WORKIVA INC Q4 FY2024 earnings call

• Workiva had a strong close to 2024 with Q4 top line results beating the high end of guidance, subscription revenue growth of 22% and total revenue growth of 20% y/y. Full year 2024 exceeded revenue guidance with 20% subscription revenue growth and 17% total revenue growth.
• Improved operating margin: Non-GAAP operating margin was 4.3% in 2024, up from 1.6% in 2023. Full year free cash flow margin was 11.7%, 170 basis points above the guide provided in Feb 2024.
• Strong account expansion: Net retention rate improved to 112%, with number of contracts valued over $300,000 up 34% and over $500,000 up 32% y/y.
• 2024 highlights: Consistently winning larger deals, platform adoption by CIOs/CFOs, global expansion (17.5% non-Americas revenue up 280bps from 2023), and strong partner ecosystem.
• Deal highlights: Wins in Assured Integrated Reporting, sustainability (e.g., mid-six-figure deals with Fortune 50 transportation and US-based Fortune 100 tech companies), financial services, and GRC; AI adoption as innovation priority with customers leveraging AI for content creation and workflow streamlining.

In Q4 2024, Workiva achieved total revenue of $200 million, up 20% year-over-year, with subscription revenue at $181 million, up 22% year-over-year. For the full year 2024, total revenue was $739 million, up 17% year-over-year, and subscription revenue was $668 million, up 20% year-over-year. Q4 2024 gross margin improved 80 basis points year-over-year to 79%, and full year 2024 gross margin was 78%, up 180 basis points year-over-year. Q4 2024 operating margin was 7.4%, and full year 2024 operating margin was 4.3%. The net retention rate in Q4 2024 was 112%, up from 110% in Q4 2023. Additionally, 17.5% of Workiva's 2024 total worldwide revenue came from outside the Americas, up 280 basis points from 2023.

• Q1 2025: Total revenue expected to range from $203 million to $205 million; services revenue slightly down compared to Q1 2024; non-GAAP operating margin approximately breakeven due to Q1 seasonality.
• Full year 2025: Total revenue expected to range from $864 million to $868 million; subscription revenue growth 20% at midpoint; non-GAAP operating margin 5%-5.5%; free cash flow margin approximately 12% for the year; operating margin in back half of 2025 stronger than first half.

• Policy and geopolitical uncertainty, including potential regulatory changes in Europe and new administration impacts in the US.
• Currency exchange rate impacts that could affect results.

Q: Rob Oliver with Baird asked about policy and geopolitical uncertainty and pipeline, and how the multiproduct strategy helps mitigate risk.

A: Julie Iskow responded that it's general uncertainty and the platform's broad-based demand across solutions, with new logos, account expansion, and partner co-sell driving growth.

Q: Alex Sklar with Raymond James inquired about the 20% subscription growth guide and sustainability mix.

A: Julie Iskow stated it's a balanced and thoughtful approach, and Jill Klindt mentioned sustainability revenues and bookings were strong, with sustainability being a top booking solution for 10 quarters.

Q: Dominique Manansala with Truist asked about setup/consulting work shifting to partners and partner ecosystem in sustainability.

A: Julie Iskow said partners are involved in most upmarket deals and are a big part of the go-to-market strategy for sustainability and broader platform sales.

Q: Adam Hotchkiss with Goldman Sachs asked about sustainability project deferrals and profitability investment cadence.

A: Julie Iskow said no trends of deferrals seen in Q1, and Jill Klindt stated they manage expenses to balance investments and stay on track for 2027/2030 margin goals.

Q: Daniel Jester with BMO asked about back-office digitization and Europe revenue.

A: Julie Iskow mentioned new ERP systems driving deals and broad-based demand in Europe beyond CSRD, with 17.5% non-Americas revenue up from 2023.

Q: George Kurosawa with Citi asked about growth margin mix and FX impact.

A: Jill Klindt said they manage expenses considering seasonality and currency as a risk factor in guidance.

Q: Jake Roberge with William Blair asked about ESG logo adoption and Sustain.Life feedback.

A: Julie Iskow discussed platform-based go-to-market and positive reception of Workiva Carbon, showing momentum in sustainability deals.