Workiva Announces Fourth Quarter and Full Year 2015 Financial Results

Q4 Revenue of $39.9 million, Up 32% from Q4 of 2014 Full Year 2015 Revenue of $145.3 million, Up 29% from 2014

AMES, Iowa, March 1, 2016 /PRNewswire/ -- Workiva Inc. (NYSE: WK), creator of the Wdesk cloud-based productivity platform for enterprises, today announced financial results for its fourth quarter and fiscal year ended December 31, 2015 and announced its first quarter and full-year 2016 guidance.

"We are happy to report strong revenue growth for the fourth quarter and full-year 2015," said Matt Rizai, Chairman and Chief Executive Officer of Workiva. "Revenue growth in the fourth quarter was 32.4% over the same quarter last year, which was ahead of our guidance. Total revenue for the year ended December 31, 2015 was $145.3 million, an increase of 28.9% over full-year 2014."

"We continue to add new Wdesk customers and seats across our customers' organizations for use cases in Sarbanes-Oxley (SOX), management reporting, risk processes and auditing," said Rizai. "Non-SEC use cases contributed 25% of our subscription bookings in 2014 and 39% in 2015," said Rizai. "In 2016, we expect that non-SEC use cases will contribute more than 50% of our subscription bookings."

"To capitalize on these expanded market opportunities, we will continue to invest in software development, sales and marketing," added Rizai.

"We anticipate cash usage from operations to improve in 2016, and then improve again in 2017," said Rizai. "We 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."

Fourth Quarter 2015 Financial Highlights

  • Revenue: Total revenue for the quarter ended December 31, 2015 was $39.9 million, an increase of 32.4% from $30.1 million in the fourth quarter of 2014. Subscription and support revenue was $32.1 million, an increase of 28.4% versus results in the fourth quarter of 2014. Professional services revenue was $7.8 million, an increase of 52.0% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the quarter ended December 31, 2015 was $28.9 million compared with $20.2 million in the same quarter of the prior year. GAAP gross margin was 72.4% in the fourth quarter of 2015 versus 66.9% in the fourth quarter of 2014. Non-GAAP gross profit for the quarter ended December 31, 2015 was $29.1 million, an increase of 42.8% compared with the prior year's fourth quarter, and non-GAAP gross margin was 72.9% compared to 67.5% in the fourth quarter of 2014.
  • Loss from Operations: GAAP loss from operations for the quarter ended December 31, 2015 was $11.8 million compared with a loss of $11.6 million in the prior year's fourth quarter. Non-GAAP loss from operations for the quarter ended December 31, 2015 was $8.7 million, compared with non-GAAP loss from operations of $9.8 million in the fourth quarter of 2014.
  • Net Loss: GAAP net loss for the quarter ended December 31, 2015 was $10.3 million compared with a net loss of $12.7 million for the prior year's fourth quarter. GAAP net loss per basic and diluted share for the quarter ended December 31, 2015 was $0.26, based on 40.2 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.38, based on 33.1 million weighted-average shares outstanding in the fourth quarter of 2014.
  • Non-GAAP net loss for the quarter ended December 31, 2015 was $7.2 million compared with a net loss of $10.8 million in the prior year's fourth quarter. Non-GAAP net loss per basic and diluted share for the quarter ended December 31, 2015 was $0.18, based on 40.2 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.33, based on 33.1 million weighted-average shares outstanding in the fourth quarter of 2014.

Full Year 2015 Financial Highlights

  • Revenue: Total revenue for the year ended December 31, 2015 was $145.3 million, an increase of 28.9% compared with $112.7 million in the prior year. Subscription and support revenue was $116.3 million, an increase of 27.3% on a year-over-year basis. Professional services revenue was $29.0 million, an increase of 35.6% on a year-over-year basis.
  • Gross Profit: GAAP gross profit for the year ended December 31, 2015 was $105.1 million compared with $78.8 million in the prior year, and GAAP gross margin was 72.3%. Non-GAAP gross profit for the year ended December 31, 2015 was $105.8 million, an increase of 32.8% compared with the prior year, and non-GAAP gross margin was 72.8%.
  • Loss from Operations: GAAP loss from operations for the year ended December 31, 2015 was $43.7 million compared with a loss of $38.6 million in the prior year. Non-GAAP loss from operations for the year ended December 31, 2015 was $32.7 million compared with a loss of $31.2 million in the prior year.
  • Net Loss: GAAP net loss for the year ended December 31, 2015 was $43.4 million compared with a net loss of $41.2 million in the prior year. GAAP net loss per share for the year ended December 31, 2015 was $1.09 based on 39.9 million weighted-average shares outstanding compared with a loss per share of $1.28 based on 32.2 million weighted-average shares outstanding in the prior year.
  • Non-GAAP net loss for the year ended December 31, 2015 was $32.4 million compared with a net loss of $33.8 million in the prior year. Non-GAAP net loss per share for the year ended December 31, 2015 was $0.81 based on 39.9 million weighted-average shares outstanding compared with a non-GAAP net loss per share of $1.05 based on 32.2 million weighted-average shares in the prior year.
  • Balance Sheet: As of December 31, 2015, Workiva had cash, cash equivalents and marketable securities totaling $76.2 million, compared with $81.8 million as of September 30, 2015. Debt, including capital lease and financing obligations, totaled $23.0 million as of December 31, 2015.
  • Cash Flow: Net cash used in operating activities was $21.6 million in 2015, compared to cash used in operating activities of $3.5 million in 2014.

Operating Metrics

  • Customers: Workiva had 2,524 customers as of December 31, 2015, a net increase of 263 customers from December 31, 2014.
  • Revenue Retention Rate: As of December 31, 2015, Workiva's revenue retention rate (excluding add-on revenue) was 95.8%, and the revenue retention rate including add-on revenue was 112.5%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook

As of March 1, 2016, Workiva is providing guidance for its first quarter 2016 and full year 2016 as follows:

First Quarter 2016 Guidance:

  • Total revenue is expected to be in the range of $42.3 million to $42.8 million.
  • Non-GAAP loss from operations is expected to be in the range of $10.4 million to $10.9 million.
  • GAAP loss from operations is expected to be in the range of $13.9 million to $14.4 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.26 to $0.28.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.35 to $0.37.
  • Net loss per basic and diluted share is based on 40.5 million weighted-average shares outstanding.

Full Year 2016 Guidance:

  • Total revenue is expected to be in the range of $177.0 million to $180.0 million.
  • Non-GAAP loss from operations is expected to be in the range of $46.0 million to $49.0 million.
  • GAAP loss from operations is expected to be in the range of $60.8 million to $63.8 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $1.16 to $1.23.
  • GAAP net loss per basic and diluted share is expected to be in the range of $1.52 to $1.59.
  • Net loss per basic and diluted share is based on 41.0 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 fourth quarter and full year 2015, in addition to discussing the Company's outlook for the first quarter and full year 2016. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 25297720. 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 March 8, 2016 at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 25297720. 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) 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. The platform's 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 1,100 people with offices in 16 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.

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)


















Three months ended

December 31,


Year ended December 31,


2015


2014


2015


2014

Revenue








Subscription and support

$

32,102



$

25,011



$

116,288



$

91,317


Professional services

7,780



5,118



28,984



21,377


Total revenue

39,882



30,129



145,272



112,694


Cost of revenue








Subscription and support (1)

5,791



6,097



22,559



21,182


Professional services (1)

5,222



3,864



17,645



12,696


Total cost of revenue

11,013



9,961



40,204



33,878


Gross profit

28,869



20,168



105,068



78,816


Operating expenses








Research and development (1)

13,496



11,911



50,466



44,145


Sales and marketing (1)

18,632



14,063



69,569



53,498


General and administrative (1)

8,538



5,797



28,716



19,783


Total operating expenses

40,666



31,771



148,751



117,426


Loss from operations

(11,797)



(11,603)



(43,683)



(38,610)


Interest expense

(508)



(763)



(2,025)



(2,044)


Other income and (expense), net

2,014



(259)



2,302



(468)


Loss before provision for income taxes

(10,291)



(12,625)



(43,406)



(41,122)


Provision (benefit) for income taxes

2



32



(7)



32


Net loss

$

(10,293)



$

(12,657)



$

(43,399)



$

(41,154)


Net loss per common share:








Basic and diluted

$

(0.26)



$

(0.38)



$

(1.09)



$

(1.28)


Weighted average common shares outstanding - basic and diluted

40,204,367



33,117,423



39,852,624



32,156,060




(1)

 Includes stock-based compensation expense as follows:



 



















Three months ended December 31,


Year ended December 31,


2015


2014


2015


2014

Cost of revenue








Subscription and support

$

88



$

99



$

363



$

502


Professional services

98



73



349



337


Operating expenses








Research and development

635



314



1,924



1,757


Sales and marketing

484



352



1,727



1,241


General and administrative

1,819



1,008



6,637



3,548


 

WORKIVA INC.

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands)










As of December 31,


2015


2014

Assets




Current assets




Cash and cash equivalents

$

58,750



$

101,131


Marketable securities

17,420




Accounts receivable, net

15,647



11,120


Deferred commissions

1,368



852


Other receivables

818



295


Prepaid expenses and other current assets

3,875



3,143


Total current assets

97,878



116,541


Restricted cash



401


Property and equipment, net

44,410



46,265


Intangible assets, net

896



549


Other assets

711



795


Total assets

$

143,895



$

164,551


Liabilities and Stockholders' Equity

Current liabilities




Accounts payable

$

5,138



$

3,011


Accrued expenses and other current liabilities

20,394



16,765


Deferred revenue

55,741



42,605


Deferred government grant obligation

985



2,324


Current portion of capital lease and financing obligations

1,808



1,941


Current portion of long-term debt

18



84


Total current liabilities

84,084



66,730


Deferred revenue

7,597



13,671


Deferred government grant obligation

1,996



3,424


Other long-term liabilities

3,343



2,069


Capital lease and financing obligations

21,083



22,747


Long-term debt

73



91


Total liabilities

118,176



108,732


Stockholders' equity




Common stock

41



39


Additional paid-in-capital

202,371



189,168


Accumulated deficit

(176,934)



(133,535)


Accumulated other comprehensive income

241



147


Total stockholders' equity

25,719



55,819


Total liabilities and stockholders' equity

$

143,895



$

164,551


 

WORKIVA INC.

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


















Three months ended

December 31,


Year ended December 31,


2015


2014


2015


2014

Cash flows from operating activities








Net loss

$

(10,293)



$

(12,657)



$

(43,399)



$

(41,154)


Adjustments to reconcile net loss to net cash used in operating activities








Depreciation and amortization

1,056



1,125



4,410



3,877


Stock-based compensation expense

3,124



1,846



11,000



7,385


Provision for (recovery of) doubtful accounts

101



(5)



449



123


Accretion of discount on convertible note



133





266


Paid-in-kind interest on convertible note



76





134


Change in fair value of derivative liability



145





193


Loss on early extinguishment of convertible note



111





111


Realized (gain) loss on sale of available-for-sale securities

(6)





(13)



136


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

45





77




Recognition of deferred government grant obligation

(1,875)



(48)



(2,383)



(99)


Deferred income tax

(76)





(76)




Changes in assets and liabilities:








Accounts receivable

(3,632)



18



(5,080)



2,602


Deferred commissions

(416)



(142)



(520)



(553)


Other receivables

133



(85)



(523)



155


Prepaid expenses and other

(595)



(1,309)



(734)



(2,251)


Other assets

(85)



113



81



(52)


Accounts payable

55



(1,901)



2,331



(1,530)


Deferred revenue

3,769



4,444



7,297



19,961


Accrued expenses and other liabilities

3,658



3,529



5,390



7,137


Change in restricted cash





101



54


Net cash used in operating activities

(5,037)



(4,607)



(21,592)



(3,505)


Cash flows from investing activities








Purchase of property and equipment

(184)



(522)



(1,843)



(8,566)


Purchase of marketable securities

(8,377)





(24,069)




Sale of marketable securities

3,509





6,521



4,864


Purchase of intangible assets

(42)



(157)



(386)



(394)


Net cash used in investing activities

(5,094)



(679)



(19,777)



(4,096)


Cash flows from financing activities








Payment of equity issuance costs





(1,346)




Proceeds from public offering, net of underwriters' discount and offering costs



91,826





91,769


Proceeds from issuance of convertible notes







5,000


Proceeds from option exercises

749



217



2,244



580


Changes in restricted cash



25



300



(275)


Repayment of other long-term debt



(2,167)



(84)



(2,365)


Principal payments on capital lease and financing obligations

(599)



(557)



(2,282)



(1,338)


Distributions to members

(346)



(228)



(381)



(279)


Proceeds from borrowings on line of credit







3,020


Proceeds from government grants





548



2,194


Payments of issuance costs on line of credit



(14)





(113)


Repayment of line of credit



(3,000)





(5,038)


Repayment of government grant

(101)





(101)




Net cash (used in) provided by financing activities

(297)



86,102



(1,102)



93,155


Effect of foreign exchange rates on cash

84



40



90



62


Net (decrease) increase in cash and cash equivalents

(10,344)



80,856



(42,381)



85,616


Cash and cash equivalents at beginning of period

69,094



20,275



101,131



15,515


Cash and cash equivalents at end of period

$

58,750



$

101,131



$

58,750



$

101,131


 

TABLE I

WORKIVA INC.

RECONCILIATION OF NON-GAAP INFORMATION

(in thousands, except share and per share data)


















Three months ended

December 31,


Year ended December 31,


2015


2014


2015


2014

Gross profit, subscription and support

$

26,311



$

18,914



$

93,729



$

70,135


Add back: Stock-based compensation

88



99



363



502


Gross profit, subscription and support, non-GAAP

$

26,399



$

19,013



$

94,092



$

70,637


As a percentage of subscription and support revenue

82.2

%


76.0

%


80.9

%


77.4

%









Gross profit, professional services

$

2,558



$

1,254



$

11,339



$

8,681


Add back: Stock-based compensation

98



73



349



337


Gross profit, professional services, non-GAAP

$

2,656



$

1,327



$

11,688



$

9,018


As a percentage of professional services revenue

34.1

%


25.9

%


40.3

%


42.2

%









Gross profit, as reported

$

28,869



$

20,168



$

105,068



$

78,816


Add back: Stock-based compensation

186



172



712



839


Gross profit, non-GAAP

$

29,055



$

20,340



$

105,780



$

79,655


As percentage of revenue, non-GAAP

72.9

%


67.5

%


72.8

%


70.7

%









Research and development, as reported

$

13,496



$

11,911



$

50,466



$

44,145


Less: Stock-based compensation

635



314



1,924



1,757


Research and development, non-GAAP

$

12,861



$

11,597



$

48,542



$

42,388


As percentage of revenue, non-GAAP

32.2

%


38.5

%


33.4

%


37.6

%









Sales and marketing, as reported

$

18,632



$

14,063



$

69,569



$

53,498


Less: Stock-based compensation

484



352



1,727



1,241


Sales and marketing, non-GAAP

$

18,148



$

13,711



$

67,842



$

52,257


As percentage of revenue, non-GAAP

45.5

%


45.5

%


46.7

%


46.4

%









General and administrative, as reported

$

8,538



$

5,797



$

28,716



$

19,783


Less: Stock-based compensation

1,819



1,008



6,637



3,548


General and administrative, non-GAAP

$

6,719



$

4,789



$

22,079



$

16,235


As percentage of revenue, non-GAAP

16.8

%


15.9

%


15.2

%


14.4

%









Loss from operations

$

(11,797)



$

(11,603)



$

(43,683)



$

(38,610)


Add back: Stock-based compensation

3,124



1,846



11,000



7,385


Loss from operations, non-GAAP

$

(8,673)



$

(9,757)



$

(32,683)



$

(31,225)


As percentage of revenue, non-GAAP

(21.7)

%


(32.4)

%


(22.5)

%


(27.7)

%









Net loss

$

(10,293)



$

(12,657)



$

(43,399)



$

(41,154)


Add back: Stock-based compensation

3,124



1,846



11,000



7,385


Net loss, non-GAAP

$

(7,169)



$

(10,811)



$

(32,399)



$

(33,769)


As percentage of revenue, non-GAAP

(18.0)

%


(35.9)

%


(22.3)

%


(30.0)

%









Net loss per share, non-GAAP:








Basic and diluted, non-GAAP

$

(0.18)



$

(0.33)



$

(0.81)



$

(1.05)


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

40,204,367



33,117,423



39,852,624



32,156,060


 

TABLE II

WORKIVA INC.

RECONCILIATION OF NON-GAAP GUIDANCE

(in thousands, except share and per share data)


















Three months ending

March 31, 2016


Year ending December 31, 2016









Loss from operations, GAAP range

$

(13,900)


-

$

(14,400)



$

(60,800)


-

$

(63,800)


Add back: Stock-based compensation

3,500



3,500



14,800



14,800


Loss from operations, non-GAAP range

$

(10,400)


-

$

(10,900)



$

(46,000)


-

$

(49,000)










Net loss per share, GAAP range

$

(0.35)


-

$

(0.37)



$

(1.52)


-

$

(1.59)


Add back: Stock-based compensation

0.09



0.09



0.36



0.36


Net loss per share, non-GAAP range

$

(0.26)


-

$

(0.28)



$

(1.16)


-

$

(1.23)










Weighted average common shares outstanding - basic and diluted

40,500,000



40,500,000



41,000,000



41,000,000


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