Good afternoon, ladies and gentlemen. Welcome to Workiva's Third Quarter 2025 Earnings Call. My name is Chuck, and I will be your host operator on this call. [Operator Instructions] Please note that this call is being recorded on November 5, 2025, at 5:00 p.m. Eastern Time. I would now like to turn the meeting over to your host for today's call, Ms. Katie White, Senior Director of Investor Relations at Workiva. Please go ahead.

Good afternoon, and thank you for joining Workiva's Q3 2025 Conference Call. During today's call, we will review our third quarter results and discuss our guidance for the fourth quarter and full year 2025. Today's call will include comments from our Chief Executive Officer, Julie Iskow, followed by our Chief Financial Officer, Jill Klindt. We will then open up the call for a Q&A session, where we will be joined by Mike Rost, our Chief Strategy Officer. After market closed today, we issued a press release, which is available on our Investor Relations website, along with supplemental materials. This conference call is being webcast live, and following the call, an audio replay will be available on our website. During today's call, we will be making forward-looking statements regarding future events and financial performance, including guidance for the fourth quarter and full fiscal year 2025. These forward-looking statements are based on our assumptions as to the macroeconomic, political and regulatory environment as of today, reflect our best judgment based on factors currently known to us and are subject to significant risks and uncertainties. Workiva cautions that these forward-looking statements are not guarantees of future performance. We undertake no obligation to update or revise these statements. If the call is reviewed after today, the information presented during this call may not contain current or accurate information. Please refer to the company's annual report on Form 10-K and subsequent filings with the SEC for factors that may cause our actual results to differ materially from those contained in our forward-looking statements. Also during the course of today's call, we will refer to certain non-GAAP financial measures. Reconciliations of GAAP and non-GAAP measures are included in today's press release. With that, we'll begin by turning the call over to Workiva's CEO, Julie Iskow.

Thank you, Katie, and thank you all for joining us today. In Q3 of 2025, we delivered another quarter of strong financial performance, powered by the continued demand for our broad portfolio of solutions and our AI-powered platform. We beat the high end of our revenue guidance with 23% growth in subscription revenue and 21% growth in total revenue. On a year-to-date basis, we've delivered 22% subscription growth and 20% total revenue growth. This performance underscores the resilience of our business and the focused execution by our team at Workiva and our partners. As a result of the Q3 revenue beat, we're increasing our full year 2025 revenue guidance. We continue to deliver value to the market because we focus on customer needs. Our customers need to trust the numbers they're disclosing. They need to provide transparency across their business, both financial and nonfinancial information. And yes, they must be accountable with assurance as a requirement every step of the way. So our customers are looking to us and our platform to solve their most challenging problems. This value we deliver to our customers is highlighted by the continued growth in our large contract cohorts. In Q3, the number of contracts valued over $100,000 increased 23%. Those over $300,000 increased 41% and contracts valued over $500,000 increased 42%, all compared to Q3 of 2024. This large contract growth was driven by both additional solution sales within our existing customer base and the landing of larger new logo deals. At the same time, we delivered a non-GAAP operating margin of 12.7%. This is a 470 basis point beat on the high end of our guide. It's also an 860 basis point improvement compared to Q3 of 2024. With this margin beat, we're raising our full year 2025 non-GAAP operating margin guide…

Thank you, Julie, and good afternoon, everyone. Thank you for joining us. Today, I will begin by providing an overview of the financials and key metric highlights for the third quarter of 2025. I will then provide guidance for Q4 and the full year 2025. As Julie discussed, we had a strong Q3, generating $224 million of total revenue, up 21% over Q3 2024 and beating the high end of our revenue guidance by $4 million. There was an approximately 1 percentage point positive impact on revenue growth due to foreign currency fluctuations. Q3 subscription revenue was $210 million, up 23% from Q3 2024. Both new customers and account expansions continue to contribute to our solid revenue growth with new customers added in the last 12 months, accounting for 40% of the increase in Q3 subscription revenue. Q3 professional services revenue was $15 million, flat versus Q3 2024, with decline in setup and consulting services, offset by higher XBRL services. Our non-GAAP operating margin for the quarter was 12.7%. This 470 basis point beat on the high end of our guidance was driven by stronger-than-expected top line results, increased PTO usage and continued focus on operational efficiency and productivity. I'll now move on to our performance metrics for the quarter. We had 6,541 customers at the end of Q3 2025, a growth of 304 customers from Q3 2024. Our gross retention rate was 97%, exceeding our 96% target. And our net retention rate was 114% for the quarter versus 111% in Q3 2024. Similar to revenue growth, there was an approximately 1 point positive impact on NRR due to foreign currency fluctuations. During the quarter, 73% of our subscription revenue was generated from customers with multiple solutions. This is up from the 68% we achieved in Q3 2024. Growth in…

[Operator Instructions] And the first question will come from Rob Oliver with Baird.

I had 2. But first, Jill, just wanted to say best wishes. It's been a pleasure working with you. And good luck to Mike Hawkins as well. First question, Julie, is just around platform sale, you made reference to some competitive consolidations within some of the wins you had this quarter. And I guess, kind of a bigger picture question, when the office of the CFO buyers are thinking about kind of applications aligned with underlying data and workflow integrity, are you starting to see a bit of a tipping point where more of these functionalities, whether it be things within GRC or things within the financial suite around filing are starting to be consolidated around a single buyer, and should we expect that to happen more in the next couple of years and color you have there would be great. And then I had a quick follow-up.

Sure. Thanks, Rob, for the question. And I would say that the trend that you're describing is a trend and it probably comes from 2 things really. One is the age-old just consolidation when companies are looking to take more responsibility for their productivity, for their efficiency and so forth. That's one. Just -- there's so many benefits to a platform, and we've seen that since day 1 as we've evolved to the platform. It's just a responsible thing to do in the CFO and the CIO office, of course. But then there's the trend of data and the importance of it and the ability to leverage it and how it works across all of our solutions. And certainly, there is a recognition. You see this by our increase in expansion deals that there's a recognition that these solutions in the office of CFO played better together. We have capability that makes them better together and that data, that's one of our key competencies really is the ability to bring all that data together, the financial and the nonfinancial CFOs get a much better and more comprehensive view of their business. And so I would say it's, one, for the efficiency of the platform, but, two, also data, particularly with AI and so forth and be able to leverage it and get better insights more quickly. It's just way more important now we have the tools and the capabilities to be able to leverage it. And our platform is unique in that we have all of these capabilities together, and our customers get a much more holistic view and they're able to leverage that for better business decisions and speed and accuracy and so forth. So 2 reasons why the trend you've spotted is going to continue.

Great. Very helpful. And then just a quick follow-up around, you guys touched on at the Analyst Day portion down in D.C., the kind of a new approach to pricing around good, better, best. And I just wanted to get any color you could provide around early reads or indications around the acceptance of that pricing? I mean, I know you guys are already not a seat-based model. So you're not facing at least from what we can tell any of the risk or concerns around that. But would be interested to know what the early indicators are on the pricing change?

Sure. And this is nothing we are disclosing at this time. It certainly plays a positive role in our expansions. We can share that. And again, early on and looking forward to doing more of it and rolling it out in a broader way across the platform. But thank you for highlighting. It's a great way to get our additional capabilities in and roll them out and get increased adoption. So thank you, Rob.

Your next question will come from Steve Enders with Citi.

Okay. Great. And Jill, great to have worked with you over the years. Maybe just starting with you, I want to touch a little bit just on the early kind of view in the '26. I appreciate some of the guide points there. But maybe how should we think about the kind of continued operating margin expansion. Is it -- does it seem a little bit more kind of straight line from here to the medium-term targets? Or is there still a view of a hockey stick? And then I guess, secondarily, just, is there any way to maybe frame the magnitude of the accrued PTO change and the impact that might have on margin over this year or in the next year?

Sure. Thanks, Steve. For the op margin for 2026, as I mentioned, we do expect, as the trend has shown for the past couple of years, for margins to be better in the second half versus the first half. We will continue to have that seasonality. Thinking about the trajectory towards our 2027 medium-term target, we will continue to make progress, and you saw us make great progress this year. We're very pleased with the guidance that we're providing and the progress that we've made and everything that Julie has talked about as far as the company focusing on that margin improvement and focusing on productivity and getting leverage from our existing resources will continue into 2026. And so we will continue to see the results of that work throughout the year. We're not going to provide a specific number on margin for 2026 at this time, but I can tell you that we will continue to progress towards our updated 2027 medium-term target, the updated amount that we provided during our Investor Day in September. And then related to PTO, just as the second part of your question related to the PTO portion of that question. If you -- you can always take a look at our footnotes and looking at the balance of our accrual at the end of Q3, it's at around $19 million. A large portion of that would be from the U.S. Our accrued PTO balance will never go to 0, but as far as helping to build some models, we will see that balance continue to decline, and we expect the U.S. portion of that balance to decline significantly through the end of 2026.

Okay. Perfect. That's helpful. And then just on the, I guess, the large deal execution. I mean, I think for the past couple of quarters, we've seen record adds in the $300,000 and $500,000 customer level. But I guess, anything to call out that maybe is helping drive that or support the strength there? And then I guess, how do we think about maybe the forward trend there continuing as you look at the pipeline going into Q4 and into next year?

Sure. I can take that. And I'll say again, probably a two-pronged answer. One, the platform is resonating, and we are just -- we are getting better at selling it. So I think it's those 2 things. It's execution and the platform resonating the market. So just again, these solutions with the platform that has all of these capabilities unified together with data, with the capabilities we continue to roll out, it is resonating in the market across financial, nonfinancial and assurance. And we also have a team, a go-to-market team that is executing and they continue to get more capable of selling with partners, of selling larger deal sizes and selling multi solution. We just continue to get better and better in execution. And I think those are the 2 reasons that you are seeing that trend.

The next question will come from Alex Sklar with Raymond James.

This is John on for Alex. Wanted to ask here on the capital markets activity. Can you maybe touch on the deal pipeline there? It certainly sounded like IPO activity or your share of IPO activity picked up. But can you maybe talk about the reasons behind that? And maybe any early perspective on how things are shaping up for 2026? And then I have a quick follow-up.

On capital markets, specifically, we can comment on that certainly. One of the questions we get most consistently on earnings calls is around the capital markets. And we did see an increase in activity this quarter. And we had a lot of great high-profile IPOs, Sigma, Klarna, HeartFlow, et cetera, and we're encouraged by it, but we also know we're in the midst of a shutdown. So we expect it to continue once the shutdown goes away, if and when, And so we do expect it to come -- the momentum to continue on post that. We don't talk about, of course, forward-looking activity around our pipe. But we did give guidance for the quarter. So you probably have an idea about how we're thinking about the next quarter.

Okay. Helpful there. And then on the international side, continue to see positive momentum there in business coming from international markets. Can you maybe talk a little bit more about what you're seeing internationally, maybe how sales cycles are trending there versus domestic markets? And then maybe any differences you'd call out in multiproduct adoption internationally versus here in North America.

Sure. Year-to-date, revenue outside of the Americas represents, at this point, greater than 19% of our total revenue compared to 17% in the year about a year ago. And we continue to put focus on it. Europe has become a strong story for us in the past 12 months. Demand has been healthy. And it's essentially broad-based as it is across our -- all regions really, it's broad-based in the region. We're selling the value of the platform. We've got the multi-solution deals, partner-led, we're getting new logos and account expansion. So we continue to remain optimistic about the market opportunity and the future growth there. So good healthy demand, broad-based.

Your next question will come from Jacob Roberge with William Blair.

Jill, it's been great working with you, best wishes moving forward. Julie, can you talk a little bit more about what you're seeing in the demand environment? I know you all have talked about some macro uncertainty over the past few quarters, but both revenue and bookings growth continued to be very strong. So it would be great to hear what you're seeing in the environment and just how the Q4 pipe is shaping up.

Sure. I mean, this year has been defined by consistency, but it's consistent uncertainty. Just a lot of change. Changes are different every week, day, tariffs, policy changes, elections, government shutdown, inflation, rate cuts, the list just goes on. But the Workiva teams just continue to execute through the consistent change. And as we've mentioned in the past many times, our broad portfolio of solutions gives us a resilient business. But make no mistake about it, there is definitely uncertainty out there. but we are powering through with our value proposition, and it's a good one in these times, providing transparency, accountability and trust, and it just continues to resonate in the market.

Okay. That's helpful. And then just on GRC, from the Analyst Day in your prepared remarks today, it seems like there's some good momentum with that business right now. What do you think has changed for that business over the past year that's helping drive that growth?

Something went wrong there. Can you say which business you're talking about? I missed it.

I was talking specifically about the GRC business and just some momentum you're seeing there.

Yes. Again, we continue to be very competitive in that market, rolling out capabilities, but we're seeing in the market a move to a cloud. And we are, again, moving strongly there on our execution. There's a lot of legacy software out there and teams are getting stronger and stronger and also many multi-solution deals there. So it's a great platform expansion. It's a land capability. So it just continues to get strong and continue to move on the trends of legacy software removal and also move to the cloud.

Your next question will come from Brett Huff with Stephens.

Congrats on a nice quarter. First one is, can you give us an update on how the base that is kind of your core base of the SEC reporting. I know that was going to be a big focus of potential cross-sells and sort of returning to those folks also with the good, better, best upgrades. To us, that seems a really big asset that you all have that you're just starting to really go back to. Any update on that on how that's going, how the conversations are evolving?

Sure. Thank you for highlighting that. I mean our base is, of course, one of our tremendous assets with 95% of Fortune 100 to 85% of the Fortune 1000. We are executing well on account expansion. I highlighted a number of those deals on the call today. You can see some longtime SEC reporting customers moving into our other categories. So that account expansion is very strong. We also highlighted our account expansion and the percentage increases for those with ACV over $300,000 and $500,000 in the low 40%. So it is a -- an absolute focus for us is expanding into the installed base and bringing them more value and bringing the unified platform and all the capabilities.

That's helpful. Just final question for me. Can you talk a little bit about some of the nonregulatory drivers from the FSG product? I think last quarter or maybe at the Analyst Day, you were talking about some of the science-based targets and things like that, you're still seeing good momentum there. Beyond sort of the direct regulatory drivers, is that still a part of the conversation still driving new logos for you all?

Yes. I'm glad you brought sustainability up. It's very simple. It just -- it remains a strategic solution for us. Has the near-term tailwind subsided? Yes, and we've been open about this, but we continue to win large deals in the sector. And you said it yourself, and it is beyond regulatory drivers. There's business performance, there's risk management, companies wanting to be resilient. They want to manage stakeholders and they're tracking to yes, those science-based targets you mentioned. So yes, it's regulation worldwide, but it's also a number of other factors that are driving this business. And again, it does remain a strategic solution for us.

The next question will come from Adam Hotchkiss with Goldman Sachs.

This is Greyson Sklba on for Adam. And Jill, it's been great working with you. I wanted to actually start on the sustainability demand environment. I know you touched on it briefly. Is it fair to say that you're seeing a similar softer demand environment in that space than what you called out in the previous few quarters? Or did you see a little bit of improvement there in 3Q? I just want to marry that with some of the strong sustainability deals that you called out in your prepared remarks.

So as far as sustainability and what we're seeing currently, you just heard Julie talk about the -- that some of the -- we haven't had the same tailwinds and we talked about this, this year, but it has still been a consistent driver. You heard her talk about some of the deals that we were able to close during the quarter, and we still see demand as far as sustainability reporting that's not tied to regulatory drivers. And so we would say that it's a similar story to what we were seeing that it has not -- or ever gone to 0 that we continue to sell sustainability, and we believe it will have -- there'll be a long demand within that solution for us.

Got it. And I also just wanted to quickly ask on the free cash flow margin guidance. I saw you brought that back up to where it was in the beginning of the year. And so I'm just curious, what are the drivers behind that and sort of bringing that back to the 1Q guide.

Yes, sure. Thanks for the question, Greyson. So thinking about our free cash flow margin, early in the year, we did have, back to sustainability, we had the moderation in demand for that business in the first half. And so it did influence us to reduce our free cash flow margin earlier this year from our original 12% that we have guided. And then since then, though, we have seen improvement in our op margin, which, of course, is a tailwind to our free cash flow margin. And we've also seen, as we talked about, improvement in Q3 and had good business during that quarter as well, and we're pleased with the results. And so it's going -- it's a combination of all those things that are influencing the -- our ability to bring that guide back up to 12% for free cash flow for the full year.

The next question will come from Andrew DeGasperi with BNP Paribas.

Thanks, and good luck, Jill, for the future. It's a pleasure working with you as well. I wanted to ask a question on the appointment of Michael Pinto as Chief Revenue Officer. I know titles matter. And I don't remember a Chief Revenue Officer per se being at Workiva recently. Can you maybe elaborate, why is that if it is or if I'm wrong, a meaningful change in terms of that person being in charge of sales organization? And what do you expect -- what changes do you expect him to bring forward or if there's any change in the reporting lines in terms of what -- how it was before.

Sure. I'll start by saying Michael is being brought in to take our go-to-market machine to the next level. It's -- the change is all about future growth and scale for us from $1 billion to the multibillions, building scale and efficiency in the sales organization, accelerating our high-performing partner ecosystem, driving new logos, account expansion, revenue retention activity, all of this in partnership with our go-to-market teams, marketing and customer success organizations and so forth. So that is why he's here. It's all about the next era of growth for us. On this title, I mean, we looked at market standard titles for the role. He's taking on the global sales organization, the partnerships and alliance and all the commercial organizations. So this is the title and the role, and we're enthusiastic about having him in and look forward to what he's bringing.

Got it. So it sounds like there's been a change in terms of the people that report to him to a degree or to that role before. But in terms of also -- I noticed the change in tone this earnings call, just in terms of your focus on efficiency, both across sales and marketing, R&D and gross margin expansion, of course. So am I right to think that there's been a shift pretty much since the Investor Day in terms of improving that and you're actively taking steps to meaningfully drive that to get to those midterm targets you laid out?

Sure. We have been working towards those targets and just improving productivity across the organization. We did roll it out in Investor Day, but we've have these plans. We've been working across the organization, whether it's automation efficiency, AI. We've been bringing in new roles across the organization, people who have been there and done that at scale. We have strong leadership across the organization, some of which is new. We've talked for a long time about having a blend of those people in the organization who've been here are evolving. We've been talking about them going out with -- understanding the customers, understanding our industry understanding our markets and then mixing that with the people who have been there and done that at scale. So it is not a new motion for us. The dual focus on growth and productivity that we did talk about at Investor Day has been a focus for us and will continue to be to drive shareholder value.

This will conclude our question-and-answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.