Workiva Inc. (WK) Q4 2015 Earnings Report, Transcript and Summary

Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Workiva Inc. Fourth Quarter and Full Year 2015 Earnings Conference Call. [Operator Instructions] Thank you. I will now turn the call over to Adam Rogers, the Senior Manager of Investor Relations, you may begin your conference.

Thanks, Mike. Good afternoon, everyone. And welcome to the Workiva fourth quarter and full year 2015 earnings conference call. This afternoon, we'll begin with comments from Chairman and Chief Executive Officer, Matt Rizai; followed by our Executive Vice President, Treasurer and Chief Financial Officer, Stuart Miller. And then we'll turn the call over to questions. Also on the line today are Marty Vanderploeg, President and Chief Operating Officer; and Mike Sellberg, Executive Vice President and Chief Product Officer. A replay of this call will be made available until March 8. Information to access the replay is listed in today's press release, which is available on our website under the Investor Relations section. As a reminder, today's conference call is also being broadcast live via webcast. Before we begin, I'd like to remind everyone that during today's call we'll be making forward-looking statements regarding future events and financial performance, including guidance for our first quarter and full fiscal year 2016. 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 obligations 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 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 earnings press release. And with that, we'll begin by turning the call over to our Chairman and CEO, Matt Rizai.

Thank you, Adam. And thanks to everyone for joining us today to discuss our fourth quarter and full year 2015 results. The fourth quarter cast off another strong year for Workiva. Fourth quarter total revenue was $39.9 million, up 32% year-over-year and ahead of our guidance range. For the full year 2015 revenue was $145.3 million, up 29% over the prior year. Before discussing our results in more detail, I would like to comment on our outlook for operating cash flow. We anticipate cash usage from operations to improve in 2016 and then improve again in 2017. We also believe that we raised enough capital at our IPO to get to positive annual operating cash flow without needing to return to the equity market. Stuart Miller will provide more details later on this call. The ongoing investments we're making to enhance our Wdesk platform and generate demand for our solutions have enabled us to continue to gain market share. In 2015 we had 263 net new customers, including 56 net new customers in the fourth quarter. We're making good progress on diversifying our revenue sources. In 2014 25% of our subscription bookings were from non-SEC use cases and for the full year 2015 the contribution from non-SEC use cases robs to 39% of our subscription bookings. In 2016 we expect that non-SEC use cases will contribute more than 50% of our subscription bookings. The percentages I just provided are conservative because customers who bought Wdesk from our SEC sales team tell us, they also use Wdesk for management reporting, investor relations, and other use cases. In the second half of 2015 we saw an increase in new use cases due to our expansion in maximum reporting on risk, as well as growth in the adjacent markets of enterprise risk management and audit management that have proven customer demand for Wdesk. This expansion of use cases has increased the size of our total addressable market for Wdesk by over 50% based on our estimates from $6.8 billion to $10.4 billion for both, public and private companies in North America and Europe today. Our market are at different stages of development and we're still in investment mode on several used cases. Therefore in 2016, we're continuing to invest in software development, sales and marketing to capitalize on these expanded market opportunities. We're excited about the opportunities we see in our expanded and new markets and growth within existing markets. Let me give you some examples. Just yesterday we released a 30/4 consulting that showed a large global manufacturer achieve an ROI of 108% by using Wdesk. The customer recognized more than $640,000 in total benefits and cost savings over a three-year period, and reduced data collection and aggregation work load by 90%. The manufacturer used Wdesk to automate financial data collection throughout its global enterprise, streamline a complicated review and reporting process, and benefit from cloud-based security protections. Here are other use cases this quarter; MPRO uses Wdesk to collect data for its swing sheets which detailed actual financial results along with comments to explain variances from plants. Americo Logistics is a private company using Wdesk for its internal controls at annual corporate reports. A leading motorcycle manufacturer uses Wdesk for financial planning and analysis. New York Life uses Wdesk for statutory reporting. UPS now uses Wdesk to track environmental health data along with other sustainability data. And Noble Energy uses Wdesk for it's mostly monthly close checklist. A global airline now uses Wdesk to collect and report information about ramp and airport incidence. With Wdesk the airline streamlined safety reporting with control and accountability, neither of which was possible with its former processor outdated spreadsheets and emails. We continue to see strong demand for Wdesk in the SaaS market because it streamlines how teams document, implement and assess internal controls over financial reporting. By integrating the risk control matrix, fast and different flowcharts, Wdesk enables data consistency and control which helps our SOX customers be more productive and accountable. Here are some customer examples for SOX. Talen Energy uses the evidenced management feature in Wdesk to upload documentation to a single location and perform cloud control checks. They used Wdesk to assign cash to process owners, send out the certification requests, and tracked progress from a dashboard which eliminates the administrative burden of babysitting email. All of Talen Energy's SOX and internal controls, documentation is located in Wdesk and is linked to audit committee slides and dashboards which instantly update other documents. Because Wdesk is cloud-based, external auditors are able to securely access the information as needed. Other SOX customers have shared the following ROI examples with us. A large global energy company said the efficiency gained with Wdesk is equivalent of a full-time employee for one year. An information technology company saved two weeks on every on-site audit. A banking company saved 40% on document management. Diversicare Healthcare Services has dramatically improved it's consistency among internal controls. A SOX manager at Upland Software used to spend two to three days sorting spreadsheets and updating information across all documentations; now with Wdesk it takes that person only two to three hours to do the same tasks. Before using Wdesk, Cousins Properties was only able to complete three or four items on a three page list of improvements for internal audit related to SOX; with Wdesk they significantly improved the efficiency of their process and are now able to cover many more audits that management needs to assess risk. Wdesk for SOX and internal controls recently won an Edison Award in the Financial Solutions Category, and Gartner once again named Wdesk the Best-of-Breed vendor for Enhanced Financial Controls and Automation. In the regulatory risk market, we continue to win new businesses for a wide range of risk reporting including resolution and recovery plans, comprehensive capital analysis and review, Dodd-Frank Act Stress Testing and owned risk and solvency assessment which is used primarily by insurance companies. For example, Credit Suisse, which began using Wdesk for its resolution and recovery plan has expanded Wdesk to its valuation risk group which manages an extremely complicated process involving many contributors across the company. Wdesk is used to document formal procedures that are valuation review for purposes of SOX and other regulators. Because Wdesk serves as a repository uplink data, it's also used as a procedure reference by valuation risk team members. We also see growing demand for within private companies. For example, a large private healthcare insurance company recently started using Wdesk for its master audit plan and risk scorecards. An adjacent market for Wdesk is enterprise risk management, or ERM, which executives use to identify systemic risk, determine and assess risk magnitude and plan strategic responses. A large financial services customer uses Wdesk to securely collect, organize and present key risk indicators while insuring consistency and accuracy of multiple levels of descriptive information throughout their monthly yearend reporting classes. In the fourth quarter of 2015, we begin marketing Wdesk to the broad base audit management market which includes audit risk assessments, audit signing and internal auditing. Audit management along with ERM is a subset of a much larger market that's defined as governance, risk and compliance known as GRC. So as you can see 2015 was a great year for Workiva and our 1,100 employees. In November, Deloitte listed us at its 2015 Technology Fast 500 list and in December Fortune Magazine ranked Workiva at number six on its 50 Best Workplace for Camaraderie, and in January Fortune Magazine ranked Workiva fourth on its Best Large Workplaces for Technology in the Large Company Category. Looking to 2016, we're extremely optimistic about the growth opportunities available to us. We expect that the SEC filings market will continue to be a source of growth for Workiva. As a reminder, today we serve about half of the accelerated and large accelerated SEC filers in the United States, and we are optimistic about capturing the balance of this market as we believe that Wdesk is widely regarded as the best practice for SEC reporting. As I discussed with you last quarter and earlier in the call, our work in SEC and SOX is enabling us to expand into the GRC market. If so it happens, when our customers work on SOX, often times their colleagues from risk and audit are collaborating on the same documents. And once they experience firsthand how Wdesk helps them to work together in a single live document and allows them to control and correct data, they want to use Wdesk for other projects. In this way Wdesk is introduced to new groups of collaborators and audit and enterprisers management. That's why we began marketing Wdesk in the fourth quarter of 2015 to the broader base GRC market where we see a lot of expansion opportunities. To land and expand in all of our markets, we continue to improve our Wdesk technology. Later this year we plan to release Wdesk enhancements that will include an enhanced data platform for SOX, next generation workbooks that can handle millions of rows of data at high speeds and an intuit of user experience with improved collaboration and audit trail. In summary, our fourth quarter and full year of 2015 results was strong. We're very excited about the momentum we're seeing in Wdesk expansion across our customers. We're pleased with the progress we've made on our land and expand growth strategy, and we believe that investments were making position us to catch a much larger total addressable market for future growth. With that, let me turn it over to Stuart Miller.

Thank you. As Matt indicated we're pleased with our results for the fourth quarter in the full year. I will talk about our non-GAAP results which are before stock-based compensation. Please refer to our press release for reconciliation of our non-GAAP and GAAP results. I'll begin by reviewing our fourth quarter of the fiscal year 2015 results, and then I will comment on our first quarter and full year 2016 financial outlook. Thereafter we'll open up the call to your questions. We generated total revenue in the fourth quarter of $39.9 million, an increase of 32.4% from the fourth of last year. In addition, our non-GAAP operating margin improved 10.7% points compared to the fourth quarter last year. Breaking out revenue by reporting line item; subscription and support revenue was $32.1million, up 28.4% from Q4 of 2014. 47.6% of the S&S revenue increase in Q4 came from new customers added in the last 12 months. The remaining 52.4% of the increase came from deeper penetration of our existing customer base. The average contract value on subscription and support from all customers continued to rise. Professional services revenue was $7.8 million, an increase of 52% from the fourth quarter of 2014. Higher customer count in services from non-SEC use cases particularly stocks and regulatory risk accounted for the majority of growth in services revenue in the fourth quarter. Turning to our supplemental metrics – we finished the fourth quarter with 2,524 customers, a net increase of 263 customers from Q4 of 2014 and a net increase of 56 from Q4 of 2015. Our subscription and support revenue retention rate was 95.8% at December 2015 measurement date, down slightly from 96.4% at September 2015. Customers being acquired or ceasing to file SEC reports once again accounted for over half of our revenue attrition. Including add-ons, our subscription and support revenue retention rate was 112.5% as of December 2015 measurement date, up from 107.7% in September 2015. Consistent with mass comments earlier, increase subscription bookings from existing customers on non-SEC use cases with the primary driver of the inquiries in the add-on revenue retention rate. Moving down the income statement. Gross profit was $29.1 million for the fourth quarter, up 42.8% from the same quarter a year ago representing a gross margin of 72.9% compared to a gross margin of 67.5% in the fourth quarter of 2014. Now breaking out gross profit; subscription and support gross profit was $26.4 million, equating to a gross margin of 82.2% on S&S revenue; compared to $19 million or 76% gross margin in the fourth quarter of 2014. Improved efficiency of our customer success team and higher subscription prices accounted for the margin expansion. Professional services gross profit in the fourth quarter was $2.7 million, equating to a 34.1% gross margin, compared to $1.3 million or 25.9% gross margin in the same period last year. Better utilization of capacity compared to Q4 last year accounted for the higher margin. Turning to operating expenses; research and development expense in the fourth quarter was $12.9 million, an increase of 10.9% from $11.6 million in the prior year's fourth quarter due to higher compensation and additional staff as we've been dedicated more resources to building the next generation of Wdesk. Our R&D expense as a percentage of revenue this quarter declined to 32.2%, compared to 38.5% in Q4 last year. Sales and marketing expense increased 32.4% over Q4 of 2014, to $18.1 million, driven primarily by additional headcount and cash incentive compensation in line with our expectations. Expanded marketing programs accounted for the remaining part of the increase. General and administrative expenses were $6.7 million in Q4, an increase of 40%, compared with $4.8 million in the fourth quarter of 2014, driven by the cost of being a public company, together with increased compensation, software and support fees. Operating loss was $8.7 million in the fourth quarter of 2015, compared to $9.8 million in the same period last year. Net loss was $7.2 million for the fourth quarter of 2015 compared to a net loss of $10.8 million in the fourth quarter of 2014. We posted a net loss per share of $0.18 in the fourth quarter of 2015 compared to a net loss per share of $0.33 in the same quarter a year ago. Now I'll recap our full fiscal year 2015 results. Total revenue was $145.3 million, up 29% year-over-year. Subscription and support revenue was $116.3 million, increasing 27% over 2014. Professional services revenue was $29 million, up 36% from the prior year. So our revenue mix was 80% subscription and support and 20% professional services in 2015. Moving down the P&L and again focusing on non-GAAP expenses, gross profit was $105.8 million, rising 32.8% year-over-year, representing a 72.8% gross margin. Operating loss was $32.7 million, compared with a loss of $31.2 million in the prior year. Net loss was $32.4 million in 2015 and net loss per share was $0.81 which compares to a net loss of $33.8 million in 2014 or $1.05 per share. Turning to our balance sheet in our statement of cash flows; at December 31, 2015, we had cash, cash equivalents and marketable securities of $76.2 million, a decrease of $5.6 million compared with the balance at September 30, 2015. In the fourth quarter of 2015, net cash used in operating activities was $5 million, compared to $4.6 million in the same quarter a year ago. As you may recall from previous calls, we cut incentives for long-term prepayments from customers in order to capture more margin and we continue to implement that plan. As a result, our long-term preferred revenue declined almost a $1 million in the fourth quarter of 2015. Offsetting this decline was an increase in current deferred revenue of $4.7 million, which was comprised of a $3.9 million rise in subscription and support deferred revenue and a $800,000 increase in professional services deferred revenue. Before I address guidance, I want to review the seasonality of our business model. Seasonality affects three dimensions of our financials; revenue, expenses and cash flow. Let's talk about revenue first. The first quarter is the seasonal peak for our professional services revenue because many of our SEC customers file their 10-K in the first quarter and hire Workiva to help them with XBRL tagging. The utilization rate for our professional services team runs close to 100% in the first quarter every year. We typically run lower utilization rates in the other quarters but professional services revenue has been rising the last few quarters due to the growth of our non-SEC use cases. The secondary seasonality I want to mention relates to expenses. Our sales and marketing expenses peaked in the third quarter since we hold our annual user conference in September. Third area of seasonality I want to highlight is cash flow. Workiva typically takes cash bonuses in the first quarter which has been a significant use of cash. Also as we deliver professional services in the first quarter, we burn off short-term deferred revenue related to services that were invoiced during the prior year which shows us as a use of cash on that line item in Q1, at the end of Q1. Turning to our guidance for 2016, our guidance on non-GAAP loss from operations and non-GAAP loss for basic share, excludes the impact of stock-based compensation; please refer to our press release for a reconciliation of our non-GAAP and GAAP guidance. For the first quarter of 2016, we expect total revenue to range from $42.3 million to $42.8 million. We expect a year-over-year growth rate in our subscription revenue to outpace the growth rate in professional services in the first quarter. Since the utilization rate for our professional services team typically runs close to 100% in the first quarter, Q1 growth and services revenue is limited to a function of headcount and billing rates. We anticipate non-GAAP operating loss to range from $10.4 million to $10.9 million. We expect GAAP operating loss in the range of $13.9 million to $14.4 million. As Matt indicated, we plan to continue to invest in sales and marketing and research and development. We anticipate non-GAAP net loss per share to range from $0.26 to $0.28, with GAAP loss per share in the range of $0.35 to $0.37. Our loss-per-share guidance assumes 40.5 million basic and diluted shares outstanding. Our guidance for the full fiscal year 2016 is as follows; we expect total revenue to range from $177 million to $180 million. Based on the midpoint of that range we are expecting revenue growth to 23% in 2016. We expect non-GAAP operating loss to be in the range of $46 million to $49 million and anticipate GAAP operating loss to range from $60.8 million to $63.8 million. Workiva's operating cash flow was a negative $21.6 million in 2015. We operating cash flow to improve for the full year 2016 and then again in 2017 as Matt indicated. We anticipate most of the expected cash used in each year to occur in the first quarter, heavily impacted by seasonality for the reasons I discussed earlier. Also based on our projections, including our expected ability to convert some quarterly contracts to annual contracts, we believe operating cash flow for the fourth quarter of 2016 will be breakeven or better. We continue to believe that we raised enough money at our IPO to get the positive annual operating cash flow without needing to return to the equity market. We expect non-GAAP net loss per share to be in the range of $1.16 to $1.23 in 2016 and we expect GAAP net loss per share in the same year to range from $1.52 to $1.59 per share. Our loss-per-share guidance for the full year assumes 41 million basic and diluted shares outstanding. In summary, Workiva posted another strong quarter. Demand remains robust for our solutions. We remain focused on executing our growth plan to capitalize on our multi-billion dollar market opportunity. And we will now take your questions. Operator Mike, we're ready to begin the Q&A session.

[Operator Instructions] And the first question is from Terry Tillman from Raymond James.

Hey, Matt. Hey, Stuart. Good afternoon.

Hey, Terry.

Hi, Terry.

I guess the first question just relates to, as we look at '16, and that was great color to see kind of the mix of business with SEC reporting and non-SEC reporting. What I'm curious about, anything at all we could think about kind of relative gross rates in those two opportunities in '16? I mean I'm just curious if the SEC reporting starting to kind of mature to the point that it's going to be slower growing or do you still see kind of solid, I don't know, mid 10s growth, 20% growth or just something that kind of get a perspective of what you see in the SEC reporting market considering it's still as the key anchor of the business.

Yes, I mean, this is Matt. To this question, we still see growth opportunity on the SEC business. As I mentioned before we still have about 15% of market that we think that we can chip at it, so we looked at that as a growth opportunity for us for at least a couple of years, moving forward and beyond. And of course the soft business is really getting a very healthy traction this year that we're really excited about, and then we're now we're also starting to get into the private markets. We're seeing quite a bit of traction of private markets. So I would say that we don't see significant or any material slow down or equal on the SEC side. So we're pretty excited about that SEC operation. It's just that we have a lot of sales people who are focusing on the non-SEC side of it, so that's why we're really excited about the growth on that side. So we expect that SEC to grow but also non-SEC to grow better.

Okay, and I don't know exactly how you can answer this question, but I can't help myself.

Try us.

Okay, thank you. I didn't think it was that funny. But anyway, so we had 260+ new customers this year, folks will look at new logo growth as one of those drivers for '16 in heading or exceeding your guidance, how do we think about growth and new customers in '16 versus '15 and kind of related to that, is there any potential shift one way or another in terms of maybe it's more ARPU growth because you can do more of mining the install phase? Do you see any kind of shift in those investments that you're stepping up in terms of getting more out of the existing as oppose to new logos?

Yes, let me kind of give you a color behind that. As we look at our bookings this year, we really feel pretty strongly that our mix is going to be 50-50, 50% of our bookings are going to come from existing customer as well as 50% will come from new customer and new logo.

Okay. Just my last question, despite I was able to tickle you with that last funny thing there sir. But in terms of cash flow, that was good color also to hear about breakeven, I guess, for fourth quarter of '16. Maybe that's a seasonally strong quarter. Would we expect it to turn negative again in the first part of '17 or is that actually the end of the burn and then from there on out it's positive OCF. Thank you.

So I think the guidance that we're giving right now is just that '16 is going to be less negative than '15, and '17 is going to be less negative than '16 on a full year basis. But you're right it depends on the quarter up and down.

And the next question is from Michael Nemeroff from Credit Suisse.

Hi, this is Kyle Chen sitting in for Michael Nemeroff. Thanks for taking the question. Stuart, I'm wondering -- hey, how is it going? Just relative to the revenue outlook, it would be helpful if you can deconstruct the guidance a little bit. Just wondering how much growth are you embedding from price increases, add-on seats versus new customers. And then also given the sales force growth in '15, should we expect an acceleration in subscription and support growth in '16 over '15, just how should we think about the mix there.

Stuart?

Well, I mean, as Matt indicated we're expecting 50-50. So half of the bookings we expect to come from new customers and half from existing customers. Yes, in terms of price increases, probably not going to be able to give you the level of granularity that you want there, but I can give you some color on it which is we raise prices on just under 1,500 customers in 2015 and we plan to raise prices on about 1,800 customers in 2016.

Got it. And then on the subscription and support growth, do you think you will see an acceleration in '16 over '15?

Well, we gave pretty specific guidance on so you can compare the guidance than what we did last year.

Okay, great. And then lastly, from a sales headcount perspective, can you comment if you achieved your 2015 goal of increasing your sales force by 25% to 30%, and then also how should we think about sales head count growth in '16 and what areas do you think you'll be making or focusing your incremental investments?

We feel comfortable with 25% to 30% sales force expansion last year, and we talked about it and we actually exceeded that by end of the year. And moving forward, I think for 2016 we feel comfortable with additional 25% to 30% sales force expansion.

Got it. Thanks, very helpful.

The next question is from Tom Roderick from Stifel.

Hey guys, thanks for taking my question. I wanted to think a little bit more about the leverage that you're seeing across various parts of the business model, and particularly now you've got another full year of the soft compliance product under your belt, and as you talked about private markets and broader initiatives to move out on the Wdesk platform. How much are you able to leverage the existing R&D staff that you have versus needing to go out and hire new people with new capabilities as you roll new products out? And then how much you're able to leverage the sales force? Loved to hear what sort of process existing sales rep to have to go through to get trained on the new products, how long you took them on the SOX side? Just probably speaking, can you talk about the leverage that you're seeing across these two elements in the business?

Marty, do you want to answer that?

Yes, I'll start with the R&D side first. Clearly as Stuart as mentioned that the growth of the R&D team is going to be less than half than historically. We still plan to grow it some, but we're getting good leverage. We're very focused on doing R&D activity is going to affect all of our different markets, and to that end when we build something like evidence collection for SOX we can use it for support binders on SEC. We can use it in the same type of thing with private companies. So we're very focused on developing technology and products that can be used on all our different markets, and that's the whole idea behind the platform if you will. In terms of the sales force, we have gotten a lot better at training. That's become, our sale is a pretty complex sale and the sales people need a lot of knowledge and to that extent we've grown our education team, and that's a big focus for this year. So I think you'll see that that will help us as these guys try to sell stuff to a lot of different types of markets and customers.

Got it. Thanks, Marty. And then Stuart, you had talked about raising prices on, I think 1,500 customers this year and the goal being maybe something 1,800 next year. What does that process look like as you go through raising their prices? Have you found that that's been an effective sales tool to upselling across all these customers as you go through a price increase, or is it really not a terribly negotiated type of initiative and so it's more or less paper pushing across without a sales cycle?

Well, I think the answer is it depends on the customer. I mean it's been positive because it gives the sales people the opportunity to talk about the enhancements that we've added to the platform during the year, and it really helps strengthen the value proposition. But, in certain cases it lead to discussion of expansion into other use cases and other times it's simply just a contract prenup, so it sort of depends on the situation.

Got it. I'll jump back in queue. Thank you guys. Nice job.

Thanks, Tom.

And your next question is from Jeff Houston with Northland Securities.

Hi guys, thanks for taking my questions. Great. Looking at the 2,500 clients, Matt, I think you mentioned that private companies are increasingly becoming a target. Could you talk about maybe how many of those are included in the client mix now and what are some of the used cases that really make sense for a price -- for a private company?

Well, I mean the -- first of all, we are really excited about the private companies. There is over 5,000 companies that we will start targeting and they use us for various different cases, some of the examples that I have given you but in terms of the internal control their finance accounting groups are using it, and some are using it just like the public company SOX team use it. We get a lot of used cases pharma management reporting and so we are pretty excited about that. We are seeing quite a bit of traction and we think that there will be a healthy traction on the private side and there is a great number of product companies that we're going to fully [ph] and so we're pretty excited about that.

Great. Then switching gears to international, could you update us on your thoughts there, is that more of -- there is so much opportunity domestically that international is several years into the future before you start looking at that?

Yes, as a question we like to be able to -- first of all, Canada for us is North America, so we don't for better or worse, we don't consider them as international but whatever we're doing in North America and United States, I think we're doing in Canada. But other of our market is in Europe as you know that since we have so many large global customers, and that really allows us to be able to follow them and their used cases in Europe, especially in UK and northern European countries and we have a healthy footprint for us to be able to leverage that as time goes on. And we -- from a priority point of view we look at North America first but on the other hand, we are executing and we look focused on the international, mostly from Europe and that will continue to be coming behind North America by about -- like you mentioned, two to three years, but we're making quite an effort and seeing results in UK and northern part of Europe as we speak.

Great. And last question for me is, looking at the examples of customer used case as you mentioned, it seems like a very broad range. I think your sales people are going in, pitching all of those different used cases. So how do those used cases come about, is it more spreading internally at clients that start using SEC filing and are there -- it's just kind of internally spreads about how they could use it different ways or is sales really encouraging them and making another sale throughout the whole process that would spread out?

Yes, our sales organization is lot more rational in terms of organization. We have a specific way to organize our sales organization and execute it. Mart, do you want to kind of give a little example of how we deal with the sales?

Sure. When we go in, the initial thing is just to get in the door, we don't try to sell a huge thing right in the breath of the bad, we get in, get a contract, get to know the people. And then we have a pretty focused effort with our customer teams. One of the strategies we use is, we have a thing called the Wdesk Day where we schedule a day and give lunch and have all the different groups come in. And those have been very successful and we have a good Wdesk Day, it generally leads to a couple of other used cases. The sales people are learning how to ask the right questions too, they are asking questions about where they having problems using traditional tools, and some of our reps have gotten really good at sniffing out what used cases are best to fit there. And then they are also learning, I mean it takes a lot for the rest to learn it when there is a dozen different used cases they can pitch. But across all of those we're seeing improvement and we're really learning how to expand once we land.

All right, that's helpful. Thank you.

All right. Well, in closing, I want to thank you for joining us today. And operator, you may now end the call.

This concludes today's conference call. You may now disconnect.