Workiva Inc. (WK) Earnings Call Transcript & Summary

Hello, and welcome to Workiva's Virtual Investor Day. Thank you for joining us. I'm Mike Rost, Senior Vice President of Investor Relations and Corporate Development. We're excited to have you here as we provide an overview of our strategy and market outlook. Before we get started, a quick review of 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 Workiva'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 a company overview and growth outlook; followed by Julie Iskow, our COO, who will provide an update on our growth strategy and TAM; finally, Jill Klindt, our CFO, will provide a financial update. 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 feature that appears at the bottom right of your Zoom window. With that, I'll now turn it over to our Chief Executive Officer, Marty Vanderploeg.

Thank you, Mike, and thank you all for attending. We have a full agenda today and look forward to spending the next few hours together. So let's get started. Since our last Investor Day in November 2020, we have delivered 4 quarters of growth and great execution on our strategy. I'm very pleased with our progress and would like to extend my gratitude to the entire Workiva team for their hard work and dedication, which has resulted in our company's strong performance. A few of our recent highlights include: we delivered total revenue growth of 25% for the first 3 quarters of 2021. As you know, we target being a low to mid-20% growth company. We are growing our global customer base. We have over 4,100 customers, adding 423 net new customers in the first 3 quarters of 2021. We are retaining our existing customers. Our Q3 gross revenue retention rate increased to 96.5%. We launched an exciting new ESG solution and are pleased with the strong customer traction we are achieving. We invested in our own internal ESG efforts, including conducting our first materiality assessment and are finalizing our ESG priorities. We also achieved a AA ESG rating from MSCI and join the United Nations CFO Taskforce, the first SaaS company to do so. We recently earned the top leader status in the Forrester Wave governance, risk and compliance platforms report. We maintained our Fortune's Top 100 Best Places to Work designation, and we were named Fortune magazine's list of Best Workplaces for millennials and for parents. For those of you who are new to the Workiva story, I would like to cover a few investment highlights. We are a cloud-native platform that supports remote work. We have a large and growing TAM. We have a global customer base, which includes 75% of all Fortune 500 companies. We have durable moats and barriers to entry. We have a great track record of disruptive innovation. We have a highly scalable platform. We have a diverse growth strategy serving multiple markets with fit-for-purpose solutions, and we have an experienced team with an exceptional culture. When I ask why I am so confident in the growth opportunities for Workiva, it always comes back to, we have the best people and the best culture. Investment in our culture is and has always been a part of our strategy. Everything we do at Workiva is driven by our values-based culture. We prioritize our employees, we value our customers, we invest in innovation and we do business with integrity. The world is complex and constantly changing. It is a simple fact that people today expect more from business, more action and more transparency. Consumers, employees, shareholders and other stakeholders, especially younger generations are demanding more. At Workiva, we think about our impact at every touch point. We recently revised our company mission statement to better demonstrate our alignment with our stakeholders evolving requirements. Our mission is very simple. Powering transparent reporting for a better world. This mission is more than a set of words on a website. At Workiva, we simplify the complex for a better world. And there's nothing simpler than radical trust, truth and transparency. For us, we are living this every day as we embrace ESG as a strategy for our own operations. Our innovative solutions and talented team enable us to take care of our customers. This includes ensuring we are operating responsibly, empowering our employees to act with purpose, and enabling our customers to accurately track their own progress and impact. The rapidly changing reporting requirements and a physically dispersed workforce are top of mind for everyone. In a world where data is everything and teams are everywhere, traditional software can't keep up and the tools customers need keep adding up, creating chaos that puts companies at risk for missed deadlines, bad intel and steep fines. Workiva is the leading provider of cloud-based reporting solutions that are designed to solve financial and ESG business challenges at the intersection of data, process and people. The work our customers do has always been important. But now they will be the ones responsible for delivering the increased transparency that the times demand. Our platform is open, intelligent and intuitive. So customers can do their most complex work without manually having to go from system to system, software to software or person to person. A centralized platform is critical for creating accurate disclosure to management, investors and regulators. We use our platform to our advantage. The architecture and delivery of our new platform provides a significant competitive advantage, including: first, features and functionality. With our platform's data linking capabilities, every change is automatically updated in all linked instances. Our platform's detailed audit trail provides accountability and transparency for tracking every change made by every user over time. Also, it allows customers to connect data from ERP, HCM and CRM systems as well as other third-party cloud and on-premise applications. Second, our platform is easy to deploy and configure. The Workiva platform can be deployed within days or weeks for new customers and can be easily configured by the customer for individual employees or entire teams. Because our solutions are browser-based, customers avoid costly time-intensive deployments, typically associated with on-premise enterprise software. Third, high performance. The architecture, design, deployment and management of our solutions provide enterprise, grade, scalability, availability and security. The performance of the Workiva platform has been tested and proven by some of the largest, most demanding enterprises in the world. Fourth, continuous improvement. Frequent collaboration with customers and development iteration allows us to make continuous improvements by releasing a new version of our platform, several times each week. Fifth, it scales rapidly, the Workiva platform is designed to support millions of end users as a result of its scalability and our relationship with Amazon Web Services and Google Cloud Platform. A number of our customers have reported millions of links to single sources of data among multiple documents, spreadsheets and presentations without any discernible negative effects on performance. And sixth, it is secure. Many of our largest enterprises in the world trust us with their most sensitive data. We employ stringent data security, reliability, integrity and privacy practices. Our platform architecture enables us to create and configure fit-for-purpose solutions as extensions of our platform and deliver them with high velocity. As part of our idea to commercialization process, we have a disciplined approach for tracking, developing and releasing new solutions that are designed to have immediate broad applicability for our customers. Julie will go into more detail about our fit-for-purpose solutions next. These platform differentiators have established meaningful barriers to entry. In the markets that we serve, we have some direct competitors. These competitors, in most cases, offer single or niche use case specialty solutions. These point solutions lack the platform scale and capabilities that Workiva delivers. They lack the integration, connectivity and data prep capabilities Workiva offers. These solutions oftentimes require customized or heavy services configuration. In many cases, we are competing with legacy systems that have a heritage of on-prem deployment. In some of our markets, we do overlap with larger software platforms, Workiva is differentiated from most of these platforms since we were designed from the ground up to be a system of reporting. Many of these other platforms are just optimized systems of record or have been loosely passed together through a merger or acquisition. Oftentimes, they are constrained by dependence of a traditional relational database and a fixed data model. When we pull together our differentiated offering of a modern platform with innovative, fit-for-purpose solutions, highly engaged employees, our award-winning values-based culture built on truth, trust and transparency and high customer retention and loyalty, we feel confident in our ability to drive future growth. We are committing to a low to mid-20% sustained growth rate for revenue. We have been above and below that growth line in periods leading up to COVID. In 2021, our results returned to the healthy growth again, as highlighted in our results during the first 3 quarters. Looking at the growth opportunities ahead of us as well as the competitive landscape and market opportunities, we are confident that we can sustain this 20% revenue growth rate and grow to over $1 billion in revenue over the next 5 years. To grow at 20% will require investment, we believe now is the right time to make investments to take advantage of the expanding TAM ahead of us. Outside of SEC, penetration of our TAM is still early in all solution areas. We will invest in new headcount and not headcount spending with investments specifically targeted at accelerating global growth, advancing our strategic product roadmap, increasing demand generation and enhancing our market position. Jill will walk through the operational model in more detail, but I do want to walk through the strategy driving this investment. From a geographic standpoint, North America will remain an important part of our growth engine. But we are doubling down across key geographic regions, in EMEA, including the U.K., France, Benelux and Germany. We also plan further investment in emerging operations in APAC focused on Singapore, Hong Kong and Australia. We have a lot of growth in front of us. As highlighted in our 2020 10-K, only 8% of our 2020 revenue came from outside of North America. With further investment, we believe we can accelerate this growth in 2022 and beyond. We believe that with well-aligned market opportunities, such as ESG and ESEF and broader finance and digital transformation tailwinds, there is still substantial upside in Workiva's future growth. Throughout the history of this company, we have continued to invest in innovation, invest in R&D. We have demonstrated that this investment resulted in durable and sustained growth. Historically, our investment in R&D and product innovation has resulted in new products, new functionality and an aggressive product roadmap that expands our leadership position. As we look at the opportunities ahead, we will invest in existing and new solutions that solve important problems for our customers, such as ESG, capital markets, accounting and finance, GRC and industry-specific solutions. We will continue to deliver innovation that helps our customers drive their transformation initiatives, which result in loyalty, retention and the willingness to purchase additional solutions. We will also invest in sales and marketing. We have built a very strong organic growth engine, and we will invest to drive topline growth. These investments will include quota-carrying sellers, non-quota sales support, go-to-market experts to support our specialized solution areas and non-headcount areas, such as marketing and demand generation programs. Our diverse solution portfolio, expanding TAM and geographic expansion opportunities requires an appropriate level of go-to-market investment to capture the market opportunity we see in front of us. Investing for growth remains our #1 priority. We are very excited about the potential results we believe we will achieve through our future investments. It continues to be an exciting time for Workiva. The world is changing at a rapid pace, and we believe we are well positioned to capitalize the increasing opportunities to power transparent reporting for a better world. I'm going to turn it over to Julie next and she's going to talk about our growth strategy in TAM. Thank you for spending time with us today.

Thank you, Marty, and hello, everyone. As we talk about our growth strategy, let's take a moment to talk about this point in time, where we are right now? You're familiar with the trends. The move to the cloud, it's table stakes now. Digital transformation, it's fast becoming a mandate. The way companies and teams work, remote and hybrid work not going away. Disparate data sources. They continue to increase in both number and in format, structured and unstructured. The regulatory environment, it continues to expand globally in both scope and complexity. Investor scrutiny. It's broadening to not just include financial factors, but nonfinancial factors as well. That now familiar acronym that Marty just spoke about, ESG. It's more critical than ever for companies to be transparent and accountable to not just shareholders and investors, but to all stakeholders, employees, customers, suppliers, partners and communities. And that's where Workiva comes in. We have the technology platform to enable, to support and to power transparent reporting, both financial and nonfinancial. It's as if we were made for these times. At last year's Investor Day, I talked about our multiyear growth strategy. The 4 tenants of this strategy. We're delivering fit-for-purpose high-value solutions, evolving our new platform, making it even more connected, more open, more intelligent and more intuitive, creating and expanding our marketplace and leveraging our high-performing partner ecosystem as a force multiplier. And it's working. Here are just a few highlights of what we've accomplished thus far. Over the past year, we grew revenue in our core solution portfolio, and we incubated and launched multiple new fit-for-purpose solutions. We migrated 100% of our customers to our new platform and made our first acquisition to expand our platform capabilities. We followed through on our commitment and we launched the Workiva marketplace in July of this year. And we continued to expand and grow the Workiva partner ecosystem and its effectiveness in go-to-market, in delivery and in the number of partners across the globe. The discipline and focus of this strategy has allowed us to take a new approach to our TAM, largely founded on our fit-for-purpose solution approach. Historically, we've communicated a 2-factor TAM of $16 billion. This was calculated using the assumption that there are just over 100,000 companies in North America and in EMEA that have over 250 employees. Our TAM approach was if enterprises can afford SAP or Oracle, they can afford Workiva and they need Workiva. Our historical TAM targeted an average annual contract value of $150,000. Our revised TAM calculation values our market at $25 billion. Our TAM has expanded with our entry into new markets and new geographies and with an expanded solution portfolio. Our revised TAM can be divided into 5 categories. Accounting and finance, GRC and industry solutions represent the historical foundation of our solution portfolio. The TAM in these core markets has now been expanded with the addition of new solutions like global statutory reporting and ESEF. We've also increased our success in selling multi-solution deals, including high 6-figure and 7-figure relationships. I'm going to do a deeper dive now into 2 new categories that we're incredibly enthusiastic about Capital Markets and ESG. Here's why we're enthusiastic about capital markets. It aligns well with what we do, and it's a hot market. We have the capability to go through every step a customer takes as they move from private to public. And it's more than just a single transaction. It's a journey. It's a journey that our platform approach and our fit-for-purpose solutions position us to execute beautifully on. The direct market sizing of capital markets is very straightforward. We look at the forecast for the number of IPOs and secondary offerings. This market is sized by the number of transactions and the average deal size for those transactions. We've taken a 5-year horizon in estimating the number of transactions, and we've taken a conservative approach to calculating the deal size to arrive at a market size of $1.5 billion. We'll continue to monitor and adjust this TAM as market dynamics change. In addressing the transactional side of the market, our cloud platform enables our customers to ditch the financial printers and digitize the process for multiple deal types and 33 act forms, including S-1 and Form S-3. We've built strong momentum here. we've benefited from positive tailwinds in a very active SPAC and IPO market. We've also built go-to-market partnerships with big 4 firms and leading law firms like Wilson Sonsini. And we supported some of the highest profile IPOs this year. Supporting S1 prep though is only one part of the story for us. We support our clients who are out there, private to public journey. Private companies often purchased the Workiva platform for financial reporting, management reporting and controls management, and they do this up to a year or 2 in advance of their target IPO date. As they go through the IPO process, they use the Workiva platform to manage the creation of S1 and roadshow materials. Around the time they go public, many of these customers will purchase SEC and expand the use of their platform to support their SOX documentation reporting requirements. Let's walk through a few client examples. A technical services company started their Workiva journey in early 2019 as a private company with our internal control solution. In early 2020, they purchased our capital markets and SEC solutions to prepare their IPO. The company went public in the spring of 2021. And in the summer of 2021, they utilized our capital market solution again to support their secondary offering. Another example is a mid-market financial services firm that purchased our private company financial reporting solution in the fall of 2018. In the fall of 2019, this firm purchased our controls management solution to support a new ICFR process. In the fall of 2020 they expanded their use of controls management and purchased the capital markets and SEC solutions in advance of going public. The IPO occurred in the winter of 2020. They made an additional purchase to support their secondary offering in the summer of 2021. And one more example is an aviation company. They purchased our private company financial reporting solution in early 2019. They added the controls management solution in the summer of 2019. Early in 2021, they purchased the capital market solution to support their IPO. In the spring of 2021, they purchased the SEC solution to support their public company requirements. These are just a few of the stories that illustrate why capital markets is a great growth opportunity for us and why we're expanding investment in this market. It's been an incredible year for ESG. The world has hit a tipping point. We introduced ESG as a new fit-for-purpose solution in the first half of 2021. And while it's still early, everything we see in the market indicates that ESG is potentially a huge market opportunity. We believe our end-to-end solution and additional differentiating capabilities will enable us to gain significant market share. Several quarters in, with great early momentum, we have a conservative estimate of at least a $3 billion market size. ESG reporting is complex. It requires the ingestion, the capture, the management and the reporting of financial and nonfinancial data from many disparate sources, and it requires the collaboration of multiple internal stakeholders. This is what we excel at. So it's a natural fit for our platform and a natural fit for Workiva. We have years of experience delivering a cloud platform that supports investor-grade reporting for the world's largest organizations. I recently had a conversation with the Chief Accounting Officer for a large energy company. Now this CAO strongly believes that it's only a matter of time before nonfinancial data will be acquired as part of the annual report. Why? Because today, more than ever, climate impact, social responsibility and corporate governance are impacting the valuations of companies and the ability of institutions to invest in those companies. This conversation is representative of many that we're having across the prospect and user communities. One of the things that makes this market so compelling is the multiple drivers of change. While we believe that regulators will impact this market, companies are also setting their own targets and embracing change ahead of the regulations. Due to the complexity and the evolving nature of ESG market requirements, many of our customers are working with our advisory partners to assist with these ESG transformation projects. At our September Amplify User Conference, we had a presentation on ESG and featuring our partner PwC and a mutual client, a large oil and gas producer. We highlighted the need to establish a reporting regimen. And we also discussed the value of a strategic plan in creating policies, processes and controls. And all of this was in the context of technology enablement. For this client, like many of our clients, ESG is driving a pivot in the corporate strategy through their commitment to net zero targets. ESG reporting targets are driving a change in business lines companies choose to support and the new markets they're pursuing. It's not just about reporting, it's about a change in business strategy. As highlighted by PwC, the use of technology and the pursuit of technology automation in this multiyear project are critical for the success of this ESG transformation. Again, with new markets, new solutions and expanded opportunities in our traditional solution areas, we modeled a conservative TAM estimate of $25 billion. Another important part of our growth is our current customer base. Today, we have over 4,100 customers. It's worth noting that 75% of those customers still spend less than $100,000 with us. Two factors drive our confidence that there's significant opportunity for expansion within that loyal customer base. Connectivity and multi-solution deals. Let's start with connectivity. Connectivity is one of the key requirements to address technical complexity. Integrating with and connecting to source systems and applications is a huge top-of-mind problem for complex businesses and businesses that want to digitally transform and truly leverage their data. So often in my calls with senior executives from our customers, they stress the critical importance of connectivity in achieving their outcomes. It's about integrating disparate source systems and connecting applications with our ecosystems. This was the impetus for our recent acquisition of OneCloud, a company we've been partnering with for several years for precisely this capability to provide connectivity between data sources and applications. OneCloud brings these critical integration and data prep capabilities to our platform. And we believe this is a competitive differentiator and a significant opportunity for us. We want every new customer to be enabled with some level of connectivity from the start. And we want every existing customer to get connected, all 4,100 of them. How will we do this? We're streamlining implementations to make them easier. And we're training and enabling our employees, partners and our customers to be experts in our data prep and integration capabilities. The continued investment we've made in the platform will better connect and harmonize data from various source systems. It will drive value for our customers and entice them to expand their investment in the Workiva platform. Our growing portfolio of products is producing a second driver for increased revenue within our customer base, multi-solution deals. We're seeing increased traction in selling multi-solutions to our customers. Comparing Q3 2021 to Q3 2020, we saw a 41% increase in those clients with contract values over $150,000. A healthy portion of that larger contract increase is represented by clients that have purchased multiple solutions. So what does a multi-solution deal look like? We're seeing a number of trends in solution combinations. The most obvious combination is companies that purchase both our SEC and SOC solution. If you're a public company and file with the SEC, you are most likely required to also document your internal controls over financial reporting, SOX 404. And you're also required to sign off on those controls, SOX 302. We've differentiated ourselves on our platform support of these requirements for years. More recently, we've seen a solid uptick in the number of SEC customers that are also purchasing ESG. For example, in Q3, we had a 4-year loyal SEC customer add on our ESG solution. Now this customer is not in a highly regulated industry, but is a well-known consumer brand that wants to be a forward mover on the ESG front. With the addition of ESG, the client's paying more than double their original contract value. Another example is a large insurance company that's using 6 solutions. And this is not only a strong multi-solution story, but it's also a client expansion story, influenced by one of our partners. This client who's working with a big 4 advisory firm, purchased our SEC, financial reporting, management reporting and insurance statutory reporting solutions as part of a finance transformation project in late 2019. Working with this advisory firm is their Workiva implementation partner, this client has expanded their Workiva footprint with insurance regulatory reporting. And they more recently added ESG reporting in Q3 of this year. They have more than doubled their initial spend with Workiva. Another great example is a top 25 U.S. bank who's been a client since 2013. This bank initially purchased our SEC and resolution plan solutions. Over the years, they've expanded their solutions to include CCAR, DFAST management reporting and policies and procedures. In Q3 of this year, they've added our ESG solution as well. This client is now spending 5x their original contract value with Workiva. The selling of multi-solutions and continual expansion of use within the client base is an excellent scorecard for the success of our strategy because it highlights the power of the entire strategy. Every tenant matters on its own, but the whole is greater than the sum of its parts. It all starts with our scalable cloud platform that delivers ease of use, security, collaboration and a common user experience. Our platform powers our fit-for-purpose solutions. And our partners are playing an ever-increasing role in delivering services and guiding solution expansion as they work with our mutual clients on finance and digital transformation projects. In conclusion, 1 year after launching, we're seeing strong signs that our strategy is working, and it's widened the opportunity for us to serve more customers and accelerate our growth. As Marty said, we're leaning into this moment to capitalize on the opportunity before us with targeted investments to build on our success. Jill, over to you.

Thanks, Julie. And thank you to all of you who are joining us today. I will first touch on our market opportunity, review our track record and then spend time discussing our operating model outlook. As we reported during our last earnings call, Workiva posted strong revenue growth in Q3 and year-to-date. During conversations with investors and analysts, the questions I'm most likely to hear are first, what is driving this acceleration in growth? And second, how do you expect to execute against your long-term operating model? I will cover both of these topics today. But first, let's start off with a review of 2021. We are pleased with the results we posted for the first 3 quarters. As Julie discussed, we continue to benefit from macro business trends, which included significant increases in cloud platform deployments, digital transformations and remote workplaces. With an increase in prevalence of remote work, we have seen prospects transition to a cloud-first or a cloud-only strategy. We believe this strategy shift will persist and will result in added market demand. Remote work has also elevated the system requirement for collaboration, the need for a reliable audit trail, security and data permissions and connectivity to multiple systems. We think about growth in terms of solutions, geographies and partners. We believe our existing portfolio of fit-for-purpose solutions provides a long runway to support growth. We have seen strong performance across our solution portfolio, and we are optimistic for continued broad-based and durable demand for these solutions. We have seen strong demand in North America this year, which, as we have discussed, has been a significant contributor to our growth. We reported in our 2020 10-K that less than 8% of our total revenue came from outside North America. Over time, we expect EMEA to contribute 25% to 30% of our revenue. While EMEA and APAC are outpacing our growth rates in North America, the continued growth in North America and the size of our revenue base will make that 25% to 30% revenue contribution, a longer-term target. We are confident in our global market opportunities, and we believe we have a significant amount of geographic growth in front of us. Partners are a force multiplier for Workiva. As Julie mentioned, partners are also playing a more central role in delivering consulting and implementation services on our deals. We look for our partners to have more influence on our S&S and services revenue mix over time. Our partners are contributing to the growth in both new logos and larger contracts with our customers. At the midpoint of our full year 2021 revenue guidance, we communicated that we are expecting total revenue growth of 25%. We have delivered a steady increase in quarter-over-quarter revenue growth for the past several years with some acceleration shown in 2021. One of the drivers of this recent growth is an uptick in the addition of net new customers. We have recently seen our best 4 quarters of net new customer growth since we went public in 2014. We have added 563 net new customers in the past 4 quarters. Our revenue growth is also being positively impacted by the number of large customer contracts. As Julie highlighted, only 25% of our customers spend more than $100,000 with us. As indicated by the chart, the number of large contracts is growing at a fast pace. We started disclosing statistics on customers with annual contract value over $100,000 and $150,000 in Q4 2017. Today, we are pleased to add an additional disclosure of customers with annual contract value over $300,000. As indicated on this chart, we are seeing great traction on that contract segment as well, with year-over-year growth of 72%. Each quarter, we proudly report our strong revenue retention and are reiterating that message with this slide. The green line shows our gross revenue retention rate, which has hovered consistently around 95% since our IPO. We are pleased by the stability of this metric, even through our transition to solution-based licensing from Q3 2018 to Q1 2020, and through the upgrade of all customers to our new platform from Q2 2019 to Q4 2020. The past 2 quarters, we have delivered an improved retention rate above 96%. The blue line here shows our net revenue retention rate, including add-ons, which has been more variable, but still bounded by a reasonably tight range. We have seen a slight improvement in full year 2021 compared to 2020. This metric provides visibility into the financial impact of the solution expansion story, as Julie walked you through. We believe the quality of our platform and our focus on exceptional customer support contributes significantly to resiliency of our revenue retention rates. We expect subscription and support revenue to continue to grow faster than services revenue. Partners, taking an increasing share of consulting services, will increasingly impact this trend. Our long-term operating model target mix is 88% subscription revenue and 12% services. We have made progress on this goal over the past 2 years. As indicated on the chart, we have moved from 83% subscription in 2019 to 84% in 2020 and improving to 85% for the first 3 quarters of 2021. Looking at our professional services revenue, we have seen a growth of 11% year-to-date compared to the same period in 2020. A high percentage of revenue from professional services, 71% year-to-date is from XBRL tagging. As we have discussed, XBRL tagging services provide high value to our customers and much of the revenue is recurring, but it continues to grow at a lower rate, 14% compared to our 28% subscription revenue growth rate. To date, we have posted financials and conducted follow-up conference calls for 28 quarters as a public company. The nature of our business model and high revenue retention rates provide fair visibility for forecasting revenue for the forward quarter. The blue line represents our reported revenue guidance at the midpoint of the range for each of the forward quarters. The green line shows our actual revenue results for that quarter. This data shows our conservative approach, aiming to under promise and over deliver. A graph of our guidance on non-GAAP operating loss and income shows a similar pattern. We are proud of this track record delivering ahead of our guidance. Now I want to pivot towards a discussion of our target operating model. At last year's Investor Day, we introduced a new long-term operating model. In the next several slides, 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 discussions are based on non-GAAP numbers. We will provide a reconciliation to GAAP numbers as an appendix to this presentation. Let's start with gross margin. On a non-GAAP basis, we have a long-term target of 80% for our consolidated gross margin. We finished 2020 at 75% and have shown an improvement to 77% for the first 3 quarters of 2021. This improvement is being driven by a higher percentage of sales in software subscription and support. R&D expense as a percentage of revenue has been steadily approaching our target of 23%. Q3, year-to-date, we stand at 24%. As Marty has stated, investment in R&D is at the core of our product differentiation and competitive moat. We intend to stay ahead of the pack. While 23% is our long-term target, we will continue to have near-term investment in R&D. In 2022, we will be investing in R&D and may show this investment percent increasing over the coming quarters. R&D investment is primarily in the form of headcount and hiring. Workiva has proven to be a destination employer, and we have had great success in recruiting the past 3 quarters. However, the current employment market will drive how quickly we can ramp this hiring and may cause some variability in this metric. We have a long-term operating target of spending 25% of revenue on sales and marketing. The past 3 years, we have hovered at around 37%. As both Julie and Marty have highlighted, we have great opportunities for growth in front of us, including geographic expansion in EMEA and APAC pursuing new fit-for-purpose solution in areas like ESG and taking advantage of the great opportunities we have in capital markets. We will continue to spend on sales and marketing at a much higher level than our targeted 25% of revenue and may see some quarters in the future where we will be spending above the 2021 levels. Our increase in sales and marketing spend will be a combination of quota headcount, non-quota headcount and marketing programs, including our Amplify User Conference. Our long-term target for G&A expense, as a percentage of revenue, is 10%. In 2020, we finished the year at 9%, a number favorable to our long-term target. In 2021, we have made some investment in headcount and systems, which has increased the percentage to 12%. We are scaling our business operations to manage our growth. We remain committed to the long-term target of 10%. We have communicated the long-term non-GAAP operating margin target of 22%. The past 2 years, we have shown progress against this target. We finished 2020 at a positive 6% and have tracked to that same percentage for the first 3 quarters of 2021. We are a SaaS business with high and increasing gross margins. We know how to operate this business to generate a profit. However, for the near term, our #1 priority is growth, and we are choosing to invest in that growth. Executing on capturing share and an expanding TAM requires investment. As stated on our most recent earnings call, we are guiding to a non-GAAP operating loss, as a percentage of revenue, to be 5% or less for 2022. In the long term, we hope to achieve these targets, but there's no guarantee that we will. We are pleased with the progress that we have made against these targets since we introduced them a year ago. As we have stated in the past, we will make progress towards achieving each target at a different pace, not in a linear fashion. For 2022, that pace will be dictated by the strategic investments we will be making to pursue our long-term growth objectives. We see long-term durable growth in front of us. We believe that the time to invest is now. And with that, it is time for the live Q&A. We look forward to answering your questions. Let's head over to join the rest of the team.

Welcome. We are at our live Q&A session as part of our Investor Day. We are coming to you live from our Ames office. It's a blustery 30 degrees here in Ames. So we are coming from the inside in one of our fantastic rooms in our Ames office. We are doing the live Q&A session. [Operator Instructions]. We've had a number of questions come in already. So with that, I'm going to start with the group and start asking some questions. Marty, I'm going to start with you. We have a question coming from Rob Oliver at Baird. The question is, given the -- all the tailwinds in the business and upcoming catalysts, can you walk through the thought process on the most recent insider sales?

Sure. Happy to do that. And good question to start on. Certainly, inside selling always causes angst, but let me start by just a couple of broad statements. First, myself and Jeff Trom who are involved in that sale are not going anywhere. We're very excited about the future of the company. We're having fun. We're energized and I don't know anywhere else I'd rather be. It's a really fun, exciting time for Workiva. Secondly, I was talking to a financial planner, and I had a fairly large Charitable Remainder Trust. And we got talking and they said, it's a lot more rewarding and fun to give money to the causes you care about when you're alive. Because with Charitable Remainder Trust you, typically, the money goes out after you are gone. So I did some soul-searching on that and decided that I wanted to start to unwind a Charitable Remainder Trust that had put at the time. We started at a fairly modest amount of capital into Workiva, but now it's a very meaningful piece in terms of helping charities. So the primary reason that I sold some equity was to invest in education for underprivileged people to go to college, students. And also environmental causes, I've been environmentalists to my whole life. So the part that came out of the Charitable Remainder Trust, all went to charities. Some of the personal funds I received are also going to education. And then finally, I would just say for myself, liquidity was a goal. Up till now, I've not had much liquidity. There was a lot of complicating factors in terms of taxes, obligations from a divorce and things like that. So I also wanted to have some fun in my life and enjoy life and have some liquidity. And so that's really the underpinnings of why we did the sale. And Jeff has similar interest, he also wants to invest in enjoying life and also in charity. So that's really the main reason that we sold some stock. But I do want to emphasize that I am so bullish on this company. The really strong fundamentals of the company, being a really true platform, existing in a space in the marketplace where people are not investing in this type of tool or platform, having a broad-based customer -- let me change that, a broad base of customers that are only going to need more of these solutions as the responsibility of organizations to report increases. So we have expansion in international markets, just a lot of things to make us very bullish. But -- and we're going to continue to work at Workiva, and we're very excited about it. So that was a long answer, but it was the elephant in the room, I wanted to address it, so.

Excellent. Next question, Jill, I'm going to throw this one over to you. This one comes from Terry Tillman from Truist. Can you give some ideas around the planning parameters for your 20% growth in 2022. What did you utilize for kind of some foundational pieces of that?

Sure. So we wanted to put out some early guidance ahead of many of our peers, of course, around 2022 because we were seeing some of the sell-side analyst models were quite under where we thought we were going to land. And we, of course, in -- any time that we're giving guidance, we want to make sure that we're giving numbers that we can beat. And so we looked at what we expected to have for bookings going into next year and across our solutions. And we did some -- of course, as always, we did some planning on the investments that we were making and focusing on all of the solutions that we have today and the geographic expansion that we're investing towards and looking at also our continued improvement in our partner enablement and the resources that we have there with our great partner network. And we used all those factors to drive towards where we think we can land from a revenue standpoint, land and beat, of course, this is where we're always focusing on, giving numbers that we can exceed. And it's right in line with the guidance that we've given around our long-term revenue goal of wanting to be a company that in the very long term can grow in that mid -- low to mid-20% range for total revenue. And taking all those factors, we really thought that it was a good idea to get something out there ahead of time so that we could plan towards that and let all of the sell-side analysts and investors plan towards that and just reiterate our goals around long-term revenue growth. To Marty's comment, we're very bullish on our opportunities. And we, of course, would like to be able to exceed those numbers, but we want to throw something out there that we believe is achievable and directionally get everybody understanding where we think we're going to go next year.

Excellent. Thank you. Next question comes from Matt Stotler from William Blair. Julie I'm going to throw this one to you. Can you give an update on your investments in your partner ecosystem, including some expectations you have of that?

Sure. I'll start out by saying, as you know, on the growth strategy side, we have a tenant in there that is focusing on expanding and growing and leveraging that high-performing partner ecosystem. So we are very focused on it. Our partners are everywhere we want to be around digital and financial transformation. So we are putting a lot of investment in this area. We want to make them commercially successful with us. And towards that end, we have been shifting work towards implementation on the partner side. And we've been investing in that to ensure that they are enabled to deliver for us with high quality. So we kicked off an enablement program in early 2021, certifications, badging and so forth, making sure that they are going to be able to deliver with high quality our solutions across the portfolio. We also spun up a partner success team in our customer success organization. We are working with our own employees to work with partners better to go to market, learning tactics to work with customers, working with the organizations to understand and Workiva can bring value. So we're working together across our portfolio with our partners. They provide advisory services, they build services and make our platform ever more valuable to our customers.

Excellent. Thanks, Julie. Next question comes from Andrew DeGasperi from Berenberg. Marty, I'll throw this one to you. This relates to your investment in APAC. Can you give some color on why you're targeting the 3 countries mentioned, Australia, Singapore and Hong Kong and what your outlook is for that market?

Sure. Yes. When you go into a new market, you sort of have to look at where entry will be most frictionless for where you're at in your sort of the life cycle of the company and the life cycle of that market. Just like we did in EMEA, we started in the Benelux and in the U.K. where the localization issues weren't as severe, where culturally, we were similar. And we built up a customer base and a reference base. And then we moved out from there. We're doing the same thing in APAC. Australia, obviously, is culturally similar with no localization issues. Singapore and Hong Kong also are areas that culturally, we knew we could be successful in. So we started there. We're starting to build a nice group of references. And of course, in our plans, we're going to go to other Asian markets. There's no doubt about that. and we're already sizing those up and looking at those. And -- but so far, it's worked. We've been able to get some really good reference customers, some really, really large companies using our platform in APAC area, and that's what you need to sort of launch a bigger growth cycle.

Excellent. Next question comes from Alex Sklar from Raymond James. A specific question around TAM. Julie, I might throw this one to you. A specific question is, can you give some color on the $3 billion TAM that you're expecting in ESG?

All right. As I mentioned earlier in the comments, it's a very conservative estimate. So we look around the globe, and we look at the companies that potentially will have purchasing ESG, and we're looking at the number of companies that will focus on ESG, and it's a very conservative estimate. We've seen other estimates in the market towards $5 billion and beyond and ours is conservative at this point.

Excellent. Thank you. A couple of other questions here. I'm going to do a follow-up question on ESG. We've got a number of questions coming in on ESG related to this. This is one that comes from Rob Oliver, which is can you provide some color on the average uplift you're seeing from ESG sales? How should we think about the average ESG deal?

So we have seen tremendous momentum in the market globally around ESG, both in EMEA and North America. While there is regulation pending we're seeing the demand for ESG ramping significantly. As we've talked about earlier, and I mentioned on the comments earlier in the call, it is around not just shareholders demanding and requiring transparency and accountability for investment, but it's also coming from a multitude of stakeholders, whether it's employees, customers, partners, suppliers and vendors and communities. There is this demand for narrative and data as well. So we're seeing a broad-based demand for it across the globe, regardless of the regulation. And our pipeline is ramping nicely.

Excellent. Next question is related to pricing. This comes from Mike Grondahl at Northland. Jill, I'm going to throw this one to you. Is -- can you walk through a little bit of the solution-based licensing. We mentioned mid-market customers buying incremental solutions. Do people just get one -- is it one price for all the solutions or how does your solution-based licensing work?

So for solution-based licensing, we really do focus on giving access, unlimited access to our customers from a user standpoint, unlimited access for each individual solution. So if a customer is purchasing multiple solutions, there is an uptick in that price per solution, not per number of users. And that's a change that we made, finished that up in 2019, and it has been very -- we had a really positive impact on our overall revenue per customer during that timeframe that everybody would have noticed as we completed that. And it does help to make the platform more sticky within our customer base. And it allows customers to bring everybody into the platform related to an individual solution or process rather than trying to diddy that out because they're trying to manage towards their budget on a user basis. And it does then -- also as we focus on multiple solution deals and pushing additional usage of our platform within each individual existing customer and then also moving towards trying to sell multiple solutions in when we're going into brand-new customers. It does push upwards -- put upward pressure on that annual contract value that we've released in the past. And then just, of course, today, we provided some additional information on the number of customers with over $300,000 in annual contract value. And so it does help to push -- drive those numbers upwards and you're not going to see as many customers within that $300,000-plus group that don't have multiple solutions in that way.

Just one quick comment on that, too. To add to Jill's point, we're seeing that most SaaS companies are realizing that value isn't tied to the number of users. And the thing that really helped us was we were able to really match value with price much better than with users. And so customers definitely understand better why we're charging for what. So that's been a big advantage, too.

Marty, kind of a related question kind of getting that value out of that. A question for Mike Grondahl at Northland, specifically is, can you talk about your largest customers? What does a big customer at Workiva look like?

Well, a big customer at Workiva looks like an organization that's first started with just a couple of solutions, and then the number of solutions kept growing, and then we get into a type of contractual discussion where we talk about different types of licensing. We do short-term ELAs, and we reassess those on a -- by every 2 or 3 years to see if it's still matching the value in terms of what the customer is paying. But these customers tend to start to put all of their reporting needs on our platform, have one consistent platform throughout the organization where they're ingesting data from all the different systems of record and then putting out internal reports, external reports, performance reports and so. And also getting involved with audit. So we really see our vision manifested in these big companies where after your systems of record, all the way out to where you report and do analysis, people use Workiva.

Excellent. Next question comes from Rob Oliver at Baird. Julie, I'm going to throw this one over to you. As you invest in global expansion, can you discuss the balance of direct sales versus partner sales?

Sure. As mentioned earlier, partners is a key tenet of our growth strategy. And it varies the extent to which we leverage them today varies across geographical location. In APAC, for example, where we are a less-known brand, we predominantly use partners to go to market and for delivery. When you look at North America, we're on the other extreme really, where we are a more well-known brand and very easy to get that direct sale. EMEA is somewhere in the middle. They're using a combination of both direct sale and -- a healthy combination of direct sales and partners. Mentioned before that it's important for us to continue to leverage our partner ecosystem, both for our go-to-market and the delivery. Again, the strength there, as Marty just mentioned, these larger customers, huge opportunity for us going in there. The partners are everywhere in those larger opportunities. So leveraging that across the globe is an intent. But today, again, the balance is not equal across the globe.

Okay. We have a couple of questions in around platform and solutions. Marty, maybe I'll start with you. I have a question from Matt Stotler from William Blair. Longer term, how do you think about the potential for Workiva's platform capabilities? Are there so many different areas going into? Do you see investing in horizontal capabilities or just around fit-for-purpose solutions?

Well, I think that dovetails under the last question I answered. When you go to sell -- first off, the platform is maturing nicely. Like I've mentioned in the past, there's other core features we're working on that are going to just enrich the platform even more like workflow and different types of analytics tools and machine learning, better connectivity. So we're just excited about the overall potential of the platform in that large space of reporting. In terms of how our customers perceive it, when we go to sell in a new customer, it's very easy to explain the value to solve 1 problem or 2 problems or 3 problems they have. And so we tend to go in and sell solutions. What we see down the road is the light goes on in these customers and they say, we can use this for any type of reporting. We can get any data in the company, put it in one place, massage it, do what we need and then use it for reporting and performance reporting. So we definitely see a need for fit-for-purpose solutions for some time because that's how we enter accounts. That's how we're able to correlate value with what we're charging initially, then the customers start to realize the value. So the investments we're making in R&D are really playing around making a platform that enables customers to move all of their reporting into one platform. And like I mentioned, those other features, just a moment ago, are going to be core to that happening. And we're already seeing it happening in a lot of large customers right now. So there'll always be a need for both.

Absolutely. Well, kind of a follow-on question, Julie, I'll throw this your way. This one comes from Matt Stotler, which is you have several new offerings that are still relatively early days of ramping. We've talked about ESG and ESEF and FERC and global stat reporting. Can you give some color on the traction of those solutions you've seen this year?

Sure. As we continue to talk about our success really in those solutions is very broad-based. We are focusing on each solution individually in going to market. We're bundling those solutions together. I mean, I could be here for now and we're talking about all these solutions and what's happening in each. But for example, I'll start with FERC. We've talked about that. that solution, we rolled that out with low code on top of the platform, as Marty spoke about, being able to provide fit for purposeness in multiple areas and verticals. And we found that solution to be very easy to go to market and found a lot of traction in their same selling motion for us, same buyer, so forth. So very easy to roll out, had a lot of success in that over the past year. And ESG, we just spoke about early, early days in that market. But again, traction there, seeing a lot of momentum, definitely interested in that solution as well. So we are looking across the portfolio, all of our solutions and bring go-to-market capabilities and activities around them and again, seeing some broad-based growth and all.

All right. Another question. Jill, I'm going to throw this one over to you. This comes from Alex Sklar, which is, as we think about the $1 billion -- sorry, the $1 billion revenue target as for our long-term growth, should we think about that in equal weight or on the TAM buckets? Or how is that going to be spread across our different TAM buckets? Where do you look at the growth coming from?

So I mean we've talked about this at length actually throughout today and as we -- over the past few quarters that, we are a company that -- we're a multiple solution company, we're a platform company. And so we will have that growth spread across all of our solutions. It will be spread across other fit-for-purpose solutions that aren't even out there yet. That's one of our growth drivers. And so you will definitely see that growth spread out across the solutions. We also, as we've talked about, are investing in geographical growth. And so you will see that outside of North America, we will have additional contribution from EMEA and from APAC over the years. APAC is very early days, but they're growing nicely, as Marty was just talking about. And we've talked about that in EMEA, we expect, overtime, for 25% to 30% of our total revenue to come from EMEA. And we think that, that is a very achievable goal as they have some great opportunities around ESEF and ESG and all of our other solutions there as well. And the other thing, Julie just talked at length about the partner opportunities. And as we develop those relationships with partners, we will continue to get additional sales from those relationships and from working with our common customer to further expand platform usage across their businesses. And so that $1 billion is going to be really from -- it's going to be across the platform, across the solution base, across geographies and across a lot of partners engaged in enabling that growth. And that's -- it really will be across all those things.

Excellent. Another question related to TAM. This one comes in from Berenberg. Julie, I'm going to throw this one over to you. In terms of TAM for accounting and finance and GRC, you've expanded it, what's driving that? Is that IPOs or are some of the drivers you're seeing driving that expansion of TAM in those solution areas?

Sure. Well, we talked about the updated TAM. When we had first rolled it out in a very conservative way in 2017. So we've learned a lot about the market. We have a greater understanding of our customer base and who we serve, but we've also increased the number of solutions. So in that particular area in accounting and finance, we have added to that bucket, as I described. And we've added some new solution areas like ESEF. So we've increased that. We've also increased our geography in terms of the TAM, included APAC as well in addition to those other buckets of capital markets and ESG.

Next question then comes from Matt Stotler. Marty, I'm going to throw this one to you is, what are your thoughts on the trajectory of the capital markets area, particularly are you thinking about the current growth rate to sustain in capital markets related to IPOs? Or how do you see that market outlook?

Well, a couple of things. First off, as everyone knows, capital markets can be -- can have a lot of cycles, ups and downs based on market, the shape the market is in. And so we traditionally shied away from that. But of late, we've seen a trend that a lot more companies are aspiring to go public. We see that when we sell the private companies. We've seen that in the recent markets, the IPOs, the SPAC mergers. And so we think that there is some long-term durable growth there in terms of more and more companies becoming public. On top of that, we are still single-digit market share. So we're investing in that to take a bigger market share. And we feel that over the next several years, just growing the market share alone will help grow that business for us regardless of the cycles. So obviously, we have to plan for the cyclical nature of it, but we think there's a real good steady growth opportunity for the next several years just because we do plan to expand our go-to-markets presence there and take a bigger market share that, we've in the past, not really focused on at all.

Excellent. I have a couple of questions that have come in here, so I'm going to kind of paraphrase a couple of these questions together here. It relates to our marketplace. So Julie, the specific question -- 2 questions is, can you tell us more about the marketplace? Kind of the follow-on is, can you talk about the usage and traction you've seen happening within the marketplace?

Sure. We just rolled our marketplace out a few months ago, midyear. And the intent of that marketplace was really to help our users get more exposure to what they can do and possibilities on the platform, to get a quicker time, to value, to have capabilities, templates and so forth to get easier access and quicker time to value and more simple interactions with the platform. We've also put it in there -- put this capability there for our partners to come and put capabilities on our platform to expose their services and their own opportunity for making the value of Workiva's platform increase. So we have seen, from the moment we have rolled it out, we've seen a lot of traction. We've seen usage. We've tracked metrics. And we've seen an increased use across the several months that it's been out. And we continue to invest in it. We're adding more asset types on the platform. We will make it easier for our partners to track their benefits and usages across the platform as well.

Our next question comes in from Joe Myers from Truist. Specific question is what does a typical partner-facilitated deal look like for Workiva? Are they larger? Are they multi-solution? Can you give some color on partner deals? Probably more of a panel discussion here on this one. Julie, maybe I'll start with you and then Marty, you can add some color on this as well.

Can you repeat the question?

Specific question is what does the partner deal look like? Are they typically multi solution? What sort of things are different about a partner deal versus a non-partner deal?

Sure. So we talked about a couple of examples here on the comments on the call. They -- we work together with the partner, oftentimes the partner is already in an account that we have, and we can -- they will recommend a -- bring us a source deal and it may start with one. We go in, we become successful in that deal, and they may drop services around that and extend the use of our platform. So it may start as a single solution deal. It may be a deal that we have brought to the partner. We like to bring partners in early so that they can work on implementations and help us show success with that customer.

Yes. And I would add that the customer deals are definitely larger. There -- we definitely see a very high satisfaction we're done because we combine the expertise of the partner with our core skills. And it's just a better model to go to market. And we're seeing, not only joint pursuit increase as a percentage of our business, but also we're seeing managed service, a lot of interest in managed service lately, understanding the value of our platform. There's a certain percentage of customers that like to do things as a managed service. They don't want to take it in-house. And we're also seeing partner opportunity in the managed service space. So partners are becoming material to our business now. So we're very pleased with the activity. We had a really good plan put together. Julie's team has executed really well on it, and we're just very bullish on partners. And I think the companies like ours, you have to have a very substantial amount of your go-to-market with partners.

On the ESG front, for example, we are partner first in that solution. Partner comes in, we go to market together. They work with the customer on defining the ESG strategy, on its framework selection, on selection of data sources. We bring the technology platform and work together to leverage the capabilities, both the services and the technology for the outcomes for the customer, for the stakeholders.

Leverages for both of us. I mean they have a better product or a better platform, I mean, to deliver their services. And we just have a higher quality of service. So it's really a synergistic thing that's really important to us.

All right. Next question comes in from Matt Stotler. Question relates to international. Jill, I'm going to throw this to you, can you give us an update on the traction you're seeing across the product portfolio internationally? And what are your revenue expectations in the long term for international contribution?

Sure. So we just talked a little bit about this. The one thing that we definitely have put out related to international revenue growth is that we expect 25% to 30% of our EMEA revenue -- of our total revenue to come from EMEA over time. And we're making progress against that because we're having good activity in EMEA and APAC, both, this year. We have had exceptional growth as well within North America. So it might not be growing as quickly off of a -- because we have a stronger base coming from North America this year. But we do expect to see it continue to expand over time. And as we take advantage of all the partner deals and enablement and engagement that we've seen and the investments that we're making in all of those go-to-market activities outside of the U.S. and Canada. As those start to take hold and bear fruit, then we will continue to see that grow over time. And we think that those are -- and we've talked about at length about the geographic expansion is one of the main growth drivers that we see. With only last year, we had just over 8% of our revenues were outside of North America. And so that's a huge area of growth for us, an opportunity for us to take advantage of -- in all these other very large markets throughout the world.

Excellent. Looking for another question here. We've had several questions related to the product portfolio. Julie, I'm going to throw this over specifically to you is, talk to us about incubation. Outside of ESG and ESEF, what else are you working on? Talk to us about a little about the process.

Sure. Well, Marty mentioned the capabilities across the platform, they really lend themselves to solving a lot of complexity around reporting. And there are a number of areas that we can go into in solutions that we can provide developer off of our platform. We have taken a pretty disciplined and rigorous approach to deciding which solutions we'll move into. By the time we have rolled them out into the market, they have gone through a vetting, a market research, a user research, customer interactions and refinement of what the solution will look like. So while there are a number of potential possibilities that we can move into solutions and markets, we really do take a disciplined approach to it and continue to incubate those opportunities for a while before we roll them out to market and commercialize them. And ESG, very recent example, FERC as we talked about, global statutory reporting and so forth.

Yes, probably a more general question on that. This comes from Rob Oliver from Baird. Jill, I'm going to throw this one to you, which is, can you talk a little bit about more of the revenue mix of that and really the deal size, right? Are you seeing these new solutions, are they higher or lower? What's the deal size mix look like on this? And I think general question is, for modeling purposes, how should people think about all these new solutions?

Well, it depends, as always. And so we -- especially when we're new to market with the solution, we're learning a lot as we talk to customers and potential customers about what their expectations are, what their needs are. And so we do see it vary, especially when we have a brand new solution that we're talking about. And these markets will develop, overtime, as there becomes more of a regulatory element to them, especially if you're thinking about ESG there will be, we think, expansion, and we've talked about this, too, that we think that there will be expansion in the regulatory requirements across the globe related to ESG metrics and releasing that information. And as that happens, it will continue to change that deal size and because it changes the tenure of the requirement and it changes what that companies might need to do related to some of those requirements. So I would say that, in general, they tend to be around an average deal size, but it can vary. So it really just does depend on the customer and their needs. And what Marty was talking about earlier when we were discussing the solution-based licensing, it is really heavily based on that value. And so it can vary by customer even.

Excellent. I was going to say a related question to this, Marty, I'm going to throw this one to you. This actually comes from both Northland and Baird, which is, can you look at the solution portfolio, what are you most excited about for 2022?

Well, let me say a couple of things. First, just to follow on to Jill's answer. It's really interesting. People ask that question over and over. What's the solution I should be focused on? And every quarter as we watch our new sales come in, we see similar orders of magnitude on each solution, meaning there's nothing that outsizes one or another by a big factor. So I'll use our favorite term here. It's really broad-based across all of our solutions. And some solutions have a lot bigger standard deviation because of how we assess value for different sized orgs. But generally, we tend to come in roughly in the same order of magnitude -- or somewhere close to the ACV you compute when you just look at all in a mix. So it's -- we think it's a really healthy portfolio in a way to approach it. And that portfolio approach gives you a lot of stability. It really does. Now when you talk about things to get excited about, it's really interesting, the pressures that consumers and investors both are putting on organizations. I mean, the millennials and all the young people in general are not going to buy products from companies that aren't responsible. And you see the pressure from the investment side as well. So it's going to -- and the taxation side, I'm very excited about GSR because of the minimum corporate tax that the globe is definitely going towards. And the accuracy that's going to become more and more important in terms of how those spoils are divided up between the countries. And in ESG, I was accused of being overly enthusiastic on one of our quarterly calls. If there was ever a solution made for us, it's ESG. And that's driving a lot of our investment decisions. I mean when you see that, a market that's hit a tipping point, a very big market, and we're being very conservative on our estimate of the TAM currently, as Julie indicated, and we're -- we have a platform that's ideally made for it, it's time to invest and take that market. You just -- shame on us if we don't. So yes, I'm excited about all of our solutions. Obviously, ESG is the new shiny one on the block, and it's big and it's -- we're well positioned and it just tipped, but all of them are meaningful in our business. They really are. Long answer, sorry.

Long answer. That's okay. We'll drill into a specific solution area here. We have a question coming in from Terry Tillman from Truist. Julie, I'm going to throw this one to you, and it's specific to capital markets. Kind of have a 2-part question is, as phrasing the question, it seems like a lot of folks involved in that area, including law firms, audit firms, investor relation firms, how much cross-pollination do you see as part of that sales cycle? How do those different organizations get involved? And more specifically, you talked about Wilson Sonsini, how do you see them getting involved and have you had success with that partnership?

Sure. We're excited about the Wilson Sonsini opportunity for sure. But capital markets for us, I do want to step back, it isn't, again, just about the transaction itself of capital markets. For us, it is the private to public journey, as I described earlier, it really is an opportunity for us, and we talk about which solution is -- brings the most opportunity for us. It really is about the value that we bring to the customers with all of those solutions. And the bundling, of course, as we discussed around the opportunity for capital markets, again, it is the multitude of solutions around the capital market sale. And on the partner side with Wilson Sonsini, they're looking at it as a managed services opportunity. They're working with customers using our platform. And we see that opportunity. We intend to invest more heavily in that area as well.

And I would just -- I would add that the interesting thing about the capital markets business is -- and the actual use of our technology is it really is a superior way to do what capital markets documents need. I mean creating an S-1, it's just a superior way to do it. We did it when we went public, and we've seen lots of customers, a lot of high-profile customers do that. And the one thing we've seen, which also gives me a lot of optimism is that we don't see customers leave it once they try it. Obviously, it's a very touchy thing going public and getting customers to trust new technology initially takes time. But once they use it one time, it's over. They're not leaving. They're coming back every time. That's why you see someone like Wilson Sonsini say, hey, we're going to get -- have a partnership with these folks and bring better value to our customers. So in the future, the majority of capital markets will be done in a platform like ours because of the collaboration and just the efficiency and accuracy of what the ultimate document is.

Well, it wouldn't be an investor call unless we had some margin questions. Jill, I'm going to actually ask you a couple of questions here from Alex Sklar from Raymond James. How should we think about free cash flow margin relative to operating margin? I think it's probably in general, how should we think about free cash flow and operating margin in general? And specifically, there's been kind of a long-term normalized spread that's tracked about 7 points above the operating margin on the free cash flow side. But maybe just general comments on free cash flow and operating margin.

Yes. And I mean, I understand where that's coming from. We're not giving, of course, any guidance on cash for next year yet. But I understand that the -- why there's questions, essentially given that we're talking about moving back towards a non-GAAP loss next year. And the reason for that is that we're investing in that growth that we've been talking about, investing in the expansion of our TAM and taking advantage of these opportunities that are in front of us. And we think that the right way to move forward, as a company, is to invest for that acceleration of growth. And it's been prevalent throughout the day as Marty and Julie talked to all the information that they provided. And it's something that we'll continue to talk about going into the next few years as well that we do think that there's these great opportunities in front of us. And so we are going to invest and use our resources in order to take advantage of that -- of those opportunities. Thinking about cash flow. We have, over the years, had quite a few different ways that we've contracted. We -- very early days, we're quarterly, moved more towards annual. We've done some amount of multiyear prepaid deals. We now have a pretty common standard if we're doing a longer-term deal that we would have an annual pay. All those things have led to some fluctuations in how we view cash flow, but we've been cash flow -- free cash-flow positive over the past 5 years. And while we are investing, we're not really changing heavily the way that we're contracting now. I think we've settled into some nice standards there. And if we do decide to change, we'll certainly make that public because it can impact the planning around cash. But thinking about margins, we already talked about that we will see further investments next year. And so I think just in planning, think about the -- we do carefully monitor cash and our usage of cash, but we think that we're making the right investments right now to take advantage of these opportunities.

Excellent. Well, our inbound questions are -- it looks like we've gone through most of them here. I'm probably going to wrap things up with just maybe a general question for each of you, right? Which is one takeaway would you want this broader audience of investors and analysts to take away from today's conversation? What are you most excited about? Julie? What are you most excited about looking forward here?

I think, I would want -- I think we're just getting started. I think we -- our platform is hardened. We are moving forward with the platform and solutions around it and bringing more and more value to our customers. Again, it isn't just one solution. It's helping them to simplify the complexities around reporting in a multitude of areas. And our platform, as Marty said, as I mentioned earlier, it truly is made for these times with investor-grade reporting, ability to ingest data, collaboration, audit-ready, secure, controlled and there are a number of opportunities around today with transparency, accountability being more demanded, again, not just from shareholders, but from stakeholders. So we are in a position where just the opportunities are tremendous. The world around us has changed with regulatory complexity. And the tailwinds are absolutely there and opportunity is significant ahead.

And Marty, I mean, where you...

Well, we've talked a lot about markets and products and all that stuff, and I share Julie's and Jill's and everyone's enthusiasm. I think that in terms of our growth journey, having enough places to sell and enough things to sell is not our problem at all. I think that our biggest asset is still our people. And we go out of our way to have a really collaborative fun, energetic culture where everybody contributes and everybody feels part of the team. And that just brings a certain amount of energy and productivity and skill and ability to recruit and hire the best people that's just unrivaled. And we've spent a lot of energy on it, and it's given us wonderful returns. We have low turnover. You see the Great Places to Work survey results. We focus on those. We interact with our employees. And then we have a great management team. I'm very happy with the management team we have now. We're synced up. We work well together, no egos in the room. And it's just been a joy to work with this team over the last few years. And it's a stable, durable team, in my opinion. And so that's the people, the culture, the leadership. That's what I'm most excited about, and that's what I focus on day to day. We just have a great group of people here. And when people come in, they all say, "Man, this place is so much better to work than I even imagine it could be." So that's what really powers success. And that's what I get excited about.

And Jill?

So I would echo, both Marty and Julie's sentiments there. And -- but what I think that, that leads to is numbers, I guess -- I maybe should focus on the numbers to you, but what the really strong platform, the great culture and engagement of our employees. What that leads to is the phenomenal retention of our customers because they can feel that. I think from us as a company, from our employees as they work with the sales team or work with the customer success person, it leads towards that, customers do want to stay. We have exceptional retention in -- against our peers and in the market as a whole. And I think that what's exciting to me is that, as Julie talked about the platform and the opportunities that we have in front of us, not only within our existing customer base, but thinking about all the new customers that we'll continue to pull in and build those relationships with and how we build that across the globe is just very exciting. So it's a whole opportunity for me.

Nobody has more fun than us, you know that.

Absolutely. Nobody has more fun. Well, that concludes our live Q&A session coming from our Ames office. We will be posting out this entire presentation, this entire day's video as well as a PDF of the presentation, so that will be posted to the Workiva Investor Relations site, here, shortly. We encourage you to share that with everybody. We want to make sure we get to show the story out to everybody. And I really thank you for your time today, and thanks for your investment and opportunities.

And I just want to say that we're even more fun in-person. These video things are -- make everybody a little bit stiff. And next year, hopefully, everything calms down and we're able to get together in-person, we'd really love to see you in Las Vegas. It's in Las Vegas.

It in Las Vegas. September. We'll get the dates out there for everybody.

You can not only interact with us and get more personal questions asked and all those types of things, but you can talk to our customers and our employees and see and feel it for yourself how enthusiastic our employees are, how enthusiastic our customers are about us. And I know a lot of you have gone out and talked to customers, and you know exactly what we're talking about. So I hope all of you can make it to Vegas. I hope we can. And not only is it really eye-opening, but that's a heck of a lot of fun there. So hope to see all of you face-to-face and not through a camera lens, next year in Vegas.

All right. And thank you. And with that, this concludes today's program.