Workiva Inc. Class A

Good afternoon, ladies and gentlemen. My name is Brent 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 the number zero. Please note that this call is being recorded on August 9th, 2022 at 5 p.m eastern time i would now like to turn the meeting over to your host for today's call mike rost senior vice president of corporate development and investor relations at workiba please go ahead good afternoon and thank you for joining us for workiba's second quarter conference call during today's call we will review our second quarter 2022 results

and discuss our guidance for the third quarter and full year 2022. Today's call has been pre-recorded and will include comments from our Chief Executive Officer, Marty Vander Plauw, followed by our Chief Financial Officer, Jill Clint. We will then open the call up for a live Q&A session. Julie Isco, our President and Chief Operating Officer, is also on the call. A replay of this webcast will be available until August 16, 2022. 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 third quarter and full fiscal year 2022. These forward-looking statements are subject to known and unknown risks and uncertainties. or give a caution that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and 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 Plauw.

Hello, and thank you for joining today's call. We are pleased with our Q2 results despite the challenging macroeconomic environment. Our S&S and total revenue have exceeded market expectations and once again beat the high end of our guidance in revenue and operating results. Q2 subscription and support revenue grew 24.3% and total revenue grew 24.6%. These growth numbers include the impact of the Q2 acquisition of Parsport. For the quarter, we saw continued bookings growth in multiple solution areas, including our GRC and ESG solutions. Our organic revenue retention rate of 97.9 is the highest we have reported as a public company. This strong quarterly performance was driven by the strategic investments we have made in the Workiva platform, purpose-built solutions, and partner and customer success. We believe that the demand for regulatory software is consistent and durable, and we will continue to invest in key platform capabilities and our ESG opportunity. However, we expect that near-term growth may be influenced by broader market conditions, including the possibility of lengthened sales cycles. Despite the potential of some market noise in the near term, our confidence remains strong in the long-term opportunity across our wide TAM. At the same time, particularly given macro conditions, we have increased our focus on achieving greater operating leverage and have slowed our hiring plans for the balance of 2022. Across the business, we continue to carefully review our spend and efficiency to balance achieving our growth targets and at the same time improving our margin profile. We do not plan to slow down or reduce strategic investments in ESG or key platform capabilities. These initiatives, we believe, will drive long-term growth and widen our competitive moat. This balance between growth and operating leverage will lead to future margin improvement. We believe that we will return to a quarterly operating profit on a non-GAAP basis in the latter half of 2023. Following our Q1 earnings call, there was a lot of discussion surrounding our capital market solution. To be clear, We have factored the impact of this downturn into our full-year guidance and are not projecting a rebound in IPO activity in the second half of 2022. Looking beyond 2022, we remain confident we will become a billion-dollar revenue company and have the TAM, the platform, and the team to deliver on that goal. We believe that the market opportunities surrounding ESG, GRC, and the broader regulatory reporting environment will drive our durable growth. We continue to be optimistic about our business opportunities in the ESG market. During the quarter, we signed several ESG contracts, including a top five global bank, a prominent U.S. consumer products company, and a large global technology company. Our ESG solution complements our other solutions, making it a seamless process for customers to report their non-financial data combined with their financial data. We are also very pleased with the growth of our governance, risk, and compliance business, where Kiva's industry leadership and significant investment in GRC has positioned us well for continued success in this growing market. In the second quarter, many of our GRC wins were multi-solution opportunities. Our clients saw the value of our platform and invested in our internal controls, internal audit, risk management, and policy management solutions. During Q2, our advisory and technology partners continued to help drive growth across our global footprint by sourcing and influencing multi-solution deals. The percent of new business sourced and influenced by our partners continues to increase. A few large partner-related wins in Q2 include the following. In North America, a regional consulting firm sourced a mid-six-figure GRC win with a large financial services company. In APAC, a Big Four partner sourced a multi-solution opportunity with a large energy company for annual reporting and global statutory reporting. And in Europe, a Big Four partner sourced a multi-solution opportunity at a large financial services company for ESF, global stat, bank risk, and corporate reporting. Our team in EMEA produced its highest quarterly bookings number ever for the regions. This is a result of a number of operational changes we initiated in Q2. There is more to come in this area as we work to maximize our substantial growth opportunity outside of North America. In April, we acquired Denmark-based Parsport, an XBRL conversion software company. The acquisition strengthened our XBRL leadership position across Europe. It grew our employee base of strong talent and is accretive to revenue, profit, and growth. Joel will provide further detail on the go-forward financial impact of Parsport later in the call. We will host our annual Investor Day on Tuesday, September 13th as part of the Workiva Amplify Conference. We hope you will join us either in person at the MGM Grand in Las Vegas or via webcast. Julie, Jill, Mike, and I will update you on Workiva's strategy and operating model. In summary, we remain confident in the resiliency of our business, the continued demand for our regulatory, financial, and ESG reporting products, the uniqueness of our cloud platform, and our ability to expand in our large and relatively unaddressed TAM. Notwithstanding the current macro challenges, we remain committed to balancing our growth strategy and achieving operating leverage from our investments. I would like to thank our global team of dedicated employees who continue to execute on our strategy, take care of our customers and each other, and live by our values.