Workiva Announces First Quarter 2015 Financial Results


Total Revenue of $35.2 Million, Up 25% From Q1 of 2014

AMES, Iowa, May 5, 2015 -- Workiva Inc. (NYSE: WK), creator of the Wdesk cloud-based productivity platform for enterprises, today announced financial results for its first quarter ended March 31, 2015, and increased its full-year 2015 guidance.

"We had a strong start to 2015, highlighted by 25% revenue growth in the quarter," said Matt Rizai, Chairman and Chief Executive Officer of Workiva. "Our first quarter revenue beat the high end of our guidance range. Our growth was driven in part by the addition of customers and seats for an increasing number of use cases in our non-SEC markets, including Sarbanes-Oxley compliance, as well as risk and management reporting. We also continued to gain market share in the SEC compliance market."

"In April we launched a new feature in Wdesk, called Evidence Management, which allows SOX teams, for the first time, to digitally embed evidence in internal audit work papers," said Rizai. "Substantiating evidence is a big issue for companies and auditors who are under increased scrutiny of how they document and test internal controls over financial reporting required by SOX. We believe Evidence Management for Wdesk is an important differentiator and will help us continue to gain market share in the SOX compliance market."

The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation.

First Quarter 2015 Financial Highlights

  • Revenue: Total revenue for the quarter ended March 31, 2015 was $35.2 million, an increase of 25.0% from $28.1 million in the first quarter of 2014. Subscription and support revenue was $26.3 million, an increase of 27.2% versus results in the first quarter of 2014. Professional services revenue was $8.9 million, an increase of 18.7% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the quarter ended March 31, 2015 was $25.5 million compared with $20.7 million in the same quarter of the prior year. GAAP gross margin was 72.5% in the first quarter of 2015 versus 73.5% in the first quarter of 2014. Non-GAAP gross profit for the quarter ended March 31, 2015 was $25.7 million, an increase of 21.8% compared with the prior year's first quarter, and non-GAAP gross margin was 73.0% compared to 74.9% in the first quarter of 2014.
  • Loss from Operations: GAAP loss from operations for the quarter ended March 31, 2015 was $7.0 million compared with a loss of $4.3 million in the prior year's first quarter. Non-GAAP loss from operations for the quarter ended March 31, 2015 was $4.8 million, compared with non-GAAP loss from operations of $2.3 million in the first quarter of 2014.
  • Net Loss: GAAP net loss for the quarter ended March 31, 2015 was $7.4 million compared with a net loss of $4.6 million for the prior year's first quarter. GAAP net loss per basic and diluted share for the quarter ended March 31, 2015 was $0.19, based on 39.6 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.14, based on 31.8 million weighted-average shares outstanding in the first quarter of 2014.
  • Non-GAAP net loss for the quarter ended March 31, 2015 was $5.3 million compared with a net loss of $2.6 million in the prior year's first quarter. Non-GAAP net loss per basic and diluted share for the quarter ended March 31, 2015 was $0.13, based on 39.6 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.08, based on 31.8 million weighted-average shares outstanding in the first quarter of 2014.
  • Balance Sheet: As of March 31, 2015, Workiva had cash and cash equivalents of $89.9 million, compared with $101.1 million as of December 31, 2014. Debt, including capital lease and financing obligations, totaled $24.3 million as of March 31, 2015.
  • Cash Flow: Net cash used in operating activities was $9.2 million for the quarter ended March 31, 2015, compared to cash generated from operating activities of $1.5 million in the first quarter of 2014.

Operating Metrics

  • Customers: Workiva had 2,290 customers as of March 31, 2015, a net increase of 297 customers from 1,993 as of March 31, 2014.
  • Revenue Retention Rate: As of March 31, 2015, Workiva's revenue retention rate (excluding add-on revenue) was 95.9%, and the revenue retention rate (including add-on revenue) was 105.8%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook:

As of May 5, 2015, Workiva is providing guidance for its second quarter 2015 and raising guidance for the full year 2015, as follows:

Second Quarter 2015 Guidance:

  • Total revenue is expected to be in the range of $32.8 million to $33.3 million.
  • Non-GAAP loss from operations is expected to be in the range of $9.3 million to $9.8 million.
  • GAAP loss from operations is expected to be in the range of $12.0 million to $12.5 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.24 to $0.25.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.31 to $0.32.
  • Net loss per basic and diluted share is based on 40 million weighted-average shares outstanding.

Full Year 2015 Guidance:

  • Total revenue is expected to be in the range of $140.5 million to $142.5 million, compared with the prior outlook for revenue of $139 million to $142 million.
  • Non-GAAP loss from operations is expected to be in the range of $36 million to $38 million, compared with the prior outlook for non-GAAP loss from operations of between $37 million and $40 million.
  • GAAP loss from operations is expected to be in the range of $47 million to $49 million, compared with the prior outlook for GAAP loss from operations of between $48 million and $51 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.90 to $0.95, compared with the prior outlook for non-GAAP net loss per basic and diluted share of between $0.92 and $1.00.
  • GAAP net loss per basic and diluted share is expected to be in the range of $1.17 to $1.22, compared with the prior outlook for non-GAAP net loss per basic and diluted share of between $1.19 and $1.27.
  • Net loss per basic and diluted share continues to be based on 40 million weighted-average shares outstanding.

Quarterly Conference Call

Workiva will host a conference call today at 5:00 p.m. ET to review the Company's financial results for the first quarter of 2015, in addition to discussing the Company's outlook for the second quarter and full year 2015. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 19918334. A live webcast of the conference call will be accessible in the "Investor Relations" section of Workiva's website at www.workiva.com. A replay of this conference call can also be accessed through May 12, 2015 at 855-859-2056 (domestic) or 404-537-3406(international). The replay pass code is 19918334. An archived webcast of this conference call will also be available an hour after the completion of the call in the "Investor Relations" section of the Company's website at www.workiva.com.

About Workiva

Workiva created Wdesk, a cloud-based productivity platform for enterprises to collect, link, report and analyze business data with control and accountability. Thousands of organizations, including over 65% of the Fortune 500, use Wdesk for risk, compliance or management reporting. Wdesk proprietary word processing, spreadsheet and presentation applications are integrated and built upon a data management engine, offering synchronized data, controlled collaboration, granular permissions and a full audit trail. Wdesk helps mitigate enterprise risk, improve productivity and give users confidence to make decisions with real-time data. Workiva employs more than 950 people with offices in 15 cities. The Company is headquartered in Ames, Iowa. For more information, visit workiva.com.

Non-GAAP Financial Measures

The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation. A reconciliation of GAAP to non-GAAP historical financial measures has been provided in Table I at the end of this press release. A reconciliation of GAAP to non-GAAP guidance has been provided in Table II at the end of this press release.

Workiva believes that the use of non-GAAP gross profit and gross margin, non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss per share is helpful to its investors. These measures, which are referred to as non-GAAP financial measures, are not prepared in accordance with generally accepted accounting principles in the United States, or GAAP. Non-GAAP gross profit is calculated by excluding stock-based compensation expense attributable to cost of revenues from gross profit. Non-GAAP gross margin is the ratio calculated by dividing non-GAAP gross profit by revenues. Non-GAAP loss from operations is calculated by excluding stock-based compensation expense from loss from operations. Non-GAAP net loss is calculated by excluding stock-based compensation expense, net of tax, from net loss. Non-GAAP net loss per share is calculated by dividing non-GAAP net loss by the weighted- average shares outstanding as presented in the calculation of GAAP net loss per share. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company's non-cash expenses, Workiva believes that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between its operating results from period to period. Workiva's management uses these non-GAAP financial measures as tools for financial and operational decision making and for evaluating Workiva's own operating results over different periods of time.

Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in Workiva's industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Workiva's reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in Workiva's business and an important part of the compensation provided to its employees. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Investors should review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate Workiva's business.

Safe Harbor Statement

Certain statements in this press release are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about the Company's expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "outlook," "guidance" or the negative of those terms or other comparable terminology.

Please see the Company's documents filed or to be filed with the Securities and Exchange Commission, including the Company's annual reports filed on Form 10-K and quarterly reports on Form 10‑Q, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this report. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

WORKIVA INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)










Three months ended March 31,


2015


2014

Revenue




Subscription and support

$

26,269



$

20,648


Professional services

8,885



7,484


Total revenue

35,154



28,132


Cost of revenue




Subscription and support (1)

5,885



4,669


Professional services (1)

3,777



2,798


Total cost of revenue

9,662



7,467


Gross profit

25,492



20,665


Operating expenses




Research and development (1)

12,008



10,287


Sales and marketing (1)

13,705



10,440


General and administrative (1)

6,734



4,228


Total operating expenses

32,447



24,955


Loss from operations

(6,955)



(4,290)


Interest expense

(510)



(265)


Other income and (expense), net

(66)



3


Loss before income tax expense (benefit)

(7,531)



(4,552)


Income tax expense (benefit)

(84)




Net loss

$

(7,447)



$

(4,552)


Net loss per common share:




Basic and diluted

$

(0.19)



$

(0.14)


Weighted average common shares outstanding - basic and diluted

39,593,700



31,767,513



(1) Includes stock-based compensation expense as follows:










Three months ended March 31,


2015


2014

Cost of revenue




Subscription and support

$

96



$

230


Professional services

72



170


Operating expenses




Research and development

334



765


Sales and marketing

350



350


General and administrative

1,322



441


WORKIVA INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands)










March 31, 2015


December 31, 2014


(unaudited)



Assets




Current assets




Cash and cash equivalents

$

89,893



$

101,131


Accounts receivable, net

11,913



11,120


Deferred commissions

706



852


Other receivables

482



295


Prepaid expenses and other current assets

2,998



3,143


Restricted cash

73




Total current assets

106,065



116,541


Restricted cash



401


Property and equipment, net

46,838



46,265


Intangible assets, net

625



549


Other assets

736



795


Total assets

$

154,264



$

164,551


Liabilities and Stockholders' Equity

Current liabilities




Accounts payable

$

2,621



$

3,011


Accrued expenses and other current liabilities

12,195



16,765


Deferred revenue

42,976



42,605


Deferred government grant obligation

2,503



2,324


Current portion of capital lease and financing obligations

1,961



1,941


Current portion of long-term debt

59



84


Total current liabilities

62,315



66,730


Deferred revenue

12,539



13,671


Deferred government grant obligation

3,492



3,424


Other long-term liabilities

2,962



2,069


Capital lease and financing obligations

22,233



22,747


Long-term debt

91



91


Total liabilities

103,632



108,732


Stockholders' equity




Common stock

40



39


Additional paid-in-capital

191,358



189,168


Accumulated deficit

(140,982)



(133,535)


Accumulated other comprehensive income

216



147


Total stockholders' equity

50,632



55,819


Total liabilities and stockholders' equity

$

154,264



$

164,551


WORKIVA INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)










Three months ended March 31,


2015


2014

Cash flows from operating activities




Net loss

$

(7,447)



$

(4,552)


Adjustments to reconcile net loss to net cash provided by (used in) operating activities




Depreciation and amortization

1,169



768


Equity-based compensation expense

2,174



1,957


Provision for doubtful accounts

74



124


Recognition of deferred benefit for government grants

(66)




Changes in assets and liabilities:




Accounts receivable

(911)



524


Deferred commissions

145



(32)


Other receivables

(188)



58


Prepaid expenses and other

144



(826)


Other assets

56



36


Accounts payable

157



(2,358)


Deferred revenue

(672)



7,150


Accrued expenses and other liabilities

(3,892)



(1,357)


Change in restricted cash

28



54


Net cash provided by (used in) operating activities

(9,229)



1,546


Cash flows from investing activities




Purchase of property and equipment

(871)



(1,750)


Purchase of intangible assets

(83)



(18)


Net cash used in investing activities

(954)



(1,768)


Cash flows from financing activities




Payment of equity issuance costs

(1,073)




Proceeds from option exercises

80



18


Changes in restricted cash

300




Repayment of long-term debt

(25)



(54)


Principal payments on capital lease and financing obligations

(678)



(171)


Proceeds from borrowings on line of credit



12


Proceeds from government for training reimbursement



134


Government loan award

313



2,000


Net cash provided by (used in) financing activities

(1,083)



1,939


Effect of foreign exchange rates on cash

28



25


Net increase (decrease) in cash and cash equivalents

(11,238)



1,742


Cash and cash equivalents at beginning of period

101,131



15,515


Cash and cash equivalents at end of period

$

89,893



$

17,257


TABLE I

WORKIVA INC.

RECONCILIATION OF NON-GAAP INFORMATION

(in thousands, except share and per share data)








Three months ended March 31,


2015


2014

Gross profit, subscription and support

$

20,384


$

15,979

Add back: Stock-based compensation

96


230

Gross profit, subscription and support, non-GAAP

$

20,480


$

16,209

As a percentage of subscription and support revenue, non-GAAP

78.0%


78.5%





Gross profit, professional services

$

5,108


$

4,686

Add back: Stock-based compensation

72


170

Gross profit, professional services, non-GAAP

$

5,180


$

4,856

As a percentage of professional services revenue, non-GAAP

58.3%


64.9%





Gross profit, as reported

$

25,492


$

20,665

Add back: Stock-based compensation

168


400

Gross profit, non-GAAP

$

25,660


$

21,065

As percentage of revenue, non-GAAP

73.0%


74.9%





Research and development, as reported

$

12,008


$

10,287

Less: Stock-based compensation

334


765

Research and development, non-GAAP

$

11,674


$

9,522

As percentage of revenue, non-GAAP

33.2%


33.8%





Sales and marketing, as reported

$

13,705


$

10,440

Less: Stock-based compensation

350


350

Sales and marketing, non-GAAP

$

13,355


$

10,090

As percentage of revenue, non-GAAP

38.0%


35.9%





General and administrative, as reported

$

6,734


$

4,228

Less: Stock-based compensation

1,322


441

General and administrative, non-GAAP

$

5,412


$

3,787

As percentage of revenue, non-GAAP

15.4%


13.5%





Loss from operations

$

(6,955)


$

(4,290)

Add back: Stock-based compensation

2,174


1,956

Loss from operations, non-GAAP

$

(4,781)


$

(2,334)

As percentage of revenue, non-GAAP

(13.6)%


(8.3)%





Net loss

$

(7,447)


$

(4,552)

Add back: Stock-based compensation

2,174


1,956

Net loss, non-GAAP

$

(5,273)


$

(2,596)

As percentage of revenue, non-GAAP

(15.0)%


(9.2)%





Net loss per share, non-GAAP:




Basic and diluted, non-GAAP

$

(0.13)


$

(0.08)

Weighted average common shares outstanding - basic and diluted, non-GAAP

39,593,700


31,767,513

TABLE II

WORKIVA INC.

RECONCILIATION OF NON-GAAP GUIDANCE

(in thousands, except share and per share data)


















Three months ending June 30,
2015


Year ending December 31,
2015









Loss from operations, GAAP range

$

(12,000)


-

$

(12,500)



$

(47,000)


-

$

(49,000)


Add back: Stock-based compensation

2,700



2,700



11,000



11,000


Loss from operations, non-GAAP range

$

(9,300)


-

$

(9,800)



$

(36,000)


-

$

(38,000)










Net loss per share, GAAP range

$

(0.31)


-

$

(0.32)



$

(1.17)


-

$

(1.22)


Add back: Stock-based compensation

0.07



0.07



0.27



0.27


Net loss per share, non-GAAP range

$

(0.24)


-

$

(0.25)



$

(0.90)


-

$

(0.95)










Weighted average common shares outstanding - basic and diluted

40,000,000



40,000,000



40,000,000



40,000,000


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Investor Relations Contact 
Adam Rogers
Workiva Inc.
investor@workiva.com
1.515.663.4471
Media Contact 
Kevin McCarthy
Workiva Inc.
press@workiva.com
1.515.663.4471