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
Key Metrics
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:
Full Year 2019 Guidance:
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.
FORTUNE® and FORTUNE 500® are registered trademarks of Fortune Media IP Limited and are used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, Workiva Inc. Note: Claim not confirmed by FORTUNE® or Fortune Media IP Limited.
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, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Subscription and support | $ | 60,472 | $ | 48,837 | $ | 116,595 | $ | 95,307 | |||||||||||||||
| Professional services | 13,012 | 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 | 3 | 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 diluted | 46,166,660 | 43,234,655 | 45,700,559 | 43,048,110 | |||||||||||||||||||
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Subscription and support | $ | 399 | $ | 228 | $ | 756 | $ | 399 | |||||||||||||||
| Professional services | 431 | 146 | 840 | 296 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Research and development | 1,851 | 1,495 | 3,751 | 2,516 | |||||||||||||||||||
| Sales and marketing | 2,032 | 1,440 | 3,996 | 2,553 | |||||||||||||||||||
| General and administrative | 3,800 | 7,156 | 7,363 | 10,606 | |||||||||||||||||||
| WORKIVA INC. CONSOLIDATED BALANCE SHEETS (in thousands) | |||||||||||
| June 30, 2019 | December 31, 2018 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 94,713 | $ | 77,584 | |||||||
| Marketable securities | 42,855 | 20,764 | |||||||||
| Accounts receivable, net | 47,206 | 65,107 | |||||||||
| Deferred commissions | 11,380 | 8,178 | |||||||||
| Other receivables | 1,236 | 1,181 | |||||||||
| Prepaid expenses and other | 7,963 | 4,417 | |||||||||
| Total current assets | 205,353 | 177,231 | |||||||||
| Property and equipment, net | 41,046 | 41,468 | |||||||||
| Operating lease right-of-use assets | 16,510 | — | |||||||||
| Deferred commissions, non-current | 13,259 | 10,569 | |||||||||
| Intangible assets, net | 1,832 | 1,266 | |||||||||
| Other assets | 1,982 | 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 liabilities | 42,147 | 36,353 | |||||||||
| Deferred revenue | 156,234 | 148,545 | |||||||||
| Current portion of financing obligations | 1,285 | 1,222 | |||||||||
| Total current liabilities | 204,434 | 191,581 | |||||||||
| Deferred revenue, non-current | 28,049 | 25,171 | |||||||||
| Other long-term liabilities | 1,284 | 6,891 | |||||||||
| Operating lease liabilities, non-current | 20,038 | — | |||||||||
| Financing obligations, non-current | 16,550 | 17,208 | |||||||||
| Total liabilities | 270,355 | 240,851 | |||||||||
| Stockholders’ equity (deficit) | |||||||||||
| Common stock | 46 | 44 | |||||||||
| Additional paid-in-capital | 332,161 | 297,145 | |||||||||
| Accumulated deficit | (322,812) | (307,027) | |||||||||
| Accumulated other comprehensive income | 232 | 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, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| (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 amortization | 971 | 876 | 1,874 | 1,748 | |||||||||||||||||||
| Stock-based compensation expense | 8,513 | 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) | 3 | |||||||||||||||||||
| Deferred income tax | (28) | — | (46) | — | |||||||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||||||||
| Accounts receivable | 3,133 | (236) | 17,951 | 6,306 | |||||||||||||||||||
| Deferred commissions | (3,833) | (2,020) | (5,862) | (3,669) | |||||||||||||||||||
| Operating lease right-of-use asset | 556 | — | 1,224 | — | |||||||||||||||||||
| Other receivables | 161 | 148 | (53) | 175 | |||||||||||||||||||
| Prepaid expenses | (310) | (2,020) | (3,546) | (1,789) | |||||||||||||||||||
| Other assets | 58 | (110) | (1,406) | (168) | |||||||||||||||||||
| Accounts payable | 1,206 | (1,294) | (356) | 1,383 | |||||||||||||||||||
| Deferred revenue | 8,295 | 8,747 | 10,282 | 6,402 | |||||||||||||||||||
| Operating lease liability | (813) | — | (1,468) | — | |||||||||||||||||||
| Accrued expenses and other liabilities | 8,966 | 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 securities | 11,500 | 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 exercises | 5,498 | 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 | |||||||||||||||
| 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, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Gross profit, subscription and support | $ | 50,270 | $ | 40,200 | $ | 96,584 | $ | 77,868 | |||||||||||||||
| Add back: Stock-based compensation | 399 | 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 compensation | 431 | 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 compensation | 830 | 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 compensation | 1,851 | 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 compensation | 2,032 | 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 compensation | 3,800 | 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 compensation | 8,513 | 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, | ||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||
| Net loss | $ | (8,322) | $ | (21,768) | $ | (15,785) | $ | (31,386) | |||||||||||||||
| Add back: Stock-based compensation | 8,513 | 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 compensation | 0.18 | 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-GAAP | 46,166,660 | 43,234,655 | 45,700,559 | 43,048,110 | |||||||||||||||||||
| Weighted-average common shares outstanding - diluted, non-GAAP | 51,540,253 | 43,234,655 | 51,061,575 | 43,048,110 | |||||||||||||||||||
| TABLE II WORKIVA INC. RECONCILIATION OF NON-GAAP GUIDANCE (in thousands, except share and per share data) | |||||||||||||||||||||||
| Three months ending September 30, 2019 | Year 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 | |||||||||||||||||||
