Workiva Announces Second Quarter 2015 Financial Results






Workiva Announces Second Quarter 2015 Financial Results
Total Quarterly Revenue of $34 million, up 28% from Q2 of 2014

Ames, IA - August 5, 2015 - Workiva Inc. (NYSE: WK), creator of the Wdesk cloud-based productivity platform for enterprises, today announced financial results for its second quarter ended June 30, 2015 and increased its full-year 2015 revenue guidance.

“We had a strong second quarter with 28% revenue growth over the same quarter last year,” said Matt Rizai, Chairman and Chief Executive Officer of Workiva. “We continued to add Wdesk customers and seats across all of our solutions, including Sarbanes-Oxley (SOX) and SEC compliance, risk processes and management reporting.”

"We now have more than 200 SOX customers, which indicates our growth in a market that spans across organizations,” Rizai added. “The unique capabilities of Wdesk that appeal to the SOX market are also attracting many new users to our platform who work in the areas of Governance, Risk and Compliance (GRC), including related policies and procedures, audit, and risk and controls management.”

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

Second Quarter 2015 Financial Highlights
Revenue: Total revenue for the quarter ended June 30, 2015 was $34.0 million, an increase of 28.1% from $26.5 million in the second quarter of 2014. Subscription and support revenue was $28.1 million, an increase of 27.8% versus results in the second quarter of 2014. Professional services revenue was $5.9 million, an increase of 29.4% compared to the same quarter in the prior year.

Gross Profit: GAAP gross profit for the quarter ended June 30, 2015 was $24.2 million compared with $18.6 million in the same quarter of the prior year. GAAP gross margin was 71.3% in the second quarter of 2015 versus 70.2% in the second quarter of 2014. Non-GAAP gross profit for the quarter ended June 30, 2015 was $24.4 million, an increase of 30.2% compared with the prior year's second quarter, and non-GAAP gross margin was 71.8% compared to 70.7% in the second quarter of 2014.

Loss from Operations: GAAP loss from operations for the quarter ended June 30, 2015 was $10.6 million compared with a loss of $10.1 million in the prior year's second quarter. Non-GAAP loss from operations for the quarter ended June 30, 2015 was $8.0 million, compared with non-GAAP loss from operations of $7.9 million in the second quarter of 2014.

Net Loss: GAAP net loss for the quarter ended June 30, 2015 was $11.0 million compared with a net loss of $10.6 million for the prior year's second quarter. GAAP net loss per basic and diluted share for the quarter ended June 30, 2015 was $0.28, based on 39.6 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.33, based on 31.9 million weighted-average shares outstanding in the second quarter of 2014.

Non-GAAP net loss for the quarter ended June 30, 2015 was $8.4 million compared with a net loss of $8.4 million in the prior year's second quarter. Non-GAAP net loss per basic and diluted share for the quarter ended


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June 30, 2015 was $0.21, based on 39.6 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.26, based on 31.9 million weighted-average shares outstanding in the second quarter of 2014.

Balance Sheet: As of June 30, 2015, Workiva had cash and cash equivalents of $86.4 million, compared with $89.9 million as of March 31, 2015. Debt, including capital lease and financing obligations, totaled $24.2 million as of June 30, 2015.

Cash Flow: Net cash used in operating activities was $11.8 million for the six months ended June 30, 2015, compared to cash provided by operating activities of $5.7 million in the first half of 2014.

Operating Metrics
Customers: Workiva had 2,390 customers as of June 30, 2015, a net increase of 287 customers from 2,103 as of June 30, 2014.

Revenue Retention Rate: As of June 30, 2015, Workiva's revenue retention rate (excluding add-on revenue) was 96.3%, and the revenue retention rate (including add-on revenue) was 108.4%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook
As of August 5, 2015, Workiva is raising its revenue guidance for the full year 2015, while our loss and loss per share guidance are unchanged for the full year 2015. Workiva is also providing guidance for its third quarter 2015 as follows:

Third Quarter 2015 Guidance:
Total revenue is expected to be in the range of $35.1 million to $35.6 million.
Non-GAAP loss from operations is expected to be in the range of $14.1 million to $14.6 million.
GAAP loss from operations is expected to be in the range of $17.2 million to $17.7 million.
Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.36 to $0.37.
GAAP net loss per basic and diluted share is expected to be in the range of $0.44 to $0.45.
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 $141.5 million to $143.0 million, compared with the prior outlook for revenue of $140.5 million to $142.5 million.
Non-GAAP loss from operations is expected to be in the range of $36.0 million to $38.0 million, unchanged from the prior outlook for non-GAAP loss from operations.
GAAP loss from operations is expected to be in the range of $47.0 million to $49.0 million, unchanged from the prior outlook for GAAP loss from operations.
Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.90 to $0.95, unchanged from the prior outlook for non-GAAP net loss per basic and diluted share.
GAAP net loss per basic and diluted share is expected to be in the range of $1.17 to $1.22, unchanged from the prior outlook for GAAP net loss per basic and diluted share.
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 second quarter of 2015, in addition to discussing the Company’s outlook for the third quarter and full year 2015. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 76866145. 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 August 12, 2015 at 855-859-2056 (domestic) or


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404-537-3406 (international). The replay pass code is 76866145. 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 1,000 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.


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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.


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WORKIVA INC. AND SUBSIDIARIES

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

 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Revenue
 
 
 
 
 
 
 
Subscription and support
$
28,085

 
$
21,968

 
$
54,354

 
$
42,616

Professional services
5,883

 
4,546

 
14,768

 
12,030

Total revenue
33,968

 
26,514

 
69,122

 
54,646

Cost of revenue
 
 
 
 
 
 
 
Subscription and support (1)
5,564

 
5,029

 
11,449

 
9,698

Professional services (1)
4,189

 
2,882

 
7,966

 
5,680

Total cost of revenue
9,753

 
7,911

 
19,415

 
15,378

Gross profit
24,215

 
18,603

 
49,707

 
39,268

Operating expenses
 
 
 
 
 
 
 
Research and development (1)
12,196

 
10,772

 
24,204

 
21,059

Sales and marketing (1)
16,329

 
12,747

 
30,034

 
23,187

General and administrative (1)
6,291

 
5,186

 
13,025

 
9,414

Total operating expenses
34,816

 
28,705

 
67,263

 
53,660

Loss from operations
(10,601
)
 
(10,102
)
 
(17,556
)
 
(14,392
)
Interest expense
(513
)
 
(316
)
 
(1,023
)
 
(581
)
Other income and (expense), net
191

 
(145
)
 
125

 
(142
)
Loss before income tax expense
(10,923
)
 
(10,563
)
 
(18,454
)
 
(15,115
)
Income tax expense
106

 

 
22

 

Net loss
$
(11,029
)
 
$
(10,563
)
 
$
(18,476
)
 
$
(15,115
)
Net loss per common share:
 
 
 
 
 
 
 
Basic and diluted
$
(0.28
)
 
$
(0.33
)
 
$
(0.47
)
 
$
(0.48
)
Weighted average common shares outstanding - basic and diluted
39,627,842

 
31,850,307

 
39,610,905

 
31,809,382


(1) Includes stock-based compensation expense as follows:
 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Cost of revenue
 
 
 
 
 
 
 
Subscription and support
$
87

 
$
85

 
$
183

 
$
315

Professional services
89

 
47

 
161

 
217

Operating expenses
 
 
 
 
 
 
 
Research and development
369

 
337

 
703

 
1,102

Sales and marketing
432

 
251

 
782

 
601

General and administrative
1,643

 
1,450

 
2,965

 
1,891



5





WORKIVA INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(in thousands)
 
June 30, 2015
 
December 31, 2014
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
86,432

 
$
101,131

Accounts receivable, net
12,452

 
11,120

Deferred commissions
738

 
852

Other receivables
907

 
295

Prepaid expenses and other current assets
3,064

 
3,143

Total current assets
103,593

 
116,541

Restricted cash

 
401

Property and equipment, net
46,226

 
46,265

Intangible assets, net
812

 
549

Other assets
699

 
795

Total assets
$
151,330

 
$
164,551

Liabilities and Stockholders’ Equity
Current liabilities
 
 
 
Accounts payable
$
3,875

 
$
3,011

Accrued expenses and other current liabilities
13,830

 
16,765

Deferred revenue
47,786

 
42,605

Deferred government grant obligation
2,642

 
2,324

Current portion of capital lease and financing obligations
2,072

 
1,941

Current portion of long-term debt
35

 
84

Total current liabilities
70,240

 
66,730

Deferred revenue
10,262

 
13,671

Deferred government grant obligation
3,147

 
3,424

Other long-term liabilities
3,049

 
2,069

Capital lease and financing obligations
21,982

 
22,747

Long-term debt
73

 
91

Total liabilities
108,753

 
108,732

Stockholders’ equity
 
 
 
Common stock
40

 
39

Additional paid-in-capital
194,356

 
189,168

Accumulated deficit
(152,011
)
 
(133,535
)
Accumulated other comprehensive income
192

 
147

Total stockholders’ equity
42,577

 
55,819

Total liabilities and stockholders’ equity
$
151,330

 
$
164,551



6





WORKIVA INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Cash flows from operating activities
 
 
 
 
 
 
 
Net loss
$
(11,029
)
 
$
(10,563
)
 
$
(18,476
)
 
$
(15,115
)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
 
 
 
 
 
 
 
Depreciation and amortization
1,127

 
852

 
2,296

 
1,620

Stock-based compensation expense
2,620

 
2,169

 
4,794

 
4,126

Provision for (recovery of) doubtful accounts
52

 
(100
)
 
126

 
24

Realized losses on sale of available-for-sale securities

 
136

 

 
136

Recognition of deferred government grant obligation
(206
)
 
(12
)
 
(272
)
 
(12
)
Changes in assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(584
)
 
3,854

 
(1,495
)
 
4,378

Deferred commissions
(32
)
 
(178
)
 
113

 
(210
)
Other receivables
(424
)
 
74

 
(612
)
 
132

Prepaid expenses and other
(65
)
 
(347
)
 
79

 
(1,173
)
Other assets
38

 

 
94

 
36

Accounts payable
1,262

 
1,002

 
1,419

 
(1,356
)
Deferred revenue
2,514

 
5,156

 
1,842

 
12,306

Accrued expenses and other liabilities
2,046

 
2,139

 
(1,846
)
 
782

Change in restricted cash
73

 

 
101

 
54

Net cash (used in) provided by operating activities
(2,608
)
 
4,182

 
(11,837
)
 
5,728

Cash flows from investing activities:
 
 
 
 
 
 
 
Purchase of property and equipment
(159
)
 
(3,526
)
 
(1,030
)
 
(5,276
)
Sale of marketable securities

 
4,864

 

 
4,864

Purchase of intangible assets
(195
)
 
(98
)
 
(278
)
 
(116
)
Net cash (used in) provided by investing activities
(354
)
 
1,240

 
(1,308
)
 
(528
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Payment of equity issuance costs
(273
)
 

 
(1,346
)
 

Proceeds from option exercises
353

 
187

 
433

 
205

Changes in restricted cash

 
(300
)
 
300

 
(300
)
Repayment of other long-term debt
(42
)
 
(48
)
 
(67
)
 
(102
)
Principal payments on capital lease and financing obligations
(483
)
 
(294
)
 
(1,161
)
 
(465
)
Distributions to members
(35
)
 
(34
)
 
(35
)
 
(34
)
Proceeds from borrowings on line of credit

 
8

 

 
20

Proceeds from government for training reimbursement

 
4

 

 
138

Repayment of line of credit

 
(2,038
)
 

 
(2,038
)
Government grant awards

 

 
313

 
2,000

Net cash used in financing activities
(480
)
 
(2,515
)
 
(1,563
)
 
(576
)
Effect of foreign exchange rates on cash
(19
)
 
(29
)
 
9

 
(4
)
Net (decrease) increase in cash and cash equivalents
(3,461
)
 
2,878

 
(14,699
)
 
4,620

Cash and cash equivalents at beginning of period
89,893

 
17,257

 
101,131

 
15,515

Cash and cash equivalents at end of period
$
86,432

 
$
20,135

 
$
86,432

 
$
20,135


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

 
Three months ended June 30,
 
Six months ended June 30,
 
2015
 
2014
 
2015
 
2014
Gross profit, subscription and support
$
22,521

 
$
16,939

 
$
42,905

 
$
32,918

Add back: Stock-based compensation
87

 
85

 
183

 
315

Gross profit, subscription and support, non-GAAP
$
22,608

 
$
17,024

 
$
43,088

 
$
33,233

As a percentage of subscription and support revenue
80.5
 %
 
77.5
 %
 
79.3
 %
 
78.0
 %
 
 
 
 
 
 
 
 
Gross profit, professional services
$
1,694

 
$
1,664

 
$
6,802

 
$
6,350

Add back: Stock-based compensation
89

 
47

 
161

 
217

Gross profit, professional services, non-GAAP
$
1,783

 
$
1,711

 
$
6,963

 
$
6,567

As a percentage of professional services revenue
30.3
 %
 
37.6
 %
 
47.1
 %
 
54.6
 %
 
 
 
 
 
 
 
 
Gross profit, as reported
$
24,215

 
$
18,603

 
$
49,707

 
$
39,268

Add back: Stock-based compensation
176

 
132

 
344

 
532

Gross profit, non-GAAP
$
24,391

 
$
18,735

 
$
50,051

 
$
39,800

As percentage of revenue, non-GAAP
71.8
 %
 
70.7
 %
 
72.4
 %
 
72.8
 %
 
 
 
 
 
 
 
 
Research and development, as reported
$
12,196

 
$
10,772

 
$
24,204

 
$
21,059

Less: Stock-based compensation
369

 
337

 
703

 
1,102

Research and development, non-GAAP
$
11,827

 
$
10,435

 
$
23,501

 
$
19,957

As percentage of revenue, non-GAAP
34.8
 %
 
39.4
 %
 
34.0
 %
 
36.5
 %
 
 
 
 
 
 
 
 
Sales and marketing, as reported
$
16,329

 
$
12,747

 
$
30,034

 
$
23,187

Less: Stock-based compensation
432

 
251

 
782

 
601

Sales and marketing, non-GAAP
$
15,897

 
$
12,496

 
$
29,252

 
$
22,586

As percentage of revenue, non-GAAP
46.8
 %
 
47.1
 %
 
42.3
 %
 
41.3
 %
 
 
 
 
 
 
 
 
General and administrative, as reported
$
6,291

 
$
5,186

 
$
13,025

 
$
9,414

Less: Stock-based compensation
1,643

 
1,450

 
2,965

 
1,891

General and administrative, non-GAAP
$
4,648

 
$
3,736

 
$
10,060

 
$
7,523

As percentage of revenue, non-GAAP
13.7
 %
 
14.1
 %
 
14.6
 %
 
13.8
 %
 
 
 
 
 
 
 
 
Loss from operations
$
(10,601
)
 
$
(10,102
)
 
$
(17,556
)
 
$
(14,392
)
Add back: Stock-based compensation
2,620

 
2,170

 
4,794

 
4,126

Operating loss, non-GAAP
$
(7,981
)
 
$
(7,932
)
 
$
(12,762
)
 
$
(10,266
)
As percentage of revenue, non-GAAP
(23.5
)%
 
(29.9
)%
 
(18.5
)%
 
(18.8
)%
 
 
 
 
 
 
 
 
Net loss
$
(11,029
)
 
$
(10,563
)
 
$
(18,476
)
 
$
(15,115
)
Add back: Stock-based compensation
2,620

 
2,170

 
4,794

 
4,126

Net loss, non-GAAP
$
(8,409
)
 
$
(8,393
)
 
$
(13,682
)
 
$
(10,989
)
As percentage of revenue, non-GAAP
(24.8
)%
 
(31.7
)%
 
(19.8
)%
 
(20.1
)%
 
 
 
 
 
 
 
 
Net loss per share, non-GAAP:
 
 
 
 
 
 
 
Basic and diluted, non-GAAP
$
(0.21
)
 
$
(0.26
)
 
$
(0.35
)
 
$
(0.35
)
Weighted average common shares outstanding - basic and diluted
39,627,842

 
31,850,307

 
39,610,905

 
31,809,382



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

 
Three months ending September 30, 2015
 
Year ending
December 31, 2015
 
 
 
 
 
 
 
 
Loss from operations, GAAP range
$
(17,200
)
-
$
(17,700
)
 
$
(47,000
)
-
$
(49,000
)
Add back: Stock-based compensation
3,100

 
3,100

 
11,000

 
11,000

Loss from operations, non-GAAP range
$
(14,100
)
-
$
(14,600
)
 
$
(36,000
)
-
$
(38,000
)
 
 
 
 
 
 
 
 
Net loss per share, GAAP range
$
(0.44
)
-
$
(0.45
)
 
$
(1.17
)
-
$
(1.22
)
Add back: Stock-based compensation
0.08

 
0.08

 
0.27

 
0.27

Net loss per share, non-GAAP range
$
(0.36
)
-
$
(0.37
)
 
$
(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