Good afternoon, ladies and gentlemen. My name is Phil and I will be your host operator on this call. Please note that this call is being recorded on August 3, 2023 at 5:00 p.m. Eastern. I would now like to turn the meeting over to your host for today's call, Mr. Mike Rost, Senior Vice President of Corporate Development and Investor Relations at Workiva. Please go ahead, sir.

Good afternoon, and thank you for joining us for Workiva's Second Quarter Conference Call. During today's call, we will review our second quarter results and discuss our guidance for the second quarter and full year 2023. Today's call has been pre-recorded 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 August 10, 2023. 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 second quarter and full fiscal year 2023. 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. Reconciliations 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 our CEO, Julie Iskow.

Thank you, Mike. And good afternoon, everyone. During today's call, we'll walk you through our Q2 results. We'll discuss where we're winning in the market across our solution portfolio, provide a perspective on the current macro environment, highlight exciting new platform innovation, and provide guidance for Q3. Q2 was another solid quarter. Subscription revenue grew at 21%, driving a beat to the high end of our revenue guidance. Q2 operating margin also beat the high end of our guidance by 222 basis points. This was my first quarter as CEO. The leadership transition has been smooth and successful. I've had the opportunity to spend a lot of time over the last few months meeting with employees, customers, and partners all around the world. I'm more optimistic than ever about the opportunity in front of us. Despite the challenging macro environment, I'm confident in our ability to successfully execute our growth strategy and advance our productivity initiatives. We're winning with assured integrated reporting. Workiva remains the only platform that brings financial reporting, ESG, and GRC together in one secure, controlled, audit-ready environment. This is showcased by the growth we're seeing in our large contract customers. The number of contracts valued over $100,000 increased 24%. Those over $150,000 increased 28%, and contracts valued over $300,000 are up 40%, all compared to Q2 of 2022. Along with our best-of-breed capabilities, our platform is a strong and key differentiator in the marketplace, and it's resonating with our customers. I'd like to highlight three Q2 expansion deals, all of which are full, assured integrated reporting wins. First, a Fortune 100 aerospace and defense company purchased ESG to complement their previous investment in SEC global statutory reporting and GRC. This 10-year loyal SEC customer was engaged with a Big Four firm to transform their ESG program. The Big Four firm recommended Workiva as the technology of choice, and they'll also be providing delivery for the project. Second, a privately held provider of IT infrastructure and services expanded their existing investment in GRC and ESG by purchasing a suite of financial solutions consisting of our private company reporting, global statutory reporting, and management reporting. This assured integrated reporting win was sourced by the same Big Four advisory firm that delivered the customer's current GRC and ESG solutions. The firm will also be handling project delivery of this new Financial Reporting Solution Suite. And third, a European-based multinational telecommunications company purchased both our ESG and GRC solutions to complement their existing investments in SEC and global statutory reporting. This deal was a co-sell win with the Big Four advisory firm and will be partnering with them on the delivery of this project. These examples showcase the value and flexibility of our innovative platform. They speak to the importance of managing financial reporting, non-financial ESG reporting, and audit, risk, and controls all in one platform. They also highlight the critical role that our partners play in extending the value of our platform and in account expansion. The strength of our partner program continues to contribute to both new logos and deal expansions that are sourced by or co-sell with a Workiva advisory or technology partner. I'd like to highlight a few examples from Q2 where customers invested in and expanded their ESG programs with Workiva. First, a Fortune 500 provider of food facilities and uniformed services purchased ESG to complement their existing SEC solution. This long-time SEC customer was looking to expand their program in ESG data management, reporting, and climate accounting. This opportunity was influenced by both a regional advisory firm partner and by a climate accounting software partner. The combination of Workiva ESG data management reporting along with the partner delivered integrated climate accounting solution will provide this client a comprehensive ESG solution. And second, a European-based consumer products company with a new logo win purchased ESG. This opportunity was sourced by a Big Four advisory firm that had been engaged on an ESG transformation project. The driving force behind this project was the customer's future compliance with new CSRD ESG disclosure requirements. The software selection went through a formal RFP process, and Workiva prevailed as the top solution to address this company's ESG reporting requirements. While non-financial reporting is a new growth driver, we continue to benefit from strong growth in our financial reporting solutions. This portfolio of solutions goes beyond our well-established SEC solution. In Q2, we had signature wins in our vertical-specific solutions for banks, investment firms, and state and local governments. We also saw strong momentum in our private company financial reporting solutions, including those companies on a private-to-public journey. I'd like to highlight two financial reporting deals that closed during the second quarter. First, a top 20 US city purchased seven solutions to support their annual comprehensive financial report. This new logo win was a joint sales pursuit with an ERP technology provider to support a finance transformation project that included a new ERP system. Workiva and this partner submitted a joint proposal and aligned on supporting the city's financial reporting requirements. This opportunity was also influenced by a regional consulting partner who had a previous relationship with the city, and this regional partner will be implementing the project. Our financial reporting suite of solutions provides significant value to finance transformation in ERP selection projects. The complexity of this type of finance transformation is where our platform truly shines. And second, we closed a seven-figure solution upsell for fund reporting with a US-based global investment company. This new purchase expands the use of our fund reporting solution across their private equity and credit fund portfolio. The project will be implemented by a regional accounting advisory firm that has implemented other Workiva solutions for the same client. I'd like to move on now to talk about our GRC suite of solutions. With increasing stakeholder scrutiny, establishing an integrated enterprise-wide governance, risk, and compliance program is a strategic priority for many organizations. At the core, GRC programs include processes for controls, risk, and audit management. I'd like to highlight two GRC deals that closed during the second quarter. First, we landed a new logo win with a publicly traded consumer products company that purchased controls management to support their SOX process. This deal was brought to us by a Big Four firm that is advising the client's accounting team on their controls process. Once they saw the power of our controls testing capabilities, the deal was secured. And second, a Top 15 US-based mutual insurance company expanded their investment in Workiva with audit management; this solution will be the sixth Workiva solution purchased, expanding on a GRC investment in controls management and enterprise risk management. This opportunity was sourced by a regional advisory firm that implemented the controls and risk management solutions back in 2022. Now I'd like to shift gears and share my perspective on the macro environment. Not unlike other SaaS companies, we continue to operate through some challenging market conditions. While our top-of-funnel activity is growing, we do see sales cycles extending, and customer budgets are under increased scrutiny. It's clear from my conversations with both our customers and partners that more executives have become involved in the decision-making process, and budgets are tightening, regardless of company size or industry sector. Having been a CIO and a buyer of SaaS software for many years, my experience suggests that organizations become more selective and focused on business-critical applications when budgets tighten. So our focus continues to be on communicating our value and working with our partners to deliver high ROI projects. We do have some positive news to share on capital markets. In Q2, secondary offerings remained strong, and we saw an uptick in our IPO activity. We're pleased with how we're competing for these IPO deals that are starting to emerge. In Q2, we supported the successful IPO of a fast-casual chain of restaurants. This company started with Workiva through the purchase of private company reporting back in Q2 of 2022. They then purchased capital markets in Q1, added on the Workiva SOX solution, and converted to the SEC solution in Q2. While it's encouraging to see IPO movement, we're not forecasting a measurable comeback in the second half of this year. However, we are encouraged by our win rates in the larger deals that are going to market. Another part of the macro environment that impacts Workiva is the fast-paced change in the evolving ESG market. ESG has emerged as an important and sometimes polarizing topic in US politics, and it frequently captures news headlines. But even with the ongoing political debate, stakeholder demands for transparent, non-financial data continue to grow louder. From our experience working with our corporate clients, it's clear that new impending ESG regulations across the US and Europe are driving the convergence of non-financial and financial reporting, as well as the requirement that data be audit-ready and investor-grade. Other stakeholder groups, such as investors, suppliers, consumers, and employees, are also requiring greater disclosure of material and non-financial information. This is evident by a number of ESG-related actions happening globally. We believe there's a generational opportunity in front of us. Here’s a shortlist of regulations and potential legislation that evolved during the second quarter. On June 9, EFRAG, the technical advisory to the European Commission under the CSRD, issued a draft set of enterprise reporting sustainability standards for providing further clarification on this already past mandate. On July 31, the EU voted on final approval for these reporting standards. Next, on June 18, Swiss voters accepted a new law that formalizes Switzerland's commitment to climate protection and adoption of new reporting requirements. On June 26, the International Sustainability Standard Board launched new ESG standards IFRS S1 and IFRS S2; the ISSB stated that the release of these standards will usher in a new era of sustainability-related disclosures and capital markets worldwide. On June 27, the Australian Government announced plans to implement mandatory climate-related financial disclosure requirements for companies and financial institutions. Finally, in the US, there are two important updates: First, the SEC reported that they are targeting October 2023 to provide further clarity on the climate disclosure rule. Second, in California, two ESG disclosure bills have passed the Senate and are now in committee review in the assembly. These two state bills would require companies operating in California to report their greenhouse gas emissions from their supply and value chains and their climate-related risks, both in line with GSCD. This list underscores how the regulatory environment continues to expand globally in both scope and complexity. Regulations are increasing, as is the demand for more data and disclosure. This is our expertise, and it's why our platform is so relevant. I'll turn now to R&D and our continuous platform innovation. We remain focused on innovating and developing new capabilities while furthering the openness and extensibility of our platform. We believe we're leading a new wave of innovation in which transformative business value will be achieved through a combination of human expertise, contextual data, and the responsible use of generative AI technology. Generative AI has the potential to revolutionize the business reporting market by enhancing productivity and efficiency while enabling insights that lead to better and faster data-driven decisions. Our platform's open ecosystem approach allows our customers to choose which industry-leading large language model best fits their needs, including models from Google and Microsoft. Customers will never have to move their data from the Workiva platform to leverage generative AI, and neither Workiva nor technology partners will store or use customer data to train models. This capability brings together our differentiated technology, data security, and domain expertise. We'll be discussing generative AI and providing a business and strategy update at our 2023 Analyst Day on Tuesday, September 19, so please mark your calendars. This year's hybrid event will take place in Nashville, Tennessee, and will also be available via livestream. We've once again combined our Analyst Day with Workiva Amplify, our Annual Customer Conference. We want to ensure that all in-person attendees have an opportunity to meet with our customers and partners. We look forward to seeing you there. In closing, I'll leave you with a few final remarks. Workiva delivered solid second-quarter results. We are winning with our multi-solution account expansion strategy, resulting in strong growth in large contract customers. We remain confident in the resiliency of our business, the continued demand for our assured integrated reporting platform, and our ability to expand in our large and relatively unaddressed TAM. Notwithstanding the current macro challenges, we remain committed to both our growth strategy and achieving operating leverage. Finally, I'd like to thank our global team of dedicated employees who continue to execute our strategy, take care of our customers and each other, and live by our company values. We were honored to be recognized by Fortune, which named Workiva on its Best Workplaces for Millennials list. This is our seventh year on the list. Millennials make up almost 70% of our workforce, which is why this award is so meaningful to us. Now, I'll turn the call over to Jill.

Thank you, Julie. Let's turn to our results. This afternoon I will review our financial performance for the second quarter 2023 and provide Q3 and full-year 2023 guidance before opening the line for questions. As Julie mentioned, we beat our Q2 revenue guidance at the high end, primarily due to strong subscription revenue growth. We beat guidance on Q2 operating results at the midpoint by $3.9 million. Our revenue beat coupled with productivity initiatives and a reduction in consulting expenses drove the operating beat. The results reflect our focus on operating leverage we discussed last quarter, evidenced by improved profitability for the first half of 2023 versus 2022. Let's go through some key results and highlights for the quarter. We generated total revenue in the second quarter of $155 million, delivering growth of 18% from Q2 2022. Subscription revenue was $136.8 million, up 21% from Q2 2022. While new logos and account expansions both helped to drive strong revenue growth in Q2 2023, 45% of the increase in subscription revenue in Q2 came from new customers added in the last 12 months. Professional services revenue was $18.3 million in Q2 2023, relatively flat compared to the same quarter last year. This was consistent with the expectations we outlined in our Q1 call. As we have discussed, our strategy for professional services is to transition lower-margin setup and consulting services to our partners. Part of building a high-performing partner ecosystem is to provide our partners a strong business opportunity, delivering professional services to our common customer and promoting the value of the platform. In doing this, we expect setup and consulting services revenue to decline year-over-year for the full year 2023, which should be mostly offset by our growth in higher-margin XBRL services. Now on to our performance metrics. We added 106 net new customers in Q2 for a total customer count of 5,860, a growth of 479 customers from Q2 2022. Our subscription and support revenue retention rate remained at the best-in-class 98% for Q2 2023, which is comfortably ahead of our internal objective of 96% or above. With add-ons, our subscription and support revenue retention rate increased to 111% for Q2 2023 compared to 108% for Q2 2022. This rate improved by 190 basis points compared to the first quarter of 2023. We are very pleased with the increase we are seeing in net revenue retention. A driver of this improvement is the strong account expansion activity we are seeing, led by the addition of new solutions and expanding the use and spend for existing solutions. One customer highlight from Q2 was a US Department of Health agency expanding their use of Workiva GRC via their six-figure purchase of our audit management solution. This government agency initially purchased our controls management solution in Q1 2021 to support their OMB Circular A-123 requirements for managing risks in establishing a system to assess, correct, and report on the effectiveness of internal controls. Account expansions like this are also a strong contributor to the increase in large contract value customers. As Julie mentioned, we continue to see momentum and are optimistic that we can continue to expand the number of customers spending over $100,000. In Q2 2023, we had 1,470 contracts valued at over $100,000 per year, up 24% from Q2 the prior year. The number of contracts valued at over $150,000 totaled 823 customers in the second quarter, up 28% from Q2 2022. The number of contracts valued over $300,000 totaled 272, up 40% from Q2 2022. In addition to account expansion, six-figure new logo wins, many of which are sourced by or co-sell with our partners, are also driving this large contract cohort. A great example is a six-figure new logo private company financial reporting win with a building products manufacturer. This deal was sourced by a technology consulting partner who will also be providing delivery on the project. This new customer was purchased by private equity in 2022 and will be using Workiva to manage more stringent financial reporting requirements. Moving on to our operating metrics, gross profit totaled $117.6 million in Q2, up 17% from the same quarter a year ago. Gross margin was 76% in the latest quarter versus 77% in Q2 2022. The decrease is due to higher cloud computing T&E and compensation expenses compared to Q2 2022. Operating expenses increased by 8% from Q2 2022. We are pleased with the operating leverage we are seeing. The trend is improving as operating expense growth is the lowest since 2020 and half the rate of revenue growth year-over-year, we posted an operating loss of $600,000 in Q2 2023. This is a substantial improvement compared to Q2 2022’s operating loss of $8.3 million. As we discussed in our Q1 call, we expect improvement in our operating leverage in the second half of 2023. We are focused on delivering non-GAAP profitability for the second half of 2023 and for the full year 2024. At June 30, 2023, cash, cash equivalents, and marketable securities totaled $466 million, an increase of $26.4 million compared to the balance at March 31, 2023. Operating activities in Q2 2023 resulted in cash provided of $26 million, compared with an increase in cash of $8.7 million in the same quarter last year. This was a record addition to cash from operating activities. The collection of several large multiyear customer prepaids drove the increase in cash in Q2. We do not expect similar accretions to cash but do believe that cash flows will continue to stay positive in the second half of 2023. Q2 delivered a rebound in our deferred revenue, as discussed in our Q1 earnings call; Q1 was impacted by seasonality in our deferred revenue and the timing of several large contract renewals and contracts with prepayments. Our Q2 deferred numbers reflect that those contract renewals have been completed, and our cash flow numbers highlight the impact from a few large contract prepayments. Turning now to our guidance, we continue to believe our guidance assumptions are prudent for the current macroenvironment. For the third quarter of 2023, we expect total revenue to range from $155 million to $156 million. We expect revenue growth to be driven by subscription revenue. Q3 services revenue growth is expected to be slightly down versus the same period in the prior year. Growth in higher-margin XBRL services should be offset by reductions in setup and consulting services as we move those towards more partner delivery. We expect non-GAAP operating loss to range from $1 million to breakeven, and a net income of $0.03 to $0.05 on a per share basis. Our share count will be approximately 54.1 million weighted average shares. For the full year 2023, we are holding our full-year revenue guidance at that reported in our Q1 call, ranging from $626 million to $620 million. We are raising our guidance for non-GAAP operating loss to range from $3 million to $1 million, or a net income of $0.09 to $0.12 on a per share basis. Our share count will be approximately 54 million weighted average shares. As I highlighted earlier, we expect the growth from XBRL services revenue to be offset by a decline in setup and consulting services revenue. For the full year 2023, we continue to expect we will post positive free cash flow for the seventh consecutive year. We will be non-GAAP profitable in the second half of 2023 and are committed to improve margins for the full year in 2024. We remain committed to the long-term operating model outlined in our September 2022 Investor Day. In summary, I want to thank all our employees and partners for the continued support and hard work. Before we turn to Q&A, I would like to reiterate three key points: One, we delivered 21% subscription revenue growth in Q2, and we continue to believe that we can deliver 20% subscription revenue growth for the full year 2023. Two, we delivered a beat on Q2 operating margin guidance and are focused on continuing the momentum of margin improvement, targeting non-GAAP operating profit in Q4. Three, we remain committed to our strategy and our long-term operating model. In closing, I want to echo Julie's thanks to all Workiva employees. You are an amazing team and I am proud to be working beside you. For the analysts and investors listening to our call today, I look forward to seeing you next month at our Investor Day event. We will now take your questions.

We'll take our first question this afternoon from Rob Oliver of Baird.

Great. Good afternoon. Thanks for taking my questions. Julie, what really stood out to me was that very strong growth in large customer metrics, particularly that 40% growth in customers paying over $300,000. You did a really nice job in your prepared remarks of giving some hints as to the partner influence, which is a relatively new thing for Workiva. I was hoping you could touch on that. What are you seeing when you see, for example, these Big Four partners? Do those automatically suggest larger deals? And are these the types of deals you're landing that are full assured and ready for reporting? So SEC, GRC, and ESG? Let me talk about the components of some of those large deals; that would be great. And then I had a quick follow-up for Jill.

Sure. Hi, Rob, and thank you for the question. I'm glad we get to highlight this key tenet of our growth strategy. Partners are everywhere we want to be, and yes, we sell higher, we sell more, we sell broader, and we sell larger deal sizes. Our goal, of course, is to make them commercially successful with us. We've been taking a partner-first approach, and the percentage of the deals that are delivered by partners continues to increase. The goal there is, of course, to source deals and co-sell with partners more and more. So we are seeing high engagement from our partners. As I highlighted in some of those customer examples, we are seeing more and more of that and broad-based demand across the portfolio. Yes, the assured integrated reporting concept of that platform we rolled out is resonating with customers. Thank you for the question, and we are able to highlight that.

I appreciate that. Thank you. And then Jill, I think you are totally pointing toward profitability in the second half on the guidance. Investors will welcome that. You mentioned in your prepared remarks about OpEx expense growth running at its lowest, greater than half of revenue growth is what you said. Where are you finding that leverage? Can you point to some things? Is it on the sales and marketing side? Can you just give us a sense of where you're finding that leverage? Thank you very much.

Yes, thanks for the question, Rob. Looking at it across the business, we're being very careful about how we operate. We're looking for leverage throughout the business, no matter what the team is; we're looking for it in sales and marketing, R&D, and G&A. We're making sure that we're using our resources to the best of their abilities and structuring the work and the teams in a way that they can succeed efficiently. I wouldn't say that it's spread across the business; it would be wrong to just call out one team in particular, because we really are looking at it in a holistic way.

If I might jump in there, Robert, you know that we're moving from $500 million to $1 billion, which requires more automation, rigor, discipline, accountability, and performance management across the board. So we are focusing on setting goals, tracking progress, and ensuring that we have the right people in the right roles and leadership. We're focused all around on productivity.

Great, thank you, Julie. Lots of info in the prepared remarks. The partner influence Rob mentioned definitely stood out. I wanted to start with your commentary around the macro. Can you talk about if this is a change versus what you called out in the past couple of quarters, or are you just reiterating a difficult operating environment?

Not an unfamiliar question these days. I will say we did have a solid quarter, and we're pleased with our results. We continue to see broad-based demand for our platform and a diverse portfolio of solutions. However, budgets are tightening, sales cycles are elongating somewhat, and we're seeing many more people in the procurement process needing approvals. So it's not a change; it's continued for the most part. I do find myself on a lot of customer calls these days, talking to C-level executives to get deals over the line. We're hearing that they see value, but they are being more thoughtful about their choices. Again, as I highlighted in my earlier remarks, we're seeing a lot of large deals, six-figure even seven-figure across the portfolio and across the industry and geos, so just general macro continues on.

Yes, okay. I appreciate that color, and definitely strong bookings. I imagine you and Jill are having those same conversations with some of your suppliers right now. Jill, on the high growth retention that you flagged running right above your internal objective, I think that was the term you used. I'm curious how you're thinking about pricing broadly as growth levers. Are there any plans or opportunity to further optimize pricing in the coming quarters as a result of that high retention?

Yes, so pricing is something that we pay a lot of attention to, of course, and especially we've talked about this quite a bit. That maybe that metric is even a little bit too high; we may not be pushing enough. Whenever we come to a renewal inflection point on a contract, we review the entire customer relationship and ongoing opportunities for additional solutions and value that we might continue to provide. We absolutely have been pushing more on price increases as contract renewals come into play, something that we look at very carefully. So yes, there's room for us to push a little harder on price.

Understood. So that’s tactical price increases on renewal more so than kind of blanket increases across the board?

Correct.

Thanks for taking my question. First, in terms of the ESG activity in Europe, I know there was a change where they loosened some of the language, particularly for smaller businesses. I was just wondering if that changes your view on ParsePort and the opportunity there, given what happened? And I have a follow-up.

I don't think that it changes how favorably we look at ParsePort and the team. There are still ongoing requirements for filing financial and integrated reports in Europe, and we think there's still market pressure for these customers to provide more information on what's material to their business going forward. Something we're watching closely, and Julie mentioned quite a few different things that are happening in Europe that might have potential impacts on our business. But overall, we feel the market is still driving ESG reporting, and we still believe that the ParsePort acquisition and what they bring is a very valuable piece of our ongoing European strategy.

That's helpful. And then maybe Jill, can you elaborate a little bit on the full-year guide? Given the strength in the metrics, is there something on the services side that potentially holds down? I know you mentioned that it's going to be lower as you outsource to partners, but just wondering if there's something else that is preventing you from raising it, given the billings growth and quarterly results.

Specifically on revenue, we wanted to be very prudent in how we provide that full-year revenue guide. We are careful about how the macro might impact those results. We have seen some of the movement of consulting services moving to our partners; that's been a bit more rapid in a couple of quarters. We talked about that in Q1. We're balancing that potential professional services shift with the macro environment and being very careful and prudent about our year-end guidance.

Hey, everybody, this is Connor on for Adam tonight. Thanks for taking the time and the questions. You call out a competitive win in Europe with the ESG solution during an RFP process, which was driven by the CSRD regulation. Can you talk about some of the things that differentiated Workiva from the competition in the RFP? And if the product is starting to gain more reference ability with each incremental win there?

Sure. We're very pleased with our progress in Europe and have seen a lot of momentum there. We did have some signature wins this quarter—multi-solution six-figure deals. To your question specifically, it's the value proposition of assured integrated reporting. It's resonating. Companies know what's coming with the CSRD deal and there is much more clarity for us on the specific requirements. We have the platform to serve that. So, bottom line—we have many opportunities to pursue in Europe. We've got the right platform, right time, ready to serve the market.

That's definitely great to hear. If I could dig into Europe a bit more with CSRD being implemented, the timelines for the reporting are coming up. Are you able to better define the market size because that has become a little more tangible? If you're looking at both public and private companies, given that CSRD impacts both sides of the fence, are the opportunity sets you see different? Or are they fairly similar for private and public companies?

With CSRD, we have targeted specific markets where we know we win initially, and well before the rules are fully defined. There are many companies that will need to comply in 2024 and 2025, so we are specifically targeting those. CSRD has a long timeline, and we are targeting companies needing to comply first.

Hey there, thanks for taking the questions. Maybe first just on generative AI. Obviously, it's still very early, but we'd love to get a sense of how much of your installed base, especially your enterprise customers, are actively exploring tying generative AI into their reporting processes. If you think about potential penetration within the base, are there any incremental monetization opportunities for Workiva associated with generative AI?

Sure, thanks for the question. This seems to be the tech innovation question of 2023. We're very excited about our first announcement to use generative AI to power new features and capabilities on the platform. We've been working with a select group of clients currently on feature validation. We are getting early feedback from them, and we appreciate some of the things I highlighted in my earlier remarks, both convenience and data security while leveraging large language models. We're making it available to customers; we haven't rolled it out entirely to the whole base and globally. We are making a lot of progress in terms of what will bring value to customers. And that ties into your question regarding monetization. First and foremost, it’s about how we bring value to customers. We focus on enhancing efficiency and productivity to help them make better decisions. We’re ensuring what we’re offering for customers provides that value. We will eventually move on to monetization.

Got it. It's very helpful. Just one follow-up. On the large customer forward growth, I would love to just double-click on what's driving the acceleration, right? There’s obviously very nice growth and acceleration in Q2. You touched on an earlier question regarding partner influence there. Is this largely driven by the partner motion ramping up and taking effect, or are there other factors driving that acceleration?

I'd say it's our focus on multi-solution account expansion. The concept of assured integrated reporting—we continue to assert that we are the only platform, only technology platform where ESG and non-financial reporting, along with financial reporting and assurance GRC, are all on the same platform. That is resonating with our customers and our prospects. Yes, you hit it on the head with our partners; they help to accelerate that.

Hey, guys. Thanks for taking the questions. I'm going to hit the partner topic from a bit of a different angle. Last year at Amplify, you increased your target percentage of sales and marketing spend from 25% of sales to 32%. Is there any conservatism in that now that you're seeing some real help from the partners as far as the sales motion is concerned? Not talking your churn, but in the next couple of years?

Yes, thanks for the question, Joe. What you're talking about is our long-term operating model is indeed still there. As we consider that model, we believe that even with the partners involved, we think that model is inclusive of the impact we’ll see from partners. We will continue to work closely alongside partners to drive some of this growth, but we will see organic sales happen within the company, and that's reflected in our long-term model.

Sure. Thank you for the question again. We’d love to highlight that ESG was yet again one of our top three booking solutions in Q2. It's also been a top solution in bookings growth—in Q2, we added several Fortune 500 clients to our already elite roster of ESG account expansions. We are not yet supplying exact customer acquisition numbers for ESG, but we see many opportunities ahead and continue to be very optimistic about the market in the longer term.

Thanks for taking the question. This is Marc for Brad. I wanted to see broad thoughts on hiring in the back half and any areas that you're prioritizing. Just a second question on guidance.

On hiring, unlike many other companies, we didn't over-hire. We are focused on growth and executing. So we're not taking the time now to right-size; we do not need to. We believe we're operating the company properly for our opportunity stage. ESG in front of us, assured integrated reporting in front of us. While we’re highly intentional regarding hiring and our focus on productivity, we will continue to focus on growth and go after the opportunities in front of us with the right talent.

Great, thank you for that. On guidance, I'm having a little difficulty here. The $0.12 loss implies so far this year about $0.10 of loss and $0.03 to $0.05 in Q3. That would suggest $0.14 to $0.16 in Q4. Just trying to understand if there’s something different in Q4 driving profitability much higher.

When looking at those earnings per share numbers, that's inclusive of our investment income. We have been intentional about improving our investment portfolio, especially as rates have risen. I can't provide you with the numbers right now—Marc, but we can follow up and clarify that with you. We have seen quite a bit of improvement in our interest income, and that's what is driving the difference between the operating loss range and the net income on a per share basis.

And we'll go next now to Mike Grondahl at Northland Capital Markets.

Hi. This is Mike Pochucha on for Mike Crandall. Most of mine is answered, but maybe just on that SEC ruling coming in October. Do you have any insight into what the final timeline will look like for a ruling like that and when companies actually have to apply it to their filings?

Yes, as we all know, it's focused on ensuring modernized comparable reliable disclosures on issues important to investors and, of course, investment and voting decisions. What we know is that it has gone through the full process and is pending release; latest communications indicate a release in the October timeframe. The timing is what it is; I wish we both had a crystal ball that was accurate, but we don’t. What I can tell you is we're ready to support our customers. One of our strengths is meeting regulatory requirements as quickly as they emerge. We've been doing this for well over a decade and we are poised to support customers. Regardless of when the SEC climate disclosure rule passes, there is already significant interest and demand from companies around these topics.

Thank you. That will bring us to the conclusion of Workiva's conference call. We appreciate you all joining us today. Wishing you all a great rest of your evening. Goodbye.