WK - Earnings call transcript Q2 2020

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Operator

Good afternoon, ladies and gentlemen. My name is Catherine, and I will be your host operator on this call. After the prepared comments, we will conduct a question-and-answer session. Instructions will be provided at the time. [Operator Instructions] Please note that, this call is being recorded on August 4, 2020, at 5:00 p.m. Time. Eastern to Adam over Relations Terese, like for your at the call, today's Director turn now to meeting host Workiva. I'd of Investor ahead. go Please

Adam Terese

Good Vanderploeg; and will Workiva's comments us Stuart from call. afternoon, Miller. Executive for our include call quarter Officer, Chief Chief Marty Officer, Today's prerecorded XXXX conference by and for been has our you followed thank second joining Financial

Relations be Q&A on open XX. the replay call. available Officer call session. live Jill on press today's section. then a Accounting be Klindt, listed which will is of We will Information replay is our for also the A will Investor the this available Chief our under up website in release, to webcast access August until the

and With Marty additional materially subsequent differ in that our for of to factors and refer call by financial Please Reconciliations this annual I to our cause and everyone the to any call, reflect non-GAAP remind are refer GAAP and today's actual XXXX. that, course begin, fiscal information update to All today, known made we financial that call. Form obligation and statements future to Vanderploeg. certain Also, unknown quarter occur like CEO, undertake be These we'll and forward-looking during turning statements no statements future results including begin subject XX-K events also would third certain reflect filings uncertainties. Workiva full to today's guarantees we non-GAAP the are will we we'll performance, today's the regarding after and over included report forward-looking to making are statement of year press release. not to that forward-looking for that expectations events call, during guidance performance. measures to measures. only statements forward-looking current the any on of these cautions company's our the risks Before statements. could from

Marty Vanderploeg

the Thank we revenue joining to pleased financial our thank from with and everyone pandemic, COVID-XX for you, challenges exceeded XXXX results. Despite operating and are for guidance which quarter Adam, you results, today's call. second

reflect results customers. their employees' our to dedication Our our and resiliency

marketing and have to into the successfully transitioned year. and we second sales teams now half environment, the greater virtual a Our visibility have of

for As year which guidance a close year will Wdata our QX, our of across full for platform later provide we our call. result, further revenue. outlook solutions Government. are demand Global Stuart reinstating Statutory growth our Reporting about the guidance, full and is and details for results improved platform Integrated all pre-pandemic and in include which financial our the Risk, EMEA, to In vectors, U.S.

important technology Our partnerships firms for our long-term remains catalyst companies growth. and advisory with an

are in world now complex We and advisory reports. the partners. that platform's our four are we initial reporting largest of proud firms connecting the by embracing are Workiva final to from documents sources and streamline new business their teams data processes as Customers capabilities three further

ever. than us also faster platform new when more developing Our our new speed enter increases solutions, and enabling to flexibility markets

to After platform example, Developing months. reporting a opportunity, FERC delivering new our be the driver on quickly solutions and we solutions success. launched ESEF new from our within continue few to platform. identifying For on and launch concept key both a to our were moved the will

to switched marketing virtual to in discussed we As last COVID-XX. events response quarter, we

virtual the leads at large with and our sales events number attendance pleased been of have We generated. the

X,XXX during registered timely building people data age top award-winning year's will have key our a talent. theme Amplify this workplace Conference of offices Next positioned Recently Annual many to business time. in business execute Stuart This well our in named I to that effectively the in pleased we of the In challenging transformation. User success. Places or ahead month, and And already and with and named working day our supporting IT. We One us. in opportunities ability our confident are virtually. results At it culture York. an trust over of is on create Fortune continuity remotely, we retains With host Global to that Best we capitalize Every and us Workiva our in is Computerworld attend. employees to team's second Miller. a Workplace driver XXXX that quarter whether closing, attracts to Workiva are Over Work in XXXX New remain ability our lie turn of will Best

Stuart Miller

Marty. you, Thank

highlight want Authority to development consultation related initial should Conduct market U.K. opened COVID-XX, to predictable we in began and the March, Following that more delay closing the our one that FCA suggesting July of the shock deadline June into by deals prospects regulator a I on and a settling year. new to are into see to cadence initial reporting normal. it the COVID-XX or Financial a in particularly whether customers ESEF has

While we companies. the lasts period the affected U.K. are the mandate, the companies the ESEF for XXXX approximately in approve comment headquartered delay month, FCA U.K.. by expect to XXXX another Of the

mandate expectation for U.K. had our market the on delay material no a for of outlook has the EMEA. impact Our of

Now to our turning financials.

and We we Lower for guidance. release midpoint results guidance of medical mentioned results As our X/X revenue The accounted performance non-GAAP high entertainment employee million. expenses accounted of the against succeeded pandemic the press QX swing. operating a on for remaining revenue in of beat travel and $X on We our beat talk address than I we to impact and a at March. QX I'll income. had QX. We most beat collections the always end on operating will of guidance Refer for about had had collecting of that an the first. reserves a The more guidance by revenue our for by on receivables guidance accounted and of XXXX anticipated than million. basis. reconciliation the less $X.X GAAP percentage and in beat I care the beat. our just subscription income QX, non-GAAP of held in X/X the Higher at

last comparison $XX.X XXXX QX, XXXX. reporting and year, generated an a the QX was subscription revenue revenue to in of XXXX. QX, quarter XX.X% to line Breaking total QX item, from million, out revenue support turning Now XX.X% $XX.X increase by of from of second up we million

year. XXXX. came our New XX of the helped from new The revenue QX the in drive QX, new solutions months. in Professional last S&S revenue year. $XX.X same small increase added to in decrease and from came consulting from quarter revenue Growth the a logos was and overcame X.X% strong XBRL customers last growth year. balance have million setup XXXX, increase in an than of QX customers in in been for increase services revenue more the relative in from who of companies XX% a services last QX,

net from the to we contract average with in XX XXXX QX. XXXX Turning in a a logos new XXXX QX, customers increase value supplemental than XXXX. customers five same of higher QX was finished The account churn value net QX for and a increase of QX, annual signed of metrics, our the customers from XX%

rates retention revenue remain Our strong.

for of reflects in revenue XXXX. support churn. for support the XXX.X% quarter rate attrition to subscription quarter pandemic-related second the XXXX decline quarter contracts The revenue was impacts customer conversion as down compared to XXX.X% QX solution-based increases well second retention on solution both winding licensing price as add-ons was of our subscription came Our XX.X% XXXX and retention M&A the to in the compared of and and and half year. XX.X% bankruptcies. from the Almost delisting's same for period last With rate

XXXX, we We over continue number the valued to totaled at contracts. our increase the second at over XXX quarter had quarter, from contracts customers valued of $XXX,XXX in $XXX,XXX XXX year, larger XX% per QX subscription of of results. XXXX second from number up In QX up XX% year. The contracts of prior the

in points. XX.X% Breaking revenue, totaled on QX, basis of a equating gross gross year the quarter expansion to in down the of out margin contraction and S&S XX.X% XXXX the versus million, Consolidated up a profit QX quarter same P&L. a gross ago. points XX% Gross a profit. margin XXX XXXX. Subscription to in Moving XX.X% of totaled basis net QX from profit was million gross $XX latest compared support $XX.X XX

million headcount $XX.X expenses due percentage of XXXX QX in QX totaled expenses $X.X in XX.X% Sales discussed QX $XX.X than higher revenue drive an in QX the margin due expense basis percentage QX help our million, the of to second and points to of expense growth. XXXX. as better compared platform and contraction. as QX General XX.X% gross guidance a primarily XX.X% and to new increased $XX.X costs. services compared the XXXX in in from profit G&A the reflecting of expense our our XX.X% talent XXXX. in in revenue additional was million, XXXX. QX, We in QX development to million driver profit X.X% Additional a of earlier. in operating sales XX.X% expenses. compensation as gross from improved higher primary an costs, million compared posted severance I headcount margin customers XX.X% in Professional upgrade XXX increased operating quarter $X.X to to QX software QX million $XX,XXX investment loss XXXX, from quarter administrative equating a up R&D to bookings XXXX was to to and Research operating $X.X Workiva's XXXX. for up primarily to marketing to QX was totaled

the the the increase subscription multiyear cash activities for present June revenue. March is at XX, with it collected this factors In receivables XXXX. million consistent marketable when accounts a operating June the quarter. million from securities provided annual XX, $X.X of of XXXX, deferred from reserve outstanding At account, and an which of of to credit million cash to compared classified compared ago. collection risk at reduced recognize balance June equivalents payment ASC with of vary invoices at deferred amounts receivables net revenue we take up of by billing until invoices the both from therefore This cash sheet year out implement to $X.X We of QX, with totaled the revenue a remove Remaining XX, quarter, obligations XXXX, a terms equal At we as million same an receivable XXX. statement. to quarter we at end variety review reserve determine flow and contracts performance of ones our to million, XX, account $XXX $X.X some that and to to customers. is begin deferred on billings amount contracts continue and reduced $XX.X revenue which million we balance in cash each the and including provided risk At cash, $XX.X Turning due totaled XXXX, end XXXX. risk

Turning our guidance. to

guidance visibility As Marty reinstating on based business XXXX both new pipeline indicated, we on are closing. improved full for deals year and

guidance year new on to improved substantially and guidance loss. is Our full full close on pre-pandemic year operating revenue our

the We on expected are results impact of factoring information today. our COVID-XX based in us available to operations business on of and

range of to $XX.X For revenue we the from total third $XX.X XXXX, to quarter expect million.

at revenue subscription revenue expect than We QX. grow a in services faster rate to

We expect operating million non-GAAP range to $X.X from $X.X to loss million.

from full range million year to For XXXX, $XXX.X revenue to million. we total expect $XXX.X

expect from to to $XX.X million. We operating non-GAAP loss range $XX million

now take to ready Q&A Operator, your we're session. will begin We questions. the

Operator

from [Operator Stifel. with first line the Roderick comes Instructions] Tom And question your of

Tom Roderick

for you out to a tough great finish on Congratulations Gentlemen, questions. was starting to thank quarter. what be a taking my

XX about them want regardless, I back of kind then at What in terms talked fact close the about more days of pipeline. you there closures So slipped at did Would that had up. Since replenishment you love what done into quarter, also kind replenish a in guess, the the as XX number the of well I deals with I XX to pipe. you ago out more were XX put of you like you're think hear little And it to just deals rates this of a and Thanks. do love the was pretty those it sales are a Marty in bit I'd sales go sounds had put team? quarter talk little lot back doing place? the big hear were close a splits team you pipeline of in deals to time of getting But put the help did look that. to as pipeline some to you about close about back well. – and But changes? were a of maybe the did Any to Any the strategic next number. pipeline, bit what those in on deals?

Marty Vanderploeg

Well, good question.

those that, slipped A The for a I in typical quarter, of number would of pretty those quarter. this had closed, potentially still that we comment of a say those and quarter number distribution. first next is pipe deals first the are

away. went going the still soon. to airlines industries some really are not like And things examples, suffering I from are that COVID-XX, the come deals mean, that. anytime back – hospitality the Those

we saw for slipped we rest and So long-term of sort sure. – category closed one the on but some we hold – didn't didn't some are outpace

seeing into building terms in past. really sales And we're industries. is In and said, virtual rate selling, coming sort economy can't mentioned that pleased in of of new normals COVID. but certain really, previously, deals as a is when to of rest building sell to our before did we percentage economy back consideration come pivoting of is not been we've the a you also to team only you And and pipe. similar the take really closure with the closing I damaged back very the Stuart normal the pipe to the those

So stressed the of the come industries normal. normalize to of for industries things or say should being, seeing and those time we're sort with I exception back damaged

good definitely shock months in pretty time everybody. sort And affected returning. The from some ago. just look after – normalcy but things of So we're three has seeing now settled

Tom Roderick

about for to the delay. I'd great your little Marty. hear one-year evaluating that. Thanks how this multiphase I a guess, just FDA mandate? be a comments you over Europe implementation are that you love mentioned, That's was I Europe know of it ESEF customers meant to bit Yes. in – in what to Stuart a referenced, customers is thinking potential and hear sort anyway. your

the by where transformation or you marketing where So this and of event, customers digital you it in or did is January either FCA improve U.K., of the YXK still your it headcount pipeline and it ramping, down wasn't like Do slows a are evaluation terms didn't. sort sales that own you're over irrelevant in you anyway to awareness? XX build about thinking there spend think

Stuart Miller

question. It's Yes. a good

the front As we've an meeting using not opportunity the indicated ESEF solution, to to And a before a we're seeing to of sell the with with we right get a opportunity but as platform. mandate sell people point the Tom, end were that. as lot an success at

delay of all. ESEF coming the down FCA on -- see that delay slowing don't the we So potential at on out is motion

So in penetration we've really already we staffing. ESEF. our into hasn't comments, and quite -- in of made really those indicated affected my forecast fact, a I didn't the and bit broadened -- And accounts we've affect beyond discussion I our -- it earlier it as

Tom Roderick

jump thank I’ll the in job. back guys. but you Outstanding. queue, Nice

Stuart Miller

Tom. Thanks,

Marty Vanderploeg

Thanks.

Operator

the James. next Alex of question line comes from with Your Raymond Sklar

Alex Sklar

math How wondering question retention could just a in QX, just Stuart is if lapping the around step the you characterize I held strong was add-on really down the revenue. Thanks. in SBL? of but of that much

Stuart Miller

particularly for companies solution taking of affected COVID. And Yes. particularly price then affected of that increases by was COVID. companies a by not churn renewing and SBL industries combination bit from that it and a were Certainly, were

to accounted SBL. the couple it's probably we've said move. isolate Specifically, basis in the for points it But of a as of hundred hard past,

Alex Sklar

terms being Great. of Marty you three you in in any partner just devoted global you partner I'm Workiva the see Okay. prepared curious partner changes deals then Thanks. versus the prior remarks, partners. And top or consulting mentioned in of if channel four the quarters? involvement resources highlighted to

Marty Vanderploeg

partner happy We're activity Yes. right now. really with our

practice and deploying how can starting they on make around a Our also real use that to build money only it. not customers partners to can our solution recognize advising are they it,

ones a clients. very engaging taking and seeing us lot not just we're our partners the their seriously with so big of And

been So And pay it a said a it thing but all that we've positive us. build we're momentum, to for that's along, like really off seeing takes while now. really

Alex Sklar

Thank Great. right. All you.

Marty Vanderploeg

Alex. Thanks,

Operator

Your next question -- of… line

Unidentified Analyst

is for my Hey, Thanks questions. on for Nick guys. This actually Terry. taking

with as end I the which are conversations and us I mandate guys And in a us guess, was competitive on EMEA? update any are seeing you terms -- So, both that can addressing ESEF the, update you the back toward pivoting kind the you're on first organizations one give opportunity. hoping lower W you both dynamics with progressing of just of maybe an larger market was how of in follow-up on changes ESEF for the an sides? just them guess, the solution, in I give

Marty Vanderploeg

and Let by we over talk mechanisms lot saying echoing of to the just engagement me of customers one sort get ESEF sort them. start to what is ESEF. had We've the that of Stuart to said, to used a

end top market. Those haven't close be on and sales down starting ESEF. doing two-third than deals platform just companies. seen there. high of there. are product SEC of we large not to investments We things. doing platform And the effect reporting compliance the sell type where different satisfy sorts internal more on They scale to the the may bottom any making the in be of market our one-third are of types They're may They we all

entry a change it's haven't and so seen expect I don't And nice been I we those going well. -- very have big any, any but into companies it's

starting that like handled. percent we're good those matter of a the On citizens. to said, two-thirds want They close again, to of comply what. we're They on no be bottom really are get business. the companies some to want engagement. going and certain market And, good to And there's getting I it carry

U.K. and really So this the we advancement the don't delay in affecting we've luck engaging our had see in good market.

Unidentified Analyst

Got it.

of just towards more then, Okay. I go-to-market. kind And pivoting That's helpful. guess,

place? operational the certain hire organization? year, efficiencies Julie wondering touch enhancements to increased Thanks. guys are I you in earlier this on the if these if enhancements potentially With in she's was of the of is And areas leading of put some could

Marty Vanderploeg

been Julie addition our lot of a to great discipline. happy operational company. brought She has a yes, for answer Well, has that.

As as could. I as was I going mentioned it do was and two to trying well in the it call, last not jobs

so, go-to-market she focused in terms brought decisions. more of And packaging in we to really terms of has going how metric-driven of on with And operational of terms a have positioning in value. discipline, sort go-to-market, lot communication -- we're

of sell spent and all that, done investing our great on in job And that. skills we've a also a so, lot she's time

talk like the anecdotal to what company to could the of sales terms in COVID observe things if we improve go-to-market definitely about of going she's more well. feel doing middle type So I very is the going of you But and it. efficiency efficiency. come hadn't to in in stuff I have itself, it's and

Unidentified Analyst

it. Got

Okay. Thanks, guys.

Operator

next comes Stanley. question Your Stan from line Morgan Zlotsky the of with

Stan Zlotsky

doing Perfect. Thank the is Couple so everybody hopefully much, me, environment. current ESEF questions the from you mandate. well guys and in on of

is as much rumblings EMEA kind considering any table? of U.K. the putting about the of potentially heard have also discussion As you potentially on that rest delaying,

Marty Vanderploeg

But as talk mentioned, existing not to us year, still bounced being than the a have they I prospects heard have I concerned -- give if and even European delayed our of it's to I'm forecast tend a We do, to they're built will it's many they're chance doing think the to official. sure to moving that, new has on think don't about we not. Obviously, but I in going I us And said that necessarily in around, that I significant the as better have even into way. something going in if forward. not be customers. general. times, Stuart that state be anything it's Union, current COVID

year. we've these before more or just delay that we So that things That And most it thought was what accounting a be for of others. COVID, there a and had that less in even seen had to model built I do that we seems the regulatory already. chance could -- we

Stan Zlotsky

that Guys, Okay. Perfect. makes…

Marty Vanderploeg

place. to does, are it it happen But your conversations going question, something very Europe. it's then, the really still seen not happen and I'm about. haven't still in It's we But if taking concerned to

Stan Zlotsky

kind now -- And you impacted of Makes maybe then, that I billings how just have? have moving of allowance just Just in make that And want million you help X% Right. unpack the declining $X.X we correct. follow-up receivables Can us billings of the matter sure the a No guys sense. for time. of pieces what Stuart. to just quarter? it it's for year-on-year? the a all

Stuart Miller

Absolutely.

is to it -- the to think is it I So Stan. way XX, compare the think to about June XXXX,

at million year the in -- what last XX So then and was $X.X that reserve the $X.X June million.

up for were billings numbers adjusted to X.X% look if change if in billings, for would short-term short-term you pro at you you been So it. added a reserves forma those back that, if have both

Stan Zlotsky

that is year-on-year sequential or that's that a change? change But change,

Stuart Miller

is to at that's right the year. I would one change. when billings. Yes, at our business of way It think -- end sequential $X look million have particularly the been I because March it one year-on-year the The it that's -- was the to right? But this mean comes seasonal

so as -- And if that percentage it the of a you at look combined number.

So million it add-back was receivables the was it the XX.X% or was total X.XX. was about at of XX.X% total about $X at plus the X.XX about

Stan Zlotsky

we Maybe so follow-up it. it you Got much. Appreciate one-on-one. Thank can

Stuart Miller

you. Thank bet. You

Operator

next Your Grondahl Mike comes the from of Northland. line with question

Unidentified Analyst

Yes. silos just for Michael year-over-year. there points the across as the a the call in industries? out on Mike. pretty my Anything the it's in more certain first growth different surprises it of XX-Q even energy quarter taking couple on strengthening as off for is segments seems on Maybe like and This question. Thanks far in broad-based to

Marty Vanderploeg

We're I good-sized very that much there And is one that's reporting. would competition different. statutory the promise of seeing say the a global showing lot deals. really is

competition. older an technology it's So

So very global that's the good year, part through statutory really first out. stood of really, showed all the of half the but growth progress vectors

Unidentified Analyst

potential it. M&A changes last of quarters pipeline just And Got market the on maybe in there? the couple comments in

Marty Vanderploeg

that. ahead Stuart. I'll on comment let Stuart Go

Stuart Miller

we initiate to brought to at mean I look opportunities and us ourselves. continue Yes. conversations

the pandemic down companies in caused fair slow might the has selling most be say to it's think that of to I the front. that on interested M&A

quiet. relatively say So been I would it's

Operator

Roderick with you do have the follow-up of Tom a from Stifel. And question line Okay.

Tom Roderick

I little Marty That's nice into taking that hoping -- they with could some other detail in here. next-generation the We're follow-up. go using same getting it's guys. the more that already. like at just kind play on a same feedback things how to was customers it interact bit seen a time platform respect even have from remote Hi, edit for at Thanks you feel of can that game the of same sort line line like that. can with changer employees each a the be really with and perhaps

So add-on of I'd out? better changer? more of employees better the bit you kind I this question reception functionality that product Just interact bit some love of are getting you products? global it's -- working with add-on thinking some for statutory one more more about guess have secondarily are the from of how number product about you on because or customers' of Wdata And a whether is as game the little then seem respect of to what's and you're home? hear adoption Does to opportunity roll does sort a your as think these the it with it or a like little features a it's other monetary monetizing

Marty Vanderploeg

undertaking. has our When a And has big a you first would rebuild performed very how been -- out size platform that's really when with very of off I extremely ours that's say next-gen pleased Well surprise. we've pleasant been stable and do a very, rolling of turned It's well. out. the that you been

months already at architecture. and those in for Remember, those I that specific we bookings. the ESEF truly FERC from platform. In the micro and package the to mentioned of remarks in going and W for created generating services modern solutions, instance, gone terms solutions prepared and two a we've of are to And we're couple just get leverage, a beginning, for selling them them

see going So, we're But be bag. leverage going package what to to next-gen. from solutions to direct in new revenues put customers more their sellers see more we're going and to is, in specific get classic able for to there XXXX, from we to aren't switching the we

that's leverage. we so the And get where really

Tom Roderick

what Is would it you are doing that. who it much one to and a perhaps adopting they Alteryx, more alternatives or or something then, more the Customers at hear deal historically, just solution love to And Wdata? of tool-type on follow-on bit just that prep pretty of that Wdata, -- looking manually? for an they've are who this prices, a it, potential about a Yeah. are like little that? is at quick data just looking is done

Marty Vanderploeg

Yeah. it's together our version what of connectivity. is it tool. Alteryx a a the particular of us say, baby particular thing for and It's, data does, let's but product prep And sort is big for put our customers. But

like of can data can our just You need cases, number to you the things in sales a really your tools Concur, good our But all there and thing do and the data bring love. prep for the customers to we solutions systems, all large use forces. source which and but connect is not ERPS CRM tools

data back just for more and that. front we're not the that's office data, data, in customers office more pull and but using seeing can you platform So

the So ADSs. with the Wdata, Wdata. platform sale We're do link like higher I missing a platform, said, in and was considerably we getting

piece a true in And platform. us of having so it's -- the it was it product, missing terms for was --

So, it. at how look to that's really

Tom Roderick

Appreciate That’s That’s for me. you, it great. guys. it. Thank

Marty Vanderploeg

Tom. Thanks,

Stuart Miller

Thanks, Tom.

Operator

with last Oliver And of the line your Baird. question comes Rob from

Matt Lemenager

the Thanks, guys. on steady. on there Lemenager holding in fairly three and It's growth platform growth of one have two with kind like Rob. or the is seems customers ago in is but the which mean have than Matt held kind greater just that compared comparing guess Is $XXX,XXX, more of sale customers traction, decelerated at bit. for growth to in And $XXX,XXX is little $XXX,XXX a quarters maybe it anything I it's unpacked I the just I while greater $XXX,XXX least a in to growth in come seeing that there? strong. down bit a than

So, about there? anything to think

Stuart Miller

Hey, Matt, it's Stuart.

think be them COVID bit, the during XX% of the that's that But time of to a we're the that strength of at do on think I COVID. a, is both growing $XXX,XXX selling levels do does else. of anything kinds more down and platform. really impact growth So, happy of the than little over those I reflective reflect the the

Matt Lemenager

Okay.

just Stuart, Okay, flow. Yeah. cash got to And ask was going it. on I

Sometimes, think been cash there flow about the calls second to cash the you've half. want people half anything in point were provided I operating additional anything year, around color on first around mean flow? positive, that? or of the strong cash how it operating looking Is sounds you at to to the like collections and

Stuart Miller

first half mean we're half specifically year. Not second of to on the cash flow the nicely Yeah. positive around the pleased the I be of year.

I'll at So, it that. leave

Matt Lemenager

guys. Thanks good. sounds Okay,

Stuart Miller

you, Matt. Thank

Operator

conference concludes call. gentlemen, Ladies this participation. for We thank your and today's you

disconnect. now may You

Workiva (WK) 4 Aug 202020 Q2 Earnings call transcript