WK - NYSE

Good afternoon, ladies and gentlemen, and welcome to Workiva First Quarter 2024 Earnings Call. My name is Ellie, and I will be your host operator on this call. After the prepared remarks and prepared comments, we will conduct a question-and-answer session. Instructions will be provided at that time. [Operator Instructions]. I would now like to turn the meeting over to your host for today's call, Mike Rost, Senior Vice President of Corporate Development and Investor Relations at Workiva. Please go ahead.

Good afternoon, and thank you for joining us for Workiva's first quarter conference call. During today's call, we will review our first quarter results and discuss our guidance for the second quarter and full year 2024. Today's call has been prerecorded and will include comments from our Chief Executive Officer, Julie Iskow, followed by our Chief Financial Officer, Jill Klindt. We will then open the call up for a live Q&A session. A replay of this webcast will be available until May 9, 2024. Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section. Before we begin, I would like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including guidance for the second quarter and full fiscal year 2024. These forward-looking statements are subject to known and unknown risks and uncertainties. Workiva cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the company's annual report on Form 10-K and subsequent filings for factors that could cause our actual results to differ materially from any forward-looking statements. Also, during the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures, and certain additional information are also included in today's press release. With that, we'll begin by turning the call over to CEO, Julie Iskow.

Thank you, Mike, and thank you to everyone on today's call. Jill and I look forward to sharing our Q1 results. We'll also discuss our outlook for Q2 and updated guidance for the full year 2024. Q1 was another solid quarter. Subscription revenue grew at 20% and total revenue grew at 17%, which drove a beat to the high end of our revenue guidance. And operating margin came in slightly above the top range of our Q1 guide. In Q1, we once again saw broad-based demand across our solution portfolio. ESG was yet again one of our top solutions for new bookings. It was followed by strong execution in both our financial reporting and GRC solutions. Consistent with the past several quarters, we continue to see outpaced growth in our large contract customers. This is driven by additional solution sales into our installed base. In Q1, the number of contracts valued over $100,000 increased 24%. Those over $150,000 increased 29%, and contracts valued over $300,000 were up 34%, all compared to Q1 of 2023. Despite these positive proof points, we still saw a cautious buying environment. Nonetheless, I remain confident in our ability to successfully execute our growth strategy and advance our productivity initiatives. We have the strategy, the team, and the platform to deliver results. Our platform remains a key differentiator for our new logo wins and account expansion deals. Workiva is the only platform that brings financial reporting, ESG and GRC together in one secure controlled audit-ready environment. We are the platform for assured integrated reporting. I'd like to highlight 3 integrated reporting wins that we signed in Q1. First, a top 10 U.S. bank expanded use of the platform with investment in ESG. This was the 11-solution purchased by this bank. This 11-year loyal customer was engaged with 2 big 4 advisory firms for an ESG transformation project. Workiva was the clear ESG solution of choice based on the connected value of the platform. The big 4 firm that's driving the CSRD transformation engagement at this bank will be delivering the project. Second, we signed a 6-figure account expansion deal with a North American financial cooperative who added to their investment in Workiva with GRC. The purchase of the controlled management solution complements their previous investment in ESG, SEC, and financial services solutions. This company first purchased the Workiva platform for funds reporting in 2019. The opportunity with a co-sell with a big 4 advisory firm that was engaged in a GRC platform replacement at this company. The same big 4 firm will be providing delivery for this project. And third, we signed a 4-solution new logo Assured Integrated Reporting deal with a Canadian-based real estate and asset management company. They purchased Workiva's management reporting, controls management, risk management and ESG solutions. This was a true platform win. In this opportunity, there were multiple solution alternatives being evaluated for ESG, risk management, and controlled management. And it was not just the strength of our individual solutions, but it was also the connected platform approach that made Workiva the clear winner. This opportunity was a co-sell with a regional advisory firm who will be providing delivery for the project. Let's move on now to one of our top booking solutions for 7 quarters in a row. And yes, I said 7 quarters. ESG. Sustainability continues to be front and center in board rooms and C-suites across the globe. And our sustainability solution is driving pipeline expansion and success in winning both new logos and account expansion deals. We already support sustainability reporting for some of the world's most complex companies, now including over 30% of the Fortune 100. I'd like to highlight 3 ESG wins from the quarter. First, a Fortune 50 telecommunications company purchased our ESG solution to support their global ESG reporting initiatives. This company has been a loyal SEC customer for 4 years. At the time of the initial purchase, they chose to continue their manual processes for sustainability reporting using office productivity tools. But with the new regulatory requirements on the horizon, including the CSRD in Europe, the company engaged a specialized ESG regional advisory firm that worked with Workiva on a co-sell for this deal. This partner will be providing delivery for the project. Second, we signed a 6-figure new logo deal for ESG with a privately held European-based retailer. This opportunity was a co-sell with their trusted design agency, a Workiva partner that's been working with them on their integrated report for many years. Design agencies are an important stakeholder in the financial and sustainability reporting processes for many firms in Europe. So, the design reporting features available in our platform are a significant differentiator for CSRD deals, and they also provide an opportunity for these design firms to drive enhanced value to their clients. Our clients' long trusted relationships with these design agency partners instill further confidence in the purchase of Workiva. In addition to the influence from the design agency, this opportunity was a co-sell and will be delivered by the big 4 firm. And third, we signed a multi-6-figure account expansion deal with a U.S.-based Fortune 500 global payments company for ESG. This customer also owns Workiva's SEC, controls management, risk management, policy and procedures, and management reporting solutions. Since this firm has more than 30% of its revenue outside of the U.S., our CSRD-related platform features for double materiality assessments were critical in the decision criteria for this client. This opportunity was a co-sell with a big 4 firm that will be providing delivery for this project. I'll now turn to financial reporting. Our financial reporting solutions go well beyond SEC. They also include multi-entity reporting, private company reporting, management reporting, ESEF and industry-specific solutions. In Q1, financial reporting continued to contribute significantly to both new logos and account expansion deals. I'd like to highlight 3 financial reporting wins from the quarter. First, we closed a mid-6-figure new logo deal with a U.S.-based privately owned hedge fund. This was for our fund reporting solution. This deal was sourced and will be implemented by a regional advisory firm. We have seen an increase in private investment firms purchasing our fund solution now that they're subject to recent SEC regulatory disclosure requirements. Second, we closed a 3-solution new logo deal with a South American Bank. The bank purchased a multi-6-figure deal for SEC reporting, global statutory reporting and ESG. This deal was sourced and will be implemented by a big 4 advisory firm. And third, an Australian bank invested in Workiva's platform as a new customer with a multi-solution platform purchase that included private company reporting, global statutory reporting and ESG. Our financial reporting solution replaced their legacy reporting systems and was a competitive win over multiple ERP vendors. This opportunity was a co-sell with a big 4 advisory firm who will be providing delivery for this project. With increasing stakeholder scrutiny, establishing an integrated enterprise-wide governance, risk and compliance program is a strategic priority for many organizations. At the core, GRC programs include processes for controls, risk and audit management. I'd like to highlight 3 GRC deals that closed in Q1. First, an International Specialty Insurance and Reinsurance Group became a new platform customer with a multi-6-figure investment in our audit, controls, risk management and SEC solutions. This opportunity was sourced by a big 4 firm that was actively working with the company on an outsourced GRC project. The company decided to bring the GRC work in-house and will use Workiva's platform to support their SOX, audit, and risk management processes. This project will be implemented by the big 4 advisory firm. And second, the European-based pharma and medical supplies company purchased our risk management solution to complement their ESG purchase to manage ESG risks. This new logo deal was a co-sell and will be implemented by a big 4 advisory firm. Workiva was selected as the vendor of choice in this competitive deal since we were the only solution to provide capabilities that address not only GRC specific requirements, but also supported their future CSRD reporting needs. And third, we signed a new logo deal with the European-based automotive parts manufacturer who purchased our audit controls and risk management solutions. This was a competitive deal against a GRC platform provider. The opportunity was sourced and will be delivered by a global professional services firm. I'll move on now to an update on global regulations. On March 6, the Securities and Exchange Commission announced that it adopted its long-awaited climate disclosure rule. This new rule is set to enhance and standardize the disclosure of climate-related data and associated financial risks. The goal is to provide investors with consistent, comparable and reliable data in annual reports and registration statements. Since the announcement, there have been several legal challenges to the rule. Energy companies and business groups contend that the rules amount to environmental regulation and therefore, overset the SEC's legal mandate. On the other side, environmental groups, including the Sierra Club and Natural Resources Defense Council has countered that the rules don't go far enough. On April 4, the SEC announced that it exercised its discretion to stay the final rules pending our view in the eighth Circuit U.S. Court of Appeals. The SEC is just one of many stakeholders that organizations must factor in as they transform their sustainability data collection and reporting processes. As we've communicated in the past, regardless of regulatory mandates, companies have been purchasing and will continue to purchase software to report the sustainability and financial information. The regulatory timing and the enforcement in Europe is much clearer. As highlighted in several of our Q1 client wins, we're seeing CSRD requirements driving purchasing decisions in both the U.S. and Europe. Q1 did bring further clarity on the digital disclosure requirements for CSRD. On February 8, the European Financial Reporting Advisory Group, or EFRAG, announced its public consultation on the draft ESRS XBRL taxonomy. With the CSRD, the EU stated that it aims to bring sustainability reporting on equal footing with financial reporting. And this includes requirements around digital disclosure using XBRL. The draft CSRD taxonomy published the first week in February will utilize the European Single Electronic Format, ESEF, which is already required for EU publicly listed companies in reporting their annual financial statements. The European Single Electronic Format, which is based on in-line-XBRL will be the same standard use for sustainability disclosures. Workiva is a global leader in XBRL and already supports over 1,200 organizations in their XBRL reporting using the ESEF format for annual financial disclosures. Similar to the process used for financial reporting, companies will have to tag their CSRD disclosures with a digital XBRL taxonomy, having a unique definition for every data point. This draft XBRL taxonomy has more than 1,000 data points with a wide range of types, including GHG emissions, water and energy consumption, head count, pollution and the number of narrative disclosures. Workiva stands ready to serve our clients with these new XBRL requirements. In fact, Workiva clients already have the ability to explore and test this new CSRD XBRL taxonomy with their disclosure data. The publishing of this new XBRL taxonomy reinforces the requirement that financial and sustainability information will need to follow a consistent disclosure process. This is what Workiva does. And this is what Assured integrated reporting is all about. The sustainability regulations in Europe go beyond the CSRD. Just last week, the European Parliament approved the corporate sustainability due diligence directive, moving one step closer to formal adoption by the European Union. Referred to as the CS3D, this regulation will require companies to track and report the adverse human rights and environmental impacts of their operations and their value chains. It also requires that they put in place appropriate compliance measures. The directive applies to EU companies with more than 1,000 employees and a global revenue of over EUR 450 million. And it also applies to non-EU companies generating that same amount of revenue within the EU, EUR 450 million. Companies will be required to integrate mandatory human rights and environmental due diligence into their policies and risk management systems. Companies that do not comply with the CS3D may face sanctions from national and administrative authorities, including fines of up to 5% of their global revenue. Let's move on now to platform innovation. In Q1, we continued to deliver new capabilities that address our customers' ever-changing requirements. As I speak about often, a significant driver of many of our product requirements are new and changing regulations. Delivering features that enable our customers to comply with regulations that Dana standards are released, and of course, well ahead of regulatory deadlines is a strong differentiator for Workiva. In Q1, we released enhancements to our ESG solution to support the draft ESEF XBRL taxonomy. These capabilities enable customers to explore the CSRD tagging requirements defined in the new ESEF standard that was released in February. We also released new features for financial reporting, and these include support for U.K. ESEF 2024 and additional country-specific tax disclosure taxonomies. We are a global leader in XBRL tagging, fast, efficient and accurate. And yes, we've been using AI in our tagging for years. Speaking of AI, Q1 also saw the release of new enhancements to the generative AI capabilities that we launched last year. We've built AI into our platform, and we're delivering capabilities our customers can trust. In Q1, we released a new generative AI information assistant. It's available anywhere in the Workiva platform. It provides a conversational prompt to get details about our solutions, best practices and enablement. And this is just one example of delivering an AI solution that works for our customers that leverages trusted data sources and that provides immediate value. For the balance of 2024, we'll continue to focus R&D on the pace of product innovation, consistent execution and enhancing our high-performing differentiated platform. You can expect to see continued development in response to the ever-changing requirements for ESG, more comprehensive DRC functionality and enhanced capabilities throughout the platform to support our reporting and disclosure use cases. I'll move on now to say a few words about our guide. Taking into consideration the current demand environment, we were pleased with our subscription revenue growth for Q1. With respect to our future outlook, Jill will provide the numbers for our updated revenue and profit guidance for both Q2 and full year 2024. What you'll see in this guide is that overall, we remain first and foremost focused on growth. Now, unlike other SaaS companies, though, we remain cautious on the top line as the current measured buying environment may persist until we see changes in the market conditions. We are increasing our full year non-GAAP operating margin guide by over 100 basis points as a result of increasing operating leverage, and we remain committed to improving our productivity and performance. We are confident in the resiliency of our business, the continued demand for our assured integrated reporting platform and our ability to expand in our large and relatively unaddressed TAM. Regulations around the world are increasing in both scope and complexity. Our customers are faced with greater investor scrutiny, more rigorous audit requirements and an increased need to manage material risk and disclosures. Companies need transparency. Companies need to comply with regulation, and companies need accuracy in reporting and disclosure. We provide solutions that companies need in both good times and in challenging times. In closing, I'd like to thank our talented team of dedicated employees, their commitment to our values and the way they support our customers, our communities, and each other have yet again earned us a spot on the list of Fortune's 100 Best Companies to work for, and it's our sixth consecutive year winning this award. Workiva again, ranks in the top 50 on this list. This award celebrates the world-class culture we've created and maintained. And thank you to our customers, our partners and our shareholders for your continued trust in Workiva. We believe we have the right team, the right technology at the right time to capitalize on the increasing global opportunities to power transparent reporting for a better world. And with that, I'll now turn the call over to you, Jill.

Thank you, Julie. For our call today, I will be discussing the financials and key metric highlights for the first quarter of 2024. Following that, I will provide commentary and guidance for Q2 and full year 2024 before opening the line for questions. As Julie mentioned, we beat the high end of our Q1 revenue guidance due to strong subscription revenue growth. We also delivered operating results at the high end of our guidance, generating $6 million of operating profit, an 830-basis point improvement versus Q1 2023. We generated $175.7 million of total revenue in the first quarter, delivering growth of 17% from Q1 2023. Subscription revenue was $155 million, up 20% from Q1 2023. A combination of new customers and account expansions continue to contribute to our strong revenue growth. New customers added in the last 12 months accounted for 45% of the increase in subscription revenue. Professional services revenue was $20.7 million in Q1 2024, remaining flat compared to the same quarter last year. A decline in setup in consulting revenue was offset by growth in XBRL services. We are making progress on our strategic plan to shift lower margin setup and consulting services to our advisory and consulting partners. We anticipate that the revenue from setup and consulting services will continue to decrease throughout 2024 compared to 2023. Moving to our performance metrics. We had 6,074 customers at the end of Q1 2024, a growth of 320 customers from Q1 2023. Our gross revenue retention rate of 98% was well ahead of our 96% internal target, and our net revenue retention rate increased to 111% from the first quarter of 2024 compared to 109% for Q1 2023. We expect this rate will have quarter-over-quarter fluctuations due to items such as currency, seasonality and solution mix of sales. For Q1 2024, 66% of our subscription revenue was generated from customers that have multiple solutions. This compares to 63% reported in Q1 2023. We are pleased with this trend and the progress it shows as we expand relationships with our largest customers. This account expansion trend is also reflected in our large contract customers. In the first quarter of 2024, we had 1,696 contracts valued at over $100,000 per year, up 24% from Q1 the prior year. The number of contracts valued at over $150,000 totaled 961 customers in the first quarter, up 29% from Q1 2023, and the number of contracts valued over $300,000 totaled 332, up 34% from Q1 2023. Moving on to our operating results. Gross profit totaled $136.5 million in Q1, up 20% from the prior year. Gross margin improved year-over-year by 220 basis points, increasing to 78% in Q1 2024. This was driven by improved leverage in compensation and cloud computing costs versus the same quarter a year ago. Operating expenses increased 8% from Q1 2023, driving 610 basis points of our margin improvement versus the prior year. Our continued focus on process automation and efficiency helped improve productivity and drove margin improvement compared to Q1 2023. We posted operating profit of $6 million in Q1 2024 compared to the Q1 2023 operating loss of $7.3 million. We were pleased with the leverage we delivered. The operating profit improvement was driven by revenue growth, disciplined investments and managing controllable expenses. At March 31, 2024, cash, cash equivalents, and marketable securities increased $25 million sequentially to a balance of $838 million. Operating activities in Q1 2024 resulted in cash provided of $25 million compared with cash provided of $6 million in the same quarter a year ago. In Q1 2024, our free cash flow margin was 14%, an improvement of over 1,000 basis points versus Q1 2023. Turning now to our guidance for Q2 and the full year 2024. As Julie discussed, it remains an uncertain macro in a measured customer buying environment. However, we continue to focus on execution and are encouraged by opportunities to drive growth over the longer-term. For the second quarter of 2024, we expect total revenue to range from $174 million to $176 million. We expect services revenue will be down compared to Q2 2023. This is a result of the shift I discussed, moving our low-margin setup and consulting services to our partners, as well as flat to slightly down XBRL services revenue. We expect non-GAAP operating income to range from $2 million to $4 million, and net income of $0.16 to $0.19 on a per share basis. Our share count will be approximately 55 million weighted average shares. Seasonality in our business can impact quarter-over-quarter revenue and expenses. Our Q2 2024 operating margin guidance reflects a seasonal quarter-over-quarter decrease in XBRL services revenue, as well as expense fluctuations. For the full year 2024, we expect total revenue to be between $79 million and $723 million. We expect total services revenue to remain flat. We expect XBRL services revenue will continue to grow at a low single-digit rate. For setup and consulting revenue, we expect a similar rate of decline from what we saw in 2023. We expect our subscription revenue growth to be slightly over 16% at the midpoint. We are increasing our guidance for non-GAAP operating income to range from $27 million to $31 million, or a net profit of $0.96 to $1.03 on a per share basis. Our share count will be approximately 55 million weighted average shares. We believe we will post positive free cash flow margin of 11% for the full year 2024. To reiterate Julie's comments, while we are focused on growth, we continue to look for leverage in our business. With calculated investment, we believe we can expect the best returns in the long-term. Before we proceed to the Q&A session, I'd like to emphasize 3 important points. First, ESG reporting is an increasing requirement. We believe our platform continues to be valuable to companies as they solve for this need. Second, I want to reiterate how pleased we are with the large account growth we saw during Q1. Expansion into our existing customer base is not only an important factor contributing to our growth, but also helps strengthen our customer relationships. And finally, our focus on generating leverage from our existing resources led to our full year operating margin guidance increase. We look for efficient ways to expand in our large and relatively unaddressed TAM. In conclusion, I want to echo Julie's thanks to our employees. Your dedication and enthusiasm led to our placement on Fortune's 100 Best Companies to work for -- for the sixth year in a row. It's because of you that we continue to deliver a positive impact, benefiting everyone involved: customers, partners, shareholders and employees. We're now ready to take your questions. Operator, please begin the Q&A session.

We are now opening the floor for a question-and-answer session. [Operator Instructions]. Our first question comes from Steve Enders from Citi.

Okay. Great. I guess maybe just to start, I guess it would be great to hear kind of what's going on with ESG conversations post the SEC clarification, and maybe some of the contestation there along with the CSRD. Like has the tone of those conversations changed or the drive to look for ESG solutions in the market? Just how has that kind of evolved over the past few months?

Sure. This is Julie. Thank you, Steve, for the question. I am sure it's on minds of many. It's a great question given the visibility of ESG. The SEC did issue their climate disclosure rule and then put a stay on the rule a month later. We believe the publishing of the rule, in fact, did provide companies with a lot of clarity on what will be required in the detail to build road map and how they'll have to comply. As you know, Workiva has 92% of the Russell 1000 as clients. So, we have a very healthy share of large accelerated and accelerated filers who are going to need to comply. Now, although they put the stay on the rule, the SEC has stated that it intends to vigorously defend the validity of the climate rules. And it's -- the previous climate change-related disclosure guidance, they've cited a lot is still very much enforced. But you're right, not 9 cases were filed challenging that climate rule, the recent climate rule. And several cases on the other side, too, -- but we'll see what happens there with the lawsuits and they're in the circuit court right now. But as we've communicated in the past, I mean, regardless of the regulations, regardless of the mandates, companies have been, and are going to continue to purchase software to report sustainability and financial information. In category of customers, yes, that we call box checkers or compliers, we do believe there may be some delay in purchasing, but we believe, again, the publishing this will provide a lot of clarity. And again, we have got 92% of that Russell 1000 clients, and we'll have a healthy share. So, from our perspective, the SEC being just one of the many stakeholders that organizations have to factor in here for sustainability day collection and reporting. So, we've not yet seen any withdraw from that. We see, again, a lot of conversations around. There's still California coming, even CSRD in Europe and so forth. So, the conversations have not changed given that law. There's just a lot of clarity on it what it will be when it comes.

Okay. Great. That's helpful context there. And then maybe for -- well, I guess maybe just on the outlook, especially on the margin side. I mean, pretty healthy raise there. I guess, how should we be thinking about maybe what has changed from prior assumptions? And maybe what line items would be seeing the most leverage here?

So, I mean, Jill, you can chime in. But essentially, we're focused on, of course, productivity. As we said, top line growth is incredibly important. That's our largest focus. We'll continue to do that. But as we've been talking about on calls prior, we have been pushing hard on being very thoughtful about the roles that we hire, the people that we hire in those roles, and that we have the right activities going on to go after our large relatively, again, unaddressed TAM. So, we are hiring well. We're being thoughtful about the way using our teams. We've also talked about the efficiency and the productivity and the processes and automation that we're adding into the mix because we are moving from a $0.5 billion to $1 billion company, things need to be done differently. So, there's a lot more rigor and discipline in the way we're working. So, again, efficiencies, automation, right people and being thoughtful about the hiring.

And really, Steve, you're going to see that across the income statement. It's going to be across all teams where we have the same motion in place, exactly what Julie is talking about. So, it will be improvement across the board.

Our next question comes from Alex Sklar from Raymond James.

Great. I think I'm just going to follow up on Steve's last question there, Jill, in terms of kind of the revenue and profitability seasonality this year. Can you just talk about some of the puts and takes on what's driving the second quarter outlook, but the higher kind of second half of the year outlook. Any more color you can give either on the subscription versus services split? Or is there anything you're seeing in terms of demand environment in the second quarter that might not impact 2Q, but hit in the back half of the year?

Sure. Thanks, Alex, for the question. So, for Q2, we did see -- there is always seasonality, especially in services revenue, XBRL services revenue from Q1 to Q2. In Q1, we have a lot of work that's done related to the case, and that's a larger volume, large dollars than what we see for XBRL tanning services work in Q2. The other piece that we have talked about is that the macro environment does impact -- has been impacting our bookings. We have seen those extended deal cycles. And especially Q1, seasonally has lower bookings for us than any other quarter in the year. And so, just looking at seasonality in SMS and in subscription revenue is what we're seeing in Q2. And you saw for the full year and for the second half, we're still very strongly believe that for the full year growth, and as you even out over each quarter, we still have very strong expectations for the full year. And then related to expense in Q2, we do have some movement between quarters, sometimes in internal events and that sort of thing, and just seasonal spending that can fluctuate quarter-over-quarter. But in looking at the full year, you can see exactly what you mentioned in the second half, we do believe that everything evens out as far as the quarter-over-quarter spend and feel very strongly and pleased with how our forecast is shaping up for the full year.

Okay. And then Julie, maybe just one for you. Given some of the prepared remarks commentary around the multi-solution customer success, and as we think about kind of capital markets activity starting to come back here a little bit, can you just talk about how that benefits some of your nonfinancial reporting solutions. So, how much more solutions per customer does an SEC customer take versus your non-SEC based? Or maybe said a different way, how important is new public company growth for your nonfinancial reporting solutions?

So, we do, of course, want to keep a blend of new logos and new solutions with existing customers. That's what we strive to do, somewhere between 40-60 is about where we -- the largest gap we want to have. So, we are continuing to do both new logos and new solutions. Multi-solution, I'll tell you this. I mean, our current customer base is a tremendous asset for us. I mean, we've reported in our 10-K, we now have 90% of the Fortune 100, 85% of the Fortune 500, and 80% of Fortune 1000. So, going into that installed base, again, is a significant drive for us and a lot of effort. We go in with our partners and our relationships with partners are absolutely contributing to strong success there with our expansion. And those multi-solution account expansion deals really do push the revenue. We go out, as you know, the market with assured integrated reporting, which means we are working with our customers on financial reporting, which includes a multi-entity reporting and management reporting, and so forth, including cap markets, which you asked about. So, a lot of landing with cap markets and private company reporting, and then rolling into the other solutions of financial reporting, nonfinancial or sustainability, or ESG, along with our GRC solutions. So, we are resilient even without the cap markets business right now coming back in any substantive way, but because of our broad portfolio, and we're heavily focused on that. And we've not baked any cap markets bookings coming into the next several months for this year, quarters for this year.

Yes, we expect those cap market bookings to remain fairly flat throughout the year, just what we've been seeing over the past few quarters.

Next question comes from Terry Tillman from Truist Securities.

This is Dominique Manansala on for Terry. Just wanted to look at some of the newer GenAI capabilities like the GenAI Infosys and mentioned on the call or the ESG specific one where users can drop disclosures. Could you share any feedback you may receive from customers thus far? And as you speak to customers and gather some GenAI leads, are there any other specific verticals or sectors you see holding the greatest potential of GenAI this year?

So, I'll comment on our industry, of course, our sector and Workiva. But thanks for the question, another hot topic of 2023 and it has rolled in this 2024. We're definitely enthusiastic about the delivery of our generative AI capabilities to power new features on the platform. You mentioned a few Workiva users get large language models in app now from Google and Microsoft and AWS integrated into our platform, secure platform, not their information not used to train those large language models. The early feedback, as you asked about from customers is that they're appreciating being able to use those capabilities in app, both for convenience and, of course, for data security. They can author and edit, and rewrite leveraging the capabilities, and it's across all workflows in our platform. We also, as you mentioned, rolled out the capability for ESG specific use and we rolled out the help and training enablement capability within the platform. As far as feedback, we're watching how our users are using the capabilities. We're learning, we're understanding, we're getting information about how they're valuing those capabilities. And that's really what our initial focus is on iterating to ensure they are getting value, and we create new featuring new capabilities using generative AI. Our team is looking into how it's being leveraged.

Our next question comes from Dan Jester from BMO Capital Markets.

Great. In the prepared remarks, you mentioned a really interesting European ESG, which is great to hear. I'd love to just kind of sort of a European specific update in terms of how you're seeing demand. And I think in the recent past, you've made some changes in how you go to market and your sales organization in Europe. And so, I love sort of how you're seeing productivity today? And do you expect kind of further improvement as the year progresses in Europe?

Sure, absolutely. Thanks, Dan. Our momentum in Europe just continues to build, and we're very pleased with it, and the results we're seeing there. And we mentioned last quarter, we're now up to 15% of revenue outside of North America, and that's primarily in Europe. And I also highlighted in my prepared remarks, we have some signature wins there, multi-solution 6-figure deals and with our partners. So, we're very bullish on the opportunity there. Our value prop of assured integrated reporting is resonating, particularly because of the CSRD. It is, in fact, a short-integrated reporting, the financials with the nonfinancial data with assurance. And I will also say, however, despite the progress, we're still very open about the need for continued improvement there, and we will continue to do that. So, our strategy in Europe is working. It's intact. Messaging and assured integrated reporting, resonating. So, lots of green shoots there and seeing a lot of early customer wins driven by the requirements in regulation.

Great. That's really helpful. And then maybe this is a question for Jill. To follow up on the seasonality comment before it does look like bookings in the first quarter did slow down again sequentially. And so, I wonder, can you just help us understand your level of visibility into the back half? And maybe just help us remind us about sort of sales cycles and kind of how you're thinking about the visibility in the platform today relative to a similar period in time in other years, anything you would compare and contrast would be really helpful.

So, we do have pretty standard seasonality in our bookings year-over-year. Even as we've been talking about, when you have a tough macro environment, Q1 is always lower. And it's because we have a lot of our customers that we're working with tend to be heads down for the majority of the quarter doing their annual filings for calendar filers. And so that's pretty standard. And then Q2 and Q3, both pick up, they can be more similar, sometimes a little bit higher in Q2. But I think Q4 is always seasonally our largest quarter for bookings, just as an overview of our booking seasonality.

The next question comes from Ryan Krieger from Wolfe Research.

Great. So, I just kind of want to add on to the question that was just asked. If we look at RPO grew kind of 20% in the quarter, but that's been steadily declining in the last couple of quarters. And then sequential customer adds were lower than a typical 1Q. So, was there anything anomalous to call out there such as push deals or sales cycles extending? Or anything that weighed on those metrics just because they do look a little bit lower than the typical amount. And then to the extent you can add some color, how did April trend compared to kind of 1Q?

I'll start with the RPO of course, of that question, Ryan. Thanks for the question. When we look at our RPO, for the past few years, we've been talking about that we've been moving our contracts over to being mostly 3-year contracts. The majority of our contracts are now 3-year terms. And so, we did have some ebbs and flows movements due to that changeover over the last few years, moving from annual contracts to 3-year contracts and the RPO metrics. CRPO was a little bit -- it took out a lot of that noise, but not all of it. And so, we do think that over the course of 2024 that will settle into a more regular seasonal cadence of RPO. And so, that's part of what we're seeing. But what we're also seeing in the RPO number in Q1 is the result of the slowing -- the macro factors slowing bookings that we saw throughout 2023, that we've talked about. And so, it is down. It's something that we're watching really closely. But we feel very strongly that our model on revenue is solid, and we expect to be able to deliver on the guide for revenue that we gave for the full year. And in the second part of your question, the logo growth. You heard in the prepared remarks, 45% of our revenue in Q1 came from new customers added in the last 12 months. And that is down from where it was in Q4. We have seen some slowing in new logos. A lot of that is because of U.S. markets, slowing and cap markets, fewer new customers or new public companies in the U.S. And when we see new logo growth, it does more heavily skewed towards EMEA, where customers or skews towards some of our other newer areas, geographies. But we still are focusing really heavily on that mix. It's very important for us as a company. As Julie was just talking about a moment ago that we need to expand within our existing base, but we also need those new customers in order to continue to build the business. So, we still find both very important.

Our next question comes from Adam Hotchkiss from Goldman Sachs.

Great. I guess to start, I'd just be curious how you're seeing the non-EU-based global multinationals approach ESG given they're a bit later in the CSRD regulatory requirement cycle, but still have California and potentially SEC to grapple with. Is there more of a willingness to take a global approach to ESG here? Or are companies taking this more on a piecemeal basis depending on which geographies have in pending regulation. Just curious if you're seeing anything interesting there?

Yes. I mean, a great question. And you're seeing ESG worldwide in various regions. But I will start off just by saying ESG remains one of our top solutions in booking performance in Q1. And as I mentioned on the call, in the prepared remarks, it's been in the top 3 bookings for the last 7 quarters. And we continue to add Fortune 500 clients to our already lit roster of ESG account expansion. We're now over 30% of the Fortune 100. So, we continue to see strong demand for Workiva's ESG solution even without the regulation in the U.S. And yes, even with the political debate around ESG acronyms and stakeholder demand for the transparency and the nonfinancial data is continuing to increase. And a lot of the U.S. companies know they will need to comply with the state of California and other regulations, including the CSRD, though it was -- had a change in its reporting date for the non-EU. But we are absolutely seeing global approach and striving to meet those requirements. And again, it's not just around the regulation, the mandatory nature of things. Companies are doing that. They've made science-based targets and they need to maintain progress towards those. So, they need that visibility. There are a number of stakeholders beyond the regulatory bodies that they're working towards satisfying. So, we're absolutely seeing strong demand for ESG.

Yes. That's great. And then just on that point, I saw the ESG practitioner survey you released. And I think one of the stats that was pretty interesting was the 81% of companies not subject to CSRD intending to still partially and fully align with sustainability disclosures. Curious, given how stringent some of those things are around scope emissions and things like that, what you think is driving the willingness to do that? And then how you think about getting from 81% of companies wanting to partially or fully aligning to actually starting to move on this.

We were not surprised by that statistic, because as I just described a moment ago, that's what we're seeing in our client base and the drivers are, as I described, it's stakeholder demand, right? It isn't just the regulation. They know it's coming, and it's not a matter of if, it's a matter of when, and they're getting ahead of it. It is the larger the company and the more complex the company, the harder it is to comply. They're getting ahead of it. They're purchasing software. They're getting third parties and partners to help with this, doing their materiality assessments and getting their data in shape. I mean, the same survey also showed they're beginning to trust their data more. They're getting their data in order, and software is, of course, helping with that. So, I'm not surprised at that statistic at all given what we're seeing in the market today.

We don't have any pending questions as of the moment. I'd now like to hand back over to the management for the final remarks.

Yes. Well, thank you, everybody, for joining the call, and this concludes today's call. And please go on the Investor Relations site for Workiva and download our investor presentation for more information. Thank you.