Good afternoon. My name is Jesse, and I will be your conference operator today. At this time, I would like to welcome everyone to the Workiva First Quarter 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Adam Rogers, Director of Investor Relations, you may begin your conference.

Thank you, and good afternoon, everyone, and welcome to the Workiva First Quarter 2017 Earnings Conference Call. This afternoon, we'll begin with comments from Chairman and Chief Executive Officer, Matt Rizai; followed by Executive Vice President 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 available until May 11. 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 second quarter and full fiscal year 2017. 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 or quarterly report on Form 10-Q 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 first quarter 2017 results. Workiva is off to a strong start this year. We outperformed our guidance for quarterly revenue, operating loss and loss per share. As a result, we are raising our full year 2017 guidance, which Stuart will discuss in more detail later in the call. Total revenue for the first quarter was $51.9 million, an increase of 16.5% over the first quarter of 2016. We continue to sign new customers, and we continue to add more seats across our existing customers' organizations for use cases in finance and accounting, Sarbanes-Oxley act and internal controls, audit, risk, compliance and corporate performance management. We're also increasing use of Wdesk within state and local governments and universities. We continue to invest in technology and talent to execute our platform strategy. We also continue to sign more partners. Our consulting and accounting partners will offer our customers more services and capabilities. Our technology partners will enable data and process integration to further streamline critical business functions as we capitalize on growing Wdesk demand for broader-base, enterprise-wide opportunities. For example, last week, we announced the partnership with Fastpath to streamline SOX compliance. In March, we announced our partnership with Armanino, a large accounting and business consulting firm. Armanino will offer Wdesk with its domain expertise and managed services to clients in SOX and internal controls, internal audit and other GRC processes. We expect to announce additional partnership in the near future. Now I would like to share a few examples of new customers' use cases that illustrate the breadth and depth of Wdesk. Brookfield Property Partners will use Wdesk to construct their massive consolidation and business plan as well as their forecast API template. A regional energy company…

Thank you, Matt. As Matt mentioned, our first quarter results exceeded our expectations, and we continue to see positive momentum in the market. Operating cash flow was positive for the third consecutive quarter. We expect operating cash flow to be modestly positive for the rest of 2017. The improvement in our cash flow outlook is primarily due to revenue expanding at a faster rate than our headcount growth rate. I will begin by reviewing our first quarter results and then I'll comment on our second quarter and full year 2017 outlook. Thereafter, we'll open up the call to your questions. So we generated total revenue in the first quarter of $51.9 million, an increase of 16.5% from Q1 last year. Breaking out revenue by reporting line item. Subscription and support revenue was $39.5 million, up 17.7% from Q1 2016. 55% of the S&S revenue increase in Q1 came from new customers added in the last 12 months. The remaining 45% of the increase came from deeper penetration of our existing customer base. Professional Services revenue was $12.4 million, an increase of 12.7% from Q1 2016. Higher customer count in services for non-SEC use cases accounted for most of the growth in services revenue. We expect the growth rate of subscription revenue to continue to outpace the growth of services revenue in Q2 2017. Turning to supplemental metrics. We finished Q1 with 2,825 customers, a net increase of 268 customers from Q1 of 2016 and a net increase of 53 from year-end 2016. Our subscription and support revenue retention rate, excluding add-ons, was 95.1% for the month of March 2017, compared with 95.4% in December 2016, and 96.1% in March 2016. Customers being acquired or ceasing to file SEC reports accounted for a majority of revenue attrition consistent with our experience…

[Operator Instructions] Your first question comes from Tom Roderick with Stifel. Your line is open.

Yes, I'm Matt Van Vliet on for Tom. Thanks for taking my question.

Hi, Matt.

How is it going? So you talked about in the past that majority of your bookings were expected this year to be non-SEC. I was wondering if you could give us an update in terms of either that metric or maybe more specifically what – which areas of non-SEC are you seeing the most traction with early in the year and what's the pipeline looking like?

Yes, we really don't comment other than giving the guidance one time at the end of the year. So we'll be able to give you a better feel of it this year where we've been, but we do feel that the split between SEC and non-SEC should be around 50-50, more tilting toward non-SEC side of the business. And we'll – that's how we think it is. But it's – some of the IPO market gets to be quite strong and that may tilt it the other way slightly, but we'll see.

And then, I guess, looking at the sales and marketing spending specifically in the quarter, were there one-time items or was there anything that sort of deferred out of the quarter that we should expect to sort of tick back up through the rest of the year because it looks like your margin guidance is indicating some increased spending. Should we expect that in headcount later in the year? How should we think about that line item?

So Matt, this is Stuart. A lot of the improvement in Q1 was around localization of accounts that were sort of less travel and simplified structure. You're right about the forecast. We are making some investments in – continued investments in talent in that area and in R&D.

All right, great. Thank you.

Your next question comes from Terry Tillman with Raymond James. Your line is open.

Hi. This is Brian Peterson in for Terry. Good afternoon, gentlemen. So I know you mentioned last quarter that some sales cycles lengthened for the enterprise deals. Just curious how those have progressed thus far in the quarter? And is there anything that you can say in terms of productivity of the reps in the realigned to go-to market structure?

Well, I think, we feel pretty good about the way that we're aligning the way that we manage our sales organization and account management that goes along with that. And also as we've talked about it before, our focus is to execute our Wdesk platform strategy. We definitely are seeing a lot of demand from large organizations to be able to use Wdesk platform as the platform for them to be able to author data and leverage the data. And as we talked about it before, we have several engagements with large organizations that we're working on the enterprise discussions with them. And as you can imagine they are larger deals, and they have larger sales cycles. And we feel very good about progress that we're making in that front.

Got it. And maybe just 1 for you, Stuart. If I look at the subscription revenue coming from new customers. That was pretty strong this quarter at 55%. I know that's a trailing number. But I'm just curious how that sort of split with the new customer adds between SEC and non-SEC use cases?

Yes. We don't – we have not historically nor do we really intend to going forward get to that level of granularity. But I will say that we had pretty good progress on new customers in multiple use cases.

Got it. Thanks guys.

Thanks, Brian.

Your next question comes from Rob Oliver with Robert Baird. Your line is open.

Hey, guys. This is Jason Velkavrh on for Rob. Thanks for taking my questions here.

Hi, Jason.

Hey, guys. First question, you mentioned a number of partnerships. I know increasing partnerships is an initiative that you're working on. I was just wondering if you could elaborate a little more on how partners fit into your go-to-market strategy, specifically – are partners opening up accounts that Workiva may not have had access to before, so new customer growth? Or would you characterize the partner role more as, as you mentioned, leveraging the expertise to possibly expand into non-SEC use cases with existing customers?

Mike, do you want to address that a little bit?

Sure. Yes I think, really, really both. We've got kind of integrated, what we call integrated practice partnerships which are really focused on advisory firms that can add domain experience around solutions into new markets and new domains outside of SEC. So in that case they will certainly bring us into accounts around some of those new use cases, and then help provide services around that with Wdesk. We also have technology partnerships where, for our sake, we will integrate with a partner and provide added value to the Wdesk solution. And so in the case of Fastpath that we talked about, that's an example of that. And so in that example, we will both bring each other into accounts whether it's added value of our integrated solution.

Got it, that's helpful. And then 1 more question from me. So I think you mentioned the surge in Professional Services in 1Q, and a lot of that has to do with you helping folks with their 10-Ks but also the non-SEC use cases. I get a sense those are more service-heavy from an implementation side. How should we – as that piece of the portfolio, the non-SEC side, becomes a bigger part of the mix, how should we think about that Professional Services line going forward? Is that something we would start to see a changing seasonality in the next couple of years?

Yes, so this is Stuart. So it is – it should become less seasonal over time as SEC becomes a smaller percentage of the overall business, but it will be gradual. The thing to keep in mind there is that services is the hardest thing for us to predict when we give guidance, and it's a little bit volatile because it – you can sell something in the same quarter and deliver on it. And relative to the visibility that we have on subscriptions, it's a little bit of more volatile. But you're right. It depends on the use cases. And there are certain use cases that are – that require more services than others and there are certain customers that require more services than others. And that's why it can be a little bit volatile quarter-to-quarter.

Okay, great, thanks. That’s all for me.

Your next question comes from Michael Nemeroff with Credit Suisse. Your line is open.

Hi. This is Chris Rochester on for Michael. Thanks for taking my question. Just to elaborate on the partnership channel, I mean, it sounds like you continue to sign new partners. But are you seeing much improvement in revenue contribution yet? Or is that still expected to be more back half weighted?

Yes, that would be later in the year that we would expect as we're signing up the partnership agreements and spinning them off and – to make sure that we can both leverage our businesses. So I would expect that to be toward the end of the year.

Okay, thanks. That’s all for me.

All right. Thank you, everybody. In closing, I want to thank you to join us today. And operator, you may now end the call.

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