Workiva Announces Second Quarter 2017 Financial Results

Q2 Revenue of $49.4 million, Up 14.8% from Q2 of 2016

Q2 Subscription and Support Revenue of $41.0 million, Up 17.2% from Q2 of 2016

AMES, Iowa - August 3, 2017 -- Workiva Inc. (NYSE: WK), a leading provider of solutions for enterprise productivity, today announced financial results for its second quarter ended June 30, 2017.

“We posted strong results in the second quarter, highlighted by 14.8% 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 are increasing the number of Wdesk data and process integrations to help our customers further improve a wide range of financial, regulatory and Corporate Performance Management functions. Expanding the amount of data that Wdesk users can directly access amplifies the power of Wdesk throughout our customers’ organizations.”

Second Quarter 2017 Financial Highlights

  • Revenue: Total revenue for the quarter ended June 30, 2017 was $49.4 million, an increase of 14.8% from $43.0 million in the second quarter of 2016. Subscription and support revenue was $41.0 million, an increase of 17.2% versus results in the second quarter of 2016. Professional services revenue was $8.4 million, an increase of 4.6% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the quarter ended June 30, 2017 was $35.1 million compared with $30.4 million in the same quarter of the prior year. GAAP gross margin was 71.1% in the second quarter of 2017 versus 70.8% in the second quarter of 2016. Non-GAAP gross profit for the quarter ended June 30, 2017 was $35.4 million, an increase of 15.4% compared with the prior year's second quarter, and non-GAAP gross margin was 71.6% compared to 71.3% in the second quarter of 2016.
  • Loss from Operations: GAAP loss from operations for the quarter ended June 30, 2017 was $9.9 million compared with a loss of $11.3 million in the prior year's second quarter. Non-GAAP loss from operations for the quarter ended June 30, 2017 was $5.5 million, compared with non-GAAP loss from operations of $7.8 million in the second quarter of 2016. Non-GAAP loss from operations as a percentage of revenue improved 710 basis points for the quarter ended June 30, 2017 compared to the second quarter of 2016.
  • Net Loss: GAAP net loss for the quarter ended June 30, 2017 was $10.2 million compared with a net loss of $11.5 million for the prior year's second quarter. GAAP net loss per basic and diluted share for the quarter ended June 30, 2017 was $0.25, based on 41.4 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.28, based on 40.6 million weighted-average shares outstanding in the second quarter of 2016
  • Non-GAAP net loss for the quarter ended June 30, 2017 was $5.8 million compared with a net loss of $8.0 million in the prior year's second quarter. Non-GAAP net loss per basic and diluted share for the quarter ended June 30, 2017 was $0.14, based on 41.4 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.20, based on 40.6 million weighted-average shares outstanding in the second quarter of 2016.

Operating Metrics

  • Customers: Workiva had 2,908 customers as of June 30, 2017, a net increase of 286 customers from June 30, 2016.
  • Revenue Retention Rate: As of June 30, 2017, Workiva's revenue retention rate (excluding add-on revenue) was 96.1%, and the revenue retention rate including add-on revenue was 106.0%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook

As of August 3, 2017, Workiva is providing guidance for the third quarter and full year 2017 as follows:

Third Quarter 2017 Guidance:

  • Total revenue is expected to be in the range of $50.4 million to $50.8 million.
  • GAAP loss from operations is expected to be in the range of $16.4 million to $16.8 million.
  • Non-GAAP loss from operations is expected to be in the range of $11.8 million to $12.2 million.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.40 to $0.41.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.29 to $0.30.
  • Net loss per basic and diluted share is based on 42.0 million weighted-average shares outstanding.

Full Year 2017 Guidance:

  • Total revenue is expected to be in the range of $205.0 million to $206.0 million.
  • GAAP loss from operations is expected to be in the range of $42.7 million to $43.7 million.
  • Non-GAAP loss from operations is expected to be in the range of $25.0 million to $26.0 million.
  • GAAP net loss per basic and diluted share is expected to be in the range of $1.04 to $1.06.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.62 to $0.64.
  • Net loss per basic and diluted share is based on 41.7 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 2017, in addition to discussing the Company’s outlook for the third quarter and full year 2017. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 44634049. 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 10, 2017 at 800-585-8367 (domestic) or 416-621-4642 (international). The replay pass code is 44634049. 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.

Read the Workiva blog: www.workiva.com/blog
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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.


For the latest information and news, visit The Workiva Newsroom.




WORKIVA
INC.

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

 
Three months ended
June 30,
 
Six months ended
June 30,
 
2017
 
2016
 
2017
 
2016
Revenue
 
 
 
 
 
 
 
Subscription and support
$
40,980

 
$
34,969

 
$
80,520

 
$
68,554

Professional services
8,411

 
8,042

 
20,775

 
19,008

Total revenue
49,391

 
43,011

 
101,295

 
87,562

Cost of revenue
 
 
 
 
 
 
 
Subscription and support
"vertical-align:top;line-height:120%;font-size:7pt">(1)
7,758

 
7,039

 
15,395

 
13,957

Professional services
"vertical-align:top;line-height:120%;font-size:7pt">(1)
6,528

 
5,538

 
13,109

 
11,726

Total cost of revenue
14,286

 
12,577

 
28,504

 
25,683

Gross profit
35,105

 
30,434

 
72,791

 
61,879

Operating expenses
 
 
 
 
 
 
 
Research and development
"vertical-align:top;line-height:120%;font-size:7pt">(1)
16,239

 
14,047

 
31,775

 
28,563

Sales and marketing
"vertical-align:top;line-height:120%;font-size:7pt">(1)
19,787

 
19,828

 
38,500

 
39,916

General and administrative
"vertical-align:top;line-height:120%;font-size:7pt">(1)
8,943

 
7,882

 
18,364

 
16,835

Total operating expenses
44,969

 
41,757

 
88,639

 
85,314

Loss from operations
(9,864
)
 
(11,323
)
 
(15,848
)
 
(23,435
)
Interest expense
(475
)
 
(468
)
 
(930
)
 
(958
)
Other income, net
176

 
278

 
788

 
854

Loss before provision for income
taxes
(10,163
)
 
(11,513
)
 
(15,990
)
 
(23,539
)
Provision for income taxes
33

 
12

 
42

 
31

Net loss
$
(10,196
)
 
$
(11,525
)
 
$
(16,032
)
 
$
(23,570
)
Net loss per common share:
 
 
 
 
 
 
 
Basic and diluted
$
(0.25
)
 
$
(0.28
)
 
$
(0.39
)
 
$
(0.58
)
Weighted-average common shares
outstanding - basic and diluted
41,429,691

 
40,593,908

 
41,270,038

 
40,522,790


(1) Includes stock-based compensation expense
as follows:
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2017
 
2016
 
2017
 
2016
Cost of revenue
 
 
 
 
 
 
 
Subscription and support
$
178

 
$
125

 
$
318

 
$
243

Professional services
100

 
93

 
200

 
215

Operating expenses
 
 
 
 
 
 
 
Research and development
472

 
609

 
965

 
1,193

Sales and marketing
694

 
449

 
1,353

 
904

General and administrative
2,953

 
2,226

 
5,700

 
4,337





WORKIVA
INC.

CONSOLIDATED
BALANCE SHEETS
(in
thousands)
 
June 30,
2017
 
December 31,
2016
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
59,986

 
$
51,281

Marketable securities
12,877

 
11,435

Accounts receivable, net
22,733

 
22,535

Deferred commissions
2,021

 
1,864

Other receivables
1,573

 
1,545

Prepaid expenses
11,416

 
9,382

Total current assets
110,606

 
98,042

Property and equipment, net
41,138

 
42,590

Intangible assets, net
1,056

 
1,012

Other assets
1,393

 
1,499

Total assets
$
154,193

 
$
143,143

Liabilities and
Stockholders’ Deficit
Current liabilities
 
 
 
Accounts payable
$
1,191

 
$
849

Accrued expenses and other current
liabilities
17,286

 
20,695

Deferred revenue
91,914

 
76,016

Deferred government grant
obligation
904

 
1,022

Current portion of capital lease
and financing obligations
1,242

 
1,285

Current portion of long-term
debt
21

 
20

Total current liabilities
112,558

 
99,887

Deferred revenue
24,342

 
21,485

Deferred government grant
obligation
405

 
1,000

Other long-term liabilities
3,985

 
4,100

Capital lease and financing
obligations
18,999

 
19,743

Long-term debt
32

 
53

Total liabilities
160,321

 
146,268

Stockholders’ deficit
 
 
 
Common stock
42

 
41

Additional paid-in-capital
230,568

 
217,454

Accumulated deficit
(236,943
)
 
(220,911
)
Accumulated other comprehensive
income
205

 
291

Total stockholders’ deficit
(6,128
)
 
(3,125
)
Total liabilities and stockholders’
deficit
$
154,193

 
$
143,143





WORKIVA
INC.

UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)

 
Three months ended
June 30,
 
Six months ended
June 30,
 
2017
 
2016
 
2017
 
2016
Cash flows from
operating activities
 
 
 
 
 
 
 
Net loss
$
(10,196
)
 
$
(11,525
)
 
$
(16,032
)
 
$
(23,570
)
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities
 
 
 
 
 
 
 
Depreciation and
amortization
867

 
975

 
1,758

 
1,972

Stock-based compensation
expense
4,397

 
3,502

 
8,536

 
6,892

Provision for doubtful
accounts
146

 
48

 
432

 
170

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

 
(4
)
 

 
(6
)
Amortization of premiums and
discounts on marketable securities, net
28

 
36

 
59

 
75

Recognition of deferred government
grant obligation
(198
)
 
(230
)
 
(736
)
 
(663
)
Deferred income tax

 
(12
)
 

 
(12
)
Changes in assets and
liabilities:
 
 
 
 
 
 
 
Accounts receivable
(3,228
)
 
(1,844
)
 
(542
)
 
(2,725
)
Deferred commissions
(149
)
 
(117
)
 
(151
)
 
(129
)
Other receivables
(865
)
 
142

 
(25
)
 
(82
)
Prepaid expenses
(2,830
)
 
(1,327
)
 
(2,026
)
 
(1,513
)
Other assets
36

 
(323
)
 
13

 
(386
)
Accounts payable
(678
)
 
797

 
339

 
101

Deferred revenue
14,398

 
5,399

 
18,494

 
2,184

Accrued expenses and other
liabilities
2,254

 
447

 
(3,557
)
 
(5,422
)
Net cash provided by (used in)
operating activities
3,982

 
(4,036
)
 
6,562

 
(23,114
)
Cash flows from
investing activities
 
 
 
 
 
 
 
Purchase of property and
equipment
(26
)
 
(597
)
 
(147
)
 
(1,009
)
Purchase of marketable
securities
(2,259
)
 
(802
)
 
(6,350
)
 
(802
)
Maturities of marketable
securities
1,850

 

 
4,851

 

Sale of marketable
securities

 
2,404

 

 
7,197

Purchase of intangible
assets
(58
)
 
(59
)
 
(89
)
 
(114
)
Net cash (used in) provided by
investing activities
(493
)
 
946

 
(1,735
)
 
5,272

Cash flows from
financing activities
 
 
 
 
 
 
 
Proceeds from option
exercises
4,709

 
236

 
5,515

 
520

Taxes paid related to net share
settlements of stock-based compensation awards

 

 
(936
)
 
(761
)
Repayment of other long-term
debt
(20
)
 
(18
)
 
(20
)
 
(18
)
Principal payments on capital lease
and financing obligations
(490
)
 
(476
)
 
(787
)
 
(908
)
Proceeds from government
grants
22

 

 
22

 
183

Payments of issuance costs on line
of credit
(10
)
 
(33
)
 
(10
)
 
(33
)
Net cash provided by (used in)
financing activities
4,211

 
(291
)
 
3,784

 
(1,017
)
Effect of foreign exchange rates on
cash
82

 
40

 
94

 
(6
)
Net increase (decrease) in cash and
cash equivalents
7,782

 
(3,341
)
 
8,705

 
(18,865
)
Cash and cash equivalents at
beginning of period
52,204

 
43,226

 
51,281

 
58,750

Cash and cash equivalents at end of
period
$
59,986

 
$
39,885

 
$
59,986

 
$
39,885




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


Three months ended
June 30,

Six months ended
June 30,

2017

2016

2017

2016
Gross profit, subscription and
support
$
33,222


$
27,930


$
65,125

 
$
54,597

Add back: Stock-based
compensation
178


125


318

 
243

Gross profit, subscription and
support, non-GAAP
$
33,400


$
28,055


$
65,443

 
$
54,840

As a percentage of subscription and
support revenue, non-GAAP
81.5
 %

80.2
 %

81.3
 %
 
80.0
 %
 




 
 
 
Gross profit, professional
services
$
1,883


$
2,504


$
7,666

 
$
7,282

Add back: Stock-based
compensation
100


93


200

 
215

Gross profit, professional
services, non-GAAP
$
1,983


$
2,597


$
7,866

 
$
7,497

As a percentage of professional
services revenue, non-GAAP
23.6
 %

32.3
 %

37.9
 %
 
39.4
 %
 




 
 
 
Gross profit, as reported
$
35,105


$
30,434


$
72,791

 
$
61,879

Add back: Stock-based
compensation
278


218


518

 
458

Gross profit, non-GAAP
$
35,383


$
30,652


$
73,309

 
$
62,337

As percentage of revenue,
non-GAAP
71.6
 %

71.3
 %

72.4
 %
 
71.2
 %
 




 
 
 
Research and development, as
reported
$
16,239


$
14,047


$
31,775

 
$
28,563

Less: Stock-based
compensation
472


609


965

 
1,193

Research and development,
non-GAAP
$
15,767


$
13,438


$
30,810

 
$
27,370

As percentage of revenue,
non-GAAP
31.9
 %

31.2
 %

30.4
 %
 
31.3
 %
 
 
 
 
 
 
 
 
Sales and marketing, as
reported
$
19,787


$
19,828


$
38,500

 
$
39,916

Less: Stock-based
compensation
694


449


1,353

 
904

Sales and marketing,
non-GAAP
$
19,093


$
19,379


$
37,147

 
$
39,012

As percentage of revenue,
non-GAAP
38.7
 %

45.1
 %

36.7
 %
 
44.6
 %
 
 
 
 
 
 
 
 
General and administrative, as
reported
$
8,943


$
7,882


$
18,364

 
$
16,835

Less: Stock-based
compensation
2,953


2,226


5,700

 
4,337

General and administrative,
non-GAAP
$
5,990


$
5,656


$
12,664

 
$
12,498

As percentage of revenue,
non-GAAP
12.1
 %

13.2
 %

12.5
 %
 
14.3
 %
 
 
 
 
 
 
 
 
Loss from operations
$
(9,864
)

$
(11,323
)

$
(15,848
)
 
$
(23,435
)
Add back: Stock-based
compensation
4,397


3,502


8,536

 
6,892

Loss from operations,
non-GAAP
$
(5,467
)

$
(7,821
)

$
(7,312
)
 
$
(16,543
)
As percentage of revenue,
non-GAAP
(11.1
)%

(18.2
)%

(7.2
)%
 
(18.9
)%
 
 
 
 
 
 
 
 
Net loss
$
(10,196
)

$
(11,525
)

$
(16,032
)
 
$
(23,570
)
Add back: Stock-based
compensation
4,397


3,502


8,536

 
6,892

Net loss, non-GAAP
$
(5,799
)

$
(8,023
)

$
(7,496
)
 
$
(16,678
)
As percentage of revenue,
non-GAAP
(11.7
)%

(18.7
)%

(7.4
)%
 
(19.0
)%
 
 
 
 
 
 
 
 
Net loss per basic and diluted
share:
$
(0.25
)
 
$
(0.28
)
 
$
(0.39
)
 
$
(0.58
)
Add back: Stock-based
compensation
0.11


0.08

 
0.21

 
0.17

Net loss per basic and diluted
share, non-GAAP
$
(0.14
)
 
$
(0.20
)
 
$
(0.18
)
 
$
(0.41
)
Weighted-average common shares
outstanding - basic and diluted, non-GAAP
41,429,691

 
40,593,908

 
41,270,038

 
40,522,790




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

 
Three months
ending September 30, 2017
 
Year ending
December 31, 2017
 
 
 
 
 
 
 
 
Loss from operations, GAAP
range
$
(16,400
)
-
$
(16,800
)
 
$
(42,700
)
-
$
(43,700
)
Add back: Stock-based
compensation
4,600

 
4,600

 
17,700

 
17,700

Loss from operations, non-GAAP
range
$
(11,800
)
-
$
(12,200
)
 
$
(25,000
)
-
$
(26,000
)
 
 
 
 
 
 
 
 
Net loss per share, GAAP
range
$
(0.40
)
-
$
(0.41
)
 
$
(1.04
)
-
$
(1.06
)
Add back: Stock-based
compensation
0.11

 
0.11

 
0.42

 
0.42

Net loss per share, non-GAAP
range
$
(0.29
)
-
$
(0.30
)
 
$
(0.62
)
-
$
(0.64
)
 
 
 
 
 
 
 
 
Weighted-average common shares
outstanding - basic and diluted
42,000,000

 
42,000,000

 
41,700,000

 
41,700,000


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