William Blair 46th Annual Growth Stock Conference

So we'll get started here. Thank you guys for coming to the Workiva session. I'm Pat McElwee, and I'm a software research analyst here at William Blair, as a part of which I cover OCFO companies, including Workiva. Quickly, I'm required to inform you that a complete list of disclosures and potential conflicts of interest are available at our website at williamblair.com. So this year, we're very excited to have the Workiva team back at the conference. For those not familiar, Workiva provides a reporting and governance platform that helps enterprises manage financial reporting, regulatory filings, ESG disclosures, and audit compliance workflows from a centralized cloud environment. I'm happy to be joined on stage by CFO Barbara Larson, who joined Workiva last year, prior to which she was serving as the CFO Sentinel One. And we also have Yogi Shah from the investor relations team in the audience, and then Mike Rose as well. So that's my quick two-liner on the business, but I'll turn it over to Barbara for a better overview of the company, and then we'll jump into more of a fireside chat format.

Thank you so much. I appreciate the introduction. It's great to be here. Thanks for joining me. I just wanted to give everyone a quick overview of Workiva, and then we'll dive into some Q&A. Of course, we couldn't have a presentation without our safe harbor statement. So there you go. But overall, Workiva manages the data that matters in the office of the CFO. So we have become known as the platform of trust. We've got more than 15 years of experience in investor grade reporting as well as regulatory expertise. And you can think of it as having both the data and the narrative in the Workiva platform. And that can be traceable all the way back to our customer source systems, ensuring that the data and the narrative are defendable, accurate, and audit ready. Something that's very close to my heart and exactly what CFOs just like me require. So in the office of the CFO, you can only imagine the tolerance for error is zero. So CFOs need to be able to explain and defend any number to any stakeholder at any point in time, whether that's an investor, a regulatory agency, or to their board. And that's the exact problem that Workiva solves. Our experience, our ecosystem, and our capabilities create a foundation of trust. In terms of our strategy, we've got four pillars to our strategy. You can see that here on the slide. Fit for Purpose Solutions, a connected AI platform, global expansion and partner ecosystem. the strategy is focused around ai powered solutions we've got more than two dozen solutions that we offer to our customers global expansion is another opportunity for us we have a lot of opportunity in terms of selling into our customers that are outside of the u.s and then we have a 200 plus network of partners that expand our reach and help us go to market. And that strategy today remains intact and relevant. We have a very large $35 billion TAM across multiple categories, financial reporting, governance risk and compliance, as well as sustainability management plus industry verticals. We have over 6,600 customers. So a lot of opportunity still to grow into that customer base. And then again, you can see with APAC and Europe, the TAMs there, we have opportunity to continue to grow our global footprint. In terms of AI, AI is embedded in the core of our platform. It is securely built in terms of the data stewardship, something our customers come to expect from us. It's seamlessly integrated into the existing workflows, and it's tailored to meet the needs across the office of the CFO. And Workiva helps provide all of that, as well as the AI that's embedded in the core. again we've got over two dozen solutions in our offering across the different product categories helping meet our customers needs for both financial as well as non-financial reporting it's a unified platform with unified reporting workflow linking data management ai and ml so again meeting our customers needs for both financial and non-financial reporting all in one platform. And then the last piece I'll touch on is our approach to pricing and packaging. So the number one thing is we are not seat-based. We have not been seat-based in for quite a while, over seven years. Our pricing is based on value-based pricing. So we are pricing based on the outcomes we deliver to our customers. It's metric driven. So if you think about our multi-entity reporting solution, we're pricing based on the number of entities. Or if you think about our controls and SOX solution, we are pricing based on the number of controls. So really trying to align that value to where we have, where our customers are getting the most outcomes out of the product. And then just last year, we also introduced tiered pricing. So tiered pricing in terms of we have essentials, a standard, an advanced. So it's our good, better, best approach to pricing. And that provides a natural expansion opportunity for us going forward as well. So hopefully that gives you a little bit of an overview of Workiva and what we do. We'll get into Q&A.

Yes, that's great. Thank you very much for the overview there, Barbara. It's very helpful. So first question, you touched on the pricing. So I'm going to just jump straight to the growth. So it's one thing to grow 20% plus in a given year, but Workiva has been growing a category of roughly 20% for like a decade now. And your product's now used by 85% of the Fortune 500, 88% of the S&P 500. So can you just help us frame how you think about the growth levers going forward? Is it deeper penetration of that enterprise customer base, new lands further down market, or just how you think about the mix of new lands versus existing customer expansion into the future?

Yeah, so growth levers, you highlighted it in terms of our customer base. We have, you know, some of the top companies across the world are customers and trust us. We've got kind of the up and coming new economy customers that are trusting us well. The companies that are really starting to control data, compute, energy capacity, LLMs, and some of the big IPOs that are coming up. So we definitely look at that 6,600-plus customers as an opportunity for us to continue to grow and expand. When you think of historically, we've been about 50-50 between new logos and expansion. In Q1, we recently reported that our revenue growth in the quarter was more at 60-40. So 60% coming from our customer base, expanding with them, 40% with new logos. So a couple of different motions on expanding with existing customers. So we've got that broad portfolio of solutions, so over two dozen. And so we have the opportunity to continue to go back and sell more solutions to our customer base across financial reporting, GRC, as well as sustainability. And then the tiered pricing model that I mentioned as well is another opportunity to drive kind of a natural expansion within our customer base. I think SEC Advanced is a really great example of that motion. So we've had customers and have been offering our SEC capabilities for over 15 years now. and just last year with the introduction of this tiered pricing model we now have the opportunity to go back and sell advanced and advanced is actually one of the ways that we are looking to monetize on ai so ai we have embedded into the core of the platform but some of those more solution specific capabilities around ai we've got in that advanced tier as well as some other advanced capabilities. So like SEC reporting or what we call intelligent finance has translations, design, financial statement automation, in addition to those more advanced AI capabilities. And we're seeing about a 20% plus price uplift when we go back to that SEC customer and sell them the higher advanced tier. So plenty of growth and expansion opportunity within our customer base there. And then new logos continues to be a growth opportunity for us. And a lot of that is coming through the global expansion. Okay. Awesome. Yeah, no, that's

really helpful overview. And as we think about that expansion within the existing customer base, You guys have been driving some really impressive growth across your size cohorts, right? So the bigger customers are growing faster than the smaller customers. And just for those in the audience, Workiva reports a KPI. So ACV from customers over $500,000 grew nearly 40% last quarter, which grew faster than the customers that were $300,000 or more and so forth. So, you know, my question is what specific products are resonating with those large customers and supporting that growth at the high end? And how, if at all, have you optimized your sales motion to support that success?

Yeah, a couple of things. Really, it's the broader platform that we have. So the broader platform of solutions, more than two dozen offerings where we see the opportunity to go back and sell into our customer base. We're also seeing the more advanced tiers drive expansion and uplift for us around the customer base, too. And I think from a go-to-market execution, one of the things that we've been really focused on, and then with Michael Pinto joining, he's our new CRO, joined about six months ago, we've had much more focus on how we sell the platform. And so that combination of, you know, having the broad platform and solutions available and then with greater focus and execution from our go-to-market team that's driving those larger multi-category, multi-solution deals and then also leaning into our partner network that also is enabling the go-to-market execution too.

Okay. And it seems like for all software businesses like yours with more of a true platform, this trend of vendor consolidation that we've seen across the software landscape is kind of endearing to your benefit. So where are you seeing the most heated competition today? You know, is it still point solutions like ESG vendors or increasingly broader platforms trying to build maybe just good enough solutions to compete with some of what you offer? Yeah, I would say it's

primarily around point solutions. And even when I talk about point solutions, it could just be manual work. So a lot of, especially on like a GRC and sustainability, you know, there are companies that are just kind of muscling through it and they've got manual processes, or you've got someone that's joined a company and maybe they have a familiarity with a particular point solution. So that is primarily where we see the competition in terms of point solutions across SEC, GRC, and financial reporting, GRC, and sustainability. What we don't necessarily see is kind of that platform competition that has the broad reach across the portfolio that we do. you know, that is one of the differentiators of Workiva is the breadth of our platform and the

solutions that we offer. Okay, great. And as we talk about competition, I think we kind of have to touch on AI. So can we just touch on, you know, potential disruption? It's obviously a big fear across the software landscape. There's a lot of uncertainty in the market right now, you know, notably from increasingly capable foundational models. Can you just talk about how Workiva is differentiated from those platforms and if you're seeing any change in the in the competitive landscape or risk of that over time yeah at this point in time yeah no I love that question thank

you love to highlight where we're different and so I'll maybe do a little bit of a compare and contrast so LLMs today right they're very probabilistic so they are providing answers or output that are based on patterns and probabilities, they don't necessarily have the data. And if you think of the CFO persona, we don't have any tolerance for error. So we are looking for things that are more deterministic. And that's what Workiva provides. So we provide deterministic data, you know, traceability as well as defensibility. And so where an LLM can provide an answer, what Workiva does is it proves that that answer is right, it's current, it's traceable, and it's defensible to an auditor. And that's how I would compare the two and how we're differentiated. And the other piece to that is our customers, the business processes they're working in across finance, risk, compliance, and sustainability, they're not necessarily binary, right? There are lots of different people and stakeholders that are collaborating around the data, the numbers, the narrative, all the commentary that goes around that, whether you've got humans in there making judgments, making comments. You can have lawyers, your auditors, so your external stakeholders. So there's a whole part of the process and workflow around that that requires a lot of judgment versus just a binary.

Got it. Yeah, there's been a lot of discussion this week on the differentiation between deterministic workflows that are right every time and then more probabilistic, where you kind of can get a myriad of different answers given the same input.

So very clear. And in our line of work, we need deterministic.

Got it. Yeah. And so you've highlighted a few competitive wins over the last couple of quarters. And in the past, you've talked about AI increasingly showing up as a differentiator in those RFPs. Can you just elaborate on exactly what functionality or features are embedded in the Workiva platform that really seem to be resonating with those customers? And if you see that having more of an impact on existing account expansion or that incremental new business wins over time?

Yeah, I think from a feature perspective, I think AI like is pretty much table stakes now. And so, you know, I highlighted in the presentation that when in our platform, we have core AI functionality that's, you know, embedded and it's available broadly to all of our users. And a great example of that is if you're drafting a narrative. And so that feature is available. It's available to all of our customers. But then we have some more advanced features. So SEC Advanced has a feature where you can create a benchmark group and benchmark maybe a new pronouncement or a risk factor against how your peers are doing that. So just different levels of functionality, and, you know, we're seeing that all resonate, and then we're also looking at rolling out some agenda capabilities as well.

Okay. Okay, great. So to kind of change topics here, there's been some buzz going around about this SEC proposal for semi-annual reporting as a replacement for the quarterly reporting requirements. It seemed like your stock reacted negatively to that kind of initial announcement when that came out. So I just wanted to ask, you know, what your thoughts are on that proposal and just give you a chance to clarify how, if at all, that has an impact on your business.

So the one thing, and you said it in the question, is right now it's a proposal. And even, you know, if it does move beyond a proposal, it's not a mandate. It is providing companies with the optionality to move to semi-annual reporting versus quarterly reporting. We've had conversations with customers. I've talked to my peers, and for the most part, I'm not hearing anyone wanting to make a big shift to semi-annual. I think investors like yourself appreciate having information more regularly than not. So I think from a customer conversation, that's what we're hearing. And then when I think about the value that we provide to the customer, it's not just the filing and whether that happens two or four times a year. It's an entire process. And, you know, we've got month-end reporting, quarter-end reporting. We're in the – my finance team is in the platform on a daily basis. So the value of Workiva and the platform extends well beyond just the filing. And then from a pricing perspective, we don't price based on the number of filings. A really good example and proof point of this is in Europe, where they do have the option for semi-annual reporting. And so we have customers in Europe that do semi-annual reporting, that also do quarterly reporting, and they pay the same amount. So, you know, we are providing value to the customer throughout the year, regardless of the filing. So we look at this as a relatively non-event for us.

Non-event. Okay, got it. And glad to hear you guys are kind of eating your own cooking within the organization. So it's been roughly half a year since you guys have made a handful of leadership changes at Workiva, bringing in a new CRO, head of product, and obviously yourself as the chief financial officer. So my question is, how is that team meshing, and how do you feel this new slate of talent kind of positions Workiva for the next chapter of its growth story in the future?

Yeah, thanks for the question. I will say the team's meshing very, very well. Michael Pinto joined us about six months ago. Deepak and I joined about the same time, probably December, January time frame. So the team's meshing very well. I think they were very intentional in terms of their strategy and bringing new leaders in. a good blend of leaders that have kind of that deep institutional knowledge tenured with the company, with the leaders that have experience within the industry and have actually also seen scale. So Michael Pinto is bringing a new level of rigor and discipline to our execution on the go to market side. He also, you know, looking at how we scale the business. Deepak is very focused on how we accelerate our product roadmap, particularly around AI, ensuring we've got really strong alignment between the product and the sales team. And then I'm very focused on kind of our dual mandate of continuing to deliver strong growth as well as operating leverage as we scale to a billion and beyond. So really focused with these leaders on kind of that next level of scale and maturity across the company and meshing and working really well

together. Okay, great. And you touched on it. So I'm just going to ask, how do you think about the balance between profitability, operating leverage and growth going forwards? I think one of the knocks on some of the highest quality software companies out there right now is just like they're not profitable or they're adding back a ton of stock-based compensation? Just how do you think about the balance between those two?

It's a balance, but I also think that the more productivity we can drive in the company, it actually fuels growth. It helps us be more focused and prioritize where we're going to place our bets to drive growth. So I look at it definitely as a balance, but also, you know, the more we can drive productivity, the more that that fuels growth and our ability to invest back into the business.

Okay. And as we think about this new paradigm where, you know, personal productivity is available to everyone, how, like, have you guys been able to leverage artificial intelligence heavily within the operational base at Workiva and see some of those efficiencies? We are. I mean, if I look at

our profitability journey. And definitely that has been very intentional, deliberate focus on how we drive productivity across the company and drive more leverage in the business. And AI has been part of that. I would say it's been an evolution, right? AI, as you mentioned, like your personal assistant making everyone more productive, but also now really focusing on how do we leverage AI across our functions and really embedding that in our cross-functional workflows. Of course, R&D and development has been, you know, a really good opportunity for us to leverage AI to drive developer productivity and that to the extent we can go faster, leveraging AI, we can do it at a much lower cost. Okay. Okay. Great. And so the backdrop for your

ESG reporting solutions has been kind of dynamic over the last few years with, you know, some delays on the SEC climate disclosure, changes to the CSRD implementation in Europe. Kate, can you talk through how demand for that solution has progressed and how large of an opportunity you still feel

that it represents for the company? Yeah, we're still seeing, you know, durable, strong demand for sustainability. And we look at that as kind of a long-term opportunity for us with durable growth. That landscape continues to change. We are starting to shift a little bit from voluntary to required. You've got some of these regulatory standards start to firm up, like CSRD, deadlines firming up as well, companies are starting to think about how they're going to build their processes around it to meet those requirements. So we're definitely, you know, continue to see strong demand. It's part of our, it's one of our growth drivers going forward.

Okay. And have you guys shared what portion of the overall revenue base that is currently versus

maybe what it could grow to over time? I think we have shared the TAM in terms of...

But not how material it is right now. Yeah. Okay. Got it. Okay. So you called out a win for an institution in the midst of an ERP transition last earnings call. I know that there's, you know, this wave of SAP transition to the cloud. It's proved a little more elusive than some people

might have initially thought. I feel like we've been talking about that for like 10 years. For

years. Yeah. So I guess my question is, you know, with that win, with that announcement that you talked about this quarter, like, are you starting to see a pickup? Is there, has there been an inflection in the amount of opportunity out in the market as a result of those transitions taking

place or being slated to take place? Yeah, I think ERP transformation, whether it's, you know, SAP, S4 HANA, it creates a forcing function for us in terms of you've got customers that are evaluating, doing finance transformation, ERP transformation. And when they're doing that, they're not just thinking about their ERP, but they're thinking about their entire reporting framework. And, you know, we're partnering with the big four and they bring Workiva in into those deals. So it's definitely a good opportunity for us in terms of finance transformation, ERP transformation, and driving more activity.

Okay, great. And another kind of segue that you opened up. So the partner strategy, I think you guys have been talking more about kind of a partner led strategy over recent quarters. And you've seen some nice traction in that network recently, especially with the big four firms. So can you talk a little bit about how you're looking to balance partners with growth more so coming from your internal sales force? And I guess how important both of

those levers are for you as you go to market? Yeah, partners are definitely going to be really important for us in terms of our go to market. We have a lot of focus on that, whether we are co-selling with them or their implementation partners. And so, you know, we have a really good partnership with them. Workiva, we bring the platform, the partner bring kind of their transformation expertise, their global reach, as well as the client relationships. And then the more and more Workiva is part of these ERP transformations, it does bring that reporting layer in, and it creates opportunity for our partners to build services practices around Workiva. So a win-win, a win-win combination for us. They bring us in, but we also help them build their

services practice up to. Okay, great. And then I think something that's probably come up more than it should, just given our material, it is for the businesses, the capital markets exposure. So there's some sensitivity there, right? But it's not overly material in my understanding. Can you just help us understand what drives that dynamic within a software, a SaaS model, and clarify how

significant that exposure is for the business? So capital markets, it comes up in multiple ways. So when I think about the capital markets over the last couple of years, you've got companies where you've got a dynamic where companies have stayed private longer. And so one of the trends that we've seen is, you know, companies have a dream to go public. It may take longer than they expect, but they're looking to mature their processes. So it's an opportunity before they become public for them to standardize on the Workiva platform. We have our private company financial reporting for global companies. We've got multi-entity reporting. So they start on their journey before they become public, and then they have a capital markets. As they go public, they buy our capital market solution. And so that's part of the journey. We're actually even seeing once they take that capital market solution, there's opportunity beyond that as a public company with our sec and then um so a longer time to go public but opportunity for them to you know drive more rigor and discipline in their processes before becoming public and then the second is you know to the extent we saw this q3 of last year to the extent you um start to see a few companies go public the markets look good we will see you know other companies kind of fast follow and want to take that opportunity to, you know, hit the market when the timing is right. And in those cases where you see a capital markets transaction, they may go public very soon. And so those are one-year deals, the capital markets transaction. And to the extent they IPO before the end of that deal, we do see some revenue acceleration. So I think that's one dynamic where we can see some upside. But overall, it's still the capital markets is a small piece of our overall business, even at the height of the market. In 2021, it was about 5% of our total revenue.

Okay, got it. That's great context. Okay, yes, it looks like we're up on time. So I think that's a good spot to close that up. And then we'll have more time for Q&A in the breakout room upstairs. So that'll be on the second floor in Richardson. And thank you, Barbara, very much for being here with us.

I appreciate it.