Workiva(US:WK)2023-02-22 03:48Financial Data and Key Metrics Changes - Workiva reported record revenue for Q4 2022, with subscription and support revenue growth of 21% and total revenue growth of 19% [8][9] - For the full year 2022, subscription and support revenue grew by 23%, while total revenue increased by 21% [9] - The non-GAAP operating profit margin for Q4 was 3.3%, exceeding guidance by 660 basis points [8] - Total revenue for Q4 2022 was $143.8 million, a 19.1% increase from Q4 2021 [29] - Gross profit for Q4 was $110.9 million, up 19% year-over-year, with a gross margin of 77.1% [34] Business Line Data and Key Metrics Changes - Subscription and support revenue for Q4 was $125.9 million, reflecting a 20.7% increase from the previous year [29] - Professional services revenue reached $17.9 million in Q4 2022, an 8.7% increase year-over-year, driven by higher XBRL services revenue [30] - The number of contracts valued over $100,000 per year increased by 20% year-over-year, totaling 1,345 contracts [33] Market Data and Key Metrics Changes - Workiva added 123 net new customers in Q4, bringing the total customer count to 5,664, a growth of 1,349 customers from Q4 2021 [30] - The gross revenue retention rate was 97.8%, an increase from 97% in the same period last year [31] Company Strategy and Development Direction - Workiva's strategy focuses on multi-solution deals, particularly in ESG, which has become the fastest-growing part of the business [11][14] - The company aims to leverage its unique integrated reporting platform that combines Financial Reporting, ESG, and GRC [12][24] - Workiva is positioned to capture a significant market opportunity with the passing of the European Corporate Sustainability Reporting Directive, which mandates ESG reporting for over 50,000 EU companies [17] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic pressures have elongated deal cycles, but the demand for ESG solutions is strong and offsetting some slowdowns [9][44] - The company remains optimistic about future growth, particularly in the ESG market, and expects to see improved operating margins in the latter half of 2023 [39][80] - Management emphasized the importance of maintaining a people-first culture and continuous innovation as core principles [22] Other Important Information - Workiva's cash, cash equivalents, and marketable securities totaled $431 million as of December 31, 2022 [35] - The company expects total revenue for Q1 2023 to range from $149 million to $150 million, with a projected non-GAAP operating loss [37] Q&A Session Summary Question: Comments on macro environment and ESG pace - Management acknowledged elongated deal cycles but noted strong ESG performance, indicating a generational opportunity [43][44] Question: Variance in operating income expectations - Management explained that increased travel and employee expenses contributed to the variance in operating income expectations [46][47] Question: Update on European market leadership - Management expressed optimism about new leadership in Europe and the potential for growth driven by ESG regulations [56] Question: Competitive landscape in ESG - Management indicated that while larger competitors focus on carbon accounting, Workiva's platform is well-positioned to win against both established and new disruptors [61] Question: Net retention rate and growth factors - Management expects to maintain high retention rates and sees potential for growth through add-on deals and customer satisfaction [65][66] Question: Focus areas for 2023 - Management highlighted growth through fit-for-purpose solutions and continued investment in ESG as key focus areas for 2023 [71] Question: Impact of CSRD regulations on pipeline - Management confirmed that inquiries related to CSRD are increasing, indicating a positive outlook for ESG opportunities [79][80]