Good afternoon, ladies and gentlemen. My name is Gary, and I will be your host operator on this call. Please note that this call is being recorded on July 31, 2025, at 5 p.m. Eastern Time. 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.

Good afternoon, and thank you for joining Workiva's Q2 2025 Conference Call. During today's call, we will review our second quarter results and discuss our guidance for the third quarter and full year 2025. Today's call 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 Q&A session, where we will be joined by Mike Rost, our Chief Strategy Officer. After the market closed today, we issued a press release, which is available on our Investor Relations website, along with supplemental materials. 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 third 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. 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-K 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 Iskow.

Thank you, Katie, and thank you all for joining us today. In Q2 of 2025, we delivered another quarter of solid financial performance, powered by the continued demand for our broad portfolio of solutions and our unified platform. We beat the high end of our revenue guidance with 23% growth in subscription revenue and 21% growth in total revenue. We also exceeded non-GAAP operating margin guidance by 380 basis points. Our business results reflect continued execution on the four pillars of our growth strategy: our connected platform, our high-value, best-of-breed solutions, a high-performing partner ecosystem, and continued global expansion. We continue to see companies standardize on the Workiva platform and expand their solution use across financial reporting, GRC, sustainability, and industry-specific solutions. Workiva continues to be a clear choice for those businesses looking to drive innovation across the office of the CFO while reducing the total cost of ownership with a unified platform. The success of our strategy is showcased by the continued strength in our large contract cohorts. In Q2, the number of contracts valued over $100,000 increased 27%. Those over $300,000 increased 37%, and contracts valued over $500,000 increased 35%, all compared to Q2 of 2024. This growth was driven by both additional solution sales within our existing customer base and the acquisition of larger new logos. We are not just focused on growth. We are also committed to profitable growth. Entering the second half of 2025, we are raising our operating margin outlook to account for anticipated margin expansion in both Q3 and Q4. We also remain committed to the 2027 and 2030 operating margin targets that we announced a year ago. We believe that our disciplined approach to margin expansion will deliver on these results. While in the macro environment, economic conditions are still somewhat uncertain, we remain confident in our long-term prospects. The breadth of our solution portfolio and the resilience of our customer demand provide us with multiple levers for sustained growth. From my conversations with our customers and our prospects, the top priorities of CFOs and finance leaders remain constant. They want to protect margins while funding growth. They want to better manage risks and controls, and they want to embrace data and AI to transform their legacy processes. The Workiva platform provides the innovation, the productivity gains, and the compelling value that our customers need to enhance their operational productivity and to drive their transformations. That compelling customer value is showcased by some of the large platform deals that we had in Q2. We continue to win with our broad portfolio of solutions. The first example is a U.S.-based Fortune 500 bank that signed a seven-figure expansion deal across financial reporting, GRC, and sustainability. This 12-year loyal SEC and GRC customer significantly increased their use of the platform with the purchase of bank regulatory reporting, sustainability reporting, and Workiva Carbon. The primary purchasing driver for this opportunity was large financial institution readiness as outlined by the Federal Reserve. This ratings framework requires integrated governance and rigorous risk analytics across all material risk areas, including climate risks. The deal was sourced and will be delivered by a Big 4 firm. Second, we signed a mid-six-figure new logo deal with a large U.K.-based asset management company. This firm sought to consolidate its tech stack by eliminating redundant point solutions. This led to the purchase of four Workiva solutions: ESEF, multi-entity reporting, sustainability reporting, and controls management. The differentiators that led to this five-year deal were Workiva's strategic partnerships with Big 4 advisory firms, our ability to scale with the customer's requirements, and the option for fee-based premium customer support. And third, we signed a mid-six-figure five-solution new logo deal with a South American utility company. They purchased SEC reporting, controls management, audit management, risk management, and sustainability, all to support a finance transformation project. The Workiva platform will be a replacement for manual processes used to assemble and file disclosures to the SEC, and it will also replace a legacy ERP-based GRC solution. This deal was sourced and will be delivered by a Big 4 firm. It's not just about platform wins. Financial reporting, along with our financial services-specific solutions, remains the primary driver of Workiva's revenue. In Q2, we saw broad-based demand for our financial reporting solutions, including SEC reporting, multi-entity reporting, insurance reporting, and fund reporting. A key theme throughout the quarter was the sustained strong performance we achieved in financial services. This was powered by our tailored solutions for banks, investment firms, and insurers. These solutions support customers in their required financial disclosures, and in the case of banks, insurance companies, and investment firms, our solutions also support operational disclosures that are mission-critical to the operations of their businesses. We continue to see strong demand across this broad TAM as our platform has proven to streamline data management and reporting processes, reduce risk, and increase ROI across a wide range of customer requirements. Since debuting our public fund reporting solution earlier this year, we've seen strong uptake across private, regulated, and public funds, highlighting the promise of this rapidly expanding market. Asset managers are accelerating fund launches to drive growth, and that surge is heightening their need for automation to keep up. A great example of this is an account expansion deal with a Canadian financing company. This company signed a high six-figure account expansion deal to add bank reporting and multi-entity reporting. They also expanded their use across fund reporting. Over the past six years, this loyal customer has grown with us since first adopting Workiva's regulated fund reporting solution in 2019. Last quarter, they expanded that footprint by onboarding more than 100 public funds through our new public fund solution. They also added bank reporting capabilities, specifically for Basel Pillar 3, which mandates that financial institutions disclose a harmonized set of qualitative and quantitative metrics so investors and counterparties can assess their capital strength and risk profile. Another great Q2 fund reporting win was a mid-six-figure new logo deal with a New York-based investment company. This company purchased fund reporting in a competitive win over a legacy financial printer. This customer was using a manual, labor-intensive process to report on nearly 150 funds. They chose Workiva for our efficiency and platform differentiation over legacy technology and our ability to scale into additional use cases later down the line. This deal was sourced and will be implemented by a regional consulting partner. Another strong example is a mid-six-figure account expansion deal that was signed with a U.S.-based private equity firm. This company was previously using a manual process for over 130 funds globally. They already had experience with the Workiva platform, having used our S-1 solution when they went public. Their experience with us gave them the confidence that they could both automate and streamline the reporting process for fund reporting. This deal was a co-sell and will be implemented by a regional consulting partner. I'll now turn to governance, risk, and compliance. Companies operate amid constantly shifting risk and compliance demands and heightened stakeholder scrutiny. As they navigate new regulatory frameworks, geopolitical uncertainties, and emerging challenges like fast-evolving AI governance, they increasingly turn to our GRC solutions, fueling ongoing demand. Here are a couple of compelling GRC wins in Q2. First, a top 20 U.S. bank signed a mid-six-figure account expansion deal for controls management, compliance management, and policies and procedures. This bank started on the Workiva platform 18 months ago with the purchase of sustainability and financial reporting. The value of our platform was clear, and it was a key differentiator in this competitive win. This deal was a co-sell and will be implemented by a regional consulting partner. And second, we signed a multi-six-figure account expansion deal for audit and controls management with a U.K. member firm of a Big 4 partner. This partnership leverages the Workiva platform as a managed service to power the firm's Controls as a Service offering that provides integrated GRC solutions to its clients. This deal underscores Workiva's strength in providing the platform that drives the service lines of our partners. Delivery through a managed service channel provides Workiva expanded market reach and lower distribution costs. It's also a great experience for the end client as Big 4 firms convert our platform into a full-service, outcome-based solution. I'll turn now to sustainability, where we saw a dynamic market throughout the quarter, influenced by shifting political policies, proposed regulatory changes, and softer demand in certain segments. At Workiva, we did observe a moderation in demand within our corporate account segment across both the U.S. and Europe. While the strong momentum we saw in the latter half of 2024 has tapered some, sustainability continues to drive both new logo wins and account expansion. In these deals, there continue to be many buying drivers, including business performance, managing stakeholder expectations, and regulations such as the CSRD, ISSB, and the state of California climate disclosure rule. I do want to make it clear that while sustainability remains a strategic part of our business, it is less than 15% of our total revenue. Also of note, the demand risks in this changing market and the weighted contribution of this solution to our bookings have already been factored into the updated revenue guidance we are providing today. We remain confident in the long, durable demand of this market, which is supported by the deals that we continue to win. Here are three notable sustainability wins for the quarter. First, a top 5 U.S. bank signed a six-figure account expansion deal for sustainability reporting and CSRD. This Fortune 100 customer had been doing voluntary sustainability reporting using Workiva for the past three years. This program, which has transformed into a centralized, enterprise-wide reporting framework, now reports into the office of the CFO. Our value-based discussions and strong partner alliances led to their expansion on Workiva's platform for a more mature, connected sustainability reporting program that is prepared for CSRD compliance. This deal was a co-sell and will be delivered by a Big 4 firm. Second, a top 5 global investment firm signed a mid-six-figure expansion deal with the addition of sustainability reporting and fund reporting to solve an array of requirements, including fund-level ESG requirements and multiple country ESG disclosures. This deal underscores the importance of combining sustainability and financial information in one reporting platform. This customer was previously outsourcing all of their financial and regulatory reporting requirements for their 300 funds, and they trusted Workiva to bring the reporting process in-house, drive efficiency, and save them money. This deal was a co-sell and will be delivered by a Big 4 firm. And third, a European multinational manufacturing company signed a six-figure sustainability reporting and sustainability assurance deal as part of their CSRD readiness journey. Having previously used Workiva for annual reporting, this customer was looking to replace their manual, inefficient sustainability reporting process with a more automated and integrated platform that allows them to adapt to changing regulations and respond to increased reporting demands from stakeholders. This deal was a co-sell and will be delivered by a Big 4 firm. Finally, I'd like to share an important leadership update. After 17 years with Workiva, Jill Klindt will be stepping down from her role as Executive Vice President and Chief Financial Officer. Throughout her tenure, Jill has played a foundational role in shaping Workiva into the company we are today. From our early days as a start-up to our milestone of reaching $800 million in revenue, she has been a steady, trusted leader and partner through every phase of growth. Her impact will be felt well beyond her time here. I'm deeply grateful to Jill for the contribution she has made to Workiva and to our leadership team. She has our full support in this transition and our warmest wishes as she looks ahead to what's next. Jill will continue to serve as CFO through December 2025 as we conduct a comprehensive search for our next CFO. In closing, I'd like to thank all of our dedicated employees for their focused execution this quarter, driving better business outcomes for our customers through transparency and accountability. 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.

Thank you, Julie. I appreciate the kind words. My journey at Workiva has simply been extraordinary, from joining this company as one of the first 10 employees of a start-up to crossing any number of growth milestones over the past 17 years. I am thankful for the experience, and I am incredibly proud of what we have built. It has been such a privilege to work with the entire team of passionate, hardworking, and dedicated employees at Workiva. I also want to thank all of you, our investment community, and in particular, our shareholders, for your continued support of Workiva. Moving on to our results. I will begin by providing an overview of the financials and key metric highlights for the second quarter of 2025. I will then provide guidance for Q3 and the full year 2025. As Julie discussed, we had a strong Q2, generating $215 million of total revenue in the second quarter, up 21% over Q2 2024 and beating the high end of our revenue guidance by $5 million. There was an approximately 1 point positive impact due to foreign currency fluctuations on revenue growth. Q2 subscription revenue was $198 million, up 23% from Q2 2024. Both new customers and account expansions continue to contribute to our solid revenue growth with new customers added in the last 12 months accounting for 41% of the increase in Q2 subscription revenue. Q2 professional services revenue was $17 million, flat versus Q2 2024, with the decline in setup and consulting services offset by higher XBRL services. Our non-GAAP operating margin for the quarter was 3.8%. This outperformance relative to our guidance was driven by stronger-than-expected top line results and our ongoing efforts to enhance operational leverage across the business. I'll now move on to our performance metrics for the quarter. We had 6,467 customers at the end of Q2 2025, a growth of 320 customers from Q2 2024. Our gross retention rate was 97%, exceeding our 96% internal target. Our net retention rate was 114% for the quarter versus 109% in Q2 2024. Similar to revenue growth, there was an approximately 1 point positive impact on NRR due to foreign currency fluctuations. During the quarter, 71% of our subscription revenue was generated from customers with multiple solutions. This is up from the 67% we achieved in Q2 2024. Growth in our large contract customer metrics also reflected strong momentum. As of the end of the quarter, we had 2,241 contracts valued at over $100,000 per year, up 27% from Q2 of the prior year. The number of contracts valued over $300,000 totaled 488, up 37% from Q2 2024, and the number of contracts valued over $500,000 totaled 208, up 35% from Q2 2024. Moving on to the balance sheet. As of June 30, 2025, cash, cash equivalents, and marketable securities were $814 million, an increase of $47 million over the prior quarter end. In Q2, we used a portion of our generated cash to repurchase 132,000 shares of our Class A common stock for $10 million. This was done under the share repurchase program approved by the Board in July 2024. As of the end of the quarter, we had $50 million remaining of the original $100 million authorization, which we will continue to deploy periodically in order to help manage dilution. As of June 30, 2025, we expect $668 million in remaining performance obligations to be recognized over the next 12 months. This is an increase of 23% versus the prior year. This growth includes approximately 2 points of positive improvement due to foreign currency fluctuations. Turning to our outlook for Q3 and full year 2025. As Julie noted, we remain firmly committed to driving profitable growth. The increase in our full year revenue guidance reflects our Q2 revenue beat and carefully factors in our assessment of market and demand risks, including that of our sustainability solution. The upward revision to our Q3 and full year 2025 operating margin guide reflects the continued focus on driving leverage at scale across the business and our planned progress towards achieving our 2027 margin targets. For the third quarter of 2025, we expect total revenue to range from $218 million to $220 million. We expect services revenue will be down compared to Q3 2024. We expect non-GAAP operating margin to be in the range of 7% to 8%. For the full year 2025, we are increasing total revenue guidance to range from $870 million to $873 million. This increase takes into account the Q2 revenue beat. Similar to 2024, we expect total services revenue will be down year-over-year as we move low-margin services to our partners. We continue to expect subscription revenue growth to be approximately 20%. We now expect our non-GAAP operating margin to range from 7% to 7.5%. This 200 basis point improvement reflects our ongoing commitment to drive operating leverage in the business. We now expect 2025 free cash flow margin to be approximately 10.5%. We continue to operate our business with our 2027 and 2030 targets in mind, improving productivity and operating leverage as we execute on our long-term profitable growth strategy. Thank you all for joining the call today. We are now ready to take your questions. Operator, please open the line for Q&A.

Our first question today is from Alex Sklar with Raymond James.

First question, maybe for you, Jill. I just had a two-part question on the revenue outlook. First, are you seeing any contribution from capital markets picking back up? And anything that you incrementally embedded into the 2025 outlook from that? And second, I appreciate all the callouts on FX. Did FX impact the guide at all as well?

Thank you for your question, Alex. In the second quarter, we have observed steady revenue from capital markets, consistent with previous trends, and we are monitoring this area closely due to the recent activities. After I address the second part of your question, I would welcome Julie's input as well. We plan to maintain capital markets at a consistent rate moving forward, which may provide potential upside if we see increased activity in the latter half of the year. Regarding foreign exchange, we've incorporated FX into our risk-adjusted model and considered possible changes for the remainder of the year. However, we're not anticipating significant changes, and we believe it won't hinder our ability to meet our goals since we have adjusted the guidance accordingly. Julie, do you have any additional comments on capital markets?

Sure. I mean you covered the important element, which is that we've not baked any comeback into the guide for capital markets. But we have seen some increased activity in the past few months, supported by some of the recent and upcoming well-publicized IPOs. In fact, a great story for Workiva, we had the IPO for Figma and also Shoulder Innovations, both of which went public today. But that detectable increase in the market activity admittedly comes off a very low comparable. So we are seeing some growth here, but nothing like we saw in the other more active periods. But continue, as Jill says, to think about capital markets as upside and not consider any capital markets return yet in the guide.

Great. Congrats on those cap markets wins. Maybe, Julie, one for you and maybe it's a two-parter with Jill, too. But some of the financial reporting success you called out this quarter, can you talk about some of the SEC reporting bundles that you've been working on in market in terms of kind of driving upsell within that base? And did that have any impact on kind of the strong NRR in the quarter?

Sure. I'll let you know about how we've been approaching the market. We're moving towards that good, better, best model. So we bring in some additional capabilities onto our cornerstone SEC reporting or financial reporting, and we add additional capabilities and features and enhancements. And that's how we're approaching the market to get additional revenue from the customer and deliver additional value to the customer as well. So Jill, if you want to comment on the NRR, please do.

We observed a significant increase in net revenue retention during the quarter. Many of our metrics showed positive results due to upselling to our existing customer base, with nearly 60% of our revenue growth coming from them. The revenue growth from subscriptions and services this quarter was driven by current customers, and we are continuing to increase the number of customers utilizing multiple solutions. This trend is crucial for us moving forward. The SEC presents an excellent opportunity for upselling, as these customers have been with us for a long time. We have a great chance to discuss how our platform can offer them even more value.

The next question is from Rob Oliver with Baird.

First, Jill, I just wanted to say it's been a pleasure working with you, and I wish you all the best. And you're not done with me yet because one of my questions is for you. But I'll start with Julie. Julie, there's a lot of concern in the market among companies in our coverage list of the broader software universe about the potential erosion from generative AI on seat-based models. And you guys do not have a seat-based model. You have a solutions-based model. And I'm wondering, particularly as you're showing really nice go-to-market motion and success, say, for example, in the financial services vertical, I'm wondering if that solutions-based model is being viewed as attractive by your customers and a potential asset for you guys in your go-to-market motion at this time. And then I had a quick follow-up.

Thank you, Rob, for discussing our pricing mechanisms and models. We implemented the solution-based licensing model several years ago to allow customers to use the platform without being limited by the number of seats. This approach has worked well for us, enabling broader use of the platform. We establish value metrics for each solution, reflecting the diverse demand across our portfolio. Each area has its specific metrics that customers use to determine their payments. This model has been beneficial, and we anticipate it will also be effective in the AI category. Our approach is not seat-based, and we plan to incorporate AI into this model at a later stage. Currently, AI is available only under premium pricing, and it continues to meet our customers' needs. Thank you for your attention to this.

Great. Okay. Good to hear. And then, Jill, just one for you on the improved operating margin outlook for the remainder of the year and the improved free cash flow margin. I know you touched on it in your prepared remarks, but would love to hear from you where you have been able to find additional margin and opportunities for additional margin as investors look towards your reiteration of the long-term targets and the kind of margin ramp that's implicit within that.

Yes. Thanks, Rob, and thanks for the kind words. I appreciate it. I have enjoyed working with you as well. As far as our improved margin, we're very pleased with the results that we had for Q2 and for the guidance that we're providing. It's a result of continued focus on execution across the business and focusing on productivity and ways that we can work much smarter. And it really is not one thing and not one part of the business, but an overall focus by the team to be better and execute at a higher level. And we're starting to see the results of some of the things that we've been doing. And you'll see us continue to focus on that as a movement as we continue to show the results and execute on our strategy.

The next question is from Steve Enders with Citi.

Congratulations once again on our collaboration, and I'm excited to see where we go from here. I'd like to start with the sustainability portfolio and gather more details about your observations in the market. It seems that this is reflected in your guidance and some of the challenges you're facing. Could you clarify how this is evident, or how it's impacting the numbers? Additionally, how are you perceiving the pipeline or opportunities moving forward, and what do you anticipate that will look like in the coming years?

Thank you for your question. It was not unexpected, considering the current political and regulatory environment. As I mentioned earlier, we did notice a decline in demand in the second quarter within our corporate accounts in both the U.S. and Europe. We are coming down from the strong momentum we experienced in the latter half of the previous year, which is an important point to acknowledge. Although we have seen a drop from those high-performing quarters, we are still experiencing growth through new client acquisitions and account expansions. Regarding the numbers and their impact, it's worth noting that sustainability represents only 20% of our total addressable market and contributes less than 15% to our revenue. We are indeed noticing a slowdown in demand primarily within the corporate sector, but we have accounted for this in our updated revenue guidance. Nevertheless, we remain optimistic about the long-term demand in this market. We are observing new deals coming in, not just driven by regulations but also due to science-based targets being adopted, with around 8,500 companies now committing to these initiatives. Organizations are striving to manage risks better and meet stakeholder expectations, indicating that market demand extends beyond regulatory requirements. We wanted to emphasize this in light of our strong performance over the past quarters. While growth has moderated, we still regard this as a market with lasting demand.

Okay. That makes sense. That's good to hear. And then just on the free cash flow guide, I guess, good to see the EBIT margin raise. But I guess I would have expected maybe free cash flow to show maybe a similar pace of expansion in the updated guide for this year. So I guess any factors that we should be taking into account there? Or maybe what's different in the assumptions on the free cash flow side versus the EBIT margin side?

Sure. Free cash flow is a really complex metric for us because it does have a lot of factors related to the timing of cash inflows and cash outflows in addition to just the impact from the margin guide that we provided. It can have some amount of fluctuations aside from that. But I think that similar to what we talked about in our last earnings call, when we talk about a risk-adjusted guide, this is one of the areas where it shows up. There is more risk and more uncertainty the further out from today that we get. The free cash flow margin that we provided is really that risk-adjusted metric that we believe properly reflects our business through the end of the year. And with the timing differences and some of that complexity rolled into it, we feel very good about that number.

The next question is from Terry Tillman with Truist Securities.

This is Dominique Manansala on for Terry. So just looking at the mandate for CFO Act agencies to modernize their financial system using approved marketplace vendors, have you seen any early RFP activity from these agencies? And how significant could that opportunity become over the back half of the year or in the long term?

Dominique, can you actually repeat the question? Sorry, it cut out a little bit for us.

Yes, sure. No problem. So just referring back to that CFO Act where agencies have to modernize their financial systems using the approved marketplace vendors. Just wondering if you're seeing any early RFP activity from these agencies and how that opportunity can look in the back half or in the long term.

Sure. We have engaged in discussions, and we stand out as the only SaaS platform available that offers a solution for integrated reporting, assurance, and GRC. We are noticing initial positive signs and having productive conversations. However, I cannot comment on any specific increases at this time. Our platform presents a chance to provide services to the government, which is primarily focused on transformation, automation, and enhancing efficiency and accountability. This represents a strong opportunity for Workiva.

Got it. As you consider growth opportunities in the current environment, what are your thoughts on mergers and acquisitions? Are there specific product areas like GenAI, ESG, or vertical solutions where you would be more inclined to purchase rather than develop in-house?

Sure. We consistently seek opportunities across the landscape, whether it's addressing gaps in our platform, enhancing technology for our solutions, or exploring related areas. We maintain an open-minded approach, actively searching for potential partners and M&A options that can reinforce our platform and help us pursue our large, untapped market more quickly or even broaden that market.

The next question is from Andrew DeGasperi with BNP Paribas.

Julie, earlier in your prepared remarks, you mentioned some significant wins, including a large bank associated with the Federal Reserve. Can you provide a bit more detail on that? Could this be a potential driver for that customer group in the near term?

Financial services regulations have been drivers for years. We are going deeper into the market. While our focus has been there, we're going to continue to go in even more extensively. So yes, absolutely, we're continuing to increase the use cases that we have under the financial services area, regulatory, certainly, and we're going to continue to focus on banks and the risk regulations and investments and fund reporting. So you will see more of that. Also have an insurance market with 20 or so regulations that we sell to as well.

That's helpful. And then, Jill, by the way, also a pleasure to work with you and wish you all the best going forward. I just had a question in terms of what you said earlier in terms of the margin. What I'm trying to understand is, are you making any changes to the sales and marketing investments assumptions that you had for the back half? Is that some of the driver behind the outperformance?

So I would say that we're constantly looking at our sales and marketing resources and reallocating based on current business. But there wasn't any large-scale change to that investment. And what you'll see from us is a lot of what you've seen in the past, which is being thoughtful around how we built the business, thoughtful around how we approach our markets. Sometimes that does include adjustments in territories and adjustments in teams. And you've seen us do that across the sales team as it is. And one of those examples would be moving towards a hunter-farmer model in certain areas this year. And so we will continue to make those kinds of changes in order to focus on profitability and efficiency throughout the business. Within sales and marketing, those aren't held aside. We'll also be trying to make those improvements and find efficiencies and better leverage for the resources within our sales and marketing teams. And that's definitely a part of the improvement. Something you can always look for is our 2027 targets, which we reiterated on the call, prepared remarks. We're still focused on executing and progressing on our goals with those 2027 margin targets in mind, inclusive of the split between the different areas of the business.

The next question is from Jake Roberge with William Blair.

Jill, I wish you all the best moving forward. It's been great working with you. Julie, just on the macro, I know you referenced some pressure on demand for your sustainability suite. Given the solid results here, did you see any other changes or improvements across the broader base over the last few months? Or was it fairly consistent with the trends that you called out last quarter?

I appreciate the question. The macro environment is a priority for many of us in the SaaS industry right now. We didn't notice significant changes from Q1 to Q2. Overall, market conditions have remained quite stable. There was some uncertainty across various sectors, similar to what we experienced in Q1, notably the lengthening of deal cycles due to market uncertainties. In some instances, even when chosen as a vendor, it took longer to finalize deals. Companies are being more cautious about when to spend on transformational purchases. However, we are still seeing some major deals come through, as I mentioned in my prepared remarks. Demand has softened for us compared to the strong momentum we saw in our exceptional booking quarters of 2024. This has been considered in our updated guidance, as Jill pointed out. We have raised our subscription revenue guidance for 2025 to reflect the positive results. In direct response to your question, the situation has been very consistent from this quarter to the last.

Okay. That's helpful. And then just to double-click on the sustainability front. You referenced the tempered demand in the corporate segment. But can you talk about what you're hearing from some of the larger enterprise and wave 1 CSRD reporters and if that's kind of different versus the corporate segment? Any change on that front over the last few months?

We discussed our corporate segment, particularly the mid-market. Our sales are divided into corporate, strategic, and major accounts. We have noticed some softening in that area due to regulation and delays. However, our main strength lies in the upmarket. The regulation with CSRD generally remains applicable to large companies in wave 1 in Europe. Those aiming to engage in a global ecosystem and supply chain are still maintaining their demand. It's more than just regulation; it involves stakeholders and risk management as well. We specifically identified where we observed a slight decrease and softening in the corporate or mid-market.

The next question is from Adam Hotchkiss with Goldman Sachs.

I would like to ask an earlier question a different way, Julie. I think you mentioned how sustainability was a bit stronger in 2024 and that things have moderated. Subscription revenue here has accelerated. I think it's your highest growth quarter in the last number of quarters. Forward-looking metrics like billings have accelerated, and cRPO continues to be strong. Could you marry some of those moderation comments, particularly around sustainability, with the acceleration or broad-based acceleration we're seeing in the business ex-sustainability? What do you think is driving that? And how sustainable do you think that is?

Our guidance reflects the comments I made earlier regarding the overall risks, particularly those stemming from the uncertain macro environment and trends observed across our entire portfolio. We experienced strong revenue this quarter, largely driven by subscription revenue from customers utilizing multiple solutions. Our platform is well-received, and our partner ecosystem is performing effectively. We have a resilient platform and a diverse array of solutions available in the market, which significantly contributes to our revenue. As a subscription SaaS company, our business model allows for revenue from deals booked in previous quarters to impact our current results. However, it's important to note that less than 15% of our revenue comes from sustainability-related initiatives. Our broad-based platform continues to resonate in the market with strong growth, but we will maintain a risk-adjusted approach in our guidance moving forward.

That's really helpful. Can you share your thoughts on Workiva's competitive advantage against generative AI technologies, especially given the recent developments? Specifically, what makes Workiva's AI capabilities stand out, and how do you view the differentiation of your reporting and workflow products in relation to newer technologies?

Sure. We've spent 1.5 decades building trusted relationships with our customers. We have the most innovative technology, and we really focus on customer data. That's very important to customers that we care for it, and it's important to us. We are bringing in the latest technology and data. When it comes to AI, data is a differentiator. We happen to have data that we can leverage in these AI capabilities. But we’re bringing the capabilities and the technologies onto the platform to ensure that we bring additional value to customers and differentiate. We are going to continue to invest in AI across the platform. We bring it into our platform. Our controlled, secure, auditable environment gives customers the comfort and the knowledge that their data remains within the platform, not used to train models and so forth. But we're helping them with, of course, speed and efficiency, helping them to respond quickly to risk and volatility with greater focus. We're seeing some ROIs from our customer that show measurable impact, and they're leveraging those capabilities on the platform. I want to emphasize that we take it very seriously that we have trusted relationships with our customers, and we will be committed to bringing value to customers using AI.

The next question is from Daniel Jester with BMO Capital Markets.

This is Kyle Aberasturi on for Dan Jester. It looks like a strong quarter for customer growth, especially the larger businesses. Could you help us unpack where in the product portfolio the strength is coming from and then more generally, what you're seeing in the competitive landscape?

I caught the part where you want to talk about the product portfolio. Can you repeat the initial part of the question before discussing the competitive landscape?

Yes, sure. So it looks like a strong quarter for customer growth, especially for larger businesses. Could you help us unpack where in the product portfolio the strength is coming from and then more generally, what you're seeing in the competitive landscape?

We continue to observe broad-based demand across our portfolio, which has remained consistent over several quarters. One of the strengths of our platform is its resilience, as demand persists across all our solutions. It mostly depends on the customer's circumstances, whether they are undergoing transformation, operating in financial services, or focusing on sustainability. We are not identifying deep trends in just one area; rather, the demand is widespread across the portfolio. In terms of competition, we face competitors primarily offering point solutions rather than a comprehensive platform like ours, which encompasses all our capabilities. We are competing against a lot of legacy technology, with status quo, legacy systems, and point solutions being our main competitors. Our differentiation lies in having a robust, broad-based platform and strong connections with all partners in our ecosystem. This is how we succeed, by providing high-value, fit-for-purpose solutions that operate on an increasingly open and intelligent platform.

Got it. And then can you just discuss how you're thinking about investment plans and the business's headcount expectations for the remainder of 2025 and into 2026?

Thanks, Kyle. We will continue to focus on productivity and leverage with our existing resources. We, of course, will continue to make investment decisions based on the potential outcomes from those investments. That will, in some cases, lead to hiring in certain areas. But really, the focus that we have as we execute on our midterm, long-term margin goals is just ensuring that we have profitable growth and that we're executing on our strategy in a way that makes sense with our margin goals in mind.

The next question is from Ryan Krieger with Wolfe Research.

Congrats on a solid quarter. I just want to touch on retention quickly. It was incredibly strong this quarter, even excluding FX. Can you provide some additional color on maybe what drove that strength and help us think about the mix of pricing versus peer expansion contribution there? How should we think about retention for the rest of this year? I know you've historically talked about over 110% being positive, but is this potentially an inflection point given the momentum that you're seeing?

Yes. Exactly right, Ryan. Thanks for the kind words on the quarter. When we think about NRR, this was a high point for us certainly. There was an impact from currency, but overall, what we were seeing here was really about the upside of selling into our existing base. At any point in time, we have focused more on price increase, but that's not a large part of our NRR in any quarter generally. The majority of our uplift on NRR tends to be from the additional solutions sold into our base, and that's really where we focus when we think about NRR. Of course, we get the benefit of amazing gross retention as well and retaining our existing customers and contracts. For the rest of the year, I would still say that, that 110% plus is what we think of as a good result there. It can fluctuate because of currency. It can fluctuate, of course, because of the mix between sales into new customers versus the existing customer base. But 110% plus is a good result for us.

This concludes our question-and-answer session, and the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect.