Earnings Call Transcript - WK Q1 2026

Operator, Operator

Good afternoon, ladies and gentlemen. Welcome to Workiva's Q1 2026 Earnings Call. My name is Darcy and I will be your host operator on this call. Please note that this call is being recorded on May 5, 2026 at 5:00 p.m. Eastern Time. I would now like to turn this meeting over to your host for today's call, Katie White, Senior Director of Investor Relations at Workiva. Please go ahead.

Katie White, Senior Director of Investor Relations

Good afternoon, and thank you for joining Workiva's Q1 2026 Conference Call. During today's call, we will review our first quarter 2026 results and discuss our guidance for the second quarter and full year 2026. Today's call will include comments from our Chief Executive Officer, Julie Iskow, followed by our Chief Financial Officer, Barbara Larson. We will then open up the call for a Q&A session. After market closed today, we issued a press release, which is available on our Investor Relations website, along with our quarterly investor presentation. This conference call is being webcast live, and following the call, an audio replay will be available on our website. During today's call, we will be making forward-looking statements regarding future events and financial performance, including guidance for the second quarter and full fiscal year 2026. These forward-looking statements are based on our assumptions as to the macroeconomic, political and regulatory environment as of today, reflect management's current expectations and beliefs 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.

Julie Iskow, Chief Executive Officer (CEO)

Thank you, Katie, and thank you all for joining us today. Q1 2026 delivered another quarter of continued demand for our trusted platform. Our two dozen purpose-built solutions are continuing to resonate with our customers. We beat the high end of our revenue guidance with 21% growth in subscription revenue and 20% growth in total revenue. We also continued to deliver on profitable growth, with Q1 2026 non-GAAP operating margin greater than 18%. This was a 240 basis point beat on the high end of our guide and it was a 1,600 basis point improvement compared to Q1 of last year. Our Q1 momentum reflects broad-based durable demand across our platform. In a market where organizations must navigate evolving regulations and complex data ecosystems, the office of the CFO relies on Workiva as their platform of trust. We provide the accuracy, accountability and assurance that they need, ensuring that every number and every narrative is traceable with full lineage. Customers are increasingly standardizing on the Workiva platform. This is showcased by the continued strength in our large contract cohorts. In Q1, the number of contracts with an annual value of over $300,000 increased 38% and contracts valued over $500,000 increased 39%, all compared to Q1 of 2025. The growth in each of these categories was driven by both additional solution sales within our existing customer base and the landing of larger new logos. Let's look at a few specific examples from Q1 that demonstrate how our platform is winning in the market. We're helping our customers solve their most complex data and reporting challenges with solutions across multiple categories. First, a European networking and communications company landed as a new platform customer with a mid-6-figure deal for three solutions. The deal included our ESEF, SEC and sustainability offerings. As a dual-listed company on the NASDAQ in both the U.S. and Europe, this company invested in the Workiva platform to replace their point solutions and manual processes. The investment in the Workiva platform will transform their financial reporting, regulatory filings and collaboration activities, ensuring compliance with ESEF, SEC and sustainability standards. The deal was a co-sell and will be delivered by a Big Four partner. Second, a large European financial services provider landed as a new customer with a mid-6-figure deal for four solutions. The solutions included ESEF reporting, multi-entity reporting and bank regulatory reporting as well as sustainability. The institution is in the process of an ERP transformation and is required to comply with the CSRD. Workiva was the only platform evaluated to address the specifics of financial, sustainability and bank regulatory reporting in a single platform. The deal was sourced and will be delivered by a Big Four firm. Third, a multinational bank and financial services company signed a mid-6-figure expansion deal for three solutions, including multi-entity reporting, policy management and Pillar 3. One of the drivers of this deal was the evolving requirements of Pillar 3 reporting. Pillar 3 is the Basel regulatory framework requiring international banks to publicly disclose detailed information on their risk exposure, their capital adequacy and their risk management practices to enhance market discipline. With the recent changes to Pillar 3, disclosures are no longer static reports. They now need to be delivered as regulatory data sets. This company became a new customer in Q3 of 2025, making a three-solution purchase on their initial deal. This Q1 expansion was a co-sell and will be delivered by a Big Four partner. I'll move on now to financial reporting. Demand for these solutions continues to build as companies modernize increasingly complex global operating models and move away from legacy manual workflows. Now as companies transform these processes, they're also keeping a close eye on the evolving regulatory landscape. I want to briefly address a financial reporting topic that received a lot of attention this quarter. It's the SEC's consideration of a proposal that would let companies opt for semiannual rather than quarterly reporting. Any change of this kind would introduce new decisions for both issuers and investors. Most companies we've spoken to expect to continue reporting quarterly, reflecting ongoing investor and stakeholder demand for timely, decision-useful financial information. As far as any potential impact to Workiva, a change in filing cadence would not alter our value proposition. The value of our platform extends well beyond the filing itself. For the office of the CFO, Workiva provides a trusted data foundation that helps teams remain report-ready and audit-ready at any point in any quarter. CFOs need continuous access to accurate, traceable and defensible information to serve internal stakeholders, lenders, business partners, regulators and investors. Simply put, Workiva's value is not dictated by how often a company files, it's tied to giving CFOs absolute confidence in their data every day of the quarter. It's this foundation of trust that enables us to win both new logos and account expansion deals across our financial reporting portfolio. Let me highlight a few of our Q1 wins in this area. First, a global delivery and logistics leader purchased a mid-6-figure account expansion deal for multi-entity reporting. The business driver of this platform expansion for this 14-year loyal customer is to transform the processes of reporting across the company's more than 250 legal entities. This was a competitive deal to replace a legacy software provider. The deal was a co-sell and will be delivered by a Big Four partner. Second, a U.K.-based AI-native cybersecurity company landed as a new customer with a multi-6-figure deal for three solutions: private company financial reporting, multi-entity reporting and management reporting. The primary driver for this purchase was enhancing their internal financial reporting processes and displacing legacy manual workflows. The deal underscores our growing traction among the world's most technologically sophisticated software and cybersecurity companies. The deal was sourced and will be delivered by a Big Four partner. Third, a European-based global health care leader signed a mid-6-figure account expansion deal for multi-entity reporting. This five-year loyal SEC customer had just invested in a multi-6-figure GRC deal back in Q4 of 2025. The primary driver for this multi-entity reporting investment was a financial transformation driven by a large-scale SAP S/4HANA initiative. As part of this larger project, Workiva will displace a legacy on-prem tax and reporting solution. As the customer transforms processes across the organization, they will deploy Workiva to support the global rollout of their multi-entity reporting. This deal was a co-sell and will be implemented by a Big Four partner. We also continue to see strong momentum with our governance, risk and compliance solutions as companies seek to replace legacy systems and consolidate risk management on a single unified platform. Let me share a few Q1 GRC deal highlights. First, one of the largest financial services institutions in the U.S. expanded their investment in Workiva with a mid-6-figure deal for controls management. This new investment will support five key GRC use cases: internal controls over financial reporting, finance data governance controls, business process controls, sustainability controls and resolution and recovery plan controls. The primary drivers for this engagement were changes to banking regulations and a strategic initiative to better manage risk. This was a competitive win that displaced multiple incumbent solutions. The deal was a co-sell and will be implemented by a regional advisory firm. Second, a regionally prominent community bank in the United States landed as a new customer with a mid-6-figure deal for five solutions. The solutions included audit management, policies management, controls management, compliance management and SEC reporting. The primary driver for this engagement was a GRC transformation project to standardize GRC processes on a single platform. This was a highly competitive win over a crowded field of legacy point solutions. The deal was sourced and will be implemented by a regional advisory firm. Third, we closed a multi-6-figure account expansion deal with the U.S. state government. Already a financial reporting customer, this organization expanded its footprint by adding four GRC solutions: controls, operational risk, policies and procedures and compliance. The primary driver for this expansion was the need to optimize their current risk and compliance processes. Leveraging Workiva's platform and technology is enabling them to accomplish more with a leaner team. This deal was a co-sell and will be delivered by a regional partner. Moving now to sustainability. We're seeing this market shift from a voluntary practice to a more formal business requirement. Regulations are taking shape across major markets. Deadlines are firming up and companies are building out the necessary processes to meet them. The bar for these disclosures is rising as well. Regulators and investors are increasingly expecting the same level of rigor that's applied to financial data, applied to nonfinancial or sustainability data. And this is pushing accountability into the office of the CFO. To meet these high stakes, customers are increasingly moving away from isolated point solutions and choosing unified platforms. Workiva provides the single system of record that links financial and nonfinancial data together. And this gives CFOs the full lineage, traceability and audit readiness that's required for them to stand behind their disclosures with confidence. Let me highlight a few sustainability deals from Q1. First, one of the world's largest chemical companies signed a multi-6-figure account expansion deal, adding our sustainability advanced and CSRD solutions to their existing platform relationship. Their existing solutions included SEC reporting, audit management and multi-entity reporting. The primary driver for this expansion was the need to comply with the emerging CSRD requirements. This was a competitive win over a point solution and reflects the growing need for integrated sustainability management at multinational organizations as they navigate the evolving European regulatory landscape. The deal was a co-sell and will be implemented by a Big Four partner. Second, one of the world's leading global biotech companies signed a multi-6-figure account expansion deal, upgrading to sustainability advanced and adding sustainability for multi-entity access and the CSRD. The primary driver of this expansion was the need to comply with emerging CSRD requirements. The customer will leverage Workiva to manage their corporate and entity-level sustainability disclosure across multiple international frameworks, including the Australian Sustainability Reporting Standards. The deal was a co-sell and will be implemented by a global systems integrator. To conclude our solutions section, let's briefly touch on the capital markets landscape. We were encouraged to see the IPO market reaccelerate in Q1. We supported several IPOs in the quarter and saw consistent demand for our capital market solution as more companies prepare to go public. We believe there is a healthy backlog of companies waiting for the right conditions, and we're ready to support them on our platform through their private to public journey and well beyond. A compelling example is one of the most widely watched potential debuts in market history, a company whose valuation, distinct business lines and cultural footprint make it unlike anything the IPO market has ever seen. This company more than doubled its spend with us with a mid-6-figure expansion deal for multiple solutions, including capital markets, SEC advanced, multi-entity reporting and controls management. The company signed on as a new customer more than a year ago with their initial investment in the Workiva platform. As part of this deal, this company plans to replace multiple point solutions as it transforms and standardizes its financial reporting and financial controls processes on the Workiva platform. This deal highlights Workiva's unmatched value proposition for companies on a private to public journey, and it underscores our platform's ability to serve some of the world's most complex organizations. The deal was a co-sell and will be delivered by a Big Four partner. I'll turn now to product innovation. Workiva is in the midst of a fundamental transformation with AI, transformation of our platform, our solutions and what we deliver to the market. Our AI strategy is outcome-driven and customer-focused, deploying AI natively across mission-critical processes that define the office of the CFO backed by purpose-built solutions and deep domain expertise that turn AI capability into measurable results. Because in the office of the CFO, the tolerance for error is zero. And as reliance on AI increases and there are more unverified data sources, trust in data becomes even more critical. Our customers, CFOs, finance leaders and audit and risk teams need to be audit-ready. They need to be able to explain and defend any number at any point at any time. This is why our platform remains differentiated. This is our core. This is our moat. This is our advantage. To solidify and build on this advantage, we're accelerating our innovation with AI across the platform. Here's what we've recently delivered to turn that advantage into customer value. First, for GRC, we launched the Workiva Flowchart Visualizer and enhanced GRC intelligence agents. The Flowchart Visualizer automatically turns process narratives into audit-ready visual diagrams, mapping risks and controls to each step and surfacing gaps in documentation. The GRC agents enable our customers to spot patterns across issues to uncover systemic risks before they escalate into material events, to surface top themes and trends to inform faster, more confident risk decisions and to track engagement for ongoing assessments and remediation. Second, for sustainability, we released an AI agent for use with the IFRS sustainability disclosure standards. This agent is designed to summarize disclosure requirements in plain language, identify disclosures related to existing data or content and generate first drafts of and iterate on narrative responses based on collected values. And third, an example of the many innovations in financial reporting is the launch of the internal tie-out agents. These are purpose-built for one of the most time-pressured tasks in the office of the CFO. These agents automate data consistency checks across financial documents and associated schedules. They flag inconsistencies and variances instantly before they reach reviewers, management or auditors, and they go beyond notifications. These agents help you review and resolve each issue with full document context, line item links and targeted alerts. This is the foundation of our agentic approach. Every human or agent action logged automatically, every workflow audit-ready by design and at enterprise scale with security built in. As AI reshapes how the office of the CFO operates, Workiva will be the foundation that organizations rely on, not because we're adapted to the moment, but because we were built for it. Our commitment to speed, innovation and transformation doesn't stop with our customers, it extends directly into our own operations. As we noted at the close of last year, we entered 2026 as a stronger, more disciplined and more agile company. We remain deeply committed to our dual focus, both growth and profitability, demonstrating our ability to drive meaningful operating leverage while maintaining durable top line growth. Our Q1 operating margin is a direct reflection of our focus on operational rigor. The 1,600 basis point margin improvement is the direct result of deliberate operational discipline executed across every function of the business. We've made progress on restructuring for efficiency, aligning our teams around our highest leverage market opportunities and embedding AI and automation into workflows that previously required manual effort at scale. Six months ago, Michael Pinto joined Workiva to reshape how we go to market. That work is underway. He's building a leaner, sharper sales organization that's designed to carry us well beyond $1 billion in revenue. This means raising the bar on seller performance and pairing deep industry knowledge with experienced leaders who've scaled businesses like ours. With a tighter focus on our multi-solution platform and more intentional decisions about where we compete and how we partner, we're developing a go-to-market engine built for sustained growth. The result is a disciplined foundation that captures our expanding market opportunity while keeping us on track toward our medium- and long-term margin goals. And yes, more operating margin on the sales and marketing line. In closing, I want to thank our customers for their continued trust and their partnership. I would also like to thank our employees and our partners around the world for their commitment to innovation and to our customers. Their support, their focus and their execution continue to strengthen our business and position us for long-term success. With that, I'll turn the call over to Barbara to walk you through our financial results and our guidance in more detail.

Barbara Larson, Chief Financial Officer (CFO)

Thanks, Julie. I'll start with an overview of our financial and key metric highlights for the first quarter 2026, followed by our guidance for the second quarter and updated guidance for the full year 2026. We started the year strong with broad-based demand across our portfolio of solutions. First quarter total revenue was $247 million, up 20% year-over-year and beating the high end of our guidance range by $1 million. Foreign currency fluctuations had an approximately 2 percentage point favorable impact on our reported growth rate. Subscription revenue was $225 million, up 21% year-over-year. Both new customers and account expansions continue to contribute to our revenue growth with new customers added in the last 12 months accounting for approximately 45% of the increase in Q1 subscription revenue, consistent with our expectations. As of quarter end, our current remaining performance obligations were $765 million, up 20% over the prior year. This growth, which reflects the revenue we expect to recognize in the next 12 months, includes an approximately 1 percentage point favorable impact due to foreign currency. Professional services revenue was $22 million, up slightly versus the prior year. In line with our expectations, higher-margin XBRL services continued to grow, while our partners took on more of our lower-margin setup and consulting services. Our non-GAAP operating margin for the quarter was 18.4%. This beat the high end of our guidance by 240 basis points, driven by our continued focus on operational rigor and productivity and the timing of certain headcount-related expenses. Moving on to our performance metrics for the quarter. We had 6,665 customers at the end of Q1 2026, an increase of 280 customers year-over-year. Our gross retention rate was 97%, exceeding our 96% target. And our net retention rate was 112% for the quarter compared to 110% in Q1 2025. Consistent with our reported revenue growth, there was an approximately 2 percentage point favorable impact on NRR due to foreign currency fluctuations. During the quarter, 75% of our subscription revenue was generated from customers with multiple solutions, up from 69% in Q1 2025. Growth in our large contract customer cohorts also reflected strong momentum. As of the end of the first quarter, we had 2,575 contracts valued at over $100,000 per year, up 24% from the prior year. The number of contracts valued at over $300,000 totaled 605, up 38% year-over-year. And the number of contracts valued at over $500,000 totaled 265, up 39% from Q1 2025. Moving on to the balance sheet and cash flows. As of March 31, 2026, cash, cash equivalents and marketable securities were $863 million, a decrease of $28 million from the prior quarter. This was primarily driven by the repurchase of 763,000 shares of our Class A common stock for $50 million. Combined with the $72 million repurchased in 2025, we have repurchased a total of $122 million under our $350 million share repurchase program with $228 million remaining as of quarter end. As we've previously shared, we remain focused on investing in growth and innovation. At the same time, our strong free cash flow profile enables us to return capital to our shareholders while effectively managing dilution through opportunistic share repurchases. Before I move on to our guidance, I'd like to briefly touch on the governance topic. We disclosed today that the Audit Committee has approved the appointment of Grant Thornton as Workiva's independent auditor. This appointment comes as part of the Board's normal governance process, and we look forward to working with the Grant Thornton team in this capacity. Turning now to our outlook for Q2 and the full year 2026. We are focused on Workiva's commitment to delivering both durable top line growth and expanding operating leverage across the business. With that in mind, for the second quarter of 2026, we expect total revenue to range from $250 million to $252 million. We expect services revenue to be relatively flat compared to Q2 2025. And we expect non-GAAP operating margin to be in the range of 14.5% to 15.0%. As a reminder, we stated last quarter that we expected Q2 operating margin to be lower than Q1, driven by headcount-related expenses. For the full year 2026, we now expect total revenue to range from $1.037 billion to $1.041 billion. We continue to expect subscription revenue to grow approximately 19% year-over-year. And similar to 2025, we still expect total services revenue to be relatively flat year-over-year. We are raising our non-GAAP operating margin outlook by 100 basis points and now expect it to range from 16.0% to 16.5%. This 660 basis point year-over-year improvement at the high end reflects our ongoing commitment to drive operating leverage as we scale the business and make meaningful progress toward our medium- and long-term financial targets. We are also raising our 2026 free cash flow margin outlook by 100 basis points to approximately 20%. For additional details on seasonality and other model assumptions, please see our quarterly investor deck available on our IR website. To wrap up, our strong Q1 financial results are a direct reflection of our ongoing commitment to profitable growth at scale. Having now completed my first full quarter with the team, I am more energized than ever by the significant opportunity ahead of us. Our platform continues to clearly resonate with offices of the CFO around the world, and we are executing with the operational rigor needed to deliver both durable top line growth and expanding operating leverage. As we progress through 2026 in our next phase of growth as a $1 billion revenue company, my team and I remain focused on the disciplined execution required to scale the business efficiently and drive durable long-term value for all of our stakeholders. Thank you all for joining the call today. We're now ready to take your questions. Operator, please open the line for Q&A.

Operator, Operator

Your first question will come from Rob Oliver from Baird.

Robert Oliver, Analyst (Baird)

I had two questions. Julie, first for you. I would love to hear from you—obviously, a really good quarter for you guys and really strong metrics upmarket and some nice examples you laid out on the power of the platform. On that topic, your customers are likely really inundated right now with lots of mandates on AI and AI usage. I'd be curious to hear from you what you're hearing from your customers about that. You laid out some of the concerns around risk and how every number needs to be verifiable. That said, is there any change in sales cycles or anything you've seen within the buying patterns that either give you cause to be excited or to think there's additional features or functionality you need to prepare for your user conference later this year? And then I had a quick follow-up for Barbara.

Julie Iskow, Chief Executive Officer (CEO)

Sure, Rob, and thank you for the question. I did mention the transformation we're making given the new era of AI and we are continuing to provide capabilities within our platform around AI, and our customers are very interested. The base of customers that we sell into are very enthusiastic about leveraging Workiva's AI, cautious but enthusiastic because it is in a secure controlled environment. We are seeing increasing use from those who have activated and those who are actively using it. We continue to look at metrics and ensuring that we are not just relevant, but continuing to increase in relevancy. You mentioned sales cycles. For us, because our execution is strengthening, we're actually seeing less length in our sales cycle. So for us, it's a positive—both from a go-to-market perspective and from the kinds of sellers that we're putting into the market and the platform and the partnerships that we have with our consulting and advisory partners. We're seeing a big push for faster sales cycles, enthusiasm from our customers, and while there is caution in the office of the CFO, customers are enthusiastic about our offerings.

Robert Oliver, Analyst (Baird)

Great. On that note, I'll pivot to your CFO. Barbara, on the Q2 guide on revenue, it looks a little lighter than we might have expected relative to the strength you've called out, while maintaining your full year targets and guidance. Is there anything we should be reading into that—conservatism, wanting to hold a bit of cushion, or anything else?

Barbara Larson, Chief Financial Officer (CFO)

Rob, thanks so much for the question. We're really pleased with our Q1 performance. We beat the high end of our revenue guide by $1 million and we did flow that through to the full year and increased our full year guide by that $1 million beat. In terms of Q2, as we mentioned last quarter, Q1 is seasonally our smallest bookings quarter of the year. Therefore, we expect that the quarter-over-quarter sequential revenue growth will be the smallest in Q2, and that's reflected in our guide of $250 million to $252 million for Q2 revenue.

Operator, Operator

Your next question comes from Adam Hotchkiss from Goldman Sachs.

Adam Hotchkiss, Analyst (Goldman Sachs)

Julie, on that large IPO deal you called out, I think you said they doubled spend with you. Can you talk a little bit about the dynamics of capital markets deals today? Are you getting involved earlier than you were historically, or is that something that only happens with the larger deals? And because GRC and sustainability have gotten a lot of traction, are you now often selling bigger to these pre-IPO companies in areas like GRC and sustainability? Or would you generally say IPO deals look similar to prior years?

Julie Iskow, Chief Executive Officer (CEO)

I'll start with the large companies like the one I highlighted. The trend is similar to prior periods. I mentioned they became a customer a year prior to purchasing IPO capabilities like our S-1 offering, and that's a trend we've continued to see. Twelve to eighteen months is not unusual for us to see companies purchasing internal controls or private company reporting as they prepare for their IPO. Many private companies are staying private longer or indefinitely or pushing IPOs out, so some of our private-company customers purchase other capabilities as they wait for an IPO or remain private. We are selling more to private companies, whether pre-IPO or otherwise. Those deals are increasing in size and multi-solution is increasingly the way we land. The IPO market was definitely stronger in the quarter than last year and we continue to see good deals come through and larger deals.

Adam Hotchkiss, Analyst (Goldman Sachs)

Barbara, could you remind us of what exposure you have from a pricing model perspective to actual financial reporting filing counts, whether that is or is not a factor? And how, if at all, could your XBRL services revenue be impacted by a change in reporting cadence?

Julie Iskow, Chief Executive Officer (CEO)

Are you referring to the SEC's semiannual reporting proposal that came out today? That proposal provides issuers the option to choose semiannual reporting. It's not a mandate. The proposal would enable public companies to choose an interim reporting frequency that best serves their company and investors. Based on our customer conversations, most companies we've spoken with expect to continue quarterly reporting to meet ongoing investor demand for timely decision-making. For Workiva, the value of our platform extends beyond the filing itself; we provide a trusted data foundation that helps teams remain report-ready and audit-ready at any point in the quarter. We do not price based on the number of reports or the number of users; we do not sell by seats or number of filings. So we view this as a nonevent for Workiva.

Operator, Operator

Your next question comes from Andrew DeGasperi from BNP Paribas.

Andrew DeGasperi, Analyst (BNP Paribas)

Following up on Adam's question regarding deal sizes getting larger. If deal sizes grow, should we expect net retention rate to become less relevant going forward, or at least see the balance shift to more contribution from new customers as those larger deals land?

Barbara Larson, Chief Financial Officer (CFO)

I'll take that. From an NRR perspective, that metric can move around quarter-to-quarter. Our internal target is to maintain NRR north of 110%. We were really pleased with the performance in Q1 at 112%.

Julie Iskow, Chief Executive Officer (CEO)

We'll continue to focus on both new logo acquisitions with multi-solution, multi-category lands, as well as account expansion within our existing accounts. Our strategy emphasizes account expansion, larger deals, and enterprise ACV growth through multi-solution, multi-category transactions—both new logos and expansions.

Andrew DeGasperi, Analyst (BNP Paribas)

On capital markets, are you leaving expectations for the year unchanged?

Barbara Larson, Chief Financial Officer (CFO)

Yes. We're pleased with Q1 performance across the business, including capital markets. Our expectations for the year remain consistent.

Operator, Operator

Your next question comes from Patrick McIlwee from William Blair.

Patrick McIlwee, Analyst (William Blair)

It's been roughly half a year since you made several leadership changes, bringing in a new CRO, Head of Product and the CFO. How is that team meshing and how do you feel this new slate of talent positions Workiva for the next chapter of its story?

Julie Iskow, Chief Executive Officer (CEO)

We were very intentional in hiring those three roles. All three have experience at scale and have executed and driven growth beyond $1 billion, which is exactly what we were looking for. They've seen successes and failures and are well positioned to help Workiva lead. Our executive team across the board is stronger, bringing expertise and focus on long-term durable and profitable growth.

Patrick McIlwee, Analyst (William Blair)

On margins, you've outlined a number of profitability levers. Given advancements in productivity technology, how are you leveraging AI to drive efficiency within Workiva internally, and does that change how you view long-term margin targets or where you're seeking efficiencies?

Julie Iskow, Chief Executive Officer (CEO)

Barbara, you may want to start?

Barbara Larson, Chief Financial Officer (CFO)

On the R&D side, we're focused on engineering productivity, which includes leveraging AI and automating across our teams to make our teams more efficient and to improve productivity across the organization. We have ongoing productivity initiatives that are a component of the strong operating leverage we've demonstrated over the past five quarters and we'll continue to make progress there.

Operator, Operator

Your next question comes from Alex Sklar from Raymond James.

John Messina, Analyst (Raymond James)

Maybe Julie, I wanted to ask about linearity in the quarter. Your prepared remarks pointed to a strong win and deal expansion environment and cRPO/bookings look really strong. Was there any timing factors you'd call out, any deal linearity or revenue recognition dynamics in the quarter that are worth calling out?

Julie Iskow, Chief Executive Officer (CEO)

I don't think anything has changed in any material way. I can't think of anything different. The deal timing is very similar and the cycle hasn't meaningfully shifted.

John Messina, Analyst (Raymond James)

On sustainability, it's not only regulatory. I'm curious about resiliency from the nonregulatory side—supply chain requirements or internal operating goals. What's proving to be most resilient and are you seeing meaningful changes in deal sizing when sustainability is sold not as part of a regulatory requirement?

Julie Iskow, Chief Executive Officer (CEO)

On the regulatory side, demand is strong. Stakeholder demand remains a major driver—many companies have made net zero commitments and want to be organized and thoughtful. The demand for sustainability information to be treated with the same rigor as financial data is strong, which is pushing sustainability into the office of the CFO. Beyond regulation, there are business reasons—renewable energy for data centers, economic reasons, and risk mitigation. We're seeing this trend, particularly among larger companies and sectors like retail where stakeholder demand is high.

Operator, Operator

Your next question comes from Terry Tillman from Truist.

Giancarlo Valle, Analyst (Truist)

I want to double-click on how you're driving more products per customer. Where are the actual plays working best to increase platform spend?

Julie Iskow, Chief Executive Officer (CEO)

The world is moving to an agentic model and we are well positioned to be part of that. We're transitioning to a data-centric platform and rolling out capabilities and products that leverage that transformation. We are putting these capabilities into customers' hands—agents across the platform, building agents for customers and enabling customers to build agents on our platform. That's the direction we're going: an agentic world and Workiva is a core part of that future.

Operator, Operator

Your next question comes from Steve Enders from Citi.

Steven Enders, Analyst (Citi)

How are you thinking about monetization given agentic AI—does it change your value-based pricing model? And how has adoption been of the good, better, best tiered pricing model?

Julie Iskow, Chief Executive Officer (CEO)

We operate a non-seat-based, metric-based value-driven pricing model—examples include number of entities, number of controls, number of integrations. We introduced tiered pricing—essential, standard and advanced versions—and we've had customers adopt premium solutions like SEC advanced. Those premium offerings include intelligent finance features and AI-enabled capabilities that are not available to every customer by default. We're seeing strong traction, though we're just getting started; it's a multiyear journey and one vector among many for growth going forward.

Steven Enders, Analyst (Citi)

On deal dynamics, billings this quarter look softer versus some forward-facing metrics. Anything to keep in mind about timing of billings versus subscription booking strength? Also, any change to your beat-and-raise cadence we should be thinking about this year?

Barbara Larson, Chief Financial Officer (CFO)

I'll start with billings. Billings is a noisy metric and can be impacted by payment terms, invoicing schedules and timing of renewals. For Q1, last year we had a higher mix of multiyear upfront invoicing in Q1 compared to this Q1. To be clear, that's separate from contract duration—it's about invoicing terms set by customer preference. Changes in multiyear upfront invoicing impact long-term deferred revenue and therefore impact our calculated billings metric. Of the forward-looking indicators, current RPO is a better indicator of future revenue because it normalizes invoice timing. Regarding guidance philosophy, there's been no change to our approach. We provide our best view of what we have clear visibility to right now, and the management team is aligned on that.

Operator, Operator

Your next question comes from Daniel Jester from BMO Capital Markets.

Daniel Jester, Analyst (BMO Capital Markets)

Julie, you mentioned Michael Pinto's six-month anniversary. Can you update us on areas of deep focus on go-to-market efficiency and any tweaks you're evaluating as the year progresses?

Julie Iskow, Chief Executive Officer (CEO)

Michael has a list of focus areas, including sales efficiency, pipeline quality, enterprise ACV growth, ramp capacity productivity and partner-sourced influenced ARR. He's building a high-powered go-to-market machine focused on future scale and growth—addressing structure, staffing, hire profiles, enablement and strategy across regions. He's taking ongoing initiatives and moving them forward to build a leaner, sharper sales organization.

Daniel Jester, Analyst (BMO Capital Markets)

On gross margin, you've shown strong year-over-year expansion. As you introduce AI agents and they ramp over time, how is your thinking around the gross margin opportunity evolving and how might that impact gross margin leverage?

Barbara Larson, Chief Financial Officer (CFO)

In the near term, we feel good about gross margin improvement. Currently, we obtain our AI compute through our broader infrastructure contracts, so we're not seeing pressure on gross margins at this point. We still expect to make progress toward our 2027 and 2030 gross margin targets and we'll continue to monitor this closely.

Operator, Operator

Thank you. Unfortunately, this concludes our time for the question-and-answer session. With that, that concludes our conference for today. Thank you for attending today's presentation. You may now disconnect.