Workiva Announces First Quarter 2017 Financial Results



Q1 Revenue of $51.9 million, Up 16.5% from Q1 of 2016
Q1 Subscription and Support Revenue of $39.5 million, Up 17.7% from Q1 of 2016


AMES, Iowa - May 4, 2017 -- Workiva Inc. (NYSE: WK), a leading provider of solutions for enterprise productivity, today announced financial results for its first quarter ended March 31, 2017.

“We posted strong results in the first quarter, highlighted by 16.5% revenue growth over the same quarter last year,” said Matt Rizai, Chairman and Chief Executive Officer of Workiva. “We outperformed our guidance for quarterly revenue, operating loss and loss per share.”
“We continue to invest in technology and talent to execute our platform strategy,” said Rizai. “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 integrations to further streamline critical business functions as we capitalize on growing Wdesk demand for broader-based, enterprise-wide opportunities.”

First Quarter 2017 Financial Highlights
Revenue: Total revenue for the quarter ended March 31, 2017 was $51.9 million, an increase of 16.5% from $44.6 million in the first quarter of 2016. Subscription and support revenue was $39.5 million, an increase of 17.7% versus results in the first quarter of 2016. Professional services revenue was $12.4 million, an increase of 12.7% compared to the same quarter in the prior year.
Gross Profit: GAAP gross profit for the quarter ended March 31, 2017 was $37.7 million compared with $31.4 million in the same quarter of the prior year. GAAP gross margin was 72.6% in the first quarter of 2017 versus 70.6% in the first quarter of 2016. Non-GAAP gross profit for the quarter ended March 31, 2017 was $37.9 million, an increase of 19.7% compared with the prior year's first quarter, and non-GAAP gross margin was 73.1% compared to 71.1% in the first quarter of 2016.
Loss from Operations: GAAP loss from operations for the quarter ended March 31, 2017 was $6.0 million compared with a loss of $12.1 million in the prior year's first quarter. Non-GAAP loss from operations for the quarter ended March 31, 2017 was $1.8 million, compared with non-GAAP loss from operations of $8.7 million in the first quarter of 2016. Non-GAAP loss from operations as a percentage of revenue improved 1,600 basis points for the quarter ended March 31, 2017 compared to the first quarter of 2016.
Net Loss: GAAP net loss for the quarter ended March 31, 2017 was $5.8 million compared with a net loss of $12.0 million for the prior year's first quarter. GAAP net loss per basic and diluted share for the quarter ended March 31, 2017 was $0.14, based on 41.1 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.30, based on 40.5 million weighted-average shares outstanding in the first quarter of 2016.
Non-GAAP net loss for the quarter ended March 31, 2017 was $1.7 million compared with a net loss of $8.7 million in the prior year's first quarter. Non-GAAP net loss per basic and diluted share for the quarter ended March 31, 2017 was $0.04, based on 41.1 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.21, based on 40.5 million weighted-average shares outstanding in the first quarter of 2016.



Operating Metrics
Customers: Workiva had 2,825 customers as of March 31, 2017, a net increase of 268 customers from March 31, 2016.
Revenue Retention Rate: As of March 31, 2017, Workiva's revenue retention rate (excluding add-on revenue) was 95.1%, and the revenue retention rate including add-on revenue was 106.6%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook
As of May 4, 2017, Workiva is providing guidance for its second quarter 2017 and full year 2017 as follows:

Second Quarter 2017 Guidance:
Total revenue is expected to be in the range of $48.1 million to $48.6 million.
GAAP loss from operations is expected to be in the range of $12.5 million to $13.0 million.
Non-GAAP loss from operations is expected to be in the range of $8.0 million to $8.5 million.
GAAP net loss per basic and diluted share is expected to be in the range of $0.31 to $0.32.
Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.20 to $0.21.
Net loss per basic and diluted share is based on 41.3 million weighted-average shares outstanding.

Full Year 2017 Guidance:
Total revenue is expected to be in the range of $204.0 million to $206.0 million.
GAAP loss from operations is expected to be in the range of $44.0 million to $46.0 million.
Non-GAAP loss from operations is expected to be in the range of $26.0 million to $28.0 million.
GAAP net loss per basic and diluted share is expected to be in the range of $1.08 to $1.13.
Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.64 to $0.69.
Net loss per basic and diluted share is based on 41.4 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 2017, in addition to discussing the Company’s outlook for the second quarter and full year 2017. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 91262090. 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 11, 2017 at 800-585-8367 (domestic) or 416-621-4642 (international). The replay pass code is 91262090. 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 (NYSE:WK) delivers Wdesk, an intuitive cloud platform that modernizes how people work within thousands of organizations, including over 70 percent of the FORTUNE 500®. Wdesk is built upon a data management engine, offering controlled collaboration, data integration, granular permissions and a full audit trail. Wdesk helps mitigate risk, improves productivity and gives users confidence in their data-driven decisions. Workiva employs more than 1,200 people with offices in 16 cities. The company is headquartered in Ames, Iowa. For more information, visit workiva.com. 

Claim not confirmed by FORTUNE or Time Inc. FORTUNE 500® is a registered trademark of Time Inc. and is used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Workiva Inc.





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.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)

 
Three months ended March 31,
 
2017
 
2016
 
(unaudited)
Revenue
 
 
 
Subscription and support
$
39,540

 
$
33,585

Professional services
12,364

 
10,966

Total revenue
51,904

 
44,551

Cost of revenue
 
 
 
Subscription and support (1)
7,637

 
6,918

Professional services (1)
6,581

 
6,188

Total cost of revenue
14,218

 
13,106

Gross profit
37,686

 
31,445

Operating expenses
 
 
 
Research and development (1)
15,536

 
14,516

Sales and marketing (1)
18,713

 
20,088

General and administrative (1)
9,421

 
8,953

Total operating expenses
43,670

 
43,557

Loss from operations
(5,984
)
 
(12,112
)
Interest expense
(455
)
 
(490
)
Other income, net
612

 
576

Loss before provision for income taxes
(5,827
)
 
(12,026
)
Provision for income taxes
9

 
19

Net loss
$
(5,836
)
 
$
(12,045
)
Net loss per common share:
 
 
 
Basic and diluted
$
(0.14
)
 
$
(0.30
)
Weighted-average common shares outstanding - basic and diluted
41,108,611

 
40,451,668


(1) Includes stock-based compensation expense as follows:
 
Three months ended March 31,
 
2017
 
2016
 
(unaudited)
Cost of revenue
 
 
 
Subscription and support
$
140

 
$
118

Professional services
100

 
122

Operating expenses
 
 
 
Research and development
493

 
584

Sales and marketing
659

 
455

General and administrative
2,747

 
2,111






WORKIVA INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)
 
March 31, 2017
 
December 31, 2016
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
52,204

 
$
51,281

Marketable securities
12,498

 
11,435

Accounts receivable, net
19,580

 
22,535

Deferred commissions
1,867

 
1,864

Other receivables
705

 
1,545

Prepaid expenses
8,580

 
9,382

Total current assets
95,434

 
98,042

Property and equipment, net
41,949

 
42,590

Intangible assets, net
1,021

 
1,012

Other assets
1,418

 
1,499

Total assets
$
139,822

 
$
143,143

Liabilities and Stockholders’ Deficit
Current liabilities
 
 
 
Accounts payable
$
1,867

 
$
849

Accrued expenses and other current liabilities
14,898

 
20,695

Deferred revenue
79,087

 
76,016

Deferred government grant obligation
832

 
1,022

Current portion of capital lease and financing obligations
1,258

 
1,285

Current portion of long-term debt
20

 
20

Total current liabilities
97,962

 
99,887

Deferred revenue
22,573

 
21,485

Deferred government grant obligation
653

 
1,000

Other long-term liabilities
4,092

 
4,100

Capital lease and financing obligations
19,473

 
19,743

Long-term debt
53

 
53

Total liabilities
144,806

 
146,268

Stockholders’ deficit
 
 
 
Common stock
41

 
41

Additional paid-in-capital
221,463

 
217,454

Accumulated deficit
(226,747
)
 
(220,911
)
Accumulated other comprehensive income
259

 
291

Total stockholders’ deficit
(4,984
)
 
(3,125
)
Total liabilities and stockholders’ deficit
$
139,822

 
$
143,143






WORKIVA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 
Three months ended March 31,
 
2017
 
2016
 
(unaudited)
Cash flows from operating activities
 
 
 
Net loss
$
(5,836
)
 
$
(12,045
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
 
 
 
Depreciation and amortization
891

 
997

Stock-based compensation expense
4,139

 
3,390

Provision for doubtful accounts
286

 
122

Realized gain on sale of available-for-sale securities, net

 
(2
)
Amortization of premiums and discounts on marketable securities, net
31

 
39

Recognition of deferred government grant obligation
(538
)
 
(433
)
Changes in assets and liabilities:
 
 
 
Accounts receivable
2,686

 
(881
)
Deferred commissions
(2
)
 
(12
)
Other receivables
840

 
(224
)
Prepaid expenses
804

 
(186
)
Other assets
(23
)
 
(63
)
Accounts payable
1,017

 
(696
)
Deferred revenue
4,096

 
(3,215
)
Accrued expenses and other liabilities
(5,811
)
 
(5,869
)
Net cash provided by (used in) operating activities
2,580

 
(19,078
)
Cash flows from investing activities
 
 
 
Purchase of property and equipment
(121
)
 
(412
)
Purchase of marketable securities
(4,091
)
 

Maturities of marketable securities
3,001

 

Sale of marketable securities

 
4,793

Purchase of intangible assets
(31
)
 
(55
)
Net cash (used in) provided by investing activities
(1,242
)
 
4,326

Cash flows from financing activities
 
 
 
Proceeds from option exercises
806

 
284

Taxes paid related to net share settlements of stock-based compensation awards
(936
)
 
(761
)
Principal payments on capital lease and financing obligations
(297
)
 
(432
)
Proceeds from government grants

 
183

Net cash used in financing activities
(427
)
 
(726
)
Effect of foreign exchange rates on cash
12

 
(46
)
Net increase (decrease) in cash and cash equivalents
923

 
(15,524
)
Cash and cash equivalents at beginning of period
51,281

 
58,750

Cash and cash equivalents at end of period
$
52,204

 
$
43,226





TABLE I
WORKIVA INC.
RECONCILIATION OF NON-GAAP INFORMATION
(in thousands, except share and per share)


Three months ended March 31,

2017

2016
Gross profit, subscription and support
$
31,903


$
26,667

Add back: Stock-based compensation
140


118

Gross profit, subscription and support, non-GAAP
$
32,043


$
26,785

As a percentage of subscription and support revenue, non-GAAP
81.0
 %

79.8
 %
 



Gross profit, professional services
$
5,783


$
4,778

Add back: Stock-based compensation
100


122

Gross profit, professional services, non-GAAP
$
5,883


$
4,900

As a percentage of professional services revenue, non-GAAP
47.6
 %

44.7
 %
 



Gross profit, as reported
$
37,686


$
31,445

Add back: Stock-based compensation
240


240

Gross profit, non-GAAP
$
37,926


$
31,685

As percentage of revenue, non-GAAP
73.1
 %

71.1
 %
 



Research and development, as reported
$
15,536


$
14,516

Less: Stock-based compensation
493


584

Research and development, non-GAAP
$
15,043


$
13,932

As percentage of revenue, non-GAAP
29.0
 %

31.3
 %
 
 
 
 
Sales and marketing, as reported
$
18,713


$
20,088

Less: Stock-based compensation
659


455

Sales and marketing, non-GAAP
$
18,054


$
19,633

As percentage of revenue, non-GAAP
34.8
 %

44.1
 %
 
 
 
 
General and administrative, as reported
$
9,421


$
8,953

Less: Stock-based compensation
2,747


2,111

General and administrative, non-GAAP
$
6,674


$
6,842

As percentage of revenue, non-GAAP
12.9
 %

15.4
 %
 
 
 
 
Loss from operations
$
(5,984
)

$
(12,112
)
Add back: Stock-based compensation
4,139


3,390

Loss from operations, non-GAAP
$
(1,845
)

$
(8,722
)
As percentage of revenue, non-GAAP
(3.6
)%

(19.6
)%
 
 
 
 
Net loss
$
(5,836
)

$
(12,045
)
Add back: Stock-based compensation
4,139


3,390

Net loss, non-GAAP
$
(1,697
)

$
(8,655
)
As percentage of revenue, non-GAAP
(3.3
)%

(19.4
)%
 
 
 
 
Net loss per basic and diluted share:
$
(0.14
)
 
$
(0.30
)
Add back: Stock-based compensation
0.10


0.09

Net loss per basic and diluted share, non-GAAP
$
(0.04
)
 
$
(0.21
)
Weighted-average common shares outstanding - basic and diluted, non-GAAP
41,108,611

 
40,451,668





TABLE II
WORKIVA INC.
RECONCILIATION OF NON-GAAP GUIDANCE
(in thousands, except share and per share data)

 
Three months ending June 30, 2017
 
Year ending December 31, 2017
 
 
 
 
 
 
 
 
Loss from operations, GAAP range
$
(12,500
)
-
$
(13,000
)
 
$
(44,000
)
-
$
(46,000
)
Add back: Stock-based compensation
4,500

 
4,500

 
18,000

 
18,000

Loss from operations, non-GAAP range
$
(8,000
)
-
$
(8,500
)
 
$
(26,000
)
-
$
(28,000
)
 
 
 
 
 
 
 
 
Net loss per share, GAAP range
$
(0.31
)
-
$
(0.32
)
 
$
(1.08
)
-
$
(1.13
)
Add back: Stock-based compensation
0.11

 
0.11

 
0.44

 
0.44

Net loss per share, non-GAAP range
$
(0.20
)
-
$
(0.21
)
 
$
(0.64
)
-
$
(0.69
)
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding - basic and diluted
41,300,000

 
41,300,000

 
41,400,000

 
41,400,000



9


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