Workiva Inc. (WK) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Workiva's Virtual Investor Day. We hope you are staying safe and healthy. For those of you who don't know me, I'm Adam Terese, Director of Investor Relations and Corporate Development here at Workiva. We're excited to have you here today here from our executive team. Before we get started, here's our safe harbor statement. During today's event, we'll be making forward-looking statements regarding future events and financial performance. These forward-looking statements are subject to known and unknown risks and uncertainties. Workiva cautions 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 webcast. 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. During the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures can be found in the presentation posted to our Investor Relations website at investor.workiva.com. Now let's move on to the agenda. We'll start with Marty Vanderploeg, our CEO, who will dive into our next-generation platform; followed by Julie Iskow, our COO, who will discuss how we think about our growth strategy; then, Stuart Miller, our CFO, will provide a financial update. To wrap things up, we'll have Mike Rost, our Head of Partners and Alliances discuss partnerships; followed by Paul Volpe, our Head of Growth Solutions, who will do a deep dive on our global statutory reporting solution. At the end, we'll have a live Q&A session with the presenting team. If you would like to submit a question, please use the Q&A field that appears on your screen. With that, I'll now turn it over to our Chief Executive Officer, Marty Vanderploeg.

Thank you, Adam, and thank you all for attending our Investor Day today. We're really excited about what we have on today's agenda, and appreciate you being here. I'm going to focus on our next-generation platform. You've heard me talk about that in the past -- in passing -- but in the last call, we really leaned in, and today, we're going to talk a lot about it. But before we do that, I would like to talk a little bit about our mission statement. This really resonates with our employees, in our millennials and everybody lived through 2008 and saw what happened when good information was not available. And we really, as this says, we want to build trust in our global economy and through what we're really good at, transparent data and connected reporting. Then what do we do as a company? We actually simplify very complex work. Our platform is designed to connect to back -- systems -- back end systems. It's designed to enable workflow, connect numbers within the system and collaborate over -- a global collaboration with your teams. So it's really what we feel is the next generation of doing complex work. We'll talk about that, and Julie will allude to that in the growth sector of this conversation. Our next-generation solution, we're very enthused about. We began coding in 2014. It's a big, big undertaking. It was born in the cloud as all of our solutions have been, single instance, multi-tenant, built on AWS and Google Cloud platform. But the big difference was we went into a microservices architecture, and I'll talk about that a lot. But microservices architecture lets you interact with the system through APIs. You can design pieces of functionality or pieces of software, plug it into the system without disturbing the rest of the system if you go through the APIs, which you must. So that architecture allows rapid deployment of new features, lets you rearchitect single microservices. We currently have 170 microservices managed on our platform through Kubernetes, all interconnected. We also have open APIs, so we can obviously get data in and out of the system. We have some out-of-the-box system integrations for some of the more common back end systems, but we're extremely excited about what we can do with this. The first thing it enables is our innovation. The containers, like I mentioned, enable fast deployment, a developer can create another service and just interact with all the other services through open APIs, that means we can deploy new solutions faster, more efficiently without disturbing the rest of the system. Also, we're opening up more and more APIs for our third-party providers, initially just for data in and out, but ultimately, to also develop other applications on top of our platform. And finally, we've heavily instrumented the platform so we can understand how our users are using it, how they're interacting with it, enables us to streamline areas that are heavily used, create new features to facilitate any areas where customers spend a lot of time and really understand where customers are getting the value out of all of our different solutions that sit on our platform. So this innovation thing is really, really huge for us. It just enables us to go so much faster in a much targeted -- more targeted fashion and much more efficiently, just extremely important to understand this. It also enables our growth strategy, the connection directly, the data is so important in these days, and we can integrate directly with most of the systems of record, if not, we have APIs to get into other systems of record. The platform is scalable. All those microservices can run on multiple CPUs, and we have hundreds of thousands of users, millions of reports and billions of links where we link some core number all the way through all the documents and reports that an organization has to produce. And then finally, our new platform is much more feature-rich. We have many more features, high-value features in areas we've identified that really help our user base. So we're extremely, extremely happy about what our new platform will enable us to do in terms of growth. And like I mentioned, Julie, in the next session here, will talk about that. In terms of our transition, I talked about that in the call as well, this is a huge feat. I just can't talk enough about this. We've transitioned 90% of our ACV, and those customers are on our new platform, using our new platform, most are not using the old platform at all. And we believe that we will have the lion's share, over 99% of our customers on the new platform by year-end, and we're on track to accomplish that. And that is a feat that's taken the entire organization, not just product development, but all of our customer support people, services, people, everybody has been in the trenches helping to get these customers moved. I'd like to talk about 1 case study, a leading global investment firm, who we did a mid-6-figure deal with recently, a new logo. And it was a multisolution deal. And one thing I want to talk about in that whole process was how one of the highest value things they talked about was they had users over the entire globe. One of the calls I got in had users from Singapore, from obviously, the U.S., there were users in New York City, one of the executives in New York City, and we had leadership and users also on EMEA to talk about this. And they all wanted to collaborate, use 1 environment, 1 tool, 1 set of data. And that's what really was the one of the largest value components of the transaction. They also wanted to connect to source data. Full audit trail is extremely important. And then the ability to scale. They want to continue to add other types of use cases in the platform and realize what we talk about in terms of efficiency gains. So this is a really typical type of transaction and the type of customer that we want. And this is something that we are unaware of any other way to do. It's been traditionally done through spreadsheets, e-mailing spreadsheets to one another, same way with text documents, files mailed around. So we really feel like they see a high amount of value in this. It was reflective in the time it took us to actually do the transaction and what the ultimate value in dollar amount was. Just in summary, I just want to talk a little bit about why we feel our platform and -- is going to really be a game-changer for a lot of companies. Obviously, the secular trends are important. And the shift to the cloud, when we started the company, there were hardly any cloud companies, and now it's something that -- especially after the pandemic, everybody is talking about, and that's going to continue and accelerate. The CFO's office, digital transformation. That's a word I hear every day. And finally, the online collaboration that's sort of been obviously accelerated by the work-from-home environment. I think that in the future, we'll go back to our offices, but I think there'll be a large work-from-home component for all employees in the future just because of the efficiency and the time savings going in and out of the office. So thank you very much for spending time with us today. I'm going to turn it over to Julie next, and she's going to talk about our growth strategy moving forward with our new platform. So thank you very much.

Thank you, Marty, and hello, everyone. Workiva's Investor Day actually marks my 1-year anniversary with our company. Last year, I only got to watch from the sidelines because Investor Day was a week or so before I joined Workiva. I do remember though, I couldn't wait to get started. And it's because what I saw was an innovative company with a powerful unified platform, solving real problems for customers. And having run in scaled product and tech organizations at 2 SaaS platform companies prior to Workiva, I saw very clearly significant market upside and potential that I wanted to be a part of realizing. And I have to say, there's been no disappointment for me so far. In fact, in the year that I've been with Workiva, the potential I see continues to grow as Workiva grows. And I've seen our teams across the company, all working together, focusing and executing to capitalize on our growth opportunity. Now one of the areas that I've personally invested a lot of time and energy and focus on over the past year is Workiva's strategy, and how we'll deliver on growth. So today, I'd like to take you through some of the key components of our practical, actionable, multiyear growth strategy. I'll first cover our winning aspiration, our ambition. And second, I'll talk about where we compete, the markets and the channels and the geographies. And third, I'll show you the core of our strategy. What differentiates us, and how we'll win. And I'll finish by talking to some of the capabilities we're strengthening that we need and are critical for us to execute on our strategy. So let's start with the winning aspiration. Our winning aspiration is to be the world's leading platform for simplifying complex work. Yes, it's broad, but it's comprehensive, and it aligns with what our customers believe we do for them. And importantly, it's an aspiration that enables us to expand our market. We've been talking a lot about Workiva as a connected reporting and compliance platform. And yes, there is an element of reporting across most of the problems that we solve, but it isn't the final deliverable, the report that we're disrupting. It's the complex work that goes into creating the report that we're simplifying. And this is what our customers look to Workiva for, to solve the problems associated with the complexity in their work. Now there are several sources of work complexity. Complexity comes from working with data, the handling and the sharing and the collaborating with data across geographies and across teams and across documents. Complexity also comes from processes and workflows that are dispersed and unwieldy. And it comes from the preparation and the assembly of the very reports that our customers are building on our platform. So our mutual customers look to the Workiva platform to handle complexity so they can have confidence in the integrity, the transparency and the availability of their data. And they look to us, too, to help us gain control over their processes. Simply put, Workiva exists to simplify complex work. Having defined our winning aspiration, it's important for us to identify and define where we'll compete. And by that, I mean the geographies and the verticals and the channels that we'll target for success. Now we'll continue to put a heavy emphasis on the CFO office. That's our bread and butter. That's our core. But there's nothing in the Workiva platform today that limits us from simplifying complex work outside of the office of the CFO. In fact, we're already incubating our capabilities to expand across the enterprise. And we've seen some promising early indicators in functions like IT and operations and supply chain. We'll continue to sell directly to customers, but we also intend to put a far heavier emphasis on working with our partners. We see far greater success with our partners with their market understanding, their network and distribution channels and the delivery expertise that they offer. We'll continue to serve our customers worldwide, and we'll continue to invest and expand in EMEA and APAC. And lastly, we'll continue to be a horizontal SaaS company with solutions that can provide high-value across all industries and sectors, but we'll also focus on winning in some key verticals where we can easily extend our platform to provide value solving industry-specific challenges, like in financial services, in energy, public sector, potentially even in life sciences. Now how will we get there? How will we win? It's by putting more rigor, more focus and more discipline in 4 key areas. And these are the 4 key tenets of our growth strategy. Our strategy starts with identifying, building and delivering fit-for-purpose solutions. Now several years back, Workiva had a tagline. It was one platform and endless possibilities. And while that's still true, it leaves a lot to the imagination, and that puts a lot of burden on our customers to figure out what those possibilities are. We'll address this by building fit-for-purpose solutions that solve very specific problems and leave a lot less to the imagination. We'll continue to modernize our platform to make it open, intelligent and intuitive. So our customers can connect to it quickly, build on top of it simply and interact with it easily. And this leads us to the third key tenet of our strategy, the Workiva marketplace. It's a marketplace or an app exchange of templates and connectors, integrations and applications that make using and expanding our platform faster and easier. This marketplace will bring our partners, our third parties and our customers together and it will allow them to extend the value of our platform to our users. We're targeting our initial launch for mid-2021. The fourth and final tenet of our winning equation is about our partners. We're continuing to build and leverage a strong partner ecosystem. Partners have the opportunity to expand our solution portfolio and extend the use of our platform with our mutual clients. They can build a strong portfolio of their own offerings on our marketplace. We are committed to our partner success in working with Workiva. Now I'll unpack these 4 components of our growth strategy. To help our customers maximize the benefit and value from our platform, we've become proficient at understanding our markets and configuring our platform to address our customers' most urgent needs. And our domain expertise in the office of the CFO has enabled us to expand our solution offerings to play a broader role in our customers' financial and digital transformation initiatives. As Marty highlighted, our new platform architecture enables us to create and configure, fit-for-purpose solutions as extensions of our platform and deliver them with high velocity, often with low to no code. We've also now formalized our idea to commercialization process. We've got defined stages and criteria all the way through incubation. It's a systematic way for us to evaluate and prioritize investment opportunities with some discipline, with speed and with agility. Some examples of our recent fit-for-purpose solutions include global statutory reporting, our management reporting use cases and our FERC reporting solution. To accelerate the delivery of our fit-for-purpose offerings, we'll continue to enhance our modern platform to make it more open, more intelligent and more intuitive. Being open is about equipping builders on our platform. And today, those builders are primarily our own development teams and solution engineers. Our strategy is to go further by enabling partners and third parties and even our customers to create new solutions powered by Workiva. Our openness will enable our platform to be extended in new and unexpected ways and to be integrated with other applications in a broader customer ecosystem. We'll incorporate intelligence into our platform, so our customers get more of their time back to do meaningful work. A first step for us in this direction is to provide customers auto recommendations and forecasting. Our intelligent platform will learn how our customers work and help them identify data anomalies and inconsistencies, for example, faster and with less effort. Finally, our efforts to simplify complex work come down to intuitive experiences. We'll continue to enable powerful solutions that are familiar and delight our users. Customers and partners will see our platform as easy to onboard, easy to use and easy to grow with. The modernization of the platform leads us directly to the next component of our growth strategy, the marketplace. We'll be launching the Workiva marketplace, so it's easy for customers to discover, to try and to activate our platform capabilities. We'll start with the offerings like Wdata connectors and prebuilt templates, and we'll follow that with digital onboarding capabilities for our solutions. And our APIs and SDKs and configuration tools will pave the way for partners and other SaaS players to build and deliver new offerings on our platform. We're looking forward to the role the marketplace will play in extending the value of our platform and accelerating its adoption. The last component of our growth strategy is our partner ecosystem. As we expand our solution reach, partners give us the opportunity to elevate our engagement with decision-makers. Our partners, in most cases, have long-standing and trusted relationships with customers and prospects, and their influence impacts our cycle time, our deal size and our win rate. And our partners bring with them significant industry and solution expertise and experience. And this gives them the ability to both deliver our existing fit-for-purpose solutions at scale and create new solutions and services on the Workiva platform. With our partners, we're looking forward to playing an even more important role in the financial and digital transformation of our joint customers. You'll hear far more about our partner focus today from Mike Rost, our Head of Partnerships. And here's an example of the adoption of Workiva's platform by one of our leading financial services customers. Now this customer has been with Workiva for several years, and they've continued to purchase and leverage additional fit-for-purpose solutions built on our platform. And over the last 18 months, they've increased their spend with us threefold. In fact, they just signed an ELA with us in Q3. This is why we have so much confidence in our strategy because we're already seeing its effectiveness. Our strategy is fit-for-purpose solutions, open intelligent, intuitive platform, a marketplace and a high-performing partner ecosystem. As I close, I'll leave you with a few words about the capabilities we need to execute on our growth strategy. We talked earlier about ideating and creating and delivering new solutions, but we're bringing an innovation mindset to almost every function in the organization. And although you'll see our product and platform innovation in the market, we're also building innovation muscle to work and think differently internally for efficiency as we scale. Also critical to our success is our ability to deliver with agility. Our operating model now enables us to quickly pivot when needed so we can jump on opportunities and react to the changing market. And we reorganized our sales and operations teams earlier in the year. And as part of this reorganization, we up-leveled our talent and optimized our commercial functions. And as a result, our go-to-market teams across marketing and sales and operations are now far more aligned around the commercial success of our solutions. And lastly, we're prioritizing work in building teams that directly relate to our strategy. So we're laser-focused on the things that matter most. These capabilities, combined with our strategy, a fit-for-purpose solution, a modern open intelligent intuitive platform, a marketplace and a high-performing partner ecosystem, set Workiva up for increasing growth and commercial success as we simplify complex work for our customers. I'll hand you off now to Stuart Miller, our CFO, for a financial update.

Thank you, Julie. I plan to touch on our market opportunity, review our track record and then spend most of my time discussing new operating targets enabled by our new platform. As Marty disclosed on our last earnings call, Workiva posted record bookings in Q3. The most common follow-up question from investors about our record bookings has been what's changed? The best answer to what's changed from a macro perspective is an acceleration of 3 secular trends that are driving demand for our solutions. The shift to the cloud started years ago with front-office applications, but the accounting and finance communities are late adopters. We're probably in the second or third inning out of accounting and finance departments, moving from on-premise solutions to the cloud. In cloud adoption, the U.S. and Canada is well ahead of EMEA. The pandemic has clearly accelerated the trend toward cloud adoption to support online collaboration of remote workers. We're hearing from customers that they need to support a hybrid work environment with more employees working from home permanently. Finally, the commitment of the consulting firms, large and small, the digital transformation of the office of the CFO is a growing force in our markets. The pandemic motivated the consulting firms to assign more personnel to these practices because the consulting work can be delivered remotely and previously reluctant customers now accept the value proposition. Now let's relate to secular demand drivers to our business. The connectedness and scalability of our new platform stand in stark contrast to that of our classic platform. Our new platform is system agnostic, permitting connection to any system of record or system of work with an API, and our new platform can handle terabytes of data through our cloud partners. A subscription to Workiva's platform is a commitment to the entire ecosystem available to the office of the CFO, an open system. We believe our position in the ecosystem gives us a competitive advantage. We think about growth in terms of solutions, geography and partners. Our existing portfolio of solutions has a long runway. With the heavy lifting on our new platform completed, our dev team is shifting resources to build functionality specific to existing solutions to enhance their value. As Julie indicated, our dev team is also devoting significant resources to new solutions through our incubation efforts. North America continues to offer huge growth opportunities for us. Ultimately, we expect EMEA to contribute 25% to 30% of our revenue. 25% of our quota-carrying sales reps are now in EMEA, which is a greenfield for us. Our APAC team has had success with limited resources. APAC is an outstanding opportunity for us in the long run. Partners are a force multiplier for Workiva. Our Head of Partnerships will discuss our partnership opportunity immediately following my presentation. Workiva's customers use our platform for more than 140 use cases. We study the large number of use cases to find candidates for incubation. That's how we found global statutory reporting. We actively market the solutions listed here with a specific go-to-market plan and pricing and packaging strategy. Each relates to a slice on the wheel. Some are specific to a vertical market like insurance or energy, others are horizontal. We started with SEC reporting in 2010, and 10 years on, we're still pursuing 2,000 prospects in that market, mostly in the category of accelerated and large accelerated filers. SEC SEDAR is still an attractive market, but it continues to be a smaller contributor to our bookings. For the first 3 quarters of 2020, non-SEC SEDAR solutions accounted for 75% of our bookings of new solutions and new logos, up from 72% for all of 2019. The number of large contracts is growing at a fast pace. We are both landing larger deals and having success selling add-on solutions. We started disclosing these statistics in Q4 2017. We now have so many customers paying us high 6 figures and low 7 figures that soon it will be time for us to revisit the breakpoints we've been disclosing. We published a 2-factor TAM of $16 billion, just over 100,000 companies in North America and EMEA have 250 or more employees. Oracle and SAP each claim over 400,000 customers globally. If enterprises can afford SAP or Oracle, they can afford Workiva and they need Workiva. Our TAM targets an average annual contract value of $150,000. Given our success developing 7-figure and high 6-figure relationships with early adopters, we are optimistic. We think Workiva can be a big company. Because some of the audience today are newer to Workiva story, we want to highlight a few accomplishments since our IPO in December 2014. We communicate our revenue retention rates each quarter. The green line shows our revenue retention rate, which has hovered consistently around 95% since our IPO, despite a change in our pricing model to solution-based licensing from Q3 2018 to Q1 2020, despite upgrading our customers to a new platform from Q2 2019 to date and despite the pandemic. The blue line shows our revenue retention rate with add-ons, which has been more variable but still bounded by a reasonably tight range. We believe the quality of our software and customer support contributes significantly to the resiliency of our revenue retention rates. We posted financials and conducted follow-up conference calls for 24 quarters as a public company. The nature of our business model and high revenue retention rates provide excellent visibility for forecasting the forward quarter. The blue line represents our revenue guidance at the midpoint for the forward quarter. The green line shows our actual results for that quarter. We endeavor to underpromise and overdeliver. A graph of our guidance on non-GAAP operating loss and income shows a similar pattern. We're proud of this track record of success. 2020 will be the fourth consecutive year Workiva has posted positive free cash flow. The bar to the right shows just the first 9 months of 2020. Our highest priority is growth in subscription revenue. Our second priority is positive cash flow. Now I want to pivot toward a discussion of our target operating model. At our IPO, we promulgated long-term targets for our operating model expressed as a percentage of revenue. We're updating those targets today. My intent here is to relate Marty's and Julie's commentary about our new platform and growth strategy to our income statement targets. On the first point, we believe that successfully upgrading 90% of our customer ACV to our new platform, while maintaining our revenue retention rates has substantially alleviated risk for our company. You should still read the Risk Factors sections of our filings, but we're very pleased with where we are with the new platform. Regarding the acceleration of innovation, by Q1 2021, we expect to have half of our dev team shifted to building enhanced solution-specific functionality for current offerings and solutions for new markets in partnership with our incubation team. We expect a faster product release cycle, as we demonstrated with FERC and W for ESEF. We also have a more straightforward capital allocation process because R&D resources are now associated with development of specific functionality and solutions. Regarding partners, the new platform connects to systems of record and upstream applications in, for example, accounting reconciliation and consolidation and budgeting and planning. The scalability of the new platform means we can serve the largest companies. These attributes translate into more opportunities for partners to make money, to advise on business process reengineering on many solutions, to run managed services with their brand and their intellectual property. Our new platform is all about partner enablement. Finally, regarding operating leverage, I'm going to walk through a percentage of revenue statement that outlines the opportunity in cost of revenue, R&D and G&A. The margin discussion is based on non-GAAP numbers. We'll provide a reconciliation to GAAP numbers at the end of the day. Subscription revenue has been growing faster than revenue from professional services, a high percentage of revenue from professional services, 69% year-to-date is XBRL tagging. These services provide high-value to our customers, and most of it is recurring, but it has been growing at a single-digit rate. Subscription revenue has been growing much faster. Consolidated gross margin has been progressively approaching our 75% target, benefiting from the shift in mix towards higher-margin subscription revenue. R&D expense as a percentage of revenue has been steadily approaching our target of 25% despite significant investment in our new platform. We've been investing in sales and marketing above our target to exploit opportunities for growth. Our original goal of 20% was too ambitious and needs adjusting. General and administrative expense as a percentage of revenue has been steadily approaching our target of 10%. Our original targets yielded an operating margin of 20%. Given our experience in the last few years, we asked ourselves if we could do better? We did some analysis and decided it is time to update our targets. We want to share our updated targets with you today. We expect subscription revenue to continue to grow faster than services revenue. In addition, we expect our partners to take an increasing share of consulting services. We're targeting a mix of 88% subscription revenue and 12% services. Due to a shift in mix to higher-margin subscription revenue, absorption of headcount, we expanded to help upgrade customers to our new platform and some expected savings on servers and other items, we're now targeting a consolidated gross margin of 80%. We've already made substantial progress on reducing R&D as a percentage of revenue. Investment in R&D is at the core of our product differentiation and competitive moat. We intend to stay ahead of the pack. We run a horizontal platform addressing a large TAM. So our benchmark comes from SaaS companies that run platforms, not applications focused on a single solution. Nevertheless, we believe we can reduce our R&D spend over time to 23% of revenue. At our IPO in 2014, we were too optimistic about how much we needed to invest in sales and marketing. The 500 basis point adjustment here, 25% is a recognition of what we've learned and is closer to what some of the large SaaS companies spend. Our 10% target for G&A expense as a percentage of revenue has not changed. It is a best-in-class number among peer B2B SaaS companies. Our new target non-GAAP operating margin is 22%, 200 basis points better than our old model. We're introducing a target for stock compensation as a percentage of revenue, and we're targeting 12%. We operate in a talent business and stock compensation is an important component of our cost of doing business. So our target for GAAP operating income is now 10%. We hope to achieve these targets, but there's no guarantee that we will. In any case, we don't expect that progress towards these targets will be linear. We're quite likely to make progress toward each target at a different pace. For example, reaching our target for sales and marketing is likely to take the longest time. We have a robust effort around incubating new solutions in new markets. We will continue to invest in sales and marketing and work with our partners to pursue the most attractive opportunities. And with that, I'd like to pass the torch to Mike Rost, who will provide an overview of our partner ecosystem and strategy. Mike?

Thank you, Stuart. I am Mike Rost, Vice President of Partners and Alliances. I'm pleased today to share with you an update on the Workiva Partner program. As both Julie and Stuart have highlighted, our partners have and will continue to play an important role in the Workiva strategy. As we look at our partner program today and in the future, our partners will deliver on expanded distribution, new sales opportunities and domain and delivery expertise. Let's roll into some more details on the slides. Clicking through to this one level deeper. In the area of market engagement, our partners provide the go-to-market alignment and efficient expansion into new geographies and industries. For example, our current EMEA expansion has significant involvement with partners. We also see partners playing a critical role in the growth of our federal, financial services, utilities and other industry use cases. Our partners are bringing us new business. Deloitte, KPMG and PwC, and more than 15 other advisory firms have all built Workiva service lines as part of their practices. These opportunities are also delivered in the form of a managed service or BPO relationship. Eight firms, including 2 of the big 4, are currently using the Workiva platform to deliver services to their clients. Use cases include SOX, M&A, accounting advisory and global statutory reporting. As Stuart highlighted, our P&L target for professional service revenue is decreasing in percentage. One of the ways we will accomplish this for our -- is for our partners to be more involved in delivery. We have partners with trained benches of Workiva experts, who are delivering on implementations. We were also engaged with joint implementations, where our partners are bringing their domain and technology expertise and finance transformation skills. We currently have over 200 partners in our ecosystem. This includes strategic alliances with 3 of the big 4, the one absent being Workiva's auditor. This also includes many regional advisory firms, specialty firms, integrators and technology ecosystem partners. This past year, we added PwC to the list with the signing of a formal agreement in July. This is a representative sample of our partner ecosystem. For all of our partners, we primarily work with them in joint deal pursuits and with partners providing delivery on the Workiva platform. We do have a few reseller relationships for markets where we do not go-to-market direct. We also have the 8 firms who have standardized on Workiva platform that I mentioned earlier as part of our managed service offering. We continue to expand our pursuit of firms looking to use Workiva for both BPO or managed service purposes. Workiva has been recognized as a leader in a Gartner Magic Quadrant the past 4 years. In my role in working directly with these Gartner analysts, I have had many conversations around the definition of these Magic Quadrants and the criteria for inclusion of vendors. It is interesting, looking at the broad scope of solutions that they put into the current cloud financial close quadrant. This quadrant covers the broad requirements for financial consolidation, financial reporting, reconciliation management, close management and intercompany transactions. As it relates to our technology partner strategy, we look at many of these vendors who provide system of record applications as value-added ecosystem partners for the Workiva platform, which is used by many of our clients as a system of information assembly and reporting. In fact, Workiva partners with many of the vendors in this Magic Quadrant and also the Gartner cloud FP&A Magic Quadrant. For example, reconciliation management vendors, such as BlackLine, Trintech and FloQast, are all complementary to the Workiva platform. We have integrations and go-to-market activities with all 3 of these firms. Other vendors that provide planning and consolidation capabilities are also complementary to Workiva. Workiva has partner relationships with Workday, Anaplan, SAP, Oracle and other planning, consolidation and system of record providers. The Workiva role of being a system of reporting is highly complementary to technology providers who primarily serve the role of being a system of record. We will continue this strategy as we look at solutions outside of the office of the CFO. Even today, we have integration with solutions such as Salesforce or other aspects of SAP, for example, in the supply chain area. We can also integrate with standard BI tools such as Power BI for Microsoft or Tableau. Workiva can utilize these systems as both the data source and also push data to these BI-type tools. As we look at connecting the Workiva platform to these partners and other technology providers in the ecosystem, we have taken a deliberate approach of expanding our list of application-specific systems integrators. This slide highlights new partners added the past year who are experts in working with our clients' existing solutions related to accounting, financial reporting, consolidations, reconciliation and tax. For example, our consulting brings with them specific expertise and integrating to NetSuite. Clearsulting is one of Blackline's most successful implementers and has plans to build a large Workiva practice. CFO Solutions and InterRel have expertise in the Oracle ecosystem, including Hyperion Financial Management and Hyperion Essbase. InterRel has been a Hyperion Essbase implementer for well over 20 years and supported over 1,000 clients in Hyperion Solutions. Column 5, itelligence and Utegration, all have expertise with SAP and the broader SAP ecosystem of solutions. These partners are playing a critical role as we expand the delivery capabilities of our partner network and expand our clients' use of Workiva to support high-volume data management with our Wdata platform. For many of our advisory firm relationships, we go to market with an industry-specific focus. This slide highlights just a few examples. In financial services, we have been very active with Deloitte on insurance and are expanding into banking. KPMG has been a great partner, working with some of our key banking clients as well. For most of our deals in the federal space, we have partners involved. The nature of long-term contracts at specific agencies requires a technology provider like Workiva to connect with the ecosystem. For the past 12 months, we have had success with both Deloitte and Guidehouse. For example, Deloitte was involved with a $9 million deal at the Department of Justice. In the state and local market, we are working with a firm called F.H. Black. F.H. Black has significant relationships with local government agencies. F.H. Black will be deploying Workiva for these agencies. In the utility space, where we are expanding into FERC reporting, that is Federal Energy Regulatory Commission, we are working with both delivery partners and technology providers. For example, Utegration is an SAP specialist in the utility space, who has partnered with Workiva to deliver overall reporting to their joint clients. PowerPlan is a system of record utilized by many utility companies. PowerPlan also sees the connectivity to Workiva is being critical in driving value to their clients to support the FERC initiative. Looking at a couple of partner-specific examples. Let's start off with the work we are doing with a large global advisory firm. This firm has engaged with Workiva in 12 different countries and has played a significant role in influencing some of our larger deals. They operate as a reseller in 2 different countries and have built advent of delivery experts in North America and with their India operations. They have also worked alongside Workiva in building out insurance-specific expertise in Actuarial Memo, LDTI, Insurance Stat and IFRS 17. Most recently, this firm has made the commitment to deploy a managed service for global statutory reporting. When we look at that use case or many of the use cases around financial services, we are typically engaged with global firms. Having a partnership, executive connections, technology expertise and transformation capabilities of a large global advisory firm significantly increases our deal size, deal win rate and delivery capacity for these types of global opportunities. Another example is the work we are doing with KPMG. A couple of years ago, the KPMG risk advisory team made the decision to standardize on the Workiva platform for delivery of their cosource, outsource SOX services, an offering which they call SOX on Demand. KPMG has been a great partner in influencing and delivery and opportunities in the integrated risk space. This past year, KPMG has expanded the use of the Workiva platform into their accounting advisory service. This is the team that works with companies on M&A, bankruptcy and other complex financial transactions. We look forward to further business with KPMG, and for that matter, all of our partners. As highlighted in these slides, there has been a lot of acceleration in the Workiva partner program over the past 12 months. We have built a strong foundation of global advisory firm, technology partner, regional advisory firm and technology integrator partners. We look the strong foundation is helping to accelerate momentum of our partner program as we roll into 2021. Now let's turn things over to global statutory reporting. Paul, over to you.

Thanks, Mike. I appreciate the opportunity to update you all on global statutory reporting since we last shared a year ago. It's fitting that I'm following Mike, as we really see this as a significant opportunity for our partners, and there's tremendous interest, both in terms of deployment opportunities and the services that go along with the global problem as well as the advisory services due to the regulatory nature of this stuff that can complement our technology. So just to introduce myself, I'm Paul Volpe, Vice President of Growth Solutions. Our team is really focused on incubating new use cases and solutions. We evaluate and grow new businesses for us as well as for our partners here on the Workiva platform. I've been with Workiva for nearly 10 years, both in sales and solution and engineering capacities. And I've got experience both with large and small accounts, different industries and across geographies. I've really been pleased with the market's interest in our global statutory reporting solution, as it really hits on some of the key issues that companies have been struggling with at a time when global collaboration has become even more important. So we've gotten into this market because our user community that we saw logging into our platform for -- across 180 different countries, and we started to ask our customers what they were doing and looking into the global reporting challenges that they had for their teams. So just to define what global statutory reporting means, it's really about the mandatory legal entity reporting to satisfy country-specific reporting requirements, tax authorities and regulatory bodies, right? They're producing documentation and reports, financial statements and disclosures according to different accounting standards and rules in different languages. These things are also audited. So there's scrutiny around the preparation and review and support of that as well as the more entities that a company has, the more complexity that they have. So as companies adapt to the changing regulations and legal structures to do business internationally, this leads to issues that Workiva can really help with. Now if we look at this problem today, what we found is that Workiva's core value is very applicable to them in this market, right? We've got customers themselves that have a system of record, whether it's the large ERP vendors like Oracle, SAP, Workday. And they're having to submit and provide reports and information to the different stakeholders, whether it be investors, regulators, internal and external. And they've got these challenges about going from their system of record to their stakeholders through that system of work. This is where they're really gathering the information, assembling it, having to go through reviews, actually involve third parties for the audits and actually submit it. And the core challenges are in the process -- is that the process is really inefficient, it's error-prone, it's costly, but it's also risky and can lead to some public disclosures. At the same time, this problem is exacerbated by the fact that it's been all around the world. You've got -- each country that you do business in has a legal entity report. You've got individual audits that happen there. And multinationals have to deal with this on a regional basis. They have the complexity of different accounting standards, different data sets. Their companies have grown up over time by having people distributed around the world. And that process of gathering, reviewing, organizing and submitting is happening on a -- at a country-by-country basis. And it's really something that as companies mature they're looking to -- that they can tackle a very distributed process and they want to wrap their arms around it in a meaningful way as they look to the future. Workiva's platform has become a multinational system of work. And if we were to look at this from the bottom-up, it's really about how do we bring data, people and processes connected together as a single component, as a system of work as it were. Customers are struggling to bring together their business and legal information together, their general ledger and financial information. And increasingly, as the regulations change and companies want to provide more transparency, information about their operations and their people as well as the ESG data, the environmental, social and governance data that many regulators are asking for, but more importantly, folks like you all who want to understand the environmental, social and governance impact of a company's operations. That information doesn't exist in the ERP. That exists from many different places, and they need to try to drive governance around that because that governance is what gives it credibility. Additionally, the people that are involved in this process, the business units, the departmental folks, either regionally or in country, that understand the business have to combine together with the people that are doing the preparation, the ones that are reviewing and managing it. And whether you're doing this in a country-by-country basis, whether companies are using service centers or, in many cases, trying to have third-party providers help them with some of this business process, they need a technology that can bring that all together. And additionally, the external auditors are looking for ways to get engaged in the process and look at the details without always showing up at the offices to go through those things, especially in this new world of work. And the last pieces is that the process of this -- of global statutory -- of this, the preparation, review process, it's not just about the output of the report, it's not just about putting financials into numbers. It's about showing the integrity of the process, the planning, identifying the changes to our business or to the regulations and how do we take what we did last year and update it for this year? How do we collect all that financial and nonfinancial information with assurance? How do we make the adjustments that we need to account for to meet the regulatory requirements because all of that stuff cannot always be managed in the system of record as well as the supporting documentation in one place? And then how do we go from review approval to actual audit? And how do we think about all of that from beginning to end and manage it efficiently and reducing risk? And on top of that, if you really want to deal with the complexity of this global problem, you're going to need a system that understands tracking and dashboards about where you're at in the process, where the issues are, that's what we can help with. The global governance and standardization, instead of letting everybody doing things as one-offs, how do you create some governance and auditability about that? And the third thing is where you don't have expertise or you need to capture it from other parts of the world, how do you bring advisory into the mix of these processes, and that's where our partner network is terrifically positioned to be able to augment our platform with their knowledge and domain expertise. But at the baseline of this, you need a global connected platform to bring all of these things together cohesively and repeatedly. What we're also finding is there really aren't terrific alternatives to a global connected platform like Workiva. Large ERP vendors have produced disclosure management software for the last 10 years. They oftentimes try to give it away, but it's not purpose-built. It doesn't solve the business needs. And if you're not solving the entire problem rather than just being able to punch out one report, customers recognize that free is not valuable. The second thing is there's legacy vendors that focus more on, can they bring some sort of standardized templates for the game. But their inability to deliver global platform means they can't bring the people, the data and deal with the complexity of this in one place, meaning it doesn't matter if they're pricing it lower, customers want a valuable global platform. That's what we're offering. All of this comes at a time when multinationals are reassessing their business processes. There's a number of trends that are making this the perfect time for companies to prioritize the global statutory reporting and why they are looking to a cloud-based platform like Workiva to enable some of the transformation that they're looking to undertake. The first is that digital transformation of finance. Companies are spending tens of millions of dollars or millions anyways on that system of record, trying to consolidate to one ERP or reduce the number of systems. And at the same time, they're looking at new operating models in terms of their -- how do they structure their organizations to be able to take advantage of that technology investment, whether it's -- we're moving to a shared service center model where you have some of your business operations regionally located to support your operations, you're leveraging third-parties for part of it or trying to keep your business expertise but your preparation, that can -- if you standardize, you can reduce your risk and you can also have some additional efficiencies. A global platform where you can set standards and governance really allows you to do that. And the second thing is around increasing regulatory oversight. There is pressure from regulators to make more information about your -- about how multinationals are doing business, the taxes they're paying, the way they're representing their operations in each country. There's a lot of pressure from the regulators to ensure that you're being truthful and honest and companies want to ensure they're both compliant but also consistent in how they're disclosing their operations globally. The third thing is really balancing insourcing and outsourcing. Many companies look to outsource certain tax functions or regulatory reporting functions. But as they get -- as they have technologies that could allow them to co-source, where they do some outsourcing to third-parties and advisers, or keep parts of the regulatory compliance that they have expertise and capacity to handle, they can handle it themselves. At the core of that -- of all of these things is having a technology platform that allows you to drive some standards and consistency across these areas. All of this leads to a significant opportunity for a global platform like Workiva. When we got into this market, we were excited about the nature of connecting with more of our core audience, our core accounting and finance users. I personally -- as I was traveling around the world connecting and going for visiting customers in different parts of the world, I got the same reaction from those users that I had in 2011 when I was showing off our SEC platform. These users are really connecting with the ease of use, the simplicity but also the impact that Workiva's platform can have on them as user communities. And there are millions of accountants around the world that have no exposure to Workiva today. And global statutory reporting is an opportunity for us to introduce ourselves to all those geographies, whether it be in the Americas or in the APAC. For us to go and expand our value proposition to our existing customers and connect with their accounting and finance staff that increasingly are globally distributed, we have a natural reference within our existing customer base to talk to them about the value. And that's what's led to so many opportunities for us to engage existing customers. At the same time, this market isn't just about public large multinationals and companies that are headquartered outside the U.S. This becomes a natural landing spot for us to attach to big problems that they have and for them to understand. We're seeing even in the U.S. private companies, companies that are not SEC customers, this is a great landing spot for us to attach to a big global problem that they all have. And the fourth thing that I think is really, really exciting is that this is really center of mass for us to help our partners build a business and expand their connection to customers. Both in terms of the accounting firms having global networks of people that can help customers on these global issues but also in the domain and advisory expertise that they're naturally going to be able to offer our customers in the context of a cloud platform where they can actually deliver that through Workiva. That's leading to this being a really big priority for quite a number of them. And we think there's just tremendous upside for our partners to monetize our capabilities. Just to give one specific example where -- that is a case study published recently by Fexco. They're a global financial technology company with -- that operates in 29 countries, they have 2,500 employees, they're headquartered in the EU, and they have many of the challenges that we've helped public large companies solve, but it's a new logo and a new opportunity for us. When they saw our technology and saw that they could do -- the results have spoken for themselves, they've been delighted with what our platform is able to offer them and in terms of efficiency, time savings and also to refocus their folks on business problems that can help Fexco grow. So we're really excited about the market opportunity and the ability to connect both with our existing customers as well as opportunities to expand into new accounts. With that, I'm going to turn it over to the Q&A portion of our presentation and back to our moderator.

Thank you for staying with us, and welcome to the Q&A portion of the event. [Operator Instructions] The first question. Could you lay out the cadence of the different OpEx targets? And what is the realistic time line for achieving that? Also, what kind of revenue growth rates do you expect in your long term model?

Sure. So I'll take that. This is Stuart. These are long-term targets, just like they were long-term targets that we promulgated at the time of our IPO. And if we knew with certainty when we would achieve them, you can bet that, that commentary would have been in the prepared remarks. So we're laying them out here for now because we're -- we have some confidence in our ability to reach them, but the time line is certainly going to be a few years.

Okay. Next question. How will the app exchange be monetized?

I'm happy to take that one.

Yes. Take that one, Julie. Thank you.

Okay. I think important to point out is that the initial goal of [indiscernible] is to give our partners, customers and users access to capability that will allow them to more easily interact with us, adopt our capabilities more quickly and really just get faster time to value. So that's our focus. The monetization will be the next phase of that. But initially, we want to widen the adoption so that more indirectly the monetization comes.

Okay. So next question, can you quantify as a percentage of revenue, what you think will be the mix of partner versus direct sales in the long run versus today?

Yes. So it's important to clarify that we're almost 100% direct now. And when we talk about partners, we're talking about partner influence for the most part. We have resellers in APAC and depending on if you view it with federal government. But we are substantially direct, and we will continue to be substantially direct on sales and don't see that changing materially. I mean what we do see changing, though, is the percentage of bookings that is going to be partner-influenced. It's been rising steadily here for the last couple of years, and there's quite a bit of upside and now that we've got the new platform in shape with the scalability and the connectedness there, we think there are more opportunities for partners to make money. And so it's more natural for them to be helping find sales opportunities for us.

Yes. We typically see larger deal sizes, faster sales cycles and almost as important as all those is they do the delivery for us and maintain the quality control over time. So it's obviously something we have to continue to build on and we're making great progress, but we have a lot of upside there, too.

All right. Can you provide examples of specific problem areas your new fit-for-purpose solutions will address?

Well, I'll -- a couple of things. First off, the ones we've talked about publicly are the FERC solution, the ESEF solution, that's the European, the FERC is the energy company disclosure, they're responsible for in the U.S. ESEF is the XBRL tagging mandate in Europe that got delayed 1 year. And finally, the global statutory reporting, which we've been talking about quite a bit. Suffice to say, we have several in the pipeline. We have several that we feel can be in the order of another global statutory reporting-type size. But there's no advantage in us. And I really don't want to get out of our skis and talk about those before we validated the willingness to pay, market size, go-to-market strategies. All those things have to be validated before we're going to talk about them. But we do have some things we're really, really excited about.

Could you give us an update on percent of revenue coming from international now versus last year in terms of reaching the target?

Yes. So we'll do that at the end of the year in our K. As group knows, we disclosed on a consolidated basis that international was only 5% of our revenue last year, and we'll update that again with the K.

Obviously, it's a much bigger percentage of our bookings more recently because of the recent investments. But that takes a while to be reflected in the revenue, especially with the denominator we're dealing with.

Can you talk about the business momentum with Wdata in terms of customer adoption? How customer feedback has been from those who have adopted the solution?

Sure. Wdata has done well. The -- attaching the back-end systems is obviously something that customers ultimately want to do. A number of our customers have adopted Wdata as a data collection and data management tool prior to their reporting without directly connecting. So we've had real good success getting customers to adopt Wdata. The connectors are also coming behind that. So we're still very optimistic. That being said, we have a lot of runway there, too. Obviously, connecting directly to back-end systems takes time. And so we're seeing really good attachment rates, but a lot of runway.

Okay. This is a global stat question. Of your customers today, how many use global statutory reporting? What percentage of the installed base is a viable candidate, just like global stat over the next 3 or 4 years?

Yes. So we're not -- we have not disclosed sort of the number of customers using global stat. It's -- again, it was launched more or less in a orchestrated way last year, and we're very pleased with the growth there. But we've not disclosed individual sort of number of customers in that group.

I would just add that we've done enough of these deals that we have a real good feel for what the market looks like. And it's beginning to contribute to our bookings, obviously, every quarter in a significant way. But again, the good news is we barely touch that market. It's going to be a significant growth driver for us for several years. In terms of eligibility, Paul, maybe you can comment on that in terms of very roughly what percent of our customers might need in terms of actually be candidates for that.

Sure. There are some order of 80,000 multinationals that are candidates for our solutions. So we think our platforms are fit for potentially all of them because if you're a multinational company, whether you have 5 entities or some of them in the thousands, our offering can complement and can help you solve that problem. So we're seeing large and small customers need this. So when we look across all of our customers that operate internationally that's all significant opportunity for us to have a conversation with.

Okay. If we go back to last year's Analyst Day and some of the strategic priorities you talked about, it seems like you've executed really well on stocks, integrated risk, global stat, federal and expanding partner relationships, but we haven't heard as much about Wdata. Can you talk about how those conversations are going? Are there certain solutions that customers are buying Wdata for more than other solutions?

That's definitely true that different solutions have different usages of Wdata, and there's 2 classes. Our new customers are attaching Wdata at a high rate. Certainly, our global statutory reporting customers almost have to have it to be successful. So there, the attachment rate is high. On our existing customer base, SEC and others, we're seeing a nice gradual adoption, just about what we'd like to see in terms of the rates that we can satisfy those customers do the integrations and move forward. So again, we're very bullish on Wdata not only from a sort of ultimately offering connections but also just loading and flat files, which a lot of our customers do and then actually manipulating their data, doing different queries against it in the different spreadsheets, and it just provides a lot of value in that mode too. So we're seeing good attachment rates, but most of it's ahead of us, which is really good news.

How long does the incubation period usually take for a new product?

Paul, I'll let you take that one.

It really depends. I mean, one of the great disciplines that Julie brought to the team is looking at stages and it depends on the size of the opportunity. So we're getting very deliberate at thinking about stages and the gates that we've put in place, what we decide to invest in and the resource as we allocate. And we really don't locate much resource until we validated that product market fit. And so the timing really depends on the opportunity. We're not looking for large quantities of solutions but really good ones and profitable ones. So we have things like FERC that came to market very quickly as an opportunity where our technology was a natural fit and then there's some drivers behind it to go out -- to get into that market and then expand in energy. That's been able to monetize really, really quickly. And other things that become longer term, global stat. We've been talking about it a while and the investment there that has a much bigger market, also a nice natural product fit. So we're going to look at those on a case-by-case basis. But the important thing is we've got some metrics and some discipline and that's really paying off.

Last quarter, you won 20% of your new logos in Europe tied to ESEF. Does the pipeline and sales capacity support a similar mix in the future or is this more of a reflection of pent-up demand after deal slippage in the spring?

I'm sorry, I had a video cut out. Can you read that again, Adam? I apologize.

Yes. Yes, last quarter, you won 20% of your new logos in Europe tied to ESEF. Does the pipeline and sales capacity support a similar mix in the future or is it a reflection of pent-up demand?

There's been a lot of talk about the pent-up demand, and I think there was some of that in the past quarter. I think the bulk of it was customers following the drivers we've talked about, the [indiscernible]. And in terms of ESEF, we continue to close ESEF deals. The customers realize that the pandemic has delayed some things. They know they still have to do it. They are already in the cycle of learning how to do it, and they don't want to stop and restart. So we continue to close ESEF deals. And when I talk about EMEA in general, there's a lot of other things we saw in EMEA besides ESEF. ESEF is a fairly small portion of the bookings we generate in Europe each quarter. So I see the [Audio Gap] adding new logos continue. Stuart, do you want to add anything?

Yes. So I would just say, remember that the point of ESEF is to initiate conversations with the right people about selling the broader platform, and so we're continuing to do that. And as Marty said, we're continuing to sell some ESEF logos, but it's more about selling broader platform. We're having some success with that in EMEA.

Okay. Next question. Can you deal -- can you talk about the deal sizes and sales cycles in global statutory reporting?

Go ahead, Marty.

Go ahead, Stuart. Go ahead.

Well, I'd just say, I think the deal sizes have a wide range. We've certainly seen low 6 figures to mid-6 figures -- high 6 figures for a number of our customers already. But there's definitely a wide range. And I would say that the sales cycle probably follows our normal path for newer solutions, which has been 180 days or so, but it accelerated a little bit in the third quarter in part because what was going on was, with the work-from-home, dynamic.

And as a follow-up to that, does the solution required buy-in from multiple entities within the organization as part of the sale?

Paul?

One of the great things about it is customers can -- they can buy globally. Typically, customers, depending on where they are in their maturity curve, want to set global standards. So sometimes you see that coming out of headquarter -- where they're headquartered and companies are making commitments in driving a large transformational project. But other times, it can be regional, and customers want to start with groups of countries or regions. And so those teams can influence the buying cycles. So we kind of have a couple of vectors that we can go after and meet customers where they are.

Do you see the Workiva platform expanding to connected planning across things like sales, finance, supply chain? What features are you missing to close the gap versus planning tools like Anaplan?