Workiva Inc. Investor Presentation February 25, 2025 Safe Harbor This presentation includes forward-looking statements. All statements contained in this presentation other than statements of historical facts, including any statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "may," "will," "could," "would," "should," "expect," "plan," "assume," "anticipate," "intend," ...

Part I Part I provides a comprehensive overview of Workiva's business, strategic initiatives, product solutions, customer base, human capital, and associated risks and cybersecurity practices [Business Overview](index=5&type=section&id=Item%201.%20Business) Workiva provides a unified SaaS platform for financial reporting, sustainability, and GRC, achieving $738.7 million in 2024 revenue, primarily from subscriptions, while expanding globally | Financial Metric | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | **Total Revenue** | $537.9M | $630.0M | $738.7M | | **Net Loss** | $90.9M | $127.5M | $55.0M | - The company serves over 6,300 organizations, with a focus on the offices of the CFO, CSO, and CAE[18](index=18&type=chunk) - Approximately **90% of 2024 revenue** was from subscription and support fees, with the remainder from professional services[19](index=19&type=chunk) - In 2024, revenue from EMEA and APAC constituted about **18% of consolidated revenue**, with expectations for this to increase[34](index=34&type=chunk) [2024 Company Highlights and Milestones](index=6&type=section&id=2024%20Company%20Highlights%20and%20Milestones) Workiva achieved key milestones in 2024, including new product launches, a share repurchase authorization, platform enhancements, and patent additions - Launched Workiva Carbon in June 2024 to support global climate regulations like CSRD[22](index=22&type=chunk) - Authorized a share repurchase program for up to **$100 million of Class A common stock** in July 2024[22](index=22&type=chunk) - Enhanced the core platform with features like linking entire tables, sharable content libraries, and generative AI prompt libraries[22](index=22&type=chunk) - Added **10 new innovation patents** in 2024, bringing the total to 86[22](index=22&type=chunk) [Growth Vectors](index=7&type=section&id=Growth%20Vectors) The company's growth strategy focuses on platform expansion, multi-solution adoption, global reach, and leveraging its partner ecosystem, with sustainability identified as a key opportunity - The company's growth strategy is focused on four key areas: expanding the Workiva Platform, selling fit-for-purpose solutions (Financial Reporting, Sustainability, GRC), global expansion, and leveraging its partner ecosystem[30](index=30&type=chunk) - Sustainability is identified as a 'generational opportunity for growth,' with plans for accelerated investment in this area[35](index=35&type=chunk) - The partner ecosystem includes over **200 advisory, technology, and service partners** that extend geographic reach and accelerate platform adoption[36](index=36&type=chunk) [Fit-for-Purpose Solutions](index=10&type=section&id=Fit-for-Purpose%20Solutions) Workiva offers over 30 solutions across financial reporting, sustainability management, GRC, and industry verticals, including new carbon accounting capabilities - Workiva markets over **30 solutions** categorized into four groups: financial reporting, sustainability management, GRC, and industry verticals[47](index=47&type=chunk) - Financial Reporting solutions include SEC/SEDAR reporting, Global Statutory Reporting, Capital Markets (IPO), Annual & Interim Reporting, and ESEF compliance for over **4,000 European issuers**[48](index=48&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[53](index=53&type=chunk) - Sustainability Management solutions help organizations with disclosures for regulations like CSRD and California's climate acts, and support frameworks like GRI, SASB, and TCFD; Workiva Carbon was launched in 2024 for carbon accounting[56](index=56&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - GRC solutions cover Controls Management (SOX), Internal Audit, Enterprise Risk Management (ERM), and Policy and Procedure Management[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Industry-specific solutions are tailored for Financial Services (banking, insurance, investment), Public Sector (government agencies), and the Energy & Utility Sector (FERC compliance)[67](index=67&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) [Customers](index=15&type=section&id=Customers) Workiva serves over 6,300 customers globally, including a significant portion of top companies, maintaining strong gross and net retention rates | Metric | As of Dec 31, 2024 | | :--- | :--- | | **Total Customers** | > 6,300 | | **Gross Retention Rate** | 97.4% | | **Net Retention Rate** | 111.9% | - Customer base includes over **85% of the top 500 companies** and over **80% of the top 1,000 companies**[73](index=73&type=chunk) [Human Capital](index=19&type=section&id=Human%20Capital) As of December 31, 2024, Workiva employed 2,828 full-time people globally, with specific representation targets for women and underrepresented groups in its workforce and leadership - As of December 31, 2024, Workiva employed approximately **2,828 full-time people worldwide**, a **12.0% increase** from 2,526 at the end of 2023[101](index=101&type=chunk) - As of December 31, 2024, women represented approximately **43% of the global workforce** and **38% of leadership**, while underrepresented racial/ethnic groups comprised **22% of the U.S. workforce** and **16% of U.S. leadership**[102](index=102&type=chunk) [Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business, technological, and securities ownership risks, including customer concentration, profitability challenges, cybersecurity threats, and dual-class stock structure [Business and Industry Risks](index=22&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Key business risks include reliance on SEC filing customers, historical net losses, intense competition, and regulatory uncertainties impacting revenue growth - Over **40% of total revenue** is derived from customers using the platform for SEC filings, creating a concentration risk[114](index=114&type=chunk) - The company has a history of net losses, including **$55.0 million in 2024**, and may not achieve or maintain profitability in the future[120](index=120&type=chunk) - Intense competition exists from diversified enterprise software providers, niche solution providers, and legacy manual processes[128](index=128&type=chunk)[130](index=130&type=chunk) - Uncertainty in regulatory environments, such as the EU's Corporate Sustainability Reporting Directive (CSRD), could affect buying decisions and negatively impact revenue growth[127](index=127&type=chunk) [Technology and Intellectual Property Risks](index=32&type=section&id=Risks%20Related%20to%20Technology%20and%20Intellectual%20Property) Technology risks encompass evolving cybersecurity threats, challenges with AI and machine learning adoption, reliance on third-party infrastructure, and complex data privacy compliance - The business faces continually evolving cybersecurity risks, which could lead to data loss, service disruption, and reputational damage[155](index=155&type=chunk) - The development and use of AI and machine learning technologies present risks related to performance, public acceptance, regulatory compliance, and data privacy[163](index=163&type=chunk)[164](index=164&type=chunk) - The business relies on third-party infrastructure, primarily Amazon Web Services (AWS), and any interruptions could negatively impact service delivery[165](index=165&type=chunk)[170](index=170&type=chunk) - Compliance with complex and evolving data privacy laws, such as GDPR in the E.U., imposes substantial burdens and costs[173](index=173&type=chunk)[174](index=174&type=chunk) [Securities Ownership Risks](index=41&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Securities) Risks related to securities ownership include concentrated voting power due to the dual-class stock structure and the company's policy of not paying dividends - The dual-class stock structure concentrates approximately **43% of voting power** with holders of Class B common stock, potentially limiting the influence of Class A stockholders[196](index=196&type=chunk) - The company does not intend to pay dividends in the foreseeable future, meaning investors must rely on stock price appreciation for returns[202](index=202&type=chunk) [Cybersecurity](index=45&type=section&id=Item%201C.%20Cybersecurity) Workiva maintains a comprehensive cybersecurity program aligned with industry standards, overseen by the CISO and Board, with no material incidents reported to date - The cybersecurity program aligns with frameworks including FedRAMP Moderate authorization, ISO 27001, and SOC 1 and 2 Type 2 reports[208](index=208&type=chunk) - The Board of Directors, through its Audit Committee, oversees cybersecurity risks; the CISO provides briefings to the Audit Committee at least three times per year and to the full Board at least once per year[214](index=214&type=chunk) - The company has not encountered any cybersecurity threats to date that have materially affected its business strategy, results of operations, or financial condition[211](index=211&type=chunk) Part II Part II details Workiva's financial performance, including key operating metrics, results of operations, liquidity, capital resources, audited financial statements, and internal controls [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=50&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Workiva's 2024 revenue grew 17.2% to $738.7 million, driven by subscription growth, with a narrowed net loss and strong liquidity, reflecting increased operating expenses for growth [Key Performance Indicators](index=53&type=section&id=Key%20Performance%20Indicators) Key performance indicators show customer growth, strong gross and net retention rates, and an increasing number of customers with high annual contract values | Operating Metric | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | **Number of customers** | 5,664 | 6,034 | 6,305 | | **Gross retention rate** | 97.8% | 97.9% | 97.4% | | **Net retention rate** | 108.5% | 110.3% | 111.9% | | **Customers with ACV >$100k** | 1,345 | 1,631 | 2,055 | | **Customers with ACV >$300k** | 236 | 311 | 416 | [Results of Operations](index=56&type=section&id=Results%20of%20Operations) Workiva's 2024 results show significant revenue growth, particularly in subscriptions, and a reduced net loss, despite increased sales and marketing expenses | (in thousands) | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | **Subscription & Support Revenue** | $667,646 | $558,645 | 19.5% | | **Professional Services Revenue** | $71,034 | $71,394 | (0.5)% | | **Total Revenue** | **$738,680** | **$630,039** | **17.2%** | | **Gross Profit** | $566,625 | $475,817 | 19.1% | | **Loss from Operations** | $(76,534) | $(94,527) | (19.0)% | | **Net Loss** | **$(55,042)** | **$(127,525)** | **(56.8)%** | - Sales and marketing expenses increased by **$60.2 million (21.0%)** in 2024, driven by higher compensation, travel, and marketing costs to support go-to-market activities[272](index=272&type=chunk) - General and administrative expenses decreased by **$7.5 million (6.8%)** in 2024, primarily due to a **$10.5 million decrease** in stock-based compensation, as certain one-time executive transition costs from 2023 did not recur[273](index=273&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2024, Workiva maintained strong liquidity with $816.4 million in cash and marketable securities, supported by operating cash flow and convertible notes - As of December 31, 2024, principal sources of liquidity were cash, cash equivalents, and marketable securities totaling **$816.4 million**[276](index=276&type=chunk) | Cash Flow (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | **Net cash from operating activities** | $87,706 | $70,875 | | **Net cash used in investing activities** | $(45,249) | $(357,253) | | **Net cash from financing activities** | $6,741 | $301,265 | - In August 2023, the company issued **$702.0 million of 1.250% convertible senior notes due 2028** and used a portion of the proceeds to repurchase **$273.8 million of its 2026 notes**[277](index=277&type=chunk) - A share repurchase program for up to **$100.0 million** was authorized in July 2024, but no repurchases were made as of December 31, 2024[278](index=278&type=chunk) [Financial Statements and Supplementary Data](index=67&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements detail Workiva's financial position, operations, and cash flows, highlighting the Sustain.Life acquisition, convertible notes, stock-based compensation, and deferred tax assets Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | $1,368,469 | $1,218,860 | | **Total Liabilities** | $1,410,153 | $1,308,250 | | **Total Stockholders' Deficit** | $(41,684) | $(89,390) | - On June 17, 2024, the company acquired Sustain.Life, Inc. for **$98.1 million net of cash acquired**, resulting in the recognition of **$89.1 million in goodwill** and **$11.9 million in intangible assets**[448](index=448&type=chunk)[449](index=449&type=chunk)[450](index=450&type=chunk) - As of December 31, 2024, the company had outstanding convertible senior notes with a net carrying amount of **$70.8 million (due 2026)** and **$694.1 million (due 2028)**[432](index=432&type=chunk) - Total stock-based compensation expense was **$102.2 million in 2024**, up from **$98.8 million in 2023**; as of year-end, there was **$173.9 million of unrecognized compensation expense** related to unvested restricted stock units[437](index=437&type=chunk)[443](index=443&type=chunk) - A full valuation allowance of **$267.0 million** was recorded against net U.S. deferred tax assets as of December 31, 2024, as management believes it is more likely than not that these benefits will not be realized[470](index=470&type=chunk)[471](index=471&type=chunk) [Controls and Procedures](index=110&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with an unqualified audit opinion - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2024[480](index=480&type=chunk) - Management's assessment concluded that internal control over financial reporting was effective as of December 31, 2024, and this assessment was audited by Ernst & Young LLP, who issued an unqualified opinion[481](index=481&type=chunk) Part III Part III incorporates by reference information on directors, executive officers, corporate governance, executive compensation, security ownership, and principal accounting fees - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the Registrant's Proxy Statement for the 2025 Annual Meeting of Stockholders[9](index=9&type=chunk)[490](index=490&type=chunk)[493](index=493&type=chunk)

Revenue Growth - Subscription revenue grew by 22% in Q4 2024, contributing to total revenue of $200 million, a 20% year-over-year increase from $167 million in Q4 2023[5] - Total revenue for the full year 2024 reached $739 million, a 17% increase from $630 million in 2023[11] - Total revenue for Q4 2024 reached $199.889 million, a 19.9% increase from $166.653 million in Q4 2023[21] - Subscription and support revenue increased to $180.897 million, up 21.5% from $148.788 million year-over-year[21] - Guidance for full year 2025 projects total revenue in the range of $864 million to $868 million[11] Customer Metrics - Customers with annual contract value over $500,000 increased by 32% year-over-year, reaching 181 customers[7] - Workiva's gross retention rate was 97% and net retention rate was 112% as of December 31, 2024[6] Profitability and Loss - GAAP net loss for Q4 2024 was $9 million, compared to a net loss of $4 million in Q4 2023, resulting in a net loss per share of $0.16[6] - Non-GAAP net income for Q4 2024 was $19 million, up from $18 million in the prior year's fourth quarter, with non-GAAP net income per diluted share of $0.33[6] - GAAP net loss for 2024 was $55 million, significantly improved from a net loss of $128 million in 2023[11] - Net loss for Q4 2024 was $8.815 million, compared to a net loss of $4.196 million in Q4 2023, reflecting a 110.5% increase[21] - The company experienced a net loss of $8.815 million in Q4 2024, compared to a net loss of $4.196 million in Q4 2023[32] Cash Flow and Liquidity - Free cash flow for 2024 was $86 million, compared to $69 million in 2023, with a free cash flow margin of 11.7%[11] - Net cash provided by operating activities for Q4 2024 was $43.970 million, compared to $24.342 million in Q4 2023, a 80.7% increase[25] - Free cash flow for Q4 2024 was $43.161 million, up from $23.950 million in Q4 2023, marking an increase of 80.5%[32] - Cash and cash equivalents as of December 31, 2024, were $301.835 million, up from $256.100 million in 2023[23] - Cash, cash equivalents, and restricted cash at the end of the period increased to $302.350 million in Q4 2024 from $256.721 million in Q4 2023, a rise of 17.7%[30] - Workiva had cash, cash equivalents, and marketable securities totaling $816 million as of December 31, 2024[6] Operating Expenses - Operating expenses for Q4 2024 totaled $167.520 million, a 21.1% increase from $138.281 million in Q4 2023[21] - Research and development expenses for Q4 2024 were $50.607 million, up from $42.555 million in Q4 2023, reflecting an increase of 18.4%[30] Deferred Revenue and Assets - Deferred revenue increased to $457.608 million in 2024, up 20.2% from $380.843 million in 2023[23] - Total assets increased to $1.368 billion in 2024, compared to $1.218 billion in 2023, marking a 12.3% growth[23] Margins - The GAAP operating margin for Q4 2024 was reported at (6.6)%, an improvement from (5.6)% in Q4 2023[32] - Non-GAAP operating margin for Q4 2024 was 7.4%, slightly down from 7.6% in Q4 2023[32] - The company provided guidance for a GAAP operating margin of (14.3)% for the year ending December 31, 2025[34] Stock-Based Compensation - The company reported stock-based compensation expense of $26.271 million for Q4 2024, an increase from $20.736 million in Q4 2023[25] Gross Profit - Gross profit for the year ended December 31, 2024, was $566.625 million, representing a 19.1% increase compared to $475.817 million in 2023[21] - Gross profit for subscription and support increased to $148.693 million in Q4 2024, up from $123.675 million in Q4 2023, representing a growth of 20.2%[30] - Non-GAAP gross profit for subscription and support reached $151.880 million in Q4 2024, compared to $124.973 million in Q4 2023, reflecting a 21.5% increase[30]

Stock Performance - Workiva stock experienced a significant sell-off, dropping 13 3% in Wednesday's trading, while the S&P 500 gained 0 6% and the Nasdaq Composite climbed 1 2% [1] EU Policy Impact - Germany and France are considering changes to the EU's sustainability reporting standards, which could impact Workiva's growth outlook as this category has been a significant part of its business [2] - The EU's Corporate Sustainability Reporting Directive (CSRD), effective since January 2023, requires companies to report on non-financial metrics, and Workiva provides a platform for this purpose [3] - Potential shifts in EU reporting requirements could lead to a significant sales shortfall for Workiva, as investors are concerned about the softening of one of its anticipated growth drivers [4] Future Outlook - Workiva will release its fourth-quarter earnings and host a conference call on February 25, where it may provide updates on its performance outlook in the EU and potential changes to CSRD reporting requirements [5] - The market may be overreacting to reports of possible policy shifts, as the extent of EU policy changes and Workiva's exposure to them remain unclear [6]

Investment Recommendation - The recommendation for Workiva (NYSE: WK) is a buy rating due to its potential to benefit from multiple secular tailwinds that support high-teens revenue growth in the next few years [1] Investment Approach - The investment approach focuses on long-term investments while incorporating short-term strategies to uncover alpha opportunities [1] - The analysis is bottom-up, emphasizing the fundamental strengths and weaknesses of individual companies [1] - The investment duration is medium to long-term, aiming to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1] Analyst's Position - The analyst has no stock, option, or derivative positions in any of the mentioned companies and no plans to initiate such positions within the next 72 hours [2] - The article expresses the analyst's own opinions and is not influenced by compensation or business relationships with the mentioned companies [2]

Market Overview - The year-end rally in November and early December has been nearly unprecedented, driving the S&P 500 to new heights almost daily [1] Analyst Insights - Gary Alexander has extensive experience covering technology companies and has been involved with seed-round startups, providing insights into current industry themes [1]

Core Insights - Deloitte and Workiva have launched four new sustainability-focused accelerators aimed at helping organizations comply with the EU's Corporate Sustainability Reporting Directive (CSRD) [1][2] - The accelerators enhance governance, risk, and compliance (GRC) controls and automation within the Workiva platform, facilitating compliance with CSRD and other EU regulations [2][3] Group 1: New Accelerators - The new accelerators include the CSRD Double Materiality Accelerator, Financed Emissions Calculator, ESRS Mapping Accelerator, and Activity Log Analyzer [3] - The CSRD Double Materiality Accelerator is designed to streamline the implementation of double materiality assessments [3] - The Financed Emissions Calculator helps organizations calculate Scope 3 financed emissions using the PCAF framework [3] - The ESRS Mapping Accelerator enables faster gap assessments by mapping existing GRI disclosures to ESRS requirements [3] - The Activity Log Analyzer tracks user activities on the Workiva platform, aiding in monitoring ESG activities [3] Group 2: Market Demand and Trends - There is a growing demand for comprehensive platforms to manage ESG reporting and regulatory compliance due to an expanding global regulatory environment [3] - 88% of institutional investors prioritize companies that effectively integrate financial and ESG data, indicating a shift towards transparency in sustainability practices [3] Group 3: Company Background - Workiva is a leading cloud platform provider for integrated reporting, combining financial, GRC, and ESG data in a secure environment [4][5] - Deloitte offers a wide range of audit, consulting, tax, and advisory services, serving nearly 90% of the Fortune 500 and over 8,500 U.S.-based private companies [6]

Core Viewpoint - Workiva is experiencing a significant disconnect between its stock performance and the overall bullish sentiment from analysts, with a strong focus on its growth potential in the software sector, particularly in ESG reporting [1][3][14]. Company Overview - Workiva offers a unique portfolio of software products designed to streamline data aggregation and reporting, which are increasingly critical for businesses [2][4]. - The company's stock has declined by 4% this year and is down 42% from its all-time high in 2021 [2][16]. Business Growth and Financial Performance - Workiva reported a record revenue of $186 million for Q3 2024, marking a 17% increase year-over-year and an acceleration from 15% growth in Q2 [9]. - The company raised its full-year revenue forecast for 2024 by $6 million, now projecting between $733 million and $735 million [9]. - The number of businesses served increased by 4.9% year-over-year, with a notable rise in high-spending customers [10][11]. - Operating expenses increased by only 10% in the first nine months of 2024, leading to a reduced net loss of $46.2 million compared to $123.3 million in the previous year [12]. Market Position and Analyst Sentiment - The majority of analysts covering Workiva have assigned it the highest buy rating, with no sell recommendations [3][14]. - The average price target for Workiva's stock over the next 12 months is $104.3, indicating a potential upside of 14.3% from its current trading price of $91.49 [15]. - The stock's price-to-sales ratio has decreased to a more reasonable 7.1 from around 20 during its peak, reflecting improved valuation amidst consistent revenue growth [16]. Future Growth Potential - Workiva is focusing on ESG reporting, which is a rapidly growing area due to increasing regulatory requirements globally [7][8]. - The company estimates a financial opportunity of $35 billion across various reporting sectors, while its current market capitalization stands at $5.1 billion, indicating substantial growth potential [17].

Core Viewpoint - Workiva reported quarterly earnings of $0.21 per share, missing the Zacks Consensus Estimate of $0.23 per share, but showing improvement from a loss of $0.65 per share a year ago, indicating a significant recovery in earnings despite the miss [1][2] Financial Performance - Workiva's revenues for the quarter ended September 2024 were $185.62 million, exceeding the Zacks Consensus Estimate by 1.71% and up from $158.18 million year-over-year, demonstrating consistent revenue growth [2] - Over the last four quarters, the company has surpassed consensus revenue estimates four times, indicating strong performance in revenue generation [2] Stock Performance - Workiva shares have declined approximately 18.8% since the beginning of the year, contrasting with the S&P 500's gain of 21.2%, highlighting underperformance relative to the broader market [3] - The current Zacks Rank for Workiva is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $0.34 on revenues of $192.22 million, and for the current fiscal year, it is $0.95 on revenues of $727.91 million, indicating positive expectations for future performance [7] - The trend of estimate revisions for Workiva is mixed, which could change following the recent earnings report [6] Industry Context - The Internet - Software industry, to which Workiva belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable industry outlook that could positively impact stock performance [8]

Revenue and Growth - Total revenues for the three months ended September 30, 2024, were $185.621 million, an increase from $158.175 million in the same period of 2023, representing a growth of 17.4%[70]. - Subscription and support revenue for the three months ended September 30, 2024, was $171.035 million, up from $143.421 million in the same period of 2023, reflecting a growth of 19.3%[70]. - The company reported revenue of $185.6 million and $538.8 million for the three and nine months ended September 30, 2024, respectively, compared to $158.2 million and $463.4 million for the same periods in 2023, representing growth of 17.3% and 16.3%[93]. - Total revenue for the three months ended September 30, 2024, increased by $27.4 million, primarily due to a $27.6 million increase in subscription and support revenue, reflecting a growth rate of 19.3% year-over-year[130]. - Total revenue for the nine months ended September 30, 2024, increased by $75.4 million, primarily due to a $76.9 million increase in subscription and support revenue[131]. - The company expects the revenue growth rate from subscription and support to continue to outpace revenue growth from professional services on an annual basis[130]. Expenses and Costs - Total interest expense for the three months ended September 30, 2024, was $3.003 million, compared to $2.090 million for the same period in 2023[59]. - Stock-based compensation expense for the three months ended September 30, 2024, totaled $27.470 million, compared to $19.377 million for the same period in 2023[64]. - Operating expenses for the three months ended September 30, 2024, totaled $163,732 thousand, representing a 21.0% increase compared to $135,345 thousand in the same period of 2023[135]. - Research and development expenses increased by 16.0% to $48,425 thousand for the three months ended September 30, 2024[135]. - Sales and marketing expenses rose by 23.7% to $89,756 thousand for the three months ended September 30, 2024[135]. - General and administrative expenses increased by $4.5 million (approximately 8.0%) for the three months ended September 30, 2024, mainly due to higher stock-based compensation[140]. Cash and Securities - As of September 30, 2024, total cash equivalents and marketable securities amounted to $637.8 million, with $109.7 million included in cash and cash equivalents[35]. - As of September 30, 2024, the company had cash, cash equivalents, and marketable securities totaling $776.4 million[147]. - Cash flow provided by operating activities was $18.9 million for the three months ended September 30, 2024, compared to $15.0 million for the same period in 2023[151]. - Cash used in investing activities was $49.6 million for the three months ended September 30, 2024, primarily for marketable securities purchases and the acquisition of Sustain.Life[158]. Customer Metrics - The number of customers increased to 6,237 as of September 30, 2024, up from 5,945 in 2023[107]. - Subscription and support revenue retention rate was 97.5% as of September 30, 2024, slightly down from 97.7% in the previous year[109]. - Subscription and support revenue from customers with annual contract value of $100k+ represented 71.8% of total subscription and support revenue for the three months ended September 30, 2024, up from 67.1% in 2023[113]. - Subscription and support revenue retention rate including add-ons was 110.5% as of September 30, 2024, down from 112.0% in the previous year[112]. Acquisitions and Investments - The company acquired Sustain.Life, Inc. for $98.1 million, enhancing its carbon accounting solutions and integrating it with its existing ESG reporting platform[81]. - The company incurred acquisition-related costs of approximately $1.1 million during the nine months ended September 30, 2024, which were expensed as incurred[83]. - The company plans to continue investing in platform development and expanding its sales and marketing efforts in EMEA and APAC regions[103]. Financial Position and Liabilities - Accrued expenses and other current liabilities totaled $111.0 million as of September 30, 2024, compared to $97.9 million as of December 31, 2023[34]. - Estimated health insurance claims decreased from $3.5 million as of December 31, 2023, to $2.4 million as of September 30, 2024[34]. - Customer deposits increased from $24.8 million as of December 31, 2023, to $25.7 million as of September 30, 2024[34]. - The fair value of convertible senior notes due in 2026 and 2028 was $82.4 million and $659.7 million, respectively, classified as Level 2 in the fair value hierarchy[47]. Market and Economic Conditions - The company expects continued volatility in the IPO and SPAC markets to negatively impact new sales of SEC and capital markets solutions in fiscal year 2024[96]. - Market risk exposures have not changed materially since December 31, 2023[169].