Workiva Inc. (WK) Earnings Call Transcript & Summary

Welcome to our Investor Day 2024. My name is Mike Rost, Head of Corporate Development and Investor Relations at Workiva. We are coming to you live from Denver today, the site of our Annual Workiva User Conference. We have an audience here on site as well as an audience via a live stream webcast. Thank you to all of those for joining online. Before we get started, a quick review of our safe harbor statement. I would like to remind everyone today that during today's conversations and event, we will be making some forward-looking statements regarding future events and financial performance. These forward-looking statements are subject to known and unknown risks and uncertainties. All forward-looking statements are made today that reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this event. Also during the course today's call and event here, we will be referring to certain non-GAAP financial measures. We have a great event today and a packed agenda. Kicking things off will be our CEO, Julie Iskow. Following Julie will be Paul Volpe, our SVP of Growth and Solutions. Our final speaker will be CFO, Jill Klindt, and we will conclude the event with a live Q&A session. So to get things started, I would like to introduce CEO, Julie Iskow. Julie.

Thank you, Mike, and welcome to our Investor Day 2024. Thank you all for taking the time to join us today. I'm looking forward to sharing our optimism, our ambition and our progress in executing on our strategy. Also would like to talk about our drive to capture the significant opportunity in front of us. Also like to welcome you to Amplify, it's our annual user conference as Mike said, we intentionally hold Investor Day at Amplify so that you can talk with and interact with our customers and our partners because there is nothing quite like hearing about Workiva from those who are experiencing impact from our solutions, our platform and our team. These Amplify attendees are vivid proof of everything we'll talk to you about today. So here's what we're covering. Our growing opportunity, our reasons for optimism, our dual focus on both growth and productivity. And if you were here yesterday, you might have heard me on the stage. I was talking to the audience about the evolution of their roles. How what once were trends have now become their business realities and that those realities have dramatically increased in the scope and visibility and importance of their roles. So they faced broaden responsibilities now, increased complexity, heightened risks, so they have to juggle and manage and navigate all of this. Just increasingly they have to do it in the midst of a dynamically changing environment, have to do it without fanfare and without drama and with confidence and assurance. The stakes are high, the impact can be massive. And yes, accuracy, speed and productivity are not optional. So you know us, yes, at our core, Workiva stands for transparency, regulatory compliance and as accuracy and data integrity in reporting and disclosure. We've always done that. But customers also need to adapt fast in a rapidly changing environment. They trust Workiva to be a platform to meet their current needs and prepare them for what's next and to be their partner through what they're realizing is mandatory transformation, and that's digital transformation, and that's financial transformation, and that's operational transformation. So let me start here with the customer story. It's really emblematic of the trust that we build with our customers. This Fortune 50 company recently expanded the use of our platform with ESG reporting. It included functionality to comply with CSRD. This is their 10th solution with us. They purchased their first solution, SEC back in 2013. They quickly followed in 2014 with their second solution. It is their first investment in bank regulatory reporting. In 2016, they added 3 new bank regulatory reporting solutions to support their requirements for CCAR, capital planning and DFAST. In 2020, they added their sixth solution, global statutory reporting to address their global multi-entity reporting requirements. In 2021, they invested in GRC with the addition of their seventh and eighth solutions, SOX and policy management. There was an additional account expansion in 2023 with further investment in bank regulatory reporting, this time for global regulations. And in 2024, they added their 10th solution with us, ESG. It was sourced and delivered by a Big 4 partner. These 4 solutions in 3 years, 10 in total. ACV grew from $75,000 in 2013 to over $3 million today, all on our unified platform. Here's a key reason that they purchased ESG from us, and it's the same reason they purchased all other 9 solutions. Before Workiva, it was complete chaos, lacking a single source of truth, inefficient review processes, limited internal transparency, time-consuming manual processes. Our platform is resonating because we provide relief. The customer has increasing requirements around ESG. They require a solution that enables them to provide audit-ready ESG reporting. They need to leverage the same processes and internal controls that they already have for financial reporting. Specific to ESG, they published their first TCFD report in 2018. It provided net zero targets in 2021, and they'll be subject to the CSRD moving forward. This is the absolute embodiment of Assured Integrated Reporting. And it's really just one example of the -- and highlighting some of the key reasons that we're winning. We win with our unrivaled capabilities, the platforms, the foundation, the only unified platform, bringing the capabilities of financial reporting, ESG and GRC together in one secure controlled audit-ready environment. We win with our partners, an ecosystem of strong and committed partners, sourcing, co-selling and delivering our platform and we win because of our loyal client base for over 6,000 customers worldwide. And these customers already trust Workiva with some of their most complex and critical challenges like the customer story I just highlighted. We also win because we have deep expertise and experience. We've been doing investor-grade reporting for over a decade. We've also been doing regulatory reporting for well over a decade. It's our wheelhouse. Customers can be compliant with Workiva, the day a regulation becomes lock. We're also the world's leader in XBRL tagging, fast, efficient and accurate, and we've been using AI in our XBRL tagging for years. All of this, it's by design. It's intentional. This is what we've been building and working towards at Workiva, and it's contributing to our optimism. So let's turn now to the macro or the buying environment. In Q2, we saw an improved buying environment and improved momentum in the market. We had a record bookings quarter, broad-based demand across the entire solution portfolio and higher volume of account expansion deals and platform wins across North America, across Europe, across APAC and Latin America. Now what's the reason for the improved demand? Is it because our focus on internal execution is paying off? Is it because regulatory deadlines are becoming a reality and fast approaching? Is it because of an overall improvement in the macro? Is it because of the scrutiny and the importance of non-financial factors are continuing to increase? There are many potential reasons. It could be one, could be several of these, all the above. Only time will tell. But what has become clear is that our platform is resonating in the market. On the heels of an encouraging Q2 buying environment, I want to first take a look here at the opportunity in front of us. Our large, relatively untapped and growing TAM. And yes, I did say growing. Let's briefly walk through the history of the TAM. In 2010, Workiva launched its first flagship use case, SEC Reporting. The listed companies on the New York Stock Exchange and NASDAQ were used to get the target. The TAM in 20 -- the TAM at that time was $120 million and was based on selling one solution to 6,000 companies at $20,000 ADS. In 2014, at our IPO roadshow, we updated our TAM to $6.7 billion, including Canada and Europe. We had expanded our solution portfolio at that time to 5 solutions: compliance, sustainability, management reporting as well as enterprise risk management. At our 2017 Investor Day, we updated our TAM to $16 billion. This TAM was not itemized by solution or geography, it was primarily focused on reporting, financial reporting. The simple math was if you have the requirement to buy an ERP system, a major ERP system, you have the sophistication to purchase Workiva, and that's what the TAM was based on. Let's fast forward to 2021, where we expanded our TAM to $25 billion, including an itemized viewed by solution area and geography. And at the time, we communicated a very conservative market size for ESG $3 billion. So today, we're providing a revised TAM of $35 billion. This is reflecting the growing opportunity we now see with our Assured Integrated Reporting platform. Here are 4 key factors that account for our TAM expansion. First, our financial reporting TAM continues to expand. Second, we've entered into new markets. I think Latin America. We've got greater clarity in expanding markets, think APAC. Third, our GRC TAM has expanded based on geographic expansion and greater deal size assumptions. And fourth and most significant, our ESG TAMs expanded from $3 billion to $8 billion. That's a 150% increase. And it's due to companies needing to comply with CSRD. The increase in the market's willingness to pay and the addition of Workiva Carbon to our sustainability offering in our portfolio, which accounts for $1.5 billion of our updated TAM. The size and the sophistication and the complexity of sustainability, that opportunity has evolved quickly, and our growth has been commensurate with this evolution. Now one of the key drivers of TAM expansion is changes in the market. But this expansion is also a reflection of how our business has evolved. We've invested in our platform, in our product innovation and importantly, in the diversity of our solution portfolio. So this is where we sit right now. We've got a clear competitive advantage with a large, growing and relatively untapped TAM and a well-defined strategy, which I'll talk through shortly. We are committed to maintaining our leadership position going after our growth opportunity. And as we do so, our focus will be on both growth and productivity. While Jill will go into some detail on our recently updated operating model, I do want to be clear. We've chosen to update the model to reflect the changes in our market and how best to capture the upside in front of us. So here's what we see and why we believe the time is now to invest in our go-to-market. The demand for Assured Integrated Reporting is real and it's increasing. We believe we need to accelerate coverage and strengthen our go-to-market machine. In our newest market and fastest-growing solution, sustainability, the regulatory deadlines are fast approaching and they bring a time element and an urgency to our opportunity. And we see an expanding TAM in rapidly growing markets. So for this reason, we're going to continue to invest with a dual focus again on both growth and productivity. So let's talk about the productivity first. We believe we can deliver both accelerated growth and improved operating leverage. We've shown improvements in operating leverage in recent quarters, and we set more aggressive targets for gross margin and G&A in our 2027 midterm model. For R&D, we're holding our original 2027 target. Our new medium-term model assumes sales and marketing spend will continue through 2027 at a rate similar to that of 2024. And this will support our focus on growth and the time-sensitive opportunity in front of us. So let's go into the sales component in a little more detail. We know that this is a work in progress for us as we transition the company and our go-to-market teams to cross over the $1 billion and beyond. We know we have work to do. To accomplish that work, we are focused on changing our sales team structure, staff and strategy. On sales structure, we're talking about how our teams are organized, our territory sizes and the roles and the responsibilities of our sellers. We're actively making changes to the structure. Two areas I would like to highlight. The first, we have an expansive sales structure and an expensive sales structure with both account execs and overlay solution specialists. We're working to improve the efficiency of that approach. Second, we're revising our territory sizes. It's a proven play in enterprise SaaS that shrinking territories improves productivity and deal sizes. And as we've evolved into a platform company, this is an opportunity for us to drive efficiency. In terms of the staff, we're raising the bar, raising the bar on what we expect from our sellers both existing and new hires. We're elevating the profile of our sellers to those that better align with our business and our market that have had success selling a platform and have embraced the value of winning with partners and that can build trusted relationships to bring our customers increasing value. Finally, on the strategy, we're focusing on where we sell and what we sell. We are improving our precision in the go-to-market execution as we expand into new geographies, as we optimize within current established markets, and we launch new solutions like sustainability. So let's transition to the second part of the dual focus growth. There are a few important assumptions embedded in our medium-term and long-term targets. We assume accelerating subscription revenue growth. We believe that we can deliver teens -- high teens to 20% subscription revenue growth over the coming years. This implies that we'll be over $1 billion by the end of 2027 and in the $2 billion range by 2030. So let's talk about how we'll execute on our growth strategy to get there. The growth strategy we've been focused on remains relevant and intact, and it guides our execution. For those of you new to the Workiva story, 4 tenets of our growth strategy are our solutions, delivering fit-for-purpose best-of-breed, high-value solutions that are better together on the platform, our innovative platform that continues to become more open and more intuitive and more intelligent and more connected. Expanding our global footprint with excellence everywhere we play, and that's in and beyond North America, across Europe, Asia and Latin America; and finally, a high-performing partner ecosystem, extending our value and accelerating our growth. So let's start with the partner ecosystem. We know we can't capture the massive opportunity in front of us without a strong partner ecosystem. It's an accelerator. It fuels our growth. That's why we've been laser-focused on winning with our partners, our maturing ecosystem of over 200 partners. This ecosystem includes the Big 4 and regional advisory and consulting firms and leading technology companies. We primarily work with these partners in a joint go-to-market motion with both source deals and co-sales. Many of these partners also use the Workiva platform to deliver managed services to their clients. When I speak with investors, this is a question I often get. Where are you in your journey with the partners? I'd like to say we're still in the early innings, the bottom of the second, top of the third. You may notice the prevalence of partners in the deals that I highlight every quarter on the earnings call. But in addition to those strategic wins, partners are engaged in deals of all sizes. And the volume and the contribution of partner involved deals has increased significantly over the past several years. Sticking with the baseball analogy, you might say Workiva has moved from the Dyersville, Iowa Field of Dreams to Yankee Stadium. As our market and our platform evolve and they are evolving, the more lucrative we become for our partners. We are now seen as a major league player. Why? Because Workiva is a platform company and partners invest in platform companies. And solutions like Workiva that are part of large transformation projects like finance or ERP system upgrades are strategic. And emerging markets like sustainability provides significant advisory business and transformational growth. We believe that ensuring the success of our partner's business models is critical to our partner strategy. We're supporting this to the shift of setup and consulting services work to our partners. This slide shows the decline in setup and consulting revenue over the past 6 quarters. The business models of the Big 4 and the regional consulting and advisory teams are very simple. They're looking to grow the billable service hours for their consultants and their advisers. Workiva is unique in that there are ongoing expansion opportunities for them. There's always another implementation project. There's ongoing opportunities for high-margin advisory services. And importantly, some of these services are recurring. The more we can unlock value for our partners, the more they're incented to source and co-sell new deals and enable account expansion. So this is why we believe shifting our services revenue to our partners will accelerate our subscription growth. So as we've transitioned to a platform company, we've taken our partners on that journey with us, and it's working. They are a critical contributor to selling our platform. When they're involved, we sell higher, we sell broader, and we see increased deal sizes and win rates. They're involved in both new logos and account expansions and multi-solution deals with strategic clients. The increased customer value and retention rates that partners can provide input into make them key to our success. Our growth strategy is designed to focus on how we win. One critical aspect of winning is determining where we play. And one of the most untapped aspects of our opportunity is outside of North America. Over the past few years, our conversations on global expansion have focused on 2 primary topics: CSRD and execution. CSRD is a game changer. It's not simply the next regulatory requirement. It's a step change in the size and the scope of our opportunity. For European companies, the regulations are clear. Larger companies will begin reporting in 2025, and there are over 1,000 new data points that they need to report on, and disclosure will be subject to external audit starting in 2026. And XBRL disclosure with ESEF will be phased in over time. But it's not just impacting Europe. For any global company, we believe initial impact will be related to supply chain and customers. Businesses that want to retain customers and grow in Europe will be strongly motivated to comply with CSRD. And finally, to do business on a global scale, customers will be driven to disclose sustainability metrics. On the topic of execution, we've been very transparent about our focus on improvement. Yes, we've made progress, but there is still more work to do. Our focus is on the quality, the rigor, the accountability and the discipline of our go-to-market teams. And our results indicate that we're turning the corner and addressing our challenges. One key indicator is our geographic revenue mix. We reported in our 2023 10-K that 15% of our revenue came from outside of the Americas. While our 2024 10-K is still months off, we did want to give you a sense of the momentum we're seeing. Today, we're providing a midyear update. In the first half of 2024, revenue accelerated to 17% outside of the Americas. To gain some perspective here, in 2019, the percentage was less than 4%. And at the end of 2022, the percentage was 11.5%. Today, it's 17%. We're still not where we want to be, but the progress is clear. The growth trajectory is a consequence of market performance in both Europe and APAC. So let's talk about Europe. We're seeing clear performance gains in Europe, where we've had several strong quarters, including a record-breaking quarter in Q2. Now one of the strengths of the opportunity of the European market is that there's already strong regulatory environment there. Sustainability has been a focus. Sustainability has been a focus there for years. It's not a new concept for them. In addition to sustainability, significant opportunities exist for financial transformation. Both of these factors are highlighted in a deal that we won last quarter. It's a large European bank. It was a 4 solution mid 6-figure new logo deal. They purchased Workiva's ESEF, ESG, controls management and bank regulatory reporting. Workiva was selected as part of a financial transformation project to replace legacy point solutions across the bank. This 4 solution deal will equip the customer with a platform to meet both their existing and their future financial and sustainability reporting requirements. With the requirements for Integrated Reporting in Europe, the deal included CSRD readiness and ESG assurance and support for their integrated report, all part of the overall financial transformation requirements. Workiva showcase differentiation with our platform, and we beat out competitive point solutions. The customer went through a formal RFP process and Workiva was the only solution evaluated that had the capabilities to address the financial reporting, ESG, GRC and Basel Pillar 3 reporting and disclosure requirements that the bank required. This deal included early and significant involvement from a Big 4 firm. In addition to the sourcing opportunity, the Big 4 advisory firm will be responsible for delivery. We landed with the platform, the drivers for financial transformation and CSRD. Our Assured Integrated Reporting platform is resonating because it has all the capability to meet CSRD requirements, financial reporting, GRC, sustainability, including Carbon. We're also encouraged by the opportunity we see in Japan. We've been successful in landing several well-known Japanese companies. The value proposition for our platform is resonating in this market as well. We're landing in APAC with financial reporting, and we've seen increased significant demand for ESG over the past several quarters. Here's a land-and-expand win that illustrates the opportunity in APAC. We first landed this large Australian financial services firm in 2021 with financial reporting and tax reporting. In Q2 of -- excuse me -- the firm expanded to its third solution in early 2023 with the purchase of management reporting. At the end of 2023, they purchased their 4 solution multi-entity reporting to support the complex statutory reporting requirements for over 300 legal entities. In Q2 of this year, the bank purchased 3 additional solutions, including ESG reporting and solutions to support the bank regulatory reporting. In just 3 years, we have a significant land-and-expand story. This is the opportunity we have in APAC and with global expansion. Now let's turn to our diverse and differentiated portfolio of fit-for-purpose, best-of-breed, high-value solutions. The diversity of our portfolio and the depth and the breadth of our solutions are key factors in our resilience, and they contribute to our growing ACV. Our customers with ACV over $300,000 have consistently grown over 30% quarter-over-quarter, and we see traction across our entire solution portfolio in financial reporting, sustainability, GRC and our industry verticals. Given such a diverse and differentiated portfolio, one common question we get asked is, how are you able to maintain the quality of these solutions as you expand? Well, that's the power of the platform. At least 80% of each of the solutions is the platform. So in most cases, an enhancement of the platform enhances all solutions. It's critical to note that because of this fact, much of the R&D investment that we make now has a multiplier effect across our entire solution portfolio. So let's dive into our specific solutions, starting off with the opportunity in financial reporting. Our portfolio financial reporting solutions continues to play an important role in both the landing of new logos and account expansion. While SEC remains an essential solution for many of our customers, our financial reporting solutions extend well beyond that. Our financial reporting solutions are sold into public companies, private companies and federal, state and local governments. It's for a wide range of use cases, including multi-entity reporting, ESEF, private company reporting and industry-specific use cases. There are many market drivers for us in landing new financial reporting clients or solution expansion, and it includes financial transformations, private to public journey, changes in regulation and replacement of legacy point solution technology. And one trigger event for Workiva purchase is an ERP transformation. Upgrading an ERP, for example, from R3 to S/4HANA or switching an ERP system or financial consolidation system often creates the need for broader financial transformation. These transformation processes may include an evaluation of disclosure reporting, management reporting, multi-entity reporting systems. These disruptive ERP transitions are a great opportunity for us to land a new logo or expand solution footprint with an existing client. A beautiful example of this was a Q2 new logo win. It was with a European consumer products company who purchased 2 solutions on the platform. This company has been working with a Big 4 advisory firm on an SAP migration project to S/4HANA. The Big 4 firm has been providing support to this organization on the SAP disclosure management solution since the beginning of ESEF regulation in 2021. With the migration to S/4HANA, the advisory firm recommended the company move to the Workiva ESEF product as their go-forward solution for disclosure management. With the upcoming CSRD requirements for Integrated Reporting, this client win also included the purchase of Workiva ESG in addition to ESEF. So deals like this showcase our continued opportunity in financial reporting, a new logo win in Europe, 2 solutions on the platform and the deal sourced and delivered by a partner and was all triggered by a change in ERP and new regulatory requirements. Now looking at some of the metrics on financial reporting. We saw a 19% increase year-over-year of those customers with over $100,000 in ACV, over 45% of our Q2 financial reporting deals, multi-solution and our partner source bookings increased by 134% year-over-year. Something to note. All of these numbers exclude SEC Reporting, and it shows the growth opportunity in financial reporting beyond our core SEC business. So moving now to GRC. GRC is a broad market segment that includes internal audit, controls, risk management and policy management. We're seeing growth opportunities for our GRC solutions through 3 primary market drivers. Of course, it begins with regulation. The increase in regulation inevitably brings broader and deeper scrutiny. It brings increased customer requirements for GRC and a requirement for Assurance. You don't need to look any further than CSRD to validate this market driver. CSRD mandates that organizations address new requirements for risk, controls and policies for new processes and metrics that will be disclosed for ESG. Risk management is a second significant GRC driver. Successful organizations know that risk can come from every angle. With our current macro and geopolitical environment, many organizations are placing an increased focus on managing risks. We're also seeing an increased focus on risk management related to ESG, specifically the work to address climate risk. And third, we see ESG as an increasingly important driver of GRC momentum. The establishment of investor-grade ESG programs brings with it new processes, new systems and new roles, all of which drive the need for the documentation and management of new controls, risks and policies. The importance of GRC for ESG is summed up in a statement you may have heard. GRC is how ESG gets done right. Looking at some metrics on GRC. We have a 26% increase year-over-year of those customers with greater than $100,000 in ACV. In Q2, over 49% of our GRC deals were multi-solution, and our partner sourced GRC deals are increasing by 27% year-over-year. As we've matured our GRC business, we've seen it grow from simply being an account expansion opportunity to a set of solutions that's landing new logos. A great example of this is a Q2 new logo deal with a European utility provider. This company purchased our operational risk management solution for the management and execution of risk and control self-assessments and the incident and event loss processes. Now like many of our new deals in Europe, this was a multi-solution deal that also included ESG. The ability of the platform to address both GRC and ESG business requirements was a clear differentiator of our point solution competitors. This deal was sourced and will be implemented by a regional advisory firm. Now let's talk sustainability. The demand for our ESG offering continues to grow. And while regulation is a clear driver, it's significant that the demand is growing even without regulation in the U.S. And as a result, our ESG solution is driving pipeline expansion and booking success with wins in both new logos and account expansion. I had the opportunity to meet with a number of investors over the past 6 weeks and the topic of ESG has been a top 3 talking point. There continues to be some confusion related to what the ESG sentiment is in the investor community compared to what the ESG sentiment is with companies that we sell to. To be clear, we are not experiencing an ESG backlash with our corporate clients and prospects. In fact, we're seeing quite the opposite. To give you a little more context on what we're seeing, I'm going to walk you through several factors that are influencing the corporate momentum. First, we'll talk about the non-regulatory drivers. And as I said earlier, we're seeing ESG demand even when there's no regulation. One of the primary sustainability disclosure drivers for large companies is commitment to science-based targets, and there were over 4,200 companies that have committed to science-based targets under the science-based target initiative or SBTi as of the year-end 2023. This represents over 100% year-over-year increase in companies that have volunteered to hold their business accountable and provide disclosures to the net zero targets that they've set. This cohort of companies represented 39% of the world's market cap at the end of the year 2023. Now included in this list of companies are 845 North American-based companies that have approved targets or have made commitments under the SBTi. This group of 4,200 companies must track their carbon emissions in accordance with the TCFD methodology. They need technology to support their carbon tracking and decarbonization efforts. Another significant nonregulatory driver is the reporting of emissions data to CDP. Carbon Accounting and ESG reporting are required for many in the global supply chain. The CDP, and this is the non-profit organization that manages a global disclosure system for companies to track their environmental impacts reported in November of 2023 that 23,000 companies representing 50% of the global market cap now report their emissions data to the CDP. Many organizations are investing in carbon and ESG disclosure because it's a requirement for them to keep their customers. The CDP reports set 330 major buyers with a combined purchasing power of $6.4 trillion as their suppliers to disclose through CDP. These are not the numbers of an ESG backlash. These numbers highlight a rapid increase of carbon disclosure as a requirement for companies to participate in the global supply chain. What many corporations have realized is if you want to land new customers or retain the customers that you have, you must report on ESG and non-financial metrics. Now many organizations are maturing their ESG reporting processes well ahead of regulation. Regulations such as the CSRD, we believe will also drive process transformation and the purchasing of software. This slide highlights some of the many ESG regulatory drivers around the world. In many of the world's economic hubs there are either existing or emerging sustainability reporting regulations. Specific to North America, we've seen a lot of activity in the past 12 months. Last October, the state of California passed 2 climate disclosure laws. As recently as last week, they confirmed the time lines are intact. And California is not the only state purchasing -- excuse me, pursuing this type of activity. On a federal level, in March of 2024, the SEC passed a climate disclosure rule. And while there is a pending federal court case and the SEC voluntarily put a stay in place, the SEC has also stated they will vigorously defend this rule. Back to the activity at the state level, there's a pending legislation in New York and pending legislation in Illinois. As of July 2024, Illinois is developing legislation to require companies with over $1 billion in annual revenue to disclose and to verify their Scope 1, 2 and 3 emissions. This Illinois bill would require companies to start reporting January 1, 2025, and to disclose their Scope 1 and 2 emissions annually. They'll need to disclose their Scope 3 emissions within 180 days of the end of the calendar year. And this bill would also require companies to obtain third-party assurance for their emissions reporting. We do not see any uncertainty or pushback with the regulations in Europe. The approved regulation with the largest market impact with defined corporate requirements and set dates of reporting and audit enforcement is the CSRD. I've made clear that CSRD is a game changer. This opportunity is highlighted by the following data points. The first cohort of companies that need to report publicly listed companies with more than 500 employees, they need to report in 2025. In total, after all the phase-in periods, the regulation is expected to directly impact nearly 50,000 EU organizations and over 3,000 organizations in the U.S. These requirements for the CSRD center around Integrated Reporting. This is the one report that combines the financial and non-financial information, probably rings a bell. The CSRD also has requirements for assurance. That is an integrated external audit of their information that will have to be reported on. This process transformation to be audit-ready provides the opportunity to utilize fit-for-purpose software like Workiva's. Finally, the CSRD requires digital disclosure. Organizations will need to disclose CSRD information utilizing XBRL in the ESEF taxonomy. All of these external drivers have pushed ESG to be one of our top booking solutions for 8 quarters in a row. A few metrics that highlight this growth. We've seen an 85% growth in customer count in the past year. We're seeing greater than 85% rate of partner delivery with our sustainability solution, and we now have more than 40% of the Fortune 100 using our ESG solution and it gets better. We recently expanded our platform with the addition of Workiva Carbon. And this new offering advances our ESG and our sustainability platform to support organizations requirements for carbon accounting, for tracking and disclosure of carbon emissions for Scopes 1, 2 and 3 and decarbonization. The launch of Workiva Carbon was supported by the acquisition of Sustain.Life, which we also announced on the launch date. Workiva Carbon is a platform play. This is a strategic addition to our platform that we believe will make our ESG solution and overall assured integrated reporting platform even more relevant. ESG plays a pivotal role in both landing new customers and account expansion on the platform. The addition of carbon accounting, the most consistently regulated part of ESG will only make our platform more valuable. We believe that adding carbon accounting capabilities will accelerate our success in ESG. We've met with thousands of organizations on the topic of ESG. And we consistently hear that many prospects and customers prefer to purchase their carbon accounting and ESG reporting solutions from one single vendor. We've also observed that carbon accounting is an immediate need for those at the beginning stages of their ESG journey. In many of our deals, carbon accounting is the first solution they're looking to buy. And importantly, it's clear that carbon accounting is a core requirement for CSRD in Europe for the proposed SEC climate disclosure rule and for the California climate legislation. To provide more detail on our opportunity and a broader picture of the global demand for Workiva's ESG and Workiva Carbon or what we now refer to as sustainability management, I'd like to bring up our SVP and Head of Solutions and Growth, Paul Volpe. Thank you, Paul.

Thanks, Julie. Well, I'm really happy to be here to talk about sustainability, something that supports Workiva's mission and also something I care deeply about. But equally important, it's something that is a massive opportunity for growth for our business. I lead our solutions team, which includes financial reporting, a GRC and ESG and our Incubation Group. I've been here for 14 years. I started and helped us establish our market in SEC, in financial services, in SOX, risk. And I was on the original team that started with Corporate Social Responsibility in 2012, and a tremendous amount has changed since that time. Workiva's tech and the customers we serve across personas, departments, use cases as well as the ever-growing group of advisory and tech partnerships that we have that make those things even better. We -- and I can confidently say to you all that we've never been in a better position to take advantage of this sustainability transformation. So today, I want to talk about 3 topics: CSRD, sustainability management and Workiva Carbon. I spent the last 2 years in Europe, in the field, working with our team and our partners. I ate a lot of good food, gained more pounds than I'd like to acknowledge. But what I did see and what I did do is learned a tremendous amount working a lot. 2 time zones is tough. But what I found in my career in tech is that in order to really understand the customers that you serve, you need to be close to them, you need to understand their challenges and to really get a sense of what they are facing. And today, I'm going to share a little bit about what I've seen and why I'm so bullish on this market. I moved to Europe to answer 3 real questions. First, is sustainability, a big opportunity for Workiva. Two, will CSRD be an accelerator for technology adoption? And 3, does Workiva have a differentiated solution in the market that can help us win big? And the conclusion is a resounding oui as the French say, that's about all the French I learned during the time there. But the market for sustainability and technology is young, and it's accelerating. CSRD is a unifying driver for change in the EU, but not just that and globally. Those of you who were here start talking to these customers about how much they're talking to CSRD here in Denver. I have been and they're listening. Companies in the EU have been doing sustainability reporting for years. We sold our solution as a complement to financial reporting, and it was doing okay. It was doing well. We're really happy with it. But this addition of CSRD puts a level of expectation that is driving motivation as well as a common standard to drive change. CSRD is adding work, and it's also changing the way teams work. So we have a very well-developed cab in Europe, has some of the -- some really terrific names. We've been working really, really closely with many of them for years. And there's a funny thing happening. Within finance, they're starting to learn about sustainability. I had a finance leader from a big EU bank said, he's been spending more time talking to his sustainability lead than he does do his own wife. And he spend -- the idea that these regulations were driving down the silos, even though they've been doing this work together or doing this as a company, they hadn't done it together. The expectations in the 25 years they've been doing this -- of these rules and regulations is requiring them to break those silos. I had another customer that said they've been doing this for years, but looking at CSRD, they only have 30% of the data points they needed to disclose, okay. So you're asking what specifically is different about CSRD sustainability? It's a lot to unpack, okay. But I want you to take away 3 big things. Number one, it's increasing the data points that need to be disclosed. Number 2, it's forcing departments to work together; and 3, it's creating a higher expectation of that level of accuracy. Integrated Reporting with Assurance is the mountain that they all have to climb to meet those regulations and Workiva is going to get them to the top. In the 2 years that I was working with many of these companies, I learned 2 important things. Number one, companies are acknowledging that technology is a must. Those that have started down this path, they think, oh these existing tools, we've been doing this for years, that's fine. They're acknowledging it's not. The second is that our platform was built for this effort. We could very quickly adapt and align our platform capabilities. We've been making a lot of investment. We all know you know we've been investing, but made us ready to be at the market quickly. So we are only just beginning to capitalize on that time to market. So we also added some really tremendous capabilities that customers love, partners love to differentiate and support these customers and partners in this effort. Number one, we really help customers assess and manage to these new European sustainability reporting standards. It's a big, very prescriptive, comprehensive set of data and requirements, not just individual metrics, but qualitative information about their business. Tell us about your climate risks, describe your policies, okay, narrative reporting. That's what we do. We also have fit-for-purpose capabilities to collect and organize those metrics and align them with the standards. We added design capabilities because the people that you bring in to actually report this information makes the teams that we can serve even bigger. And now Workiva ESG is a critical part of our offering in CSRD. Integrated Reporting with Assurance is hard. It means it's not just about a pretty report. I know a lot of you, just like the sausage making, you get to eat that beautiful tasty sausage. The German is doing a nice one at the end, but it takes a tremendous amount of work to compile these documents. The expectations of the data that goes in there is if these customers are realizing they need enterprise software to address it due to the complexity. It's akin to the issues they face in financial reporting as they looked at U.S. GAAP or IFRS, where they had decades to adapt to these standards within their teams, but now they have years. Customers are telling us Workiva ESG has a differentiated approach because we can allow them to collect the data and unifies people. Our suite is really resonating with our existing customers and with new logos. As an example, an EU telecommunications company that had been using us for financial reporting for years, they bought ESG and GRC together in one integrated platform, replacing a bunch of legacy, sustainability and risk tools, all because they knew now finance sustainability and risk teams can no longer operate in their individual applications. ESG drives new logos. A Nordic company that we worked with, an energy company have -- we've been chasing them for a while. It wasn't until CSRD came along that, that was a driver to finally act. And they replaced a variety of point solutions with 5 solutions at once, mid 6-figure deals. And these -- there are numerous and the growing number of these opportunities. We continue to see higher win rates, bigger deal sizes and strong momentum because of our readiness to help in CSRD. Our years of building a customer-obsessed reputation in major European markets is paying off. The transformation is giving us multiple places to establish our relationships and expand. It's creating a flywheel of momentum that we're super excited to take advantage of. Now sustainability management is wider than just a set of capabilities around ESG reporting. Customers and partners had been extending our platform to do carbon calculations. Many of these companies do all of that in spreadsheets, and they want to move beyond that point. We added Workiva Carbon because we needed to capitalize on that single sustainability platform with integrated carbon accounting. We need to meet customers where they are, and offer them one -- but at the same time, also be open to the idea that they have existing technologies or we have great technology partnerships that we would be open to in-grading the Carbon technology that they already have or that fits their business. Now our sustainability capabilities can span customers to meet their needs and end from that. Innovative platform where our partners are building and doing unique things as well as our customers, frameworks and standards, the system of connectivity that we've established, design reporting and now carbon accounting. So now we can really tackle reporting across traditional metrics like revenue, non-financial metrics like GHG emissions and climate risks and opportunities, ensuring consistency and governance. This is what our customers have to deal with, and now we've got them covered across all data differentiating us in the market. And CSRD, as this survey is shared with us is exactly -- is having an impact outside of the EU. It's what we see in the field every day in North America and APAC. Global companies, I just talked to 4 of them yesterday that brought this up, see CSRD as the standard driving their sustainability program expectations. Even those that only are domiciled in the U.S., their competitors are not, their investors are not. They have to look outside and say, this is raising the bar of the expectations. We have to look at how we address these and up our game and performance. The new due diligence directive that's coming adds even more pressure on the supply chain. If you're not doing business directly in the EU, sure as heck you are probably serving somebody that does. This is only going to keep increasing. Just an example of a North American tech company that in 2013, I was lucky enough to bring on as a seller, but for $57,000 annual subscription for SEC and XBRL. Over years, they've added a bunch of financial reporting use cases, but we couldn't go beyond that until sustainability came along. They bought us for ESG and for sustainability report. But then because of these global regulations, they bought our GRC solution for ESG controls, policies and procedures now 3 additional solutions, pushing their spend well over $1 million in annual spending. A U.S. multinational company that had been using us in financial reporting since 2011, they started looking at ESG and they saw the global regulations. They saw that business transformation they were going under, and they looked across their team and said we need to restructure how our sustainability risk and finance teams work together in the technology they all use that help us differentiate our GRC platform to get in there to win that workload. And then they added ESG pushing their spend over $1 million. So this is a driving momentum that we see consistently. And now we're starting to see the impact of carbon, the interest has been very, very positive. We had a North American company, just over $1 billion in business, not massive, but they are going public. They were looking at financial reporting. They're a global company operating and needing ESG, but then they started to look at CSRD, said we need that, too. Hey, we also need carbon accounting, 4 solutions at once. The rise of ESG and the sustainability controllership is underway and finance is playing a key role. We are in a unique position because we know the controllership and the controllership knows us. Now I'm very excited about Carbon accounting, and I know that sounds pretty ridiculous to most, if not all of you. But regardless of the news cycles, climate is a critical component of sustainability and it's growing. We acquired Sustain.Life for their emissions experience and their technology leadership. We've already made significant progress in the 2.5 months. We launched Workiva Carbon day one. We seamlessly integrated into our platform within days, and we'll have consolidated their global cloud infrastructure within months. We're very pleased with the engagement from customers. You can see it for those of us that want to go see our booth here and see the activity as well as our ESG booth, but also from our partners in the field. They are looking for more ways to grow their business and to help their customers. Now I want to take a quick minute to talk about Workiva Carbon. It's comprehensive. It has a robust set of capabilities to tackle emissions, to decarbonize, to address regulatory reporting. But carbon accounting is truly a team sport. It takes planning, looking at your sources of carbon and how they're changing, collecting, aggregating, calculating, sharing reporting. This takes organized collaboration across teams. You're probably thinking, this is what Workiva does, why didn't you just build this? Why did you have to buy a company? This is a bit of an eye chart, but the point is that carbon accounting is complex. The greenhouse gas protocol outlines multiple methodologies to calculate to differing levels of accuracy. You're essentially creating an emission system of record unique to each of your -- to your business. It takes a deep understanding of emissions, and it takes real-world experience of actually doing this to build tech in a way that makes it simple and easier to adopt. We bought a company that had spent 3 years solely on this with a strong technology foundation and climate experience, great people and a comprehensive platform that we could take to our partner network immediately. It will accelerate our effort to capitalize on this market opportunity for the right market segment. It's truly Integrated Reporting that will benefit all of the teams we serve in finance. They'll be able to look at their investment and cost management decisions. Sustainability teams will be able to help decarbonize. Risk and compliance teams will be able to address regulation and mitigate those risks, all in one unified platform. Now I want to show a few things about Workiva Carbon, just to give you a sense of what it's capable of. It allows companies to organize emissions by categories. Think about your buildings, your vehicles, your transportation, your purchases. It has a friendly user interface that even companies early in their programs can understand. It drives automation. It has comprehensive data collection across Scope 1, 2 and 3 categories. It has thousands of connectors to pull data from your utility providers or from your ERP or your procurement systems. It has AI-driven category mapping to help reduce the manual cost that goes into getting to your emissions footprint so that you're ready to decarbonize. It has a sophisticated data foundation that supports a hybrid approach to the GHG methodology and to drive that accuracy that customers want and comprehensive dashboards and analysis to drive down the cost savings and decarbonization. So what makes it better than the scores of stand-alone calculators and the many start-ups that are out there that are trying to tackle this problem? Well, it is truly integrated. Emissions data is now available to Workiva ESG and the Workiva platform. From that single source of truth, you can drive assured data and metrics across your reporting, internal and external, across your dashboards, preserving traceability and audibility end-to-end. The metrics are now available also connecting them to your climate policies, to your procedures, to your controls, ensuring the required governments, all within one unified platform. So there is a tremendous amount to be shared about Workiva Carbon and Workiva ESG. I would welcome that all of you here go by the booth, check out and get some more demos, visit our website. And that was my attempt to make CSRD and Carbon accounting engaging. I can't promise anything, but I did my best. Thank you very much. Back to you, Julie.

Thank you, Paul, for describing in more detail why we're so optimistic about our sustainability management opportunity. I'll say it again. Workiva is a platform company. Our platform is the single most competitive differentiator that we have. The only unified platform, bringing together financial reporting, ESG and GRC in one secure controlled audit-ready environment. And therefore, it's the only platform for assured integrated reporting. So we're pressing our advantage, and we're investing in the capabilities of our platform and accelerating our innovation to keep pace with the growing needs of our market. This we could amplify, our product and our tech team will be talking to you and the audience about new and enhanced platform capabilities. They'll focus on critical areas for customers like connectivity and data management, collaboration and cross-team workflows, the focus on intelligent productivity tools, including Workiva GenAI. At Workiva, we take a very practical approach to GenAI, both in our internal use of AI and in our new capabilities that we deliver to our customers. Internally, yes, we use GenAI in all areas where we can deliver efficiencies and expanded value. This might include the productivity of our sales and engineering teams, automating routine tasks across our business processes and enhancing customer interactions through features provided by our software vendors. Now similar to the requirements we hear from our own customers, our adoption of GenAI also includes consideration, of course, for security and data accuracy. So last year at Amplify, we launched Generative AI capabilities on the platform and within certain specific solutions. Now this included the ability for users to author and edit and rewrite content across our entire suite of solutions. We leveraged the large language models from AWS, from Google, from Microsoft across every workflow in our platform. And over the past 12 months, we've seen growing interest from our clients in the adoption of GenAI. This year at Amplify, we're announcing some expanded GenAI capabilities. So I do encourage you to check out our GenAI sessions or speak to our product experts in the exhibit hall. Before I hand you off to Jill, I'll leave you with these key takeaways. Our opportunity is large and growing. Our strategy is relevant and intact. We believe we're well positioned to capitalize on our growing opportunity. We see proof points in our results, large multi-solution platform account expansion deals with partners. And our solutions and our platform are resonating with partners and our customers, and we'll continue to focus on delivering both growth and productivity. And now, yes, we are committed to staying in the lead and going after our growing opportunity. So I'm handing it over to you, Jill. Thank you.

Thank you, Julie, and thanks to everybody for joining us here in Denver. For those of you that were able to make the trip. Really appreciate it. And also thank you to everybody that's joining us online. We hope that you've gotten a lot of information so far. I've been enjoying it myself. It's always good to hear from everybody, and I hope that you get a little bit here as we dive into my section. So we're going to still focus on our overall areas of focus on our opportunity, our dual focus, growth and productivity and also our optimism. And we're going to discuss the metrics and drivers that support our opportunity. We're going to review our operating model, and then I'm going to reiterate and close with the reasons for optimism. And then we'll get into Q&A. I know that you all have lined up questions and come up with some other good ones as we've gone. And so let's start with the growth trends supporting our opportunity. One main thing that is -- I think that shows the ability of Workiva to execute over time is that we have had consistent subscription growth -- revenue growth. We've had a 22% CAGR over the last 5 years for subscription revenue growth. There's movement up and down. We have capital markets in there was, of course, aggressive in 2021. But we have been able to perform and maintain subscription revenue growth. And we -- as you heard Julie talk about, we expect to be able to reaccelerate subscription revenue growth into the high teens to 20% over the next few years in a consistent way. And we'll go into a little bit about that as I drive into the model, the operating model. One area that you heard a lot of focus on in Julie's discussion and in Paul's discussion is Europe. And we believe that European growth, growth into Europe will be really important as we execute on our opportunity. Of course, CSRD, all the ability to expand with new logos into that geography. So what I'm showing here is that in addition to what Julie provided that updated 17% of our total revenue coming from outside of the Americas in the first half of 2024, what I'm showing here is that in the first half of 2024, 15% of our total revenue was coming from EMEA. And this is the first time that we've peeled this out and giving you a look into EMEA specific revenue. So just to clarify, this is 15% of our total revenue in Q1 -- in the first half of the year came from EMEA. Now you've heard me say a lot of times, I'm sure, but I'll reiterate it here that we believe that we can grow European revenue to be 25% to 30% of our total revenue over time. We have the opportunity there. We have CSRD. And it's a pretty standard metric for a lot of SaaS companies. It's very reasonable. And so you do expect to see this continue to grow over time. The next slide here, and this is one that is familiar, but I wanted to call out a little change. We have, on a quarterly basis, provided you tranches of number of customers within certain annual contract value. So a number of contracts that had annual contract value of $100,000, had $150,000 and $300,000. So note that we've decided that the $150,000-plus range was not providing as much value. And so we have decided to remove that from our ongoing reporting, and we're shifting instead to add a top range of customers that have more than $500,000 in ACV. As you can see here, over the past year, we had a 31% growth in the number of customers that had ACVs over $500,000. This is key. We're showing that we are closing larger contracts, successfully selling into our existing customer base and doing that, but also larger new logo deals, and you heard Julie give some examples of those. Another really exciting thing other than the growth at the top end is that 70% of our clients still spend less than $100,000 with us a year. And for me, that is showing nothing but opportunity. If we can sell one additional solution into that base, we can continue to drive growth into our base. And so not only will we be able to do that, but there's also still room for expansion in some of these other larger contracts. As you've seen, we have a large -- a good history of being able to drive that growth. A little bit more detail related to those ACV cohorts. What we're providing here is the average ACV of all the customers in each of these tranches. So for example, for the customers that spend more than $500,000 a year with us, their average contract value is over $900,000. So not only are they spending more than $500,000 with us. In general, they're spending significantly more than $500,000 with us. We have customers over $1 million, over $2 million, over $3 million in spend every year. And it shows the success that we've had over time with significant large contract growth, selling on the platform, selling additional solutions and more you continue -- get ready for it. You're going to continue to hear me talk about this trend because it is so important for us. Case in point, this is a slide that you're familiar with, but I did want to call out because it is so important. Last quarter, 67% of our total subscription revenue came from customers that had multiple solutions. This has continued to grow over time. Over the past 3 years, this has gone from 51% to 67%, familiar every frame. This growth comes from landing new logos with larger platform deals, multi-solution deals as well as expansion into our base. And it is a key metric that we watch to ensure that we're still getting progress, but something that you all can use to drive your models as well. Looking at our new logo growth, it has not been steady. It does fluctuate. But selling new logos continues to be very important. I actually got a question in the last 2 weeks, well, why don't you just sell into your base? Why do you bother selling new logos? New logo attainment is critical to our growth. If you think about growth in Europe, that's going to come majority new logo growth. We just are newer there, same in Latin America, same in APAC. So while we think that new logo growth is very important, of course, we do want to expand into our base, and we will. The way that we look at this is we expect to have about a 50% contribution to our revenue growth from customers, the new logos and from account expansion. Last quarter, you heard me give the statistic, 49% of our revenue growth in Q2 of 2024 came from customers who were added in the last 12 months. I give that metric every quarter, and it does fluctuate around, but a range of 60% to -- 40% to 60% makes sense for us. So we will be focusing on new logo growth, not only in Europe and in Latin America and in APAC. We continue to sell new logos in the U.S. And then also sustainability management, everything that Paul talked about will also be a key way that we can continue to add new logos. Now Workiva's revenue retention speaks for itself. This is a best-in-class, world-class metric for us, strong gross retention. We aim to be over 96%. And you know that we, over the past few quarters, have been trending a little bit higher, 97%, 98%, which the comment that I always get is, well, don't you think you can push more on price if your gross retention is so strong? Yes, we do think that we can push more on price, and we have continued to push on price. And that's why we say that we expect this metric to be 96% plus because there is a potential for that to drop a little bit as we push on pricing. But our net retention is currently sitting above 109%. Now over the next few years, quarters, we expect it to remain in that range, 109% to 111%. It will fluctuate as we move back and forth between potentially having more new logo expansion in one quarter as opposed to selling into the base. But we're comfortable with where it's at right now, and we think it will stay in a similar range, which, by the way, is still best-in-class across both these metrics. And it's a way that we continue to win. If we didn't have this kind of retention, we wouldn't be able to be keeping such a good mix of selling into our existing base. And then this leads me into my favorite slide. This slide is showing historical customer cohort revenue. So this is a history of Workiva right here. And the way that we have continued to grow the company in such a way is that we're providing excellent customer service. We're helping our customers develop and use the platform in new ways all the time. We have a strong platform that they can build links. They can build reports. They can build communication pathways and processes. And year-after-year, customer after customer, we have consistently been able to excel at pleasing our customers. For those of you that are in the room, you probably have already had some conversations with them, you can feel it, you can hear it. You'll hear them talk about it. And being able to grow customers that came on and joined Workiva in 2010. They're still growing today. A lot of the ones that Paul talked about and the examples that Julie gave, it's all what we're talking about here. And so these metrics, as we think about the opportunity in front of us, these metrics are giving us the confidence to know that -- what I'll talk about next, our operating model, to know that this is the right path forward to us. We have strong subscription revenue growth. We have global execution. We have continued expansion within annual contract values. We have best-in-class revenue retention, and we have every right to be able to take advantage of the opportunity in front of us. So then we're going to dive into now the operating model. I know all of you have been waiting for this. So it's not only that we released an updated model in early August, and we've had some really great conversations with all of you over the past month. And so we wanted to make sure and give some additional detail and then specifically around the revenue expectations as well. So diving into that really quickly. I know this is something that all of you will appreciate having this clarity. So very clearly, we believe that we can deliver high teens to 20% subscription growth over the coming quarters and years. Conservatively, this implies that we'll be in a revenue range of $1.1 billion to $1.2 billion by the end of 2027. Do we think we can outperform? Do we hope to be able to outperform that? Of course, we hope to be able to do that. But this is a conservative range of where we think revenue might fall within that year and within the model. Leading to 2030 using the same growth assumptions, being able to grow the high teens to 20%, we believe that by 2030, we would be in a revenue range of $1.8 billion to $2 billion. So coming into the margin targets. And so starting at the top of the model, gross margin, Julie mentioned, is one area where we did improve our 2027 targets. We intend to be able to achieve this margin goal for gross margin by shifting our revenue mix towards subscription. We're going to be reducing our low-margin setup and consulting services and shifting them to our partners. You heard Julie talk about that. We have been doing a good job of enabling our partners and building those relationships. That work continues. But as we do that shift, we will be able to be more efficient in the way that we're overall supporting our services. We're going to continue to manage our cloud computing costs. And with all of these things and just other productivity gains, we expect to be able to gain in gross margin within our CPX organization. We do intend to and believe that we can get this leverage and achieve our gross margin goals. We maintained our R&D operating model target for 2027. And we believe that we can achieve the improved leverage that we will be required in order to achieve that goal by managing head count in R&D, process improvements and leveraging the latest in AI tools within the development organization, helping them to be more productive and efficient in the way that we code in our platform. So sales and marketing is one where you heard Julie talk a lot about how we plan to execute on our go-to-market over the next few years? And why it's so important for us to continue investing at the current rate as we are today through 2027? We have this opportunity that we need to take advantage of. It's very timely. And we believe that by continuing to invest in sales and marketing at the current levels that we will be able to drive better revenue growth in the long term. And I'm sure that we'll still get some questions around this, and we'd love to talk to you about it, but I do think that everything that Julie went through and how we're going to really focus on the way that we go to market, focus on those teams and being more efficient in the way that we do so, we expect to be able to reach this goal and then drive leverage into the 2030 targets. Finally, on the G&A line, near and dear to my heart. We are driving efficiencies across all of our platform, all of our processes within G&A to drive leverage. This is people, this is systems, reducing manual work, and we did improve the margin target in 2027 for G&A because we were already nearing actually what the original target had been, and we knew that there was more that we could do to be even more efficient within our G&A organization. So coming down to our overall operating margin target. This is not something that will be easy, but if we do nothing, that we will achieve this. Now today, we already are focusing on productivity, focusing on efficiency. We're continuing to make changes throughout the organization to become more efficient and planning and executing on different ways to leverage our existing resources and better methods. So it's not something that we're going to push off and the start next year. We're already doing this. And we do need to execute to achieve our operating model targets. But we're committed to building a growing and a profitable company, and we're committed to driving progress against our operating model and expanding margins over time. One last thing I wanted to give is because I have gotten the question quite a bit as to what our share-based comp expectations would be in the model. We do think that share-based comp will continue to be about 12% in the model, both 2027 and 2030. Providing RSUs to our employees will continue to be a very important way that we compensate them. And so 12% though, it is very reasonable and actually on the low end of where a lot of SaaS companies land for this metric, and we think that this is the right level for us. So closing out as I wrap up. I hope this session has helped you really see and feel all the reasons we're optimistic. I'm optimistic. I'm a naturally optimistic person. But in this role, I actually do need to see the numbers to actually believe it. But these are the numbers. We have a strong history of subscription growth. We have best-in-class revenue retention. We have a large global opportunity, growing and address TAM. We have success in driving larger contracts. We have the ability to sell both new logos and expand into our base, and we will continue to drive margin expansion with leverage. So all the things are here for us to be able to execute on our strategy and achieve our long-term opportunity. With that, we're going to move on to Q&A. And Mike and Julie and Paul are going to join me on the stage here.

All right. So we're going to do Q&A. We will do Q&A from both in the room here and also online. For those who are online, please leverage the Q&A feature of the online platform. [Operator Instructions] We'll start in the front row in the corner right up here with Terry.

Terry Tillman from Truist Securities. Thanks for all of the insight. A lot of work went into that, and we appreciate all the insight. It's a 2-partner, it's never a single partner. So first, in terms of carbon. It's exciting. You talked about it yesterday, Julie. And so you unveiled that. I'm curious, what are the carbon deal sizes potentially look like? And now it's actually pretty powerful. Now it's a sustainability suite. What do those deal sizes look like? And the second question going in a different direction is I appreciate the sales and marketing targets. But the reality is you're getting more of these Big 4 advisory firms, we talk to them. They're bringing you into deals. They're sourcing deals. Couldn't that offset some of the need to spend more money in sales and marketing?

I'll let Paul comment on the deal sizes. You're out in the field, Paul and close to it. I will say on the Big 4, even with the Big 4, we co-sell. So we need to be on teams with them. Yes, they source the deals and we co-sell. But there's opportunities globally. And you saw again our -- there's the time element to the opportunity we want to go quickly. And the CSRD is there, and we're in the lead, and we want to stay in the lead. So we want feet on the street, working with our advisory and consulting partners, yes. And we want to go after them as quickly as we can. So we're taking all angles, and we're moving on the opportunity that has a significant time element to it. We want to stay in the lead. We want to go after the growing opportunity.

Just as far as the deal size, it's not really about the deal sizes for us. It's about first, on the carbon, the AD there is really about multi-solution. So the specific numbers were still early, so I'm not going to be able to speculate on that. But what I can tell you is that the ADS going -- for ESG is going up because of the comprehensiveness of our solution, obviously, adding carbon to that adds one more component to a comprehensive platform that can truly address the majority of needs that these customer segments want. So I gave one example of a North American company that bought 4 right out of the gate. Those are the things that we really like to see. And that's what -- those are the things our partners are very interested in seeing because that gives them a great opportunity to help a customer across their business. So -- for right now, all I can really say is it's increasing the win rates of the -- what we're doing in ESG, and it's also uplifting on the multi-solution side of things.

I will say, as you heard in my remarks earlier, we were coming up against opportunities that were -- the case where there was a carbon first opportunity, and we were actually being pushed out of those deals. They wanted a single vendor, right, with -- for the carbon accounting and ESG. So that's why I described it as the platform play. It is a platform play to enable us to get in the opportunity and so assured in ESG and assured in Integrated Reporting.

Yes. Just one other data point on the carbon, just talking to some people I said about this is it's not typically just a single purchase, right, this expansion opportunity, and Paul had highlighted it earlier, right. You might start with spend-base, you might go to a location-based activity-based methodology of carbon and then mature into vendor-based. Going through that journey since we are a metro-based model, you may actually over time increase your spend on carbon even for -- within a single customer. Second question up here from Rob here.

Great. Rob Oliver with Baird. I like what Terry's comments. Really appreciate all the detail. So my question, Julie, is, I think you described the sales and go-to-market as expansive and expensive. And I can appreciate the focus on growth and productivity that you guys have laid out here. But can you just help us reconcile the commitment to drive more efficiency and productivity within the sales force and that rise in sales and marketing that is within your target model? And I guess more specifically, do you expect to see some of the benefits of that increased productivity and efficiency within the time frame of that model? In other words, that could represent upside? And then my follow-up question is with regarding the go-to-market and some of the changes, how you plan to minimize disruption given changes in territories and other things that could be disruptive on the sales front?

Sure. So firstly, the opportunity with the sales organization, and we've been talking about this. We have solution sales specialists over what we call overlays and we have account owners, account executives who are responsible for over all of our portfolio. So we've been bringing both into opportunities and it's a very expensive sales model. So over time, we will shift over and basically change the ratio of account executives and solution specialists. And that will -- that is our mode of operation. And we're not doing it overnight. We're doing it over a period of time. So that will help with the change and the disruption. We're doing it thoughtfully. We have -- we brought in sales -- a new sales leadership who have comfort with these models. So we're confident around lack of disruption here and the way we're going to approach it. The other opportunities are for territories, as I described. And this is a pretty standard model for SaaS companies as they scale is shrinking the territory size. And again, there's opportunity for these sellers to focus on the accounts that they have. And as we've all described, there's opportunity in these accounts for account expansion, building the trust of relationship and expanding accounts. So this isn't that we will be disappointing sellers or a significant change in approach for them. There's opportunity for those sellers across the board. So we do not expect a significant disruption, no.

Yes, just from the experience from the field, spending a lot of time with the sales reps in customers, in opportunities. This convergence of the teams between finance and sustainability and risk. The amount that we used to have to go and treat them individually meant we had to have specialists in a broader swath of mapping. Today, this convergence also means we have an opportunity to serve them more holistically across the group. It's just a natural evolution of our sales teams to match what we're seeing on the go-to-market side.

We'll start on the front..

Dan Jester, Bank of Montreal. So first, I appreciate the update on the ESG TAM. Maybe can we dive in a little bit deeper about the drivers of the change relative to the last update beyond just the $1.5 billion you talked about for carbon? And then secondly, this time last year, Julie, you had a bunch of new executives that you had brought on in the organization to sort of help scale and mature the business. I think you've talked a little bit about that today with the go-to-market changes, but maybe any other sort of areas that you would call out have been a focus as you've been in the CEO seat and sort of modernizing and building the momentum of the organization at a high level?

You want to start with the ESG and I'll take the TAM?

So we have brought in new leadership, a second layer of leadership essentially. We're going across the organization bringing in leaders that have seen scale, been with companies that have experienced scale and no one is like to work in larger companies and operate at that scale. And we're doing it across the organization, certainly on the commercial teams and the go-to-market side. We've been doing that over the course of the past year. And we've seen more discipline and more rigor as we execute, focus on performance and performance management and productivity. So we are doing that. We also are -- from a -- it's not just about the people side of things, it's also efficiency and effectiveness within the organization and automation. We recently brought in a CIO, Kim Huffman, who's going around every function in our organization, ensuring we're using the right tools, leveraging the right capabilities. We talked about AI previously. So across the organization, we are focusing on efficiency, some discipline, some rigor, just operating effectiveness. So that contributes as well in combination with the leadership. That's why we feel confident around the targets that we set out for productivity. Still room for improvement, where we're doing that as we're focusing on the growth opportunity.

Yes. And specific to the TAM question, we released our first ESG TAM in 2021. We were relatively new to the market, and the market was forming, right? And this was pre passing of the CSRD, pre having any experience on deal size and those things like that, right. So in addition, you basically look at that, that increase from the $3 billion to the numbers we have now, right, it is primarily around the number of targets and also the deal size, right. So we have a lot more fidelity on the actual willingness to spend to the market. And there was a question asked earlier, what do we see in on deal sizes, right. I mean, yes, we have some deal sizes that are at times in more than the mid 5-figures. But we are going all the way up to mid 6-figure now in ESG deal sizes, right. So we've seen a lot -- we didn't have any idea of that back in 2021. So it's a number of targets within CSRD in Europe 50,000 targets. Plus all the state laws and things like that. So we really put that in there. We believe it's still conservative, right, compared to where this market is at, but we leave it deserved an update to reflect what we're seeing right now.

Front row question up here.

Steve Enders with Citi. On the sales investments that are being made, how much of those are being centered internationally and on capturing the opportunity in Europe and CSRD coming here? And I guess, secondarily, you mentioned prices being another lever for growth here. How is it maybe going to be different moving forward? And kind of what contribution should we expect to the growth equation in the back half of the decade?

Julie, you want to take where the subs are coming from?

So as far as the sales organization, we are going to be investing across globe, but there will be a good amount of the investment will be in Europe. We do want to make sure that we have the right coverage to be able to go deep on CSRD and make sure that we're building the relationships with those customers to not only sell them that first solution, but talk to them about the platform. And so it will be important, but not the only place where we're going to be putting those resources. It will be also in the U.S. and Latin America and APAC that will be overall.

On the pricing side, I will say that well, we've been focusing on price increases and certainly at renewal time and so forth, and we've described that. Our focus is on value for the customer. And at a renewal time, we'd rather sell multi-solutions, additional solutions than talk to the customer about getting another x percent price increase. Our focus is on value. It's on account expansion. It's on growing the account again with the growth of our solutions.

I just wanted to comment a bit on Europe, just as I got back. What we have done is it's not just about putting people in market, it's about having the customer and the market ready to make them productive. And the work we've done in the relationships and the customers we've earned in Spain, in Paris, in Berlin and Frankfurt, in the U.K. Each one of these markets is very unique. Every country looks at themselves and wants to know where are their peers using your technology because they think much longer term. We've established terrific logos and reputations in each one of those major markets. And now that this opportunity is a natural place to make -- to us to be able to make those people really productive and take advantage of that opportunity.

Excellent. We'll go to the side of the room, any questions from this side of the room?

This is Alex Sklar with Raymond James. Julie or Paul, I just want to follow up on your answer to Rob's question earlier. It sounds like just given the ability to reduce the level of overlays, you can actually grow the rep count far faster than the subscription growth you've kind of talked about over the medium-term targets. Is that the right way we should think about it? Kind of mix of reps might be in excess. But in aggregate, you've kind of stayed within the framework? And then I had a follow-up on that.

I didn't hear the first part of the question, my apologies.

It's just the idea that you spoke to, you have a lot of overlays currently. You have the direct pays and then you have some overlays. And you said you'll be able to pull down the number of overlays. So should we think about rep count, the A bucket within sales and marketing as a whole, up in excess of the whole subscription growth rate?

Yes. We are going to be expanding the number of account execs, but more than just to compensate for a decrease in the number of solution specialists or sales solution specialists.

Okay. And then maybe just a second part to that. So you spoke to structure staff and strategy. So if we think about the time line, how far are you to date kind of in the structure piece. Does that kind of need to be in place first before you really focus on augmenting the staff? Are you doing them all concurrently? Just more color on kind of the time line of the specific structure piece.

Dual approach. That's why we've described throughout the discussion today. We're taking a dual approach to growth and productivity. We could wait to get more productive before we went after growth. But again, the time element to our opportunity is there. So the time is now to go after it. So we are concurrently focused on growth and the productivity piece.

And this side of the room?

This is Jake Roberge from William Blair. Just as you make these sales investments, could you talk more about the traction that you're seeing in EMEA? And maybe just how win rates and your right to win there compared to the U.S. because you obviously have SEC reporting in the U.S., but as CSRD ramps in Europe, I'm sure the Integrated Reporting message starts to resonate more. So maybe can you just talk about the right to win and how your win rates compare in the Europe -- in the U.S. versus Europe?

Yes. So while I'm not going to give specific numbers, what I can tell you is, as you would imagine, in a market like Europe where we have work to do -- where we had work to do to build a reputation and product market fit, our win rates were lower in ESG, in particular, in the U.S. What we've seen is those have caught up and in some segments, actually surpassed the U.S. win rates. So we're really pleased with the performance we're seeing based on our product market fit and the market's recognition of their needs.

I will say, too, it's partners. They help with the win rate and more leveraging of those advisory and consulting partners. It's also on our own execution and the sales capabilities that we've described were enhancing. So it's a different profile of seller. It's leveraging partners. It's the platform resonating. It's the CSRD opportunity and the need for the first cohort of companies that need to comply reporting in Q1 of -- or Q2 of 2025. All of these reasons are behind accelerating win rates.

Ryan Krieger from Wolfe Research. So first on Generative AI. Julie, you talked about introducing a couple of new capabilities this week. So what do you see as the most kind of additive to the platform or differentiated that you view as monetizable going forward? And then Jill, for you on linearity of subscription revenue. Obviously, we're going to see the acceleration. But is that acceleration going to be linear from where you guided this year to the 2027 target?

Sure. I'll kick off with the AI question. We are -- the way we look at AI is we just want to bring the new technologies to make them available to our customers to ensure they're operating effectively with the best capabilities that we have. We're taking an iterative approach to it. We're bringing them to the customers. We're watching how they leverage it and we'll provide additional capabilities enhancements where they're using it the most. So we're watching and responding. The feature that I think is most additive, as you ask the question, is really the ability to leverage customer data. We previously brought in the large language models. As I described, you can write, you can edit, you can author. We have some -- the ability to do an ESG draft disclosure, you can create something like that. What we are launching now today, and you'll hear at Amplify is we're now actually getting the ability to leverage these capabilities, Generative AI capabilities going into the customer-specific data. And I think that is a step change for us, and we'll continue to do more of that. But that's a change that I think is different than the others.

And as far as the revenue growth, we still will continue to have some seasonality quarter-over-quarter in bookings. We did talk about our Q2. We had a record bookings quarter, and that did drive the increased guide for 2024 revenue. Going through '25 to '27. We can't say because of all that because there could be some fluctuations in individual quarters and individual markets, potentially driven by some of the timing of regulations, timing of other unknown factors. I can't say that it would be a direct linear drive towards that or that we don't see some amount of fluctuation around the high 20s -- the high -- high teens to 20% range. And so I think that the guidance would be that it likely will continue to trend around a little bit just because it's unlikely to just be a steady increase towards that. We expect to be able to drive towards that 20% as much as we can. But it will still [indiscernible] a little bit.

Any additional questions? Hands go quick, will start on the side, then we'll go straight across.

Dan Jester, Bank of Montreal again. So there's 2 comments I wanted -- that you made today that I wanted to sort of dig in on. So you talked about having carbon as part of the ESG solution is going to help you unlock additional customers because they want to have one vendor. But you've also said that you've already sold ESG to 40% of the Fortune 100 and that happened before you bought the counting -- the carbon solution. So I guess this is a question of, is this like for smaller companies in Europe? Or kind of help us understand kind of the moving pieces here? Because it seems like you're already doing really well with large companies in ESG before you bought the carbon accounting solution.

So look, Fortune 100 is 100 companies. So we're really proud of the work that we've done to serve our largest customers. They also have the ones that have the most complexity. We didn't buy it for them. We bought it for the other -- if I could do the math, the other 5,900 companies that exist that might be starting their journey at a different maturity point. The market for this technology is evolving. If you look at the technology that's available on the market, even across the Scope 1, 2 and 3 categories, many companies are looking for solutions on just one portion of that. We might just want to do our Scope 1 or Scope 2 or we've got this really complex supply chain if we're in agriculture. And so I need the certain category within Scope 3. There are many companies that really specialize on those nuanced differences on the difference between palm oil in Indonesia versus Thailand, okay, and the energy and emissions. That's not what we're looking to serve. So there are also thousands of companies that are at the beginning of this journey because of they're covered by the regulations. Or more importantly, they're in the supply chain of a large company. If you -- if a large company is working to address their emissions footprint in Scope 3, they are asking their vendors to provide. In fact, that's why Sustain.Life started. They were all at Walmart or to the Jet.com acquisition. They saw the need for Walmart asking their vendors to provide us how do we create an easy-to-use place to get your Scope 1 and 2 categories so that you could give it to your supplier. Because those are increasing, we see it. We answer as a software vendor, particularly in Europe. Our answers from our sustainability report go into our RFPs, go into questionnaires from our customers. So the ripple effect of these expectations from investors and from the market and from the big companies, is just cascading down. And that's why we acquired the company. That's why we want to integrate it so that we can start them on the journey. And I get very excited because I've been here a long time. And the idea of once they start to experience some of the relationships we have to really reduce that cost of sales to do an add-on to the financial reporting. And we've been working in public companies. We have a lot -- a growing number of private companies, but this gives us an avenue to go after that private segment in a way that we've never had to do. And the add-ons, the winning for back to the financial reporting is -- and taking our core platform that we've been doing for years. That's where I spent beef and our growth team was working in a global statutory is helping take our existing financial reporting technology to new markets and serving global financial teams. Turns out they have a lot of the same problems without more tech spend we can -- and establish that. So there's a tremendous amount of opportunity once you land these customers across our trifecta that we get very excited about.

Steve Enders with Citi again. I want to ask about a comment that was made on stage during the keynote yesterday about a new customer that you signed that mandated all new software companies they work with to have some AI strategy and leveraging that. But I just want to ask the question of I guess, if you think of your customer base, kind of where are they on this journey for AI adoption? Like are we still in that camp of customers saying that you need to have some AI strategy? Or is there still kind of a more conservative CFO? Maybe they are a little bit more hesitant to want to adopt new technologies.

Sure. It's hard to know for sure the mindset of all of these companies, but we are seeing what we are doing, which is essentially you're leveraging it where it makes sense. I mean some companies are charging and wanting to monetize it and doubling the cost of their capabilities and solutions. And you look at it and say, wait a minute, am I getting the ROI from it. But in other cases, we look at our vendors, there's some great opportunity there for improving productivity and efficiency. So we're doing that, and we see our customers doing that. I think if we talked to other software companies, they're probably saying the same thing in most industries. It's there, it's usable. We're not charging for it. We add it on where we can. And I think it's -- the practical approach seems to be winning the day as we see it across the board.

Excellent. Then final question up here front.

Terry Tillman from Truist Securities again. I think, Julie, you were talking about all the different tailwinds. One of them is this ERP cloud migration cycle. And I think you talked about a disclosure management opportunity that was basically driven by an advisory firm with, I think, an SAP Shop. How actionable is that cloud ERP cloud migration cycle for yours business? How visible is it in the pipeline? Or is it going to be -- they're large deals and they're going to be uneven? Just trying to understand how much this could be in the normal course of business going forward.

It is a significant opportunity for Workiva, and we have good relationships with our ERP colleagues. And it varies on when those ERP transitions come, but it's a significant trigger point, right, for an event, for us to sell our solutions and capabilities. There really isn't -- when you think about the S/4HANA, there isn't a disclosure management capability there. So we are -- when we are involved with our partners, especially, I mean, those Big 4 partners are involved in these large transformations and they're there, and they can make our strong relationships with them, they make recommendations that were -- this would be part of the disclosure management solution for these companies. So where these large transformations occurring are occurring. We have strong partnerships with those Big 4 firms and advisory that are advising and leveraging our trusted relationships with those companies.

Excellent. Thank you, Julie. We are closing in at the top of the hour. So I first off would like to thank all of those that you joined online. We will be concluding our online webcast today. So thank you very much. For those of you here in the room, we will be serving lunch right outside the room here and members of Workiva management will be here to continue on some of the conversations and welcome the conversations we're going to have year over lunch. And we are also going -- obviously the management happy hour later today as well. So thank you all for both in-person and online joining. And this concludes our formal content for today. But again, thank you very much.

Thank you.