Workiva Inc. Price & Performance (WK)

During today's call, we will be making forward looking statements regarding future events and financial performance, including guidance for the first quarter and full fiscal year twenty twenty [indiscernible] These forward looking statements are subject to risks and uncertainties and are based on our assumptions as to the macroeconomic, political and regulatory environment today and reflect our best judgment based on factors currently known to us. Workiva cautions that these forward looking statements are not guarantees of future performance. All forward looking statements are made as of today and reflect our current expectations We undertake no obligation to update or revise these statements. If the call is reviewed after today, the information presented during this call may not contain current or accurate information. Please refer to the company's annual report on Form 10 ks and subsequent filings with the SEC for factors that may cause our actual results to differ materially from those contained in our forward looking statements. We Also, during the course of today's call, we will refer to certain non GAAP financial measures. Reconciliations of GAAP and non GAAP measures are included in today's press release. With that, we'll begin by turning the call over to Workiva's CEO Workiva, Julie Isko.

Thank you, Katie, and welcome to the team. And thank you all for joining us today.

What a start to the year. We're operating in an ever changing environment.

And while we look forward to discussing sustainability and the regulatory land we'll first dive into our results. Workiva team had a strong close to 2024. Our Q4 top line results beat the high end of our guidance. The value of our platform continued to resonate and we saw broad based demand across our portfolio of solutions. In Q4, we delivered subscription revenue and total revenue growth of 20%. Compared to Q4 of twenty twenty three. For the full year 2024, we exceeded the top end of our revenue guidance, achieving a growth rate of 20% in subscription revenue, and 17% total revenue.

At the same time, we continued to increase productivity delivering a non GAAP operating margin of 4.3%.

That's up from 1.6% in 2023. We also delivered a full year free cash flow margin of 11.7%, 170 basis points above the guide that we provided in February of twenty twenty four, Our Q4 results are supported by strong underlying business fundamentals. We exceeded expectations in our account expansion activity showcased by our net retention rate improving to 112% Our large contract value customers continue to Whether from new logos or account expansion, we're encouraged by our win rates, our increasing deal sizes and the multi solution platform demand from our customers. Before I jump into some specific deals from the quarter, I'd like to share some twenty twenty four highlights that show our progress as we execute on our strategy. First, we are consistently winning larger deals. Multi solution deals are now the expectation not the exception. Second, we're winning with our platform. CIOs and CFOs are interested in vendor consolidation and efficiencies gained from streamlined operations. And we're winning with our assured integrated reporting platform, which now includes Carbon Accounting, the most consistent regulated part of sustainability management. Third, we are effectively executing on global expansion. As highlighted in our 10 ks, 17.5% of our twenty twenty four total worldwide revenue now comes from outside The Americas.

Up two eighty basis points from 2023. And finally, our high performing partner ecosystem is Partners are engaged in deals of all sizes and the volume and the contribution of partner involved deals have increased throughout 2024. The market has recognized the significant value of Assured Integrated Reporting. And Morgueva remains the only platform that brings financial reporting, sustainability and governance risk and compliance together in one secure controlled and audit ready environment I'd like to start off our deal highlights for the [indiscernible] [indiscernible] First, we signed a mid 6 figure 3 solution new logo deal with a Fortune 50 transportation company. This company purchased SEC reporting, controls management for SOX and sustainability reporting along with support The deal included a replacement of a legacy SEC filing solution the legacy SOX platform There were multiple big four advisory firms co selling with Workiva on this deal, and they were all competing for the implementation and broader advisory work for this finance transformation initiative. Second, we closed a mid 6 figure account expansion deal with the Fortune one hundred Life Sciences Company. This eight year loyal SEC client expanded their use of Workiva's GRC capability they purchased management reporting and sustainability reporting as part of this deal.

The CSRD reporting requirements were primary driver of the purchase of Sustainability Management, Although majority of the company's businesses in North America they have over $6,000,000,000 in European sales. This company is now licensed [indiscernible] The deal was sourced and will be delivered by a big four advisory firm. And third, we signed a mid six figure five solution new logo deal with a privately held European services company. This company purchased ECEF reporting controls management, policy management, operational risk management and sustainability reporting. The business drivers of this platform opportunity included the PREPA an RFP to replace a legacy GRC platform The opportunity was a co sell with a Big Ford advisory firm who will be delivering on the project. Let's move on now to one of our top booking solutions for the quarter, sustainability reporting and management. Before jumping into some deal highlights, I'd like to provide an update on the broader sustainability market. Clearly there's a lot of discussion around sustainability regulation. Including the CSRD And State Level Regulations In The U. S. The bottom line is this, we believe that companies will continue their investment in sustainability reporting and management to meet the needs and the demands of their customers, their shareholders and their other stakeholders.

Let's start with the CSRD. In the coming days or weeks, the EU is set to release what is being referred to as Omnibus Simplification Package. The purpose of this package is described by the EU Commission is to streamline and reduce administrative and reporting burdens associated with various EU sustainability regulations. These regulations include the CSRG, The Corporate Sustainability Due Diligence Directive or CS3D and the EU Taxonomy Regulation. The omnibus simplification effort has been going on for some time. Following an informal meeting of the EU Council leadership on 11/08/2024, the President of the European Commission announced her intention to modify sustainability regulations to reduce the burden on businesses. The EU Council and the EU Commission indicated that the omnibus bill will focus on reducing the impact of multiple overlapping regulations. The commission has not yet released any specifics on the Omnibus proposal as of today. A few member states though have proposed changes to the CSRD in areas such as thresholds for reporting requirements, scope of required data points and content, and timing. So how would these proposals impact Workiva's market opportunity? Well, we've consistently disclosed that we are targeting larger enterprises for CSRD. Including those defined as public interest entities.

This segment has thousands of companies that we can sell to in Europe, in North America and in APAC. We believe that this cohort of companies will continue to invest in transforming their processes, for financial and non financial reporting. Including the current, potentially revised requirements of the CSRD. We are expecting a release from the EU on the CSRD Omnibus in the coming days or weeks. Following its release, it's expected that the proposal will undergo the EU's legislative process. This process will take some time and will involve discussions and approvals by the European Parliament and the Council of the European Union before it can be enacted into law. While we're waiting for proposed changes to legislation, it's important to remember that companies are reporting in alignment with the CSRD today. The largest European companies some of the 11,000 plus that are subject to the NFRD are actively preparing and disclosing their first CSRD reports this quarter. We have received positive feedback from our clients on how the Workiva platform has supported them in this process. An early review of these published reports has surfaced some observations and trends. Audit committees are identified as the governing body responsible for overseeing these disclosures.

Assurance by the big four accounting firms on both financial and sustainability information is a prevailing trend. And CSRD goes beyond disclosures. Companies are integrating climate related financial risks into their accounting policies showing a greater connection of sustainability factors with financial reporting. All of these trends highlight the need for a platform that brings together financial reporting, sustainability reporting and policy and risk processes. I would also like to highlight that the sustainability market for Workiva goes well beyond the CSRD. Looking at the broader sustainability marketing opportunities, in Q4 and throughout 2024, we saw a consistent theme. Organizations were purchasing our sustainability to address a wide variety of requirements. This included reporting to show progress towards committed science based targets, required reporting for the CDP or the Carbon Disclosure Project, addressing regulations beyond the CSRD, including U. S. State and other global regulations and most importantly, embracing non financial metrics to manage emerging risks, improve business productivity, and drive business performance. [indiscernible] One area of growth that I'd like to highlight in more detail is in support of companies that have committed to science based targets. The Science Based Targets Initiative or SBTI is a corporate climate action organization.

It develops standards, tools and guidance that's support companies in setting greenhouse gas emissions reduction targets as they seek to reach net zero in accordance with the Paris Agreement by 02/1950 at the latest. At our Investor Day in September, we highlighted that there were 4,200 companies that had set science based targets as of year end twenty twenty three. That number has now increased to over 7,200 as of January 2025, a more than 70% increase year over year with another 3,000 companies who have already committed to setting those targets. This increased focus on both a commitment to sustainability and the transformation of their processes for disclosure have resulted in increasing demand in the market for Workiva solutions. [indiscernible] proof point of this is the success we've seen around Workiva Carbon. This solution, which we launched at the end of Q2 twenty twenty four, has advanced our sustainability platform to support organizations requirements for carbon accounting as well as the tracking and the disclosure of carbon emissions for Scopes one, two and three and decarbonization. Our results in Q4 continued to demonstrate the momentum that we've seen since day one of the launch of this solution. Workiva Carbon was a strategic addition to our platform that has made our sustainability solution and overall assured reporting platform even more marketable and relevant.

One of the best ways to articulate the success we've delivered with our sustainability solutions including Workiva Carbon, is highlighting some signature customer wins. The three deals I'm about to discuss showcase the types of customers and the size of sustainability deals that we're winning in the market. First, we landed a mid 6 figure new logo customer a European retailer. This company purchased Workiva for managing their multi entity This sustainability forward organization has set CSRD, starting in 2025. This project was part of a formal RFP process with multiple technology and advisory firms competing for the business. The deal was a co sell and will be delivered by a Big four consulting firm. Second, a U. S.-based Fortune 100 tech 6 figure deal for sustainability reporting. The purchase of sustainability reporting complements the company's previous investment in SEC reporting, and management reporting. This company purchased sustainability to support their current science based target reporting initiative and to address requirements for the CSRD. The opportunity was a co sell and will be delivered by a big four firm. While CSRD is a strong driver for our sustainability management solution, we continue to see significant business that is not CSRD related.

We signed a mid 6 figure new logo deal for sustainability reporting and Workiva Carbon with The U. S.-based Fortune 500 transportation company. This opportunity also included the purchase of SEC reporting The project was initiated by an RFP to improve disclosure against their committed science based targets and to support the upcoming California climate disclosure rules. This was a competitive opportunity for both the software Five different Workiva partners provided bids for this opportunity to deliver the Workiva project. Sustainability, our commitment remains the same delivering the solutions that our customers are demanding. As highlighted in the executive benchmark survey that we released we believe that sustainability reporting is a market with a long durable demand and that many core corporations will continue to embrace sustainability reporting and disclosure. They will continue to do so to address business imperative to engage with the global supply chain. While we credit our sustainability solutions with driving part of our 2024 growth acceleration, our financial report We saw broad based demand in our financial reporting solution set including SEC reporting, multi entity reporting, private company reporting and management reporting. We also have been particularly successful in driving high value deals with financial services firms with our industry specific solutions, which include fund reporting for investment firms, regulatory reporting for insurance companies and risk and compliance solutions for banks.

I'd like to highlight three financial services specific deals from the quarter. First, we closed a 7 figure account expansion deal with an investment advisory company for fund reporting. We originally landed this company as a customer with the Workiva Connected shareholder report solution back in 2022. This account expansion for fund reporting aims to transform their current manual process of collecting, consolidating, validating and reconciling data from documents spreadsheets and email. This opportunity was sourced and will delivered by a regional advisory firm. Second, a U. S.-based global insurance company purchased a three solution mid 6 figure account expansion deal for global statutory reporting, insurance reporting, and SEC reporting, this company now uses seven solutions on the Workiva platform. This deal was part of a formal RFP for a broader financial transformation project. Workiva will be replacing the legacy systems used for SEC [indiscernible] And third, we closed a high 6 figure account expansion deal with a privately held financial services company for fund reporting. This nine year loyal customer uses 12 solutions across the Workiva platform. This new opportunity increases their spend with Workiva by 40%. This opportunity was sourced by an accounting advisory firm and had co sell support from a financial services consulting firm.

I'll now turn to governance risk and compliance. As we enter 2025, organizations are once again faced with an environment of changing risks new compliance requirements and stakeholder oversight that requires a In addition to the existing macro and geopolitical risks, the policy uncertainty of new administrations and emerging risk such as those brought about by innovations like AI are on the rise. We believe that this ever changing business environment will continue to create demand for our GRC solutions. Looking back at Q4, here were three signature GRC wins. First, a leading cryptocurrency exchange platform signed a multi 6 figure 3 solution GRC account expansion deal. The company purchased controls management audit management and policies and procedures to replace the legacy GRC platform solution that they purchased back in 2020. This GRC opportunity was part of a broader financial transformation deal that included global statutory This opportunity was a co sell will be delivered by a regional consulting firm. Second, a U. S.-based global risk services firm purchased controls management enterprise risk management, and policy management in a multi 6 figure new logo deal. This was competitive deal with five GRC vendors being evaluated. The expanded value of the Workiva platform was showcased with the addition of insurance reporting as part of this opportunity.

This deal was a co sell and will be delivered by a regional The ability to address both the financial reporting and GRC requirements for this [indiscernible] This opportunity was sourced by a Big four advisory firm who is working with the company on their IPO journey. All of these deals highlighted on the call today are just a small representation of the broad based demand that we've seen for Workiva's platform this past year. I want to take a moment to thank the Workiva team and our partners for all of their hard work in executing on our opportunity in 2024. As we entered into 2025, I have the chance to meet with many global leaders, key customers and top partners at the World Economic Forum in Dava, where A key theme in so many of my conversations circled around one topic, AI, AI has shifted from interest to requirement as teams tackle financial transformation, evolving sustainability regulations and investor scrutiny, Workiva has put AI at the top of our innovation priorities. Over the past twelve months, we've seen a recent acceleration of adoption of our AI capabilities as customers grow more receptive to adopting this technology. Customers are leveraging AI capabilities on the platform to create, modify and improve content and streamline workflows.

Workiva AI enables clients to use X external content and their company specific information that's stored in Workiva documents. Examples of solution specific use cases include drafting, editing and refining SEC disclosure documents, including 10 Qs, 10 Ks, S1s, eight Ks and press releases. Creating and editing policies and risks and controls to support GRC processes, and boosting productivity and efficiently scaling processes across the Workiva platform by pointing the power of large language models to all Geva documents and attached files. We continue to collaborate with our customers on additional AI capabilities that will drive value for them. We see AI as a reinvention of work. To that end, we're focusing on delivering usable and useful capabilities all delivered in a secure environment that provide the safety and productive experience with AI on our platform. As we've already experienced in the first two months of twenty twenty five, we believe that this will be a transformative year for AI and the adoption of our current and planned innovations will drive additional value to our customers. Before I turn it over to Jill to provide you with detailed information for our Q1 and full year 2025 guidance, I have a couple of comments to set the backdrop for the guide based on what we're seeing in the market.

Our execution and performance in 2020 It was a year of strong bookings across the globe. We saw substantial new logo growth, Accelerated account expansion broad based platform deals and increased impact from our expanded partner ecosystem. Our platform is resonating with our customers and in the market. As we enter 2025, however, we find ourselves in a business environment that has some policy and geopolitical uncertainty. With impacts that are not yet clear. All of this leads us to be thoughtful in our 2025 guide, which is 20% subscription revenue growth. Companies rely on our strategic and sustainability management. Workiva's position as the assured integrated reporting platform to power transparency continues to provide value to customers helping them to mitigate risk drive growth and power performance all while meeting the needs of their customers, their employees and their investors. And with that, I'll now turn the call over to Jill to walk you through our financial results and 2025 guidance in more detail. Over to you, Jill. Thank you, Julie, and good afternoon, everyone. Thank you for joining us. I'll start by providing an overview of the financial and key metric highlights for the fourth quarter and full year 2024.

Then I will provide guidance for Q1 and the full year 2025. As Julie discussed, we continued to see solid results in Q4 with execution across our broad portfolio of solutions. We beat the high end of our Q4 revenue guidance by $4,000,000 generating $200,000,000 of total revenue in the fourth quarter up 20% over Q4 twenty twenty three. Q4 subscription revenue was $181,000,000 up 22% from Q4 twenty twenty three. As in past quarters, new customers and account expansions both contributed to our strong revenue growth. New customers added in the last twelve months accounted for 42% of the increase in Q4 subscription revenue Q4 professional services revenue was $19,000,000 up slightly from Q4 twenty twenty three driven by higher XBRL services. Moving on to our Q4 twenty twenty four operating results. All on a non GAAP basis. Q4 gross margin improved 80 basis points year over year increasing to 79%. We continue to focus on leverage in our cloud computing costs as well as in how we scale our customer and partner experience teams. Operating profit was $14,800,000 compared to the Q4 twenty twenty three operating profit of $12,700,000 Operating margin for the quarter was 7.4%. Continuing on to performance metrics for the quarter.

We had 6,305 customers at the end of Q4 twenty twenty four. A growth of two seventy one customers from Q4 twenty twenty three. Our gross retention rate was 97%, exceeding our 96% internal target. And our net retention rate was 112% for the quarter. Up from 110% in Q4 twenty twenty three, reflecting increased account expansion across our platform. We generated 70% of our subscription revenue from 64% in Q4 twenty twenty three. As you heard from examples provided by Julie, we continue to show progress on creating and expanding relationships with our largest customers. This trend is also reflected in our large contract customers. In the fourth quarter, we had 2,055 contracts valued at over $100,000 per year. Up 26% from Q4 the prior year. The number of contracts valued at over $300,000 totaled four up 34% from Q4 twenty twenty three. And the number of contracts valued over $500,000 totaled 181, up 32% from Q4 twenty twenty three. Moving on to full year 2024 results. We generated $739,000,000 of up 17% over full year 2023. 2024 subscription revenue was $668,000,000 up 20% from 2023. And 2024 professional services revenue was $71,000,000 as expected, down slightly from 2023.

Reflecting our ongoing efforts to move low margin services [indiscernible] Continuing on to full year operating results, all on a non GAAP basis. Full year 2024 gross margin improved 180 basis points year over year increasing to 78%. Full year 2024 operating profit was $32,000,000 compared to $10,200,000 in 2023. Operating margin for the year was 4.3%, up from 1.6% in 2023. As we delivered leverage while still investing for growth. Moving on, as of 12/31/2024, cash, cash equivalents and marketable securities were $816,000,000 an increase of $2,700,000 over the prior year. Operating activities for 2024 result compared with cash provided of $71,000,000 in 2023. For the full year 2024, we delivered a free cash flow margin of 11.7%, 170 basis points above the February 2024 guide, an 80 basis point improvement year over year. Turning now to our guidance for Q1 and the full year 2025. As Julie discussed, we are optimistic about our market opportunity and encouraged by our large and unaddressed TAM. But we are also mindful of policy uncertainty from a new administration in The U. S. Potential regulatory changes in Europe and possible impacts currency exchange rates could have on our results. For the first quarter of twenty twenty five, we expect total revenue to range from $2.00 $3,000,000 to $2.00 $5,000,000 We expect services revenue will be down slightly compared to Q1 twenty twenty four.

We expect non GAAP operating margin to be approximately breakeven reflecting typical Q1 seasonality. For the full year 2025, we expect total revenue to range from $864,000,000 to $868,000,000 Similar to 2024, we expect total services revenue will continue to be down year over year as we move low margin services to our partners. We expect 2025 XBRL services revenue will grow at a low single digit rate. While setup and consulting revenue will declinely more than the rate we saw in 2024. We expect subscription revenue growth to be 20% at the midpoint We expect non GAAP operating margin to range from 5% to 5.5% delivering improved productivity compared to 2024. Similar to 2024, we expect operating margin in the back half of 2025 will be stronger than the first half. We expect twenty twenty five free cash flow margin will be approximately 12% for the year. In closing, I want to thank all of our employees and partners for delivering a strong 2024. The value of our platform continued to resonate with We are proud to have delivered 22% subscription revenue growth in Q4 twenty twenty four. In 2025, we expect our 20% subscription revenue growth will be driven by broad based demand across our platform and solutions.

We operate our business with our 2027 and 02/1930 targets in mind as we continue to invest in the growth opportunities in front of us. We remain confident in our ability to achieve these targets as laid out at our Investor Day in September 2024, and we're committed to delivering long term durable growth with improved product Thank you all for joining the call today. We're now ready to take your questions. Operator, please open up the line for Q and A. We will now begin the question and answer session. And your first question today will come from Rob Oliver with Baird. Please go ahead. Great. Thank you. Good afternoon. Julie, I appreciate your comments toward the end of your prepared remarks about the macro. I don't want to probe those a little bit. Where you called out some policy and geopolitical uncertainty I think you you touched on the policy uncertainty around CSRD and CSDD in Europe and so I wanted to understand, was that sort of the main policy thing that you were calling out? And then on the geopolitical side, wanted to understand what if there's anything new you guys are seeing relative to trade or tariff concerns and how that informed your 2025 Got it.

Good. Your commentary certainly made it seem as if it perhaps would have been higher. And then I had a follow-up question.

Yes. I think I did give some detail on the everything going on there and policy uncertainty. And discuss a little bit that likely it's not impacting us because of our our targeting the upmarket. Our thoughts and balanced guide truly is around just general uncertainty. There's tariffs, there's exchange rate, the new administration and so forth. So it wasn't any one thing, it was just general uncertainty and not like other SaaS companies and technology companies providing guidance Nothing unusual and really not one heavier than the other.

Got it. And just a quick follow-up. I mean, you guys since certainly since your arrival at the company, you've really sort of instilled the platform focus for the company, the multiproducts strategy, it certainly seems in Q4 with the strength that we saw that sort of the larger customers that that is playing out nicely presumably at the right time. So you can talk about kind of the pipeline that you see for this year and because I think investors are all focused on risk adjusting these pipelines, How you think about that multi product strategy and how that both with cross sell and up sell in new land and how that's helping to perhaps mitigate some of the risk for in the end market? Thanks.

Thanks for highlighting the strength of our platform and our approach to going to market with it. I mean, our our building blocks are in 2025, we'll remain the same. It's broad based demand across our platform and we've got dozens of solutions there across the platform, lots of white space, lots of unaddressed TAMs.

So feeling confident there around the platform. Just in general, we have the same vectors of growth strategy. It's our mix of new logos, account expansion and yes around the platform and the strength of that platform that's become a significant differentiator for us.

Sourced and co sell deals with partners, again, broad based amount around the platform.

Okay. Thanks very much. And your next question today will come from Alex Sklar with Raymond James. Please go ahead. Great. Thank you. Just following up on Rob's first question on the subscription growth guide, really impressive 20% outlook. You talked about being thoughtful there just given some of those risks that they were just stressing Should we think is the right way to think about the 20% as kind of a floor under any regulatory circumstance? It just a little bit more conservatism versus prior years? I just wanted to kind of get a little bit finer point on that.

I'll just comment briefly. We haven't changed really our approach. It's We feel we exited 2024 feeling strong with a lot of momentum, but again, it's the environment and just taking just taking a balanced approach and a thoughtful approach on it. So no different than our usual approach to the guide.

Okay, great. And then just maybe one other follow-up on sustainability and mix. Top Booking Solution again, exiting now '24. I'm wondering if you could update us on where sustainability revenue sits as a as a percentage of revenue today or any color on what kind of mix it was in 2024 bookings and how you're kind of approaching thinking about that for 2025? Hi, Alex.

This is Jill. Thanks for the question. Appreciate it. We were very pleased with sustainability revenues and bookings last year. We're still not providing a split of switch and base split of revenues, but it has continued to be one of our top booking solution now for ten quarters in a row.

And we expect it to play a balanced part of our of our plan for 2025. And continue to participate at a high level.

Okay. Thank you both.

Yes. Thanks.

Your next question today will come from Terry Tillman with Truist. Please go ahead.

This is Dominique Monstalla on for Terry. Thanks for taking my question. So just with more set up and consulting work shifting to partners, have you seen a measurable impact on deployment speed and scalability so far And have you seen any impact on customer satisfaction, retention or maybe churn rate as we get further along in the transition?

With partners, I mean sure. We continue to work hard to build out those strong alliances, work with our partners to deliver We spend a lot of time ensuring that they are receiving the same experience and implementation and delivery that they would if it coming from the Workiva team. So yes, we are continuing to get better. Yes, we move more quickly. They also develop tools, capabilities in accelerators around our our platform to bring more value, but also help to expedite the implementation. So we are seeing a lot of momentum in this direction. And thanks for highlighting it. Continue to build even more strength with our partners and become more effective in the delivery Great.

And then just as a follow-up with ESG sustainability solutions still being a key driver, especially in Europe. I was just curious how the how you expect the mix of partner led versus direct sales to evolve over the year? Maybe any other recent shifts or improvements in the partner ecosystem call out there with Sure. I mean, I will say that we have partners involved in the majority of our deal now, particularly those that are upmarket. And we're going after the high end of the market as I mentioned in my prepared remarks. So partners are are very strong in the sustainability place that we have and a big part of our go to market. Again, everywhere we want to be, they help us sell not just sustainability, but more broadly across the platform. We sell higher, we get higher deal sizes, just a big part of our growth strategy and accelerating our growth.

Got it. Thank you.

Your next question today will come from Adam Hochkiss with Goldman Sachs. Please go ahead. Great. Thanks so much for taking the questions. Julie, I'd be curious you mentioned all the non CSRD related momentum in sustainability and other reporting categories in your prepared remarks. But I'd be curious if you see any risk of prospects deferring or delaying sustainability related projects in light of some of the dialog in the market or if that's just something that's not coming up in your conversations?

Yes. Thank you for the question. I'm sure it's on the minds of others as well. We've always disclosed that Q1 is very hard for us to to look at trends in the beginning of the year simply because our customers are heads down and they're filing in the first one in two months. But even that aside, we've not seen any trends. And as you can imagine, we're looking, but we haven't really seen any trends in that regard. At this point.

Okay. That's helpful. Thanks so much. And then Jill, just on profit on investment cadence here. You mentioned your midterm and long term margin targets are intact. But margins are coming down in Q1. I think the improvement is a little bit less year over year next year in general. So I'd be curious how you're weighing those few issues. Thank you.

Well, thanks for the question. You're right. We did reiterate on the call and continue to stand behind our 2027 and 02/1930 margin goals.

We are We are able to manage our business and manage our expenses in order to shift as needed throughout the year. And as we because I think that's your question really is, how are we going to be able to execute on that and ensure that we reach those goals.

The way that we do that is to operate our business carefully to ensure that we have a balanced approach to our investments. And react to how the market is trending and how we're performing on a on a quarterly basis. And so we do expect to still be we do believe we're on track and we're pleased to be continuing to move towards those 2027, 2030 goals.

Okay, great. Thanks so much. Your next question today come from Daniel Jester with BMO. Great. Thanks for taking my question. So a couple of times in the prepared remarks, you mentioned broader digital transformation helping fuel deals for you. I guess there's several sort of big publicized trends driving ERP digitization. I'm just wondering, are you seeing a broader acceleration of back office digitization? Or is this comments on the prepared remarks consistent with some of the trends that you saw in 2020 Sure.

Good to highlight that as well. On New New ERP systems and upgrades are a great buying trigger for our platform And we do see a strong demand there. And I actually highlighted in the call just earlier, we closed Q4 deal with a new customer, the manufacturing company going through an Oracle implementation and they were preparing for an IPO.

Customer using Workiva private reporting and financial statement automation.

So that was one example. Another one I gave on the call too, large 6 figure platform deals, and that was part of an ERP system upgrade as well. Client purchase sustainability, SEC, GRC, to complement the ERP functionality. So we get these deals most significantly through our partners. We've got big four regional partners that have dedicated ERP practice and they are of course, as you know, frequently driving finance transformations and we slide right in there. And I'll give you a good example. S4HANA transformation playbook, one of the big four has us in there. So these are how we typically find these opportunities and definitely see strong demand on that area.

Thank you. That's very helpful. And then I just wanted to double click on Europe.

Great call out in terms of the the improvement that you're seeing there. I think just want to be clear, how much of Europe the improvement there has been CSR [indiscernible] related driven? And how much are you seeing a broader uptick in the work platform outside of sustainability in Europe? And any difference in the trends seeing there. You very much.

Sure. I can certainly see why you asked that question, but the answer is we we saw broad based demand across the geos in Europe and across our portfolio. Momentum just continues to build there and we're very pleased with what we're seeing. It was a great story for us in 2024. Actually, we highlighted in our 10 ks that 17% of our revenue outcomes from outside The Americas and primarily that's Europe. Two fifty basis points improvement there from 2023. Just got a lot of greenfield opportunities in Europe. Since we don't have a whole lot of penetration in that market. So just a lot of opportunity both for new logo and expansion for us. So it isn't just about the the CSRD or sustainability. It's really about platform. And admittedly too, it's our own execution. We've made a lot of changes as we've disclosed over the past year or so and we are just executing much better in general in Europe and We believe we've built some strong momentum there with our teams across the region.

Great. Thanks for the color. Your next question today will come from Steve Enders with Citi. Hi, this is George on for Steve. Thanks for taking the questions. Wanted to ask about the kind of gross margin mix and how you're thinking about that framework into '25 Obviously, 20% sub rev growth is really strong. On the operating margin side, guiding to 5% for the year, more at 7% for Q4. Is it right to think about you're just investing behind strong demand signals that you're seeing kind of foot on the gas type of year? How would you frame that? So when we look at our full year margin and especially I mean you mentioned coming out of Q4, we do have significant seasonality within our expenses as we roll into Q1. We've talked about for the past few years that all of our employee raises hit January 1 and we also have front loaded expenses around four zero one matches, employment taxes, those sorts of things. And so we do see some seasonality in the first part of the year around expenses. But as we look at the full year investments, a lot of the investments that we made during 2024 will, of course, see the full year impact in 2025.

But we are looking to see where can we further accelerate and ensure that we're taking advantage of the timely opportunity in front of us. To really take advantage of our large and unaddressed TAM and ensuring that we're making the right investments across the business, across geographies, across solutions and across the platform in order to really ensure that we're doing the most that we can to accelerate growth.

Excellent. And then one quick follow-up. Was there any material impact of FX on your metrics in the quarter and anything baked in on FX in the guidance [indiscernible] nothing to call out in particular around FX. It has continued to course, impact our results as it has other SaaS companies. We're building our current models using current rates and a potential risk and part of the reason why we're being very balanced with our guide for the full year.

And so alongside policy uncertainties, some of the other things that Julie highlighted, currency, potential currency fluctuations definitely weighs in on the mix Great. Thanks for taking the questions.

Thanks. Your final question today will come from Jake Rauberg with William Blair.

Yes. Thanks for taking the questions. Just wanted to follow-up on the ESG front. I know one of the added benefits for some of those new ESG logos you're landing in Europe is that it gives you a chance sell the broader platform. So I'm curious what you're seeing from those new logos in terms of adopting ESG alone versus actually landing with a broader platform that includes financial and GRC reporting given that that's much more of a greenfield market for you? Sure.

We We always go out with a platform, right? We pitch the platform and it the value proposition to be able to do your financial reporting, your non financial sustainability reporting along with your auditability, governance risk and so risk management and so forth. So that's how we go to market.

Sometimes it is a carbon first or sustainability first. Sometimes we're looking for the controls and audit capability. And sometimes it is an ESET financial reporting. So or global statutory or multi entity reporting. So we do both new logos and account expansion. But as you highlighted, we're less well known there. We're less penetrated in the market in Europe. So oftentimes it is with a new logo, but it can come from anywhere in our platform. Broad based and we're increasing the amount of multi solution land. So it isn't just one solution that we would land with. So teams going out there or trying to fill our pipeline with multi solution deals as opposed to the single solution. So very much focused on the platform play. And of course, also meeting the customer where they are.

Okay. That's helpful. And then now that it's been under your roof for a little bit more time, can you just talk about how the initial feedback for sustained up life has been from customers and then how that solution is helping with win rates and just the overall reception in terms of getting the ESG solution into the door earlier with customers. So I'd love to just kind of hear Sustain. Life the reception and how it's been impacting win rates We love the question because the highlights of staying life wonderful team that is very much a part of Workiva and was almost on day one. But we executed very well. That was only six months ago on the launch of Workiva Carbon. As mentioned in my prepared remarks, our results in Q4 just continue to demonstrate the momentum that we've seen again since day one of the launch of the solution. So I do want to remind you that Workiva Carbon was a strategic addition to our platform. It's made our sustainability solution our overall assured integrated reporting platform even more marketable and even more relevant That was the intent and we're certainly seeing that. Some companies want to purchase sustainability first, but also carbon first.

So we are there with that. It's opened up opportunities for us and we expect trends to continue to help again win new sustainability reporting deals going forward and of course platform place.

That's helpful. Thanks for taking the questions and congrats on the results.

Thank you.

Thank you. We'll conclude our question and answer session as well as conference call. Thank you for attending today's presentation. You may now disconnect your lines.