporting, insurance reporting and ESRS XBRL reporting to support their requirements for CSRD. This was a competitive deal with four point solution vendors competing for part of the business. The cloud delivery and comprehensive capabilities of the Workiva platform is a differentiator in this deal.

The opportunity was sourced and will be delivered by a big four advisory firm. I’ll now turn to GRC. GRC programs fundamentally involve managing controls, risks and policies and conducting operational audits. Our GRC portfolio closely aligns with our financial reporting and sustainability solutions. This is truly a better together value proposition. Let’s take a look at three GRC deals that closed in Q3. First, a European-based entertainment company signed a mid six-figure three-solution account expansion deal. The company purchased controls management, audit management and policies and procedures to complement the investment made in the Workiva ESEF solution in Q4 of 2023. This opportunity was a co-sell and will be delivered by a big four advisory firm.

Second, a Canadian consulting firm purchased controls management and audit management in a six-figure account expansion deal. These were the sixth and seventh solutions purchased by the company. This was a competitive deal with the GRC platform vendor. The value of the platform and the ability to leverage the investments already made in our SEC and ESG solutions were differentiators in this opportunity. The deal was a co-sell and will be delivered by our regional consulting firm. Third, a U.S. regional bank purchased four GRC solutions as an account expansion deal. This 12-year loyal SEC reporting customer purchased audit management controls management, risk management and policies and procedures. This was a competitive deal against three GRC platform solution providers.

The opportunity was a co-sell and will be delivered by a regional consulting partner. Let’s move on now to talk about one of our top booking solutions for nine quarters in a row, sustainability management and reporting. The demand for our sustainability management and reporting solution, which includes ESG reporting and Workiva Carbon continues to grow. Organizations are investing in sustainability programs to enhance the reporting on corporate targets and to comply with regulations such as the CSRD. I’d like to highlight a few of these sustainability management and reporting wins from the quarter. First, we landed a multi six-figure new logo customer, a Canadian manufacturing company. This company purchased Workiva Carbon and ESG reporting along with the SEDAR reporting to support their global disclosure requirements including those of the CSRD.

Workiva was differentiated in this opportunity with our fit-for-purpose ESG solution and the capability to support financial reporting. ESG in combination with SEDAR reporting is a clear, better together value proposition. This opportunity was a co-sell and will be implemented by a regional consulting firm. Second, we closed a two solution new logo customer for ESG reporting and ESEF with the European advertising and PR firm. This deal was driven by the integrated reporting requirements the reporting of both sustainability and financial information as required by the CSRD. The opportunity was sourced by a design agency partner that’s been working with this company for years. And third, we signed an account expansion deal for ESG and Workiva Carbon with a U.S.-based manufacturing company.

This 10-year loyal SEC customer purchased both ESG and Workiva Carbon after meeting with the Workiva product team and with Workiva ESG customers at our Amplify Event in September. This company will be reporting on sustainability for the past two years and will leverage the Workiva platform to evolve their sustainability reporting process. As a supplier to many consumer-based companies, reporting on climate and broader sustainability metrics has become a strategic requirement to retain customers and win new business. As outlined in a couple of these deal examples, Workiva Carbon played a new role in our deal activity this quarter. We launched Workiva Carbon at the end of Q2 and Q3 was a busy and productive quarter for us. We trained our sales team, certified our partners, we built our pipeline and we closed deals.

Along with ESG reporting, we delivered to market a comprehensive sustainability management and reporting solution. Workiva Carbon has advanced our ESG and our sustainability platform to support organizations requirements for carbon accounting and the tracking and the disclosure of carbon emissions for Scope 1, 2 and 3 and decarbonization. As a fit-for-purpose solution, it enables organizations to measure, manage, collaborating report on emissions data to support their net zero supply chain and regulatory reporting requirements. This solution combines technology and expertise from the Sustained Life acquisition with the power of the Workiva platform. Workiva Carbon is a platform play. Our results in Q3 have confirmed that this was a strategic addition to our platform that has made our ESG solution an overall assured integrated reporting platform even more relevant.

The CSRD is not the only regulation that’s driving market demand. Sustainability regulations continue to advance in North America. On September 27, California Senate Bill 2019 was signed into law. Senate Bill 219 introduces key amendments to 2 existing climate disclosure laws: the Climate Corporate Data Accountability Act, or SB 253 and the Climate-related Financial Risk Act, SB 261. These laws require large companies operating in California to report their GHG, or greenhouse gas emissions, as well as their climate-related financial risks. The main impact of SB 219 is that it grants the California Air Resources Board, more time to adopt regulations related to these disclosures. The Board’s deadline has been extended from January 1, 2025 to July 1, 2025.

However, it’s important to note that the original reporting deadlines remain unchanged. Companies must still begin reporting Scope 1 and Scope 2 emissions in 2026 with Scope 3 emissions reporting starting in 2027. This extension provides the regulator the California Water Resources Board with flexibility to better address complex issues like Scope 3 emissions. Scope 3 emissions involve indirect emissions across a company’s value chain. With this extension, those corporations subject to the regulation will just have less time to prepare once the Board publishes the specifics of what will need to be disclosed. Additionally, SB 219 offers more leniency in how companies can consolidate emissions reporting at the parent level, and it allows the California Air Resources Board to handle reporting duties directly or through third parties.

Overall, SB 219 aims to ease the implementation of California’s ambitious climate reporting requirements offering companies more flexibility, but it does so while maintaining the state’s strong commitment to climate transparency and accountability. Moving on to our guide. As I highlighted at Investor Day, we’re focused on both driving growth and improving operating margin. We’ll be raising our full-year guide for both revenue and operating profit. We’re successfully accelerating subscription revenue growth. Following a strong third quarter, we’re raising our full-year 2024 revenue guidance by $6 million. We’re also achieving margin expansion. In the third quarter, we realized a 170 basis point improvement in gross margin and a 70 basis point improvement in operating margin compared to Q3 of 2023.

As a result, we’ll also be raising our full-year operating margin guidance. This guidance factors in the continued investment in sales and marketing that we’ve previously communicated. The vast majority of the sales and marketing spend is the hiring of quota-bearing reps. It’s an indicator of our confidence in our opportunity. We’re encouraged by the demand we’re seeing in the market which was also reflected in this quarter’s billing numbers. Our results and our progress give us confidence that our strategy is working. We’re focused on the long-term growth of our business by delivering an innovative platform and a set of high-value fit-for-purpose solutions that solve our customers’ increasingly complex and expanding reporting requirements.

We continue to build Workiva as a durable business with a focus on both growth and profitability. I’d like to thank our customers, our partners and our investors for their continued support. I’d also like to thank our talented team of dedicated employees. Together, we’re working to make an even greater impact and accelerate our mission to power transparent reporting for a better world. And with that, I’ll now turn the call over to you, Jill.

Jill Klindt: Thank you, Julie, and good afternoon, everyone. Thank you for joining us. Today, I will cover the financials and key metric highlights for the third quarter of 2024. I will also provide guidance for Q4 and for the full-year 2024, and before opening the line for questions. As Julie discussed, the continuation of a healthy buying environment helped us achieve solid results in Q3. We beat the high end of our Q3 revenue guidance by $2.6 million, driven by an acceleration of subscription revenue growth. We came in at the top of our operating margin guidance, generating $7.6 million of operating profit, a 70 basis point improvement versus Q3 2023. We generated $185.6 million of total revenue in the third quarter, delivering growth of 17% over Q3 2023.

Subscription revenue was $171 million, up 19% from Q3 2023. We continue to see a combination of new customers and account expansions contributing to our strong revenue growth. For reference, new customers added in the last 12 months accounted for 45% of the increase in subscription revenue. Professional services revenue was $14.6 million, down slightly from Q3 2023 driven by the ongoing execution of our plan to move setup and consulting services to our partners. I’ll now move on to our performance metrics for the quarter. We had 6,237 customers at the end of Q3 2024, a growth of 292 customers from Q3 2023. Our gross revenue retention rate of 97.5% exceeded our 96% internal target. And our net revenue retention rate was 110.5% for the quarter.

We generated 68% of our subscription revenue from customers with multiple solutions. This compares to the 64% reported in Q3 2023. We continue to be pleased with this trend and the progress it shows as we focus on expanding relationships with our largest customers. As discussed during our Investor Day in September, we have changed the tranches we report related to annual customer contract value. We will no longer report the number of contracts over $150,000 per year. And instead, have added a tier to report the number of contracts valued over $500,000 per year. We believe this change will better reflect our progress selling into our largest customers. In the quarter, we had 1,926 contracts valued at over $100,000 per year, up 23% from Q3 the prior year.

The number of contracts valued at over $300,000 totaled 383, up 29% from Q3 2023 and the number of contracts valued over $500,000 totaled 166, up 28% from Q3 2023. Moving on to our operating results. Gross profit totaled $146 million in Q3, up 20% from the prior year. Gross margin improved year-over-year by 170 basis points, increasing to 79%. This was driven by continued efficiency gains as we scale our customer and partner experience teams and lower cloud computing costs versus the same quarter a year ago. We posted operating profit of $7.6 million compared to the Q3 2023 operating profit of $5.3 million. Operating margin improved year-over-year by 70 basis points, increasing to 4%. At September 30, 2024, cash, cash equivalents and marketable securities increased $36 million over the end of Q2 2024 to a balance of $776 million.

Operating activities in Q3 2024 resulted in cash provided of $19 million compared with cash provided of $15 million in the same quarter a year ago. Turning now to our guidance for Q4 and the full-year 2024. We are pleased with the subscription growth acceleration we are driving. Our strong year-to-date performance, along with improved sales momentum gives us the confidence to raise our full-year revenue guide. For the fourth quarter of 2024, we expect total revenue to range from $194 million to $196 million. We expect services revenue will be down slightly compared to Q4 2023. Similar to Q3, we expect a decline in setup and consulting services revenue to be partially offset by growth in XBRL services revenue. We expect non-GAAP operating income to range from $13 million to $15 million, or a non-GAAP net income of $0.31 to $0.34 on a per share basis.

Our share count will be approximately 56 million weighted average shares. For the full-year 2024, we are increasing our total revenue guide to between $733 million and $735 million. We are encouraged by the demand we’re seeing in the market. This is a primary driver for the raise. We expect total services revenue will be down year-over-year with XBRL services revenue continuing to grow at a low single-digit rate, while setup and consulting revenue is expected to decline slightly more than the rate we saw in 2023. We expect our subscription revenue growth to be over 19% at the midpoint. We are increasing our guidance for non-GAAP operating income to range from $30 million to $32 million or a non-GAAP net profit of $0.93 to $0.96 on a per share basis.

Our share count will be approximately 55 million weighted average shares. We believe we will post a positive free cash flow margin of 11% for the full-year 2024. I wanted to provide some early thoughts on 2025. We achieved margin improvement in 2024 and expect to make continued progress in 2025. However, we do not expect to make linear progress. Similar to 2024, we expect operating margin in the back half of 2025 will be stronger than the first half. We expect XBRL services revenue will continue to grow at a modest low single-digit rate in 2025. We expect setup and consulting revenue will decline from 2024 to 2025. In closing, I want to reiterate three points. First, we are pleased with our acceleration of subscription revenue growth. Second, even while we continue to invest in sales and marketing and hiring quota-bearing reps, we are focused on margin expansion.

And finally, we are focused on the long-term and building a durable business with a commitment to both growth and improving operating margin. I would like to thank all Workivans around the globe for their hard work and dedication to our mission and strategy. It’s because of you that we are able to continue to execute on the opportunities in front of us. Thank you all for joining the call today. We’re now ready to take your questions. Operator, please begin the Q&A session.

Operator: [Operator Instructions] And one moment for our first question, will be coming from Steve Enders of Citi. Your line is open, Steve.

Steve Enders: Okay, great. Thanks for taking the question here. I guess maybe just to start, I want to get a little bit of a better sense of what it is that is happening to the deal environment today. And I think the bookings looks pretty — billings and bookings are looking pretty strong here. So I guess what would you characterize as happening in the market? Is this just some of the budget challenges reversing and things getting better there and deals are closing? And is something else kind of happening out there in the macro today?

Julie Iskow: Thanks for questions, Steve. We really do attribute it to a couple of key factors. The first is our own internal execution. I mean we’ve been focused on improving and go to market and the strength of our teams and the way we’re approaching things shift towards the platform play and so forth. So internal execution, of course, is one. We also see the CSRD. It’s alive and well and the first cohort of companies that need to comply must do so in 2025 with the data of 2024. And it’s not just Europe, it’s North America as well and we’re seeing some momentum there. And finally, it’s just our broad use high-value platform is resonating, assured integrated reporting pushing hard to go after that unaddressed TAM, and the strategy is working. So, that’s what it’s about, focused on the growth and going after it.

Steve Enders: Okay, great. That’s helpful context there. And then I guess on the go-to-market changes and kind of the hiring — but you’ve been, I guess, working on, I guess, kind of where are we on that process? How are kind of the newer reps or some of the newer profile reps that you’re hiring? How are they beginning to resonate? And what the kind of productivity look like versus kind of what you’ve been targeting for those?

Julie Iskow: I’ll just start off by saying we have been very vocal about the investment in go-to-market and reps take anywhere from 6 to 12 months to ramp. So we are still ramping on a lot of the reps that we’ve hired. But again, going after it, investing in it and we’ll continue to invest going after that market opportunity, again, has a time element to it. It’s right there. We want to keep our leadership position. So again, going after the growth and address TAM.

Steve Enders: Okay, perfect. Thanks for taking the question.

Operator: Thank you and one moment for our next question. Our next question will be coming from Jake Roberge of William Blair. Your line is open.

Jake Roberge: Yes, thanks for taking my questions and congrats on the results. Great to hear that CSRD is starting to drive more demand to the platform. Could you just give us an update on the competitive environment that you’re seeing in the ESG space? If there are any kind of early inclinations about how Sustained Life could actually factor into the win rates on that side?

Julie Iskow: Sure. And I’ll say this. I mean, even your question asking it is the competitive landscape gets — is increasing, but still we have a very differentiated platform as well as differentiated solutions. So while we might see some point solutions coming in or some competitors moving into some of the space, we are the only unified platform for assured integrated reporting. We did acquire Sustained Life and then roll out Workiva Carbon on our platform. And we were very open and candid about why because often in parts of the market, we would see sustainability requiring carbon — calculation of carbon emissions first. It’s the most consistently regulated part of ESG or sustainability. So we wanted to capture that part of the market, make sure we were in deals so that we could again go out and sell the platform, ESG and then the full platform is a platform play for us.

So we also wanted to make sure that we were answering the market’s need for, in some cases, a single vendor to provide both carbon accounting and ESG. So we have now sustainability management reporting, which has both. And we believe that it will be significant for us in the platform play across the board. So received great feedback from the market, continue to build pipe and the value proposition of the ESG platform, including carbon is resonating.

Jake Roberge: Okay, very helpful. And then I know that Europe and California are steady steam ahead, but now that the presidential election has been decided. Can you maybe talk about some of the puts and takes that you could see around SEC mandates in the U.S. just under the new administration?

Julie Iskow: I’ll start with that one. We time will tell around the SEC regulations. I mean, we’ve continued to grow under each administration regardless of who’s in charge, operated now on I think under eight different SEC chairs during the time of the company. But we’re confident our growth will continue. I mean we remain confident in our market opportunity, including sustainability management reporting. It’s about performance and growth and surfacing risks and managing those risks and companies around the globe, as we talk to are building and maturing their sustainability programs and they’re doing it to build durable growth companies and manage the demand to their stakeholders. So we feel confident regardless of that SEC regulation that our platform is continuing to be relevant and our growth strategy is working.

Jake Roberge: Thanks for taking my questions.

Operator: And one moment for our next question. Our next question will be coming from Rob Oliver of Baird. Your line is open.

Rob Oliver: Great. Good evening. Thank you very much. Julie, my first question is for you. And by the way, thank you to you guys for hosting us in Denver. It was really helpful. Just at the analyst portion of the event in Denver, you called out ERP migrations as a trigger event. I noticed in response to Steve’s question earlier, you did not list them as one of the drivers of business near term. And maybe it’s just not the top one. But just wanted to get a sense since you had previously called out some ERP migration deals. Is that something that’s happening right now for Workiva? Or is that more of a 2025, 2626 event? How significant is it to you guys at the moment? And how significant could it be? And then I had a quick follow-up for Jill.

Julie Iskow: Sure. Yes. We have partnerships with some of the ERP vendors. We work with our big four regional partners who’ve got dedicated ERP practices and they’re frequently driving finance transformation, ERP changes. So we are part of, for example, say, the S/4HANA transformation playbook for one of the big four. So ERP implementations and upgrades for Workiva are absolutely a trigger event, and we continue to be a part of that transformation lot.

Rob Oliver: Great. Helpful. Thank you. And then, Jill, just one for you on the sales investments, this came up a little bit earlier, but obviously you sort of called out that a fair amount of that investment was going to be focused on Europe, that there is a ramp to hiring time. We just want to make sure that ahead of the CSRD implementation time line, at least that first tranche, that you guys are adequately staffed adequately invested to meet that need. How should we think about your — the hiring and the investments that you’ve made? Where are you in that process relative to where you need to be? Thank you.

Jill Klindt: Thanks for the question, Rob. We are still in the process of hiring quota reps around the globe, actually, but we do have a good amount of hiring that’s happening within Europe. I would say that we are still in the process of working through that hiring and getting good results and we’re feeling good about the progress, but we are not done with the investments that we will make as far as hiring quota reps in that region or even in the U.S. and other areas around the globe as we take advantage of this sustainability reporting opportunity in front of us.

Rob Oliver: Great, helpful. Thanks again.

Operator: And one moment for our next question. Our next question will be coming from Ryan Krieger of Wolfe Research. Your line is open, Ryan.

Ryan Krieger: Hi, guys. Thanks for taking the question. I just want to follow-on to Steve’s question on the macro environment. It’s great to hear that things are getting better or continue to be stable, but were there any verticals or geos, even geos here in the U.S. where buying trends were maybe better or worse than the average?

Julie Iskow: No. As mentioned in my prepared remarks, we continue to see a healthier buying environment and it’s really marked by the broad-based demand across our entire solution portfolio and even across the geos. We saw some great platform deals closed in Q3, as I highlighted in the call, but it truly is a broad-based demand for us.

Ryan Krieger: Great. And just on bookings, I think last quarter, you also called out record bookings and then just looking at bookings from this quarter, it far exceeded that. So were there any kind of onetime dynamics this quarter or maybe any pull-forward dynamics from 4Q that maybe we should be aware of just like when we’re looking at the rest of the year?

Jill Klindt: No, we didn’t really see any pull forward. I think it really has just been, as Julie discussed on the prepared remarks, a combination of performance and execution and what we’ve seen as a more positive buying environment through Q2 and Q3. But we aren’t feeling like we’re pulling from Q4 or pulling ahead deals. It really is just a good cadence and a clean pipeline, and we’re really encouraged by what we’re seeing there.

Ryan Krieger: Awesome. Thank you guys and congrats on the great quarter.

Julie Iskow: Thank you.

Operator: One moment and our next question will be coming from Terry Tillman of Truist Securities. Terry. Your line is open.

Dominique Manansala: This is Dominique Manansala on for Terry. Thanks for taking my questions. So just wanted to know how you’re all viewing the growth potential of your financial reporting business outside of SEC reporting. I just want to know what kind of growth you’re seeing in other use cases, particularly within capital markets and maybe what your assumptions are for that part of the business heading into Q4?

Julie Iskow: Sure. As we highlighted in the call, our financial reporting business continues to grow. And you may have heard me talk about this multiple times as we did in Investor Day that financial reporting is SEC, but beyond SEC, it’s our global statutory reporting, our multi-entity reporting and operational reporting and so forth. So we have rewarding beyond SEC when you think about it, so very strong. And of course, it’s fundamental to assured integrated reporting. And when you think about the CSRD requirements, it is about an integrated report, financial reporting, along with nonfinancial or sustainability data and assurance. So it is a healthy part of the Workiva platform and continues to be strong for us.

Dominique Manansala: Thank you…

Jill Klindt: And just as a follow-on to that, thinking about capital markets, in particular, we aren’t, at this time, stating that we think that there’s any kind of a return there. We’re, of course, watching it very closely along with the rest of the market, but — and we haven’t built any kind of a return to capital markets into our models. We’re just keeping that more consistent at this time. But we, like you all are watching it really closely.

Dominique Manansala: Super helpful, thank you.

Operator: And one moment for our next question. Our next question will be coming from Daniel Jester of BMO Capital Markets. Your line is open, Daniel.

Kyle Aberasturi: Great. Hi. This is Kyle Aberasturi on for Dan Jester. Thanks for taking our questions. I guess, first, it was nice to hear about the S/4HANA customer deal during the quarter. Could you maybe dig a bit deeper here? I guess, how did that deal progress compared to expectations? And then just more broadly, how do you feel about the S/4HANA customer pipeline heading into 2025?

Julie Iskow: We don’t talk about the future pipeline, but it’s very indicative of, again, the trigger event of S/4HANA, our ERP upgrade or replacement. We have partners on both — that are the big four, but other system integrators with dedicated practices for ERP implementations, they drive a lot of the decisions related to how ERP systems connect with other systems. And we have prebuilt connectors. We are there when they’re looking for disclosure management on these platforms, for example, on S/4HANA. So these are typical for us. We get these — whether it’s a co-sell or a source deal motion, we work with these partners who, again, have these dedicated ERP practices and driving financial and digital transformation.

Kyle Aberasturi: Great. And then on the carbon solutions, I guess, how or is Carbon first deals faring relative to expectations? I understand it is early there. And then how are sales, if any to, of the Workiva platform to Carbon customers that came with the acquisition progressing? Thank you.

Julie Iskow: Sure. Thank you, Daniel. We don’t disclose solution-specific deal activity, but we are pleased with the momentum of our — with our sales team and what they’ve been generating. Of course, sustainability offering is top of mind for us and particularly with Workiva Carbon now. So we’ve received some great feedback. We’re continuing to build pipe, the value — the full sustainability platform, including Carbon is resonating. And the other thing is our partners are very enthusiastic and they’re investing around the opportunity. So yes, as we mentioned, we are closing deals. And we are moving forward with the sustainability management and reporting offering.

Jill Klindt: And to follow on to Julie’s comments, I wanted to point out that this is really organic growth. The business that we brought in as part of the Sustained Life purchase was pretty immaterial that — where we really are focusing is the ability for us to then use Workiva Carbon and accelerate deals and get in the door, as Julie was talking about, where we otherwise maybe wouldn’t have been able to as quickly. So it really is more of that organic business that it’s driving.

Operator: One moment for our next question. Our next question will be coming from Alexander Sklar of Raymond James. Your line is open, Alexander.

John Messina: Hi, thanks. This is John on for Alex. Really, it’s been talked about quite a bit here, but just wanted to ask about the changes on the go-to-market side. Beyond the hiring commentary, where are we in some of the other initiatives you mentioned in Amplify, like shrinking territories? Has that been completed? Or is that still a work in progress? Then I have a quick follow-up.

Julie Iskow: Sure. It is still a work in progress. We’re improving. We’re doing it globally. We’re working to change ratios of our overlay sellers along with our account executives. So we’re still moving there, and we’re still working to improve our sales, again, going to market with partners, working on platform plays and so forth. So we’re in the midst of those changes.

John Messina: Okay. Thanks. Helpful color there. And just maybe just double click on the Carbon commentary that we just had here. I wanted to dig in there. Just curious on some of the early learnings there, are you finding success building pipe selling to prospective new ESG customers like first-time Workiva customers? Or so far has the pipeline success been with existing cross-sell into your ESG base?

Julie Iskow: We are going after both. But again, I’ll remind you and those on the call, this was — this is really a platform play, strategic addition to our platform that we believe will make our ESG solution and overall assured integrated reporting platform better. So that’s — this is really what the carbon accounting was about. And it does enable us to get access to more deals and yes, go after our base as well.

John Messina: Okay, thank you very much.

Operator: One moment for our next question. Our next question will be coming from Adam Hotchkiss of Goldman Sachs. Your line is open, Adam.

Adam Hotchkiss: Great, thanks so much for taking the question. Julie, could you just remind us on the go-to-market side, what you’re anticipating from a mix and channel perspective for ESG in Europe? I know you have lead heavily into your partners, but have also talked about pretty substantial hiring plans. So I’m just curious how that plan around mix between those two channels has evolved? And what gets you confident you’re employing the right strategy there?

Julie Iskow: Sure. In Europe, in general, we go to market with partners more — even more so than in North America, we’re less known, but partners are everywhere we want to be. So we’re leaning heavy into that channel with ESG and our platform. We are doing, as you said, a mix of both. But with ESG, it is absolutely partner first. And it is the play that we’re using and yes, going to market directly as well, but partners play a significant part in our — in expediting our growth and executing on our strategy.

Adam Hotchkiss: Okay, great. That’s really helpful. And then just on the ESG uptake side of things, I think we’ve talked about this before, but just — any new learnings in terms of the actual cohort go lives through CSRD and how that impacts when customers would adopt your solution. So obviously, we have some being impacted for the fiscal 2024 reporting year and then subsequent years thereafter. Are you seeing some sensitivity to that timing? Or are you seeing customers sort of front load their early work on getting ESG deals done? Just curious how that’s evolved?

Julie Iskow: Thanks for that question. It really does depend on where they are in their own ESG or sustainability path. We’ve been pretty consistent about communicating that this will be a long durable demand market with what we believe will be growth over multiple years. But again, there are customers in that first cohort that are needing to comply in 2025 and we are seeing more and more demand for ESG and sustainability based on CSRD. But there are those that are very mature in their programs and those that are starting. There are some that will be box checkers, but there are thousands of companies over the course of the next few years and several years that will be complying. So again, it depends on where you are in compliance requirements needing to meet them as well as where you are in your own journey on CSRD and sustainability.

But we are, of course, seeing an uptick in companies that are working towards meeting those requirements and many are not waiting. And in fact, regulation hasn’t even been in place whether here or Europe yet, and again, has been our fastest-growing booking — one of our fastest-growing booking solution now for nine quarters in a row.

Adam Hotchkiss: Okay, thanks so much, Julie. Appreciate it.

Operator: And this concludes today’s conference call. Thank you for participating. You may now disconnect.