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Workiva Announces Second Quarter 2019 Financial Results

Q2 Subscription and Support Revenue of $60.5 Million, up 23.8% from Q2 2018

Q2 Total Revenue of $73.5 Million, up 24.3% from Q2 2018

AMES, Iowa - August 6, 2019 — Workiva (NYSE:WK), the leading cloud provider of connected reporting and compliance solutions, today announced financial results for its second quarter ended June 30, 2019.

"Once again, we posted strong quarterly results,” said Marty Vanderploeg, Chief Executive Officer of Workiva. "We exceeded quarterly guidance for revenue and operating results, and we are raising our full year 2019 guidance."

"This past year we improved operational efficiencies, focused our growth strategy and invested in key growth opportunities. Based on our success to date, we plan to continue to accelerate investments in expanding across Europe, increasing adoption for global statutory reporting and integrated risk and building more data integrations," said Vanderploeg.

"As we continue to expand into new markets and countries, we are even more confident of the broader global demand for our platform. Workiva is the only cloud platform for connected reporting and compliance with the scale and sophistication that corporations and governments need and trust," added Vanderploeg.


Second Quarter 2019 Financial Highlights

  • Revenue: Total revenue for the second quarter of 2019 reached $73.5 million, an increase of 24.3% from $59.1 million in the second quarter of 2018. Subscription and support revenue contributed $60.5 million, up 23.8% versus the second quarter of 2018. Professional services revenue was $13.0 million, an increase of 26.4% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the second quarter of 2019 was $52.8 million compared with $42.8 million in the same quarter of 2018. GAAP gross margin was 71.8% versus 72.4% in the second quarter of 2018. Non-GAAP gross profit for the second quarter of 2019 was $53.6 million, an increase of 24.1% compared with the prior year's second quarter, and non-GAAP gross margin was 73.0% compared to 73.1% in the second quarter of 2018.
  • Loss from Operations: GAAP loss from operations for the second quarter of 2019 was $8.4 million compared with a loss of $21.8 million in the prior year's second quarter. Non-GAAP income from operations was $86 thousand, compared with non-GAAP loss from operations of $5.4 million in the second quarter of 2018.
  • Net Loss: GAAP net loss for the second quarter of 2019 was $8.3 million compared with a net loss of $21.8 million for the prior year's second quarter. GAAP net loss per basic and diluted share was $0.18 compared with a net loss per basic and diluted share of $0.50 in the second quarter of 2018.
  • Non-GAAP net income for the second quarter of 2019 was $0.2 million compared with a net loss of $5.4 million in the prior year's second quarter. Non-GAAP net income per basic and diluted share were both $0.00, compared with a net loss per basic and diluted share of $0.12 in the second quarter of 2018.
  • Balance Sheet: As of June 30, 2019, Workiva had cash, cash equivalents and marketable securities totaling $137.6 million, compared with $98.3 million as of December 31, 2018. Financing obligations totaled $17.8 million as of June 30, 2019.

  • Key Metrics

  • Customers: Workiva had 3,421 customers as of June 30, 2019, a net increase of 199 customers from June 30, 2018.
  • Revenue Retention Rate: As of June 30, 2019, Workiva's revenue retention rate (excluding add-on revenue) was 95.4%, and the revenue retention rate including add-on revenue was 114.5%. Add-on revenue includes changes for existing customers in new solutions, new seats and pricing.
  • Large Contracts: As of June 30, 2019, Workiva had 558 customers with an annual contract value (ACV) of more than $100,000, up 52.5% from 366 customers at June 30, 2018. Workiva had 238 customers with an ACV of more than $150,000, up 47.8% from 161 customers in the second quarter of 2018.

  • Financial Outlook

    As of August 6, 2019, Workiva is providing guidance for its third quarter 2019 and full year 2019 as follows:


    Third Quarter 2019 Guidance:

  • Total revenue is expected to be in the range of $72.0 million to $72.5 million.
  • GAAP loss from operations is expected to be in the range of $16.4 million to $16.9 million.
  • Non-GAAP loss from operations is expected to be in the range of $7.5 million to $8.0 million.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.35 to $0.36.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.16 to $0.17.
  • Net loss per basic and diluted share is based on 46.9 million weighted-average shares outstanding.

  • Full Year 2019 Guidance:

  • Total revenue is expected to be in the range of $290.0 million to $291.0 million.
  • GAAP loss from operations is expected to be in the range of $47.0 million to $49.0 million.
  • Non-GAAP loss from operations is expected to be in the range of $12.0 million to $14.0 million.
  • Net cash provided by operating activities is expected to be approximately $32 million.
  • GAAP net loss per basic and diluted share is expected to be in the range of $1.03 to $1.07.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.27 to $0.31.
  • Net loss per basic and diluted share is based on 46.4 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 second quarter 2019, in addition to discussing the Company’s outlook for the third quarter and full year 2019. To access this call, dial 833-287-0800 (domestic) or 647-689-4459 (international). The conference ID is 4857095. 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 13, 2019 at 800-585-8367 (domestic) or 416-621-4642 (international). The replay pass code is 4857095. 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, the leading cloud provider of connected reporting and compliance solutions, is used by thousands of enterprises across 180 countries, including more than 75 percent of Fortune 500® companies, and by government agencies. Our customers have linked over five billion data elements to trust their data, reduce risk and save time.

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    Non-GAAP Financial Measures

    The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation and CEO separation expense. 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 income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (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 income (loss) from operations is calculated by excluding stock-based compensation expense and CEO separation expense from loss from operations. Non-GAAP net income (loss) is calculated by excluding stock-based compensation expense, net of tax, and CEO separation expense from net loss. Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (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. Because of the non-recurring nature of CEO separation expense, Workiva believes this expense is not representative of ongoing operating costs. Workiva’s management excludes CEO separation expense when evaluating its ongoing performance and/or predicting its operating trends and believes that its investors should have access to the same set of tools that we use in analyzing results. 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.

    CONSOLIDATED STATEMENTS OF OPERATIONS
    (in thousands, except share and per share amounts) 
    Three months ended June 30, Six months ended June 30, 
    2019201820192018
    (unaudited)
    Revenue 
    Subscription and support$60,472 $48,837 $116,595 $95,307 
    Professional services13,012 10,293 26,852 23,729 
    Total revenue 73,484 59,130 143,447 119,036 
    Cost of revenue 
    Subscription and support (1)
    10,202 8,637 20,011 17,439 
    Professional services (1)
    10,475 7,659 20,202 15,368 
    Total cost of revenue 20,677 16,296 40,213 32,807 
    Gross profit 52,807 42,834 103,234 86,229 
    Operating expenses 
    Research and development (1)
    21,795 20,718 43,806 40,845 
    Sales and marketing (1)
    28,213 22,252 53,578 43,258 
    General and administrative (1)
    11,226 21,654 21,609 33,422 
    Total operating expenses 61,234 64,624 118,993 117,525 
    Loss from operations (8,427)(21,790)(15,759)(31,296)
    Interest expense (433)(449)(873)(899)
    Other income, net 530 492 850 835 
    Loss before (benefit) provision for income taxes (8,330)(21,747)(15,782)(31,360)
    (Benefit) provision for income taxes (8)21 26 
    Net loss $(8,322)$(21,768)$(15,785)$(31,386)
    Net loss per common share: 
    Basic and diluted$(0.18)$(0.50)$(0.35)$(0.73)
    Weighted-average common shares outstanding - basic and diluted46,166,660 43,234,655 45,700,559 43,048,110 

    (1) Includes stock-based compensation expense as follows:
    Three months ended June 30, Six months ended June 30, 
    2019201820192018
    (unaudited)
    Cost of revenue 
    Subscription and support$399 $228 $756 $399 
    Professional services431 146 840 296 
    Operating expenses 
    Research and development1,851 1,495 3,751 2,516 
    Sales and marketing2,032 1,440 3,996 2,553 
    General and administrative3,800 7,156 7,363 10,606 




    WORKIVA INC.

    CONSOLIDATED BALANCE SHEETS
    (in thousands) 
    June 30, 2019December 31, 2018
    (unaudited)
    Assets 
    Current assets
    Cash and cash equivalents$94,713 $77,584 
    Marketable securities42,855 20,764 
    Accounts receivable, net47,206 65,107 
    Deferred commissions11,380 8,178 
    Other receivables1,236 1,181 
    Prepaid expenses and other7,963 4,417 
    Total current assets205,353 177,231 
    Property and equipment, net41,046 41,468 
    Operating lease right-of-use assets16,510 — 
    Deferred commissions, non-current13,259 10,569 
    Intangible assets, net1,832 1,266 
    Other assets1,982 577 
    Total assets$279,982 $231,111 
    Liabilities and Stockholders’ Equity (Deficit) 
    Current liabilities
    Accounts payable$4,768 $5,461 
    Accrued expenses and other current liabilities42,147 36,353 
    Deferred revenue156,234 148,545 
    Current portion of financing obligations1,285 1,222 
    Total current liabilities204,434 191,581 
    Deferred revenue, non-current28,049 25,171 
    Other long-term liabilities1,284 6,891 
    Operating lease liabilities, non-current20,038 — 
    Financing obligations, non-current16,550 17,208 
    Total liabilities270,355 240,851 
    Stockholders’ equity (deficit) 
    Common stock46 44 
    Additional paid-in-capital332,161 297,145 
    Accumulated deficit(322,812)(307,027)
    Accumulated other comprehensive income232 98 
    Total stockholders’ equity (deficit) 9,627 (9,740)
    Total liabilities and stockholders’ equity (deficit) $279,982 $231,111 




    WORKIVA INC.

    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands) 
    Three months ended June 30, Six months ended June 30, 
    2019201820192018
    (unaudited)
    Cash flows from operating activities 
    Net loss $(8,322)$(21,768)$(15,785)$(31,386)
    Adjustments to reconcile net loss to net cash provided by (used in) operating activities: 
    Depreciation and amortization971 876 1,874 1,748 
    Stock-based compensation expense8,513 10,465 16,706 16,370 
    Provision for doubtful accounts 233 139 46 183 
    (Accretion) amortization of premiums and discounts on marketable securities, net (23)(15)(104)
    Deferred income tax(28)— (46)— 
    Changes in assets and liabilities:
    Accounts receivable3,133 (236)17,951 6,306 
    Deferred commissions(3,833)(2,020)(5,862)(3,669)
    Operating lease right-of-use asset556 — 1,224 — 
    Other receivables161 148 (53)175 
    Prepaid expenses(310)(2,020)(3,546)(1,789)
    Other assets58 (110)(1,406)(168)
    Accounts payable1,206 (1,294)(356)1,383 
    Deferred revenue8,295 8,747 10,282 6,402 
    Operating lease liability(813)— (1,468)— 
    Accrued expenses and other liabilities8,966 4,542 4,425 3,679 
    Net cash provided by (used in) operating activities 18,763 (2,546)23,882 (763)
    Cash flows from investing activities 
    Purchase of property and equipment(454)(210)(2,197)(219)
    Purchase of marketable securities(18,562)(11,283)(40,717)(11,283)
    Maturities of marketable securities11,500 3,900 18,890 4,400 
    Purchase of intangible assets(577)(64)(661)(128)
    Net cash used in investing activities (8,093)(7,657)(24,685)(7,230)
    Cash flows from financing activities 
    Proceeds from option exercises5,498 3,318 16,553 6,393 
    Taxes paid related to net share settlements of stock-based compensation awards— (519)(390)(1,861)
    Proceeds from shares issued in connection with employee stock purchase plan— — 2,149 1,370 
    Principal payments on capital lease and financing obligations(301)(294)(595)(592)
    Proceeds from government grants
    — 22 — 22 
    Net cash provided by financing activities 5,197 2,527 17,717 5,332 
    Effect of foreign exchange rates on cash 110 (85)215 (177)
    Net increase (decrease) in cash and cash equivalents 15,977 (7,761)17,129 (2,838)
    Cash and cash equivalents at beginning of period 78,736 65,256 77,584 60,333 
    Cash and cash equivalents at end of period $94,713 $57,495 $94,713 $57,495 


    7


    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, 
    2019201820192018
    Gross profit, subscription and support $50,270 $40,200 $96,584 $77,868 
    Add back: Stock-based compensation399 228 756 399 
    Gross profit, subscription and support, non-GAAP $50,669 $40,428 $97,340 $78,267 
    As a percentage of subscription and support revenue, non-GAAP 83.8 %82.8 %83.5 %82.1 %
    Gross profit, professional services $2,537 $2,634 $6,650 $8,361 
    Add back: Stock-based compensation431 146 840 296 
    Gross profit, professional services, non-GAAP $2,968 $2,780 $7,490 $8,657 
    As a percentage of professional services revenue, non-GAAP 22.8 %27.0 %27.9 %36.5 %
    Gross profit $52,807 $42,834 $103,234 $86,229 
    Add back: Stock-based compensation830 374 1,596 695 
    Gross profit, non-GAAP $53,637 $43,208 $104,830 $86,924 
    As percentage of revenue, non-GAAP 73.0 %73.1 %73.1 %73.0 %
    Research and development $21,795 $20,718 $43,806 $40,845 
    Less: Stock-based compensation1,851 1,495 3,751 2,516 
    Research and development, non-GAAP $19,944 $19,223 $40,055 $38,329 
    As percentage of revenue, non-GAAP 27.1 %32.5 %27.9 %32.2 %
    Sales and marketing $28,213 $22,252 $53,578 $43,258 
    Less: Stock-based compensation2,032 1,440 3,996 2,553 
    Sales and marketing, non-GAAP $26,181 $20,812 $49,582 $40,705 
    As percentage of revenue, non-GAAP 35.6 %35.2 %34.6 %34.2 %
    General and administrative $11,226 $21,654 $21,609 $33,422 
    Less: Stock-based compensation3,800 3,535 7,363 6,985 
    Less: CEO separation expense(1)
    — 9,527 — 9,527 
    General and administrative, non-GAAP $7,426 $8,592 $14,246 $16,910 
    As percentage of revenue, non-GAAP 10.1 %14.5 %9.9 %14.2 %
    Loss from operations $(8,427)$(21,790)$(15,759)$(31,296)
    Add back: Stock-based compensation8,513 6,844 16,706 12,749 
    Add back: CEO separation expense(1)
    — 9,527 — 9,527 
    Income (loss) from operations, non-GAAP $86 $(5,419)$947 $(9,020)
    As percentage of revenue, non-GAAP 0.1 %(9.2)%0.7 %(7.6)%


    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, 
    2019201820192018
    Net loss $(8,322)$(21,768)$(15,785)$(31,386)
    Add back: Stock-based compensation8,513 6,844 16,706 12,749 
    Add back: CEO separation expense(1)
    — 9,527 — 9,527 
    Net income (loss), non-GAAP $191 $(5,397)$921 $(9,110)
    As percentage of revenue, non-GAAP 0.3 %(9.1)%0.6 %(7.7)%
    Net loss per basic and diluted share: $(0.18)$(0.50)$(0.35)$(0.73)
    Add back: Stock-based compensation0.18 0.16 0.37 0.30 
    Add back: CEO separation expense(1)
    — 0.22 — 0.22 
    Net income (loss) per basic share, non-GAAP $0.00 $(0.12)$0.02 $(0.21)
    Net income (loss) per diluted share, non-GAAP $0.00 $(0.12)$0.02 $(0.21)
    Weighted-average common shares outstanding - basic, non-GAAP46,166,660 43,234,655 45,700,559 43,048,110 
    Weighted-average common shares outstanding - diluted, non-GAAP51,540,253 43,234,655 51,061,575 43,048,110 

    (1) CEO separation expense in the three and six months ended June 30, 2018 includes stock-based compensation of $3.6 million related to the acceleration of eligible stock awards and separation payment expense of $5.9 million pursuant to the former CEO’s employment agreement. Included as separation payment expense are cash payments made in excess of the related bonus accrual recorded through the date of separation.




    TABLE II
    WORKIVA INC.
    RECONCILIATION OF NON-GAAP GUIDANCE
    (in thousands, except share and per share data) 
    Three months ending September 30, 2019Year ending December 31, 2019
    Loss from operations, GAAP range $(16,400)$(16,900)$(47,000)$(49,000)
    Add back: Stock-based compensation
    8,900 8,900 35,000 35,000 
    Loss from operations, non-GAAP range $(7,500)$(8,000)$(12,000)$(14,000)
    Net loss per share, GAAP range $(0.35)$(0.36)$(1.03)$(1.07)
    Add back: Stock-based compensation
    0.19 0.19 0.76 0.76 
    Net loss per share, non-GAAP range $(0.16)$(0.17)$(0.27)$(0.31)
    Weighted-average common shares outstanding - basic and diluted
    46,900,000 46,900,000 46,400,000 46,400,000 

    Relations Contact

    Adam Rogers
    Workiva Inc.
    investor@workiva.com

    Media Contact

    Kevin McCarthy
    Workiva Inc.
    press@workiva.com

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