Workiva Inc. Class A

Good afternoon, ladies and gentlemen. My name is Sedarius 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 that time. If at any time during the conference you need to reach an operator, please press star followed by zero. Please note that this call is being recorded on February 17th, 2021 at 5 p.m. Eastern Time. I would now like to turn the meeting over to your host for today's call, Adam Therese, Director of Corporate Development and Investor Relations at Workiva. Please go ahead.

Good afternoon. Thank you for joining us for Workiva's fourth quarter 2020 conference call. Today's call has been prerecorded and will include comments from our Chief Executive Officer, Marty Vander Plauw, followed by our Chief Financial Officer, Stuart Miller. We will then open the call up for a live Q&A session. Jill Clint, our Chief Accounting Officer, is also on the call. A replay of this webcast will be available until February 24. Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section. Before we begin, I would like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including guidance for the first quarter and full fiscal year 2021. These forward-looking statements are subject to known and unknown risks and uncertainties. We keep a caution that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only. We undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the company's annual report on Form 10-K and subsequent filings for factors that could cause our actual results to differ materially from any forward-looking statements. Also, during the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are also included in today's press release. With that, we'll begin by turning the call over to our CEO, Marty Vander Plaat.

Marty Vander Plaat Hello, and thank you for joining today's call. We are pleased with our fourth quarter and full year 2020 results, which beat guidance for revenue and operating income. In Q4, we continued to benefit from macro business trends, which included significant increases in cloud platform deployments, digital transformations, and remote workplaces. Akiva has also benefited from the growing demand for RegTech and XBRL. Our financial results reflect the broadening adoption of our platform and fit-for-purpose solutions. We exceeded 20% growth in subscription and support revenue and generated record bookings. In 2020, 77% of new solution and new logo bookings were generated by solutions outside FDC or Cedar. As we recently announced, all of our customers are now on our next generation platform, which is more open, scalable, intelligent, and intuitive. This company-wide initiative was a significant undertaking And I would like to thank our employees for their dedication and hard work in achieving this important milestone. I'd also like to thank our customers for their commitment to Orkiva and recognizing the value of our new platform. Now that our platform upgrade is complete, we are prioritizing three areas where we see opportunities for growth. Fit for purpose solutions, global expansion, and our partner ecosystem. First, our fit for purpose solutions. Our idea to incubation framework gives us a mix of discipline, speed, and agility. We will continue to launch new solutions that solve specific business problems and enable our customers to realize value quickly. Second, global expansion. We will continue to capitalize on demand from companies outside North America that need to manage complex data sets reduce errors and risk, improve efficiency, and respond to regulatory requirements. In 2020, EMEA and APAC generated less than 8% of our consolidated revenue. We expect these markets to contribute an increasing percentage of total revenue over time. And third, our partner ecosystem. Many of our more than 200 partners are now creating new solutions and services on top of the Workiva platform. We look forward to further expanding our partner ecosystem as we work together to deploy our platform throughout global enterprises. In 2020, our values-based culture sustained us as we remained strong and connected to each other and to our customers, even as our global teams were remotely for most of the year. We also strengthened our commitment to advancing our diversity, equity, and inclusion efforts through a variety of employee and company-wide initiatives. We continue to win awards in 2020, including being named a top 100 best workplace by Fortune Magazine for the second year in a row, as well as being named a great place to work in technology for families and for millennials. Earlier today, we announced that Stuart Miller, our CFO, will be retiring at the end of this month. I want to thank Stuart for his dedication over the past seven years, guiding us from a private company through an IPO and to the global SaaS company we are today. Stuart has been a valued colleague and we will all miss him. Thanks to Stuart's leadership, we are able to make a seamless transition by appointing Jill Quint, our Chief Accounting Officer to the CFO role. Jill has been with Workiva since our early days, building our finance and accounting teams and taking on more responsibility over the past several years. I look forward to continuing to scale Workiva with Jill on our executive management team. In closing, I am extremely pleased that we finished 2020 with strong revenue growth and record operating income and cash flow, while upgrading all of our customers to our new platform and continuing to provide innovative solutions. With that, I will turn the call over to Stuart Miller.

I want to start by thanking all of my colleagues at Workiva, particularly Marty, the rest of the executive team, and my team in accounting, finance, and corporate development. I believe Workiva is in great hands with Jill Clint as CFO, having worked closely with her for many years. Working with the extraordinarily talented people at this great company for the last seven years has been the highlight of my career. Turning to our results, we saw broad-based demand for our solutions in Q4. As a result, we're raising guidance for 2021 revenue, which I will discuss later. As always, I will talk about our results and guidance on a non-GAAP basis. Refer to our press release for a reconciliation of our non-GAAP and GAAP results and guidance. I'll address our performance against Q4 guidance first. We beat Q4 2020 revenue guidance at the midpoint by $3.4 million. Higher subscription revenue accounted for all of the beat. We closed more deals early in the quarter, and we sold and delivered some capital markets deals within the quarter. We beat guidance on Q4 operating income by more than $4.5 million. The revenue beat I just mentioned accounted for the majority of the swing. The remainder of the beat relative to guidance included lower travel and entertainment costs, reduced expenses from shifting marketing and internal events to a virtual format, higher PTO usage, and decreased occupancy costs. Turning to Q4 2020 results versus Q4 the year before. We generated total revenue in the fourth quarter of $93.8 million, an increase of 16.9% from Q4 2019. Breaking out revenue by reporting line items. Subscription and support revenue was $81 million, up 22.4% from Q4 2019. New logos and new solutions helped drive strong revenue growth in Q4 2020. 56% of the increase in S&S revenue in Q4 came from new customers added in the last 12 months. Professional services revenue was $12.9 million in Q4 2020. down 8.9% from the same quarter last year. A decline in XBRL services revenue outpaced growth in setup and consulting. In Q4 2019, we had posted a one-time increase of $2.5 million in XBRL services revenue due to a regulatory change. Turning to our supplemental metrics. We finished Q4 with 3,723 customers, a net increase of 213 customers from Q4 2019, and a net increase of 140 customers from Q3 2020. Our revenue retention rates remain strong. Our subscription and support revenue retention rate was 95% for the fourth quarter of 2020, compared to 94.7% for the same period last year. With add-ons, our subscription and support revenue retention rate was 109.5% for the fourth quarter of 2020, compared to 113% in Q4 2019. The number of larger subscription contracts continues to increase. In the fourth quarter of 2020, we counted 847 contracts valued at over $100,000 per year, up 30% from Q4 the prior year. The number of contracts valued at over $150,000 totaled 419 customers in the fourth quarter, up 47% from Q4 2019 results. Moving down to P&L, gross profit totaled $71 million in Q4, up 22.2% from the same quarter a year ago. Consolidated gross margin was 75.6% in the latest quarter versus 72.3% in Q4 2019, a net expansion of 330 basis points. Breaking out gross profit. Subscription and support gross profit totaled $68.1 million, equating to a gross margin of 84.2% on S&S revenue, an expansion of 160 basis points, compared to Q4 2019, driven by lower server costs related to the transition to our new platform and lower travel costs. Professional services gross profit in the fourth quarter was $2.8 million, equating to a 22% gross margin. Research and development expense in Q4 totaled $22.1 million, up 4% from Q4 2019. due to higher compensation partially offset by lower T&E expenses and occupancy costs. R&D expense as a percentage of revenue improved to 23.5% in Q4 2020 from 26.4% in Q4 2019. Sales and marketing expense for the quarter increased 12.8% from Q4 2019 to $35.1 million. driven by higher compensation partially offset by lower T&E expenses. General and administrative expenses totaled $8.6 million in Q4, down $1.7 million compared to Q4 2019 due to reduced T&E expense, lower compensation, and decreased professional services fees. G&A expense as a percentage of revenue improved 370 basis points to 9.1%. We posted an operating profit of $5.2 million in Q4 2020 compared to an operating loss of $4.6 million in Q4 2019. Turning to our balance sheet and cash flow statement. At December 31, 2020, cash, cash equivalents, and marketable securities totaled $530 million, an increase of $6.2 million compared to the balance at September 30, 2020. Net cash provided from operating activities in Q4 2020 totaled $13.4 million, compared with cash provided of $2.1 million in the same quarter a year ago. Remaining performance obligations on subscription contracts continue to vary from deferred revenue as we implement multi-year contracts with annual billing terms for some customers. Turning to our guidance. We are factoring in the expected impact of COVID-19 pandemic on our business and results of operations based on information available to us today. For the first quarter of 2021, we expect total revenue to range from $100 to $101 million. We expect subscription revenue to grow at a faster rate than services revenue in Q1. We expect non-GAAP operating income to range from $4 to $5 million. For full year 2021, we are raising guidance for revenue. We now expect total revenue to range from $409 to $411 million. We expect non-GAAP operating loss to range from $12 to $10 million. In the last three quarters of 2021, we are modeling higher travel costs and investment in growth opportunities. In 2021, we expect to post positive free cash flow for the fifth consecutive year. We will now take your questions. Operator, we are ready to begin the Q&A session.

If you would like to ask a question, you will need to press star 1 on your telephone. Once again, that is star 1 on your telephone to ask a question. And your first question comes from the line of Rob Oliver with Bayard.

Great. Good evening, everyone. Thank you very much for taking my question. Stuart, congratulations on your retirement, and certainly we'll miss working with you. I have two quick questions. One first for you, Marty. You talked about the three focus areas of growth for the business this year, fit-for-purpose solutions, global expansion, and Parker ecosystem. I was wondering, and you guys had laid those out really nicely at the analyst day, and I was wondering if you could just provide a little bit of color on where we are with some of those key initiatives right now, and then I had just one follow-up for Stuart.

Sure. I'll start sort of with the fit-for-purpose solutions and just say that we've had good results. in the first solutions we've run through there, primarily FERC and GSR, Global Statutory Reporting. The system that Julie put in place in terms of vetting, developing, and preparing these before we go to market has been really rigorous and very good. And we have several in the pipeline. for next year that we're excited about. We're not ready to talk about what they are until we're sure we're going to go, but we feel good about that. Global expansion has been going well. You know, the revenue growth is higher in both EMEA and APAC, and it's on a small denominator, obviously, as we referenced. That's looking very good, and we almost have to do that because a lot of our customers are deploying us more broadly, and a lot of them are global companies, so they want representation and support in all those areas. So not only is it expanding our market, but it's better serving our biggest customers. Partners, we're doing really well. That's really coming together. Partners are realizing that they can generate good income from themselves deploying our products, and we've been going together jointly into the marketplace and doing really well. We're seeing that grow rapidly. It's a big part of what we want to do because we really want to get more involvement from our partners for delivering our product. We want to focus on being a software company, not a services company. And so that's gone well. We're really not ready to talk about metrics yet because that metric is so ill-defined. But most of what we do is go to customers together, and then we contract directly with our customers. So you had another question?

Yeah, no, I appreciate that. That's really great, Marty. Thank you very much. And then, Stuart, just one for you just on the guidance. I know you said it still factors in COVID-19. I think you also said from a cost perspective that it sounds like you guys are expecting some return to normalcy at least from cost outlays in the back half of the year. So just wondering how those two things match up and what were some of the factors that you thought about when thinking about the revenue guidance for 21 in light of COVID-19. Thank you guys very much.

Yes, on the expense side first, you know, we're fairly optimistic about the ability to get shots in arms and the efficacy of the vaccine. And we also thought it was just prudent from a forecasting standpoint to assume that those costs were going to rise due to increased travel in the back half of the year actually starts to ramp in our model starting in the second quarter. And then on the revenue side, our optimism really is as it's always been, it's been rooted in the pipeline and the maturity of that pipeline. And, you know, we run a fairly granular business, and we've got many years of experience with it, so we're pretty confident in what we're seeing with the pipeline. And, you know, the demand has been very broad-based.

Thank you again.

Your next question comes from the line of Matt Stotler with William Blair.

Hey, guys, thanks for taking my questions. Marty, it's good to connect with you. Jill, good to speak with you again. And Stuart, you know, we obviously just launched coverage about six weeks ago, but you and I have been talking for the better part of four years. So it's been a pleasure and congrats on your retirement and best of luck going forward. Thank you, Matt. A couple of. um maybe product specific questions here so first on uh esef uh you know just look to get an update on the traction you're seeing without offering um you know how many customers you have using it today and when you think about what that adoption could look like you know what kind of penetration do you think uh you know is likely or reasonable uh when you look at that target um you know 5 000 plus potential customer base over time well let me uh you know in terms of It's tracking about where we thought it would be. It's behaving much like the early days for the SEC market. And we expect that we will have success as time goes on. It's not a one-shot deal. And we are definitely closing business even in light of the delay that some of the countries have lately announced. And customers are taking it seriously. And, you know, we're seeing a good broad base all the way from very small companies to large companies looking at our solutions. So we're very optimistic. Yeah, that's helpful. And then just one on W data. So when we talk to your customers and partners, there seems to be a lot of interest in W data. But, you know, in a lot of cases, still typically pretty early stage, you know, customers evaluating the practical use case, value proposition, though there are some high-attach areas like global stat reporting you guys have talked about in the past. Can you just give us more color on the overall interest or attach rate that you're seeing with this capability and, you know, what you're doing to drive broader customer adoption here? Thank you. Yeah, I think that that question is really sort of locked in the fact that we're trying to move to more of a platform company. Obviously, our journey there takes us through selling solutions, but obviously some of our customers have seen and understand the value of the platform. WData has been more incorporated in the platform in late and is viewed as one of the key parts of it, being able to connect and then prepare your data properly is vital to our platform. So as we move toward a platform sale, we're seeing it in a lot of the newer solutions that we're rolling out. And so W-Data is still a very important thing that we do, and we're seeing good attachment rates. Julie, you want to add anything?

No, Marty, I think you covered it there. It's now just a component of our end-to-end platform and part of our growth strategy rather than a single solution offering that will sell separately.

Great. Thanks, Marty. Thanks, Julie. Thanks, everybody.

Your next question comes from a line of Terry Tillman with Truist Securities.

Yeah, good afternoon. Congrats on the quarter. Stuart, we're going to miss you. Congrats. You're going to miss our engaging questions, I'm sure, and these earnings calls. Jill, welcome aboard, and good luck with our questions. But I guess maybe my first question, and I don't know if this is for Marty or who it's for, but I'll just throw it out there. The strength in the fourth quarter in terms of new logo activity, and I know it can kind of move around each quarter depending on just kind of the seasoning of the pipeline, but as we're looking at 21, You know, we've got a couple things going on. Your customer successfully replatformed. You know, these built-for-purpose or built-for-use solutions, maybe there could be a quicker path of, you know, the next use case adoption in your installed base. But I'm curious, this logo strength, should we expect kind of a similar kind of dynamic in 21 where it's stronger new logo activity, or could it shift back to maybe where you're getting a lot more from your installed base because of the success with replatforming and then add a follow-up?

Sure, I'll just give a high-level question and see if Stuart wants to add anything. But, you know, what we've always said and which continues to hold true is roughly about half of our new sales each quarter come from new customers, new logos, and about half comes from new solutions and existing customers. You know, that ebbs and flows a little bit, but for the most part it stays right in that range. We expect that to continue for the most part. Stuart, you want to add anything?

No, I think that covers it, Marty. Over the long run, it has been 50-50. We have no reason to believe it's going to be otherwise in the future.

Okay, got it. And, you know, I know we're talking about global expansion, but if I come back kind of to the states and look at the federal opportunity, it was great to see the deal. I think it was the DOJ signature deal. We saw the value as a large deal. In the aftermath of that, maybe Marty or team, what could you all say about the federal government and just public sector in general and what you're seeing? Thank you.

Well, just to back up a little bit, you know, our plan in general for growth is to be broad-based in terms of geographies and solutions. Clearly, the state and local governments and the federal government between COVID and the election definitely took a hit. And so we see great opportunity there, and it's just starting to revive now based on the election being over and sort of everybody seeing the light at the end of the tunnel on COVID. So we're seeing that recover nicely. But, again, it's just part of our portfolio. And because we have a portfolio approach, we can always deal with, you know, one or two of our vectors being a little soft. So we're optimistic about the future for the federal, but, you know, you can imagine what it went through in terms of the COVID experiences.

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

Perfect. Thank you so much, guys. And, Stuart, we're definitely going to miss you. A couple of quick questions from our end, maybe just at a very high level. When you guys think about pricing for your products as you go into 2021 and beyond into 2022, how do you feel about the balance of essentially the value that you are delivering to your customers from your products versus how much you're able to monetize those products across your customer base? And I have a quick follow-up for Stuart before we let him go.

I'll just give a high-level point of view on that in terms of pricing. I think that any time you start a new solution in a market, you know, to get some market share and experience, you tend to start a little lower. And in the SEC, for instance, in that product base that we've, you know, we've sort of gotten those prices that match value. We also have a value team that looks at this, and we try to match that with value. So, So I think in some of the solutions, we're quite mature, and we think that the value matches the price tag, and we're confident in that because of the customer set and the churn numbers. In some of the newer markets, you know, we'll see, you know, as we develop those markets, we'll right-size it and probably move it up. But almost always when you start a new market, you start low. Stuart, do you want to add anything?

No, I think you covered it.

All right. And then one for Stuart. When you think about net revenue retention, I know you guys don't guide to it, but when you think about it for 2021, what do you see happening to that net revenue retention rate as we go through the year?

As you know, the components of that include price increases and add-on sales. We expect to see good contribution from add-on sales. We're really not planning to take price at all this year, very little. We're having good success selling volume. We'd rather sell more solutions to customers than take price. You know, that's what I can say in terms of components of it. You know, the pipeline would indicate that we've got good prospects when it comes to the add-on sales.

Got it. So just as people are kind of going through trying to calibrate their models, is the current level of net revenue retention, is that what you're expecting to see moving forward?

Well, as you indicated in your preamble, we haven't guided to it, and so we don't want to break any news today on that front.

Fair enough. All right. Thanks, Stuart.

Thanks, Dan.

Your next question comes from the line of Tom Roderick with FIFO.

Hi, everybody. Happy New Year. Thanks for taking my questions. And, Stuart, I'll start with you. It's been a real pleasure working with you. So congratulations on your retirement. We're going to miss you over here on our end much more than I know you're going to miss us. But it's been great. So thank you. Maybe I'll throw the first one back at you, Stuart, and Marty, Julie, please chime in. I know, I think it was Matt earlier that asked the question just on Europe in general and ESEF. I was wondering if you could share some more statistics with us. I think, Marty, you might have said it was five single digits international as a percentage of revenue. Do you have the exact number that Europe was, either for the full year or where we're sort of finishing the year? where we finished the year 2020 as a percentage of either revenues or new logos. And I guess what I'm just trying to get behind it is, you know, how quickly is that ARR or, you know, net new bookings kind of catching up to where the quota carrying reps are? And then what does that look like for next year for Europe? Thanks.

So, Tom, thank you for your comments. I've greatly enjoyed working with you as well. So we filed the 10-K today, and there is a footnote to the financials that lays out America versus the rest of the world. in terms of splitting out revenue. And so that is finally, as we cut it, a majority of that non-America's revenue comes from EMEA, although APAC is starting to contribute, but certainly in terms of uh 2020 uh substantial percentage of that 22.3 million dollars and subscription revenue um in four and a half million of professional services revenue is coming from uh from omea so let's put note 12 to the page 90 of the 10k okay great

And then just maybe following up on that, Stuart, real quickly in terms of the question on headcount and how quickly you're ramping that relative to where the opportunities are in Europe or international, if you want to cut it that way.

Yeah, Marty, do you want to talk about that?

Sure. I mean, the – In terms of overall headcount, we put a lot of growth into EMEA in 2020 in terms of headcount and will continue this year as well. We think that's a big opportunity. And in APAC, it's very early days still, and we will continue to add people there as well, probably at a higher percentage even than EMEA, but it's off even a smaller denominator. But, you know, all the indications are good in terms of demand in both markets. Great.

And a quick follow-up one. This is a bit more thematic, but with everybody talking about ESG and how to monitor that and track it and measure it, it would certainly seem like your platform is sort of tailor-made for helping your customers take advantage of the reporting and connected reporting qualifications and needs around ESG. Can you talk about what your customers are asking for you from that matter and how you think about that as an opportunity to monetize the platform?

Well, you know, again, the new solutions we're working on, I really don't want to comment on. We definitely see there's a market there, and you'll hear from us in the future.

Okay. We'll look forward to that. Thank you all. Appreciate it. Have a great night.

You too.

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

Thank you, Stuart and Jill. I'll echo my congratulations to you both as well. On the booking strength, I want to dig in a little bit more on the logo growth. Just two really strong quarters in a row. I think fourth quarter was the most any quarter in the past six or seven years. I can appreciate the commentary of selling the platform more broadly, but has there been kind of any commonality you can speak to in terms of these ads, any two to three solutions that are driving the most success or any geography in particular? Thanks. Stuart, you want to take that?

Yeah. So, I mean, it was really – Alex, thank you for your comments, by the way. But it was very broad-based. And we saw strength with global stat, with energy, with capital markets, with ESF, you know, with SEC, with integrated risk. It was a very strong quarter. I mean, I think we would direct you back to some of the macro trends that we're seeing, the shift to the cloud, the digital transformation, the office of the CFO, the realization that the hybrid work environment is here to stay and that customers need collaborative work platforms. So all that was heading in our direction.

Okay, thank you. And then I guess, Stuart, to follow up, in the prepared remarks, you mentioned new logos drove, I think, 56% of the revenue growth.

I think that implies that those new customers are coming in at roughly 2x the company average. Is that right? And then in terms of why the much bigger land, is that at all geography-based? Is that just having the broader platform to sell now? Anything else you can tell us on that?

Yeah. So, the 56% is relative to incremental subscription revenue. And that number, it averages, it goes 50-50 over time. When we were implementing solution-based licensing, it got up to about 54% on existing customers, and now it's 56% for new logos. And so, That's just the percentage of revenue that's attributable to new logos in the past year. So it really hasn't changed that much.

Okay. Thank you.

Thank you.

Your next question comes from the line of Andrew DeGasperi with Barenburg.

Thanks for taking my question. First, congrats, Stuart and Jill, as well. I had a question in terms of just a high-level, you know, paid administration. Obviously, people are expecting a much more rigorous pace of regulations coming from there in the U.S. And I was just wondering if, you know, talking with your partners and clients, is there any sort of chatter or activity that reflects like either potential for more solutions that they need to adopt or anything like that?

Yeah, I mean, we certainly are optimistic that the Biden administration is going to it's going to look at regulation and, you know, the pendulum is going to go back the other way some. And so we are optimistic about that. I would say that the thing I'm more optimistic about is the adoption of XBRL. It's starting to hit a tipping point, you know, ESF and then FERC. And I think XBRL is already being talked about for, a number of different things, some of the solutions that we're going to look at in the future. It's being adopted across the global statutory reporting in some jurisdictions. So, you know, when XBRL hits a tipping point, it'll be a meaningful thing for us. And so I think the Biden administration in terms of, you know, the U.S. is definitely going to help us, but I think the fact that XBRL is becoming almost the go-to machine-readable language now is what –

what you know gives me uh most optimism thanks and then uh just had a question in terms of your go-to-market outside the us i know you're planning to do this organically in in emea but i was just wondering if you considered doing something uh more in depth with some of the larger erp vendors when it comes to aipac um something like for example blackline has done on with sap um or something to that effect

I don't anticipate us doing that. I mean, the double-edged sword, right? You've got better access to markets, but you pay a heavy price for that in terms of go-forward SMS revenue. And you probably heard the rumored number for Blackline. But, you know, we want to address our market through our partners and our own direct channels and, you know, not – damage our TAM in any way. So I don't expect to see that unless it's a joint thing, you know, a go-to-market jointly. But really, that's a tough thing to do. So probably not.

Understood. Thank you.

Your final question comes from the line of Mike Grundahl with Northland.

Hey, thanks. We're a Kiva team. Stu, best of luck in your retirement. Well-deserved. Two quick questions. One, Stuart, is there anything to call out? You talked a little bit about the 4Q upside coming from the capital markets area. Any more you can add there or anything in the pipeline would be great. And then just maybe for Marty, any thoughts on acquisitions going forward or if you've been spending any time there?

Go ahead. So, yeah. So, thanks, Mike. Enjoyed working with you as well. So, you know, capital markets is part of the story in Q4, but certainly global stat and energy and ESF, you know, they were all big contributors. The capital markets piece was just relative to guidance, because we generally have low expectations for that business. From a safety standpoint, it's better for us to assume very little from that business, and some of it gets delivered within the quarter, and that's why it can be an upside surprise. We're just trying to avoid a downside surprise, so we don't assume much there. And then on the M&A front, Marty, do you want to talk?

Sure. My answer will be the same as yours, Stuart. We continue to look. We think that there's opportunities in our future, but we're very careful. The last thing we're going to do is run out and do something that would cause us harm. We just see so much organic growth potential. You want to comment, Stuart?

No, I mean, I think you covered it. I mean, we've been looking more at small add-ons that can accelerate our existing strategy. You know, we're not actively looking at anything that would be transformational.

Got it. Thanks, guys.

Thanks, Mike.

And there are no further questions at this time.

Thanks, everybody.

Thank you all. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.