Workiva(US:WK)2019-05-02 02:16Financial Data and Key Metrics Changes - Billings increased by 25% from Q1 2018 to Q1 2019, but declined 19% sequentially from Q4 2018 to Q1 2019 [18] - Total revenue for Q1 2019 was nearly $70 million, representing a 16.8% increase from Q1 2018 [21] - Operating profit was recorded for the first time in Q1 2019, with an operating margin improvement of 720 basis points [19][31] - Gross profit was $51.2 million in Q1 2019, up 17.1% from the same quarter a year ago, with a consolidated gross margin of 73.2% [28] Business Line Data and Key Metrics Changes - Subscription and support revenue was $56.1 million, up 20.8% from Q1 2018, driven by deeper penetration of existing customers [22] - Professional services revenue was $13.8 million, an increase of 3% from Q1 2018, with growth in XBRL professional services [23] - Subscription and support revenue retention rate was 95.7%, unchanged from the same period last year, while the retention rate with add-ons improved to 110.7% [26][27] Market Data and Key Metrics Changes - The company finished Q1 with 3,366 customers, a net increase of 247 customers from Q1 2018 [24] - The number of contracts valued at over $100,000 a year totaled 493, up 47% from Q1 2018 [27] - For annual contract value of $150,000 plus, there were 207 customers, up 37% from Q1 2018 [27] Company Strategy and Development Direction - The company is focusing on building more APIs and connectors to improve integrations with ERPs and other third-party systems [11][12] - There is an aggressive expansion in Europe, with new offices in Frankfurt and Paris to better support customers [13] - The company aims to deepen its penetration of existing customers while also pursuing new customer acquisitions [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand for Wdesk, particularly in Europe, and noted that customers are seeking efficient reporting solutions [14][15] - The company plans to accelerate hiring to capitalize on revenue growth opportunities, expecting operating expenses to rise as a percentage of revenue [20][34] - Positive operating cash flow is anticipated for Q2 and the full year 2019, with a focus on improving operating cash flow significantly compared to 2018 [21][33] Other Important Information - The company raised its full-year 2019 revenue guidance to a range of $284 million to $286 million [34] - Non-GAAP operating loss guidance for the full year remains unchanged at $15 million to $17 million [34] Q&A Session Summary Question: Subscription growth rate and future expectations - Management indicated that they expect subscription growth to remain strong and are making investments to support this growth [38] Question: Impact of solution-based pricing on customer migration - Less than half of customers are on solution-based licensing, with significant add-on sales contributing to growth [40] Question: European XBRL mandate and customer inquiries - There is increasing interest from larger customers in Europe regarding the upcoming XBRL mandate, leading to inquiries about solutions [47] Question: Renewal values and sustainability - The new quarterly measurement of retention rates is expected to reduce variability, with a current retention rate of 110% [48] Question: New logo growth and sales strategy - The company anticipates a consistent pace of new logo additions, maintaining a balance between new logos and upselling to existing customers [66][67]