Workiva Announces Third Quarter 2017 Financial Results






Q3 Revenue of $52.1 million, Up 16.5% from Q3 of 2016
Q3 Subscription and Support Revenue of $43.2 million, Up 19.3% from Q3 of 2016


AMES, Iowa - November 7, 2017 -- Workiva Inc. (NYSE: WK), a leading provider of solutions for enterprise productivity, today announced financial results for its third quarter ended September 30, 2017.

“We posted strong results in the third quarter, highlighted by 16.5% 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 the evolution of our Wdesk platform as part of a larger ecosystem that includes data integrations, partnerships and enterprise-wide opportunities where we see great long-term potential for broad-based adoption,” said Rizai. “Our investments are focused on improving user management, enhancing products and features and targeting sales and marketing to capitalize on our expanded total addressable market (TAM).”

“In the third quarter, we hosted our largest annual user conference to date,” said Rizai. “Our conference helps us maintain our high customer satisfaction rate and allows us to test new products and features while showcasing a wide range of Wdesk use cases to current customers and prospects.”

Third Quarter 2017 Financial Highlights
Revenue: Total revenue for the quarter ended September 30, 2017 reached $52.1 million, an increase of 16.5% from $44.7 million in the third quarter of 2016. Subscription and support revenue contributed $43.2 million, up 19.3% versus results in the third quarter of 2016. Professional services revenue was $8.9 million, an increase of 4.5% compared to the same quarter in the prior year.
Gross Profit: GAAP gross profit for the quarter ended September 30, 2017 was $36.4 million compared with $32.0 million in the same quarter of the prior year. GAAP gross margin was 69.9% in the third quarter of 2017 versus 71.5% in the third quarter of 2016. Non-GAAP gross profit for the quarter ended September 30, 2017 was $36.7 million, an increase of 14.1% compared with the prior year's third quarter, and non-GAAP gross margin was 70.6% compared to 72.0% in the third quarter of 2016.
Loss from Operations: GAAP loss from operations for the quarter ended September 30, 2017 was $13.8 million compared with a loss of $12.7 million in the prior year's third quarter. Non-GAAP loss from operations for the quarter ended September 30, 2017 was $9.1 million, compared with non-GAAP loss from operations of $9.1 million in the third quarter of 2016. Non-GAAP loss from operations as a percentage of revenue improved 280 basis points for the quarter ended September 30, 2017 compared to the third quarter of 2016.
Net Loss: GAAP net loss for the quarter ended September 30, 2017 was $14.1 million compared with a net loss of $12.9 million for the prior year's third quarter. GAAP net loss per basic and diluted share for the quarter ended September 30, 2017 was $0.34, based on 41.8 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.32, based on 40.8 million weighted-average shares outstanding in the third quarter of 2016.




Non-GAAP net loss for the quarter ended September 30, 2017 was $9.4 million compared with a net loss of $9.2 million in the prior year's third quarter. Non-GAAP net loss per basic and diluted share for the quarter ended September 30, 2017 was $0.23, based on 41.8 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.23, based on 40.8 million weighted-average shares outstanding in the third quarter of 2016.

Operating Metrics
Customers: Workiva had 2,991 customers as of September 30, 2017, a net increase of 295 customers from September 30, 2016.
Revenue Retention Rate: As of September 30, 2017, Workiva's revenue retention rate (excluding add-on revenue) was 96.5%, and the revenue retention rate including add-on revenue was 108.6%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook
As of November 7, 2017, Workiva is providing guidance for the fourth quarter and full year 2017 as follows:

Fourth Quarter 2017 Guidance:
Total revenue is expected to be in the range of $53.0 million to $53.4 million.
GAAP loss from operations is expected to be in the range of $15.6 million to $16.0 million.
Non-GAAP loss from operations is expected to be in the range of $8.8 million to $9.2 million.
GAAP net loss per basic and diluted share is expected to be in the range of $0.38 to $0.39.
Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.22 to $0.23.
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 $206.4 million to $206.8 million.
GAAP loss from operations is expected to be in the range of $45.2 million to $45.6 million.
Non-GAAP loss from operations is expected to be in the range of $25.2 million to $25.6 million.
GAAP net loss per basic and diluted share is expected to be in the range of $1.11 to $1.12.
Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.63 to $0.64.
Net loss per basic and diluted share is based on 41.6 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 third quarter 2017, in addition to discussing the Company’s outlook for the fourth quarter and full year 2017. To access this call, dial 866-393-4306 (domestic) or 734-385-2616 (international). The conference ID is 93468973. 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 November 14, 2017 at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 93468973. 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. For more information, visit workiva.com.





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Non-GAAP Financial Measures
The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation. A reconciliation of GAAP to non-GAAP historical financial measures has been provided in Table I at the end of this press release. A reconciliation of GAAP to non-GAAP guidance has been provided in Table II at the end of this press release.

Workiva believes that the use of non-GAAP gross profit and gross margin, non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss per share is helpful to its investors. These measures, which are referred to as non-GAAP financial measures, are not prepared in accordance with generally accepted accounting principles in the United States, or GAAP. Non-GAAP gross profit is calculated by excluding stock-based compensation expense attributable to cost of revenues from gross profit. Non-GAAP gross margin is the ratio calculated by dividing non-GAAP gross profit by revenues. Non-GAAP loss from operations is calculated by excluding stock-based compensation expense from loss from operations. Non-GAAP net loss is calculated by excluding stock-based compensation expense, net of tax, from net loss. Non-GAAP net loss per share is calculated by dividing non-GAAP net loss by the weighted- average shares outstanding as presented in the calculation of GAAP net loss per share. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, Workiva believes that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between its operating results from period to period. Workiva’s management uses these non-GAAP financial measures as tools for financial and operational decision making and for evaluating Workiva’s own operating results over different periods of time.

Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in Workiva’s industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Workiva’s reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in Workiva’s business and an important part of the compensation provided to its employees. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Investors should review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate Workiva’s business.

Safe Harbor Statement
Certain statements in this press release are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company’s future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about the Company’s expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “outlook,” “guidance” or the negative of those terms or other comparable terminology.





Please see the Company’s documents filed or to be filed with the Securities and Exchange Commission, including the Company’s annual reports filed on Form 10-K and quarterly reports on Form 10-Q, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this report. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company’s control. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
###




WORKIVA INC.

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

 
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2016
 
2017
 
2016
Revenue
 
 
 
 
 
 
 
Subscription and support
$
43,214

 
$
36,237

 
$
123,734

 
$
104,791

Professional services
8,854

 
8,473

 
29,629

 
27,481

Total revenue
52,068

 
44,710

 
153,363

 
132,272

Cost of revenue
 
 
 
 
 
 
 
Subscription and support (1)
8,472

 
6,694

 
23,867

 
20,651

Professional services (1)
7,180

 
6,040

 
20,289

 
17,766

Total cost of revenue
15,652

 
12,734

 
44,156

 
38,417

Gross profit
36,416

 
31,976

 
109,207

 
93,855

Operating expenses
 
 
 
 
 
 
 
Research and development (1)
17,527

 
14,342

 
49,302

 
42,905

Sales and marketing (1)
23,712

 
22,354

 
62,212

 
62,270

General and administrative (1)
8,959

 
8,015

 
27,323

 
24,850

Total operating expenses
50,198

 
44,711

 
138,837

 
130,025

Loss from operations
(13,782
)
 
(12,735
)
 
(29,630
)
 
(36,170
)
Interest expense
(464
)
 
(462
)
 
(1,394
)
 
(1,420
)
Other income, net
198

 
298

 
986

 
1,152

Loss before provision (benefit) for income taxes
(14,048
)
 
(12,899
)
 
(30,038
)
 
(36,438
)
Provision (benefit) for income taxes
25

 
(8
)
 
67

 
23

Net loss
$
(14,073
)
 
$
(12,891
)
 
$
(30,105
)
 
$
(36,461
)
Net loss per common share:
 
 
 
 
 
 
 
Basic and diluted
$
(0.34
)
 
$
(0.32
)
 
$
(0.73
)
 
$
(0.90
)
Weighted-average common shares outstanding - basic and diluted
41,815,139

 
40,762,960

 
41,453,736

 
40,603,430


(1) Includes stock-based compensation expense as follows:
 
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2016
 
2017
 
2016
Cost of revenue
 
 
 
 
 
 
 
Subscription and support
$
204

 
$
122

 
$
522

 
$
365

Professional services
129

 
100

 
329

 
315

Operating expenses
 
 
 
 
 
 
 
Research and development
601

 
594

 
1,566

 
1,787

Sales and marketing
788

 
567

 
2,141

 
1,471

General and administrative
2,942

 
2,287

 
8,642

 
6,624






WORKIVA INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)
 
September 30, 2017
 
December 31, 2016
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
62,718

 
$
51,281

Marketable securities
15,033

 
11,435

Accounts receivable, net
24,283

 
22,535

Deferred commissions
2,208

 
1,864

Other receivables
1,109

 
1,545

Prepaid expenses
6,298

 
9,382

Total current assets
111,649

 
98,042

Property and equipment, net
41,300

 
42,590

Intangible assets, net
1,088

 
1,012

Other assets
1,553

 
1,499

Total assets
$
155,590

 
$
143,143

Liabilities and Stockholders’ Deficit
Current liabilities
 
 
 
Accounts payable
$
1,861

 
$
849

Accrued expenses and other current liabilities
20,771

 
20,695

Deferred revenue
99,149

 
76,016

Deferred government grant obligation
813

 
1,022

Current portion of capital lease and financing obligations
1,184

 
1,285

Current portion of long-term debt

 
20

Total current liabilities
123,778

 
99,887

Deferred revenue
23,278

 
21,485

Deferred government grant obligation
289

 
1,000

Other long-term liabilities
4,008

 
4,100

Capital lease and financing obligations
18,709

 
19,743

Long-term debt

 
53

Total liabilities
170,062

 
146,268

Stockholders’ deficit
 
 
 
Common stock
42

 
41

Additional paid-in-capital
236,386

 
217,454

Accumulated deficit
(251,016
)
 
(220,911
)
Accumulated other comprehensive income
116

 
291

Total stockholders’ deficit
(14,472
)
 
(3,125
)
Total liabilities and stockholders’ deficit
$
155,590

 
$
143,143






WORKIVA INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 
Three months ended September 30,
 
Nine months ended September 30,
 
2017
 
2016
 
2017
 
2016
Cash flows from operating activities
 
 
 
 
 
 
 
Net loss
$
(14,073
)
 
$
(12,891
)
 
$
(30,105
)
 
$
(36,461
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
 
 
 
 
 
 
 
Depreciation and amortization
854

 
944

 
2,612

 
2,916

Stock-based compensation expense
4,664

 
3,670

 
13,200

 
10,562

(Recovery of) provision for doubtful accounts
(691
)
 
(92
)
 
(259
)
 
78

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

 

 

 
(6
)
Amortization of premiums and discounts on marketable securities, net
24

 
36

 
83

 
111

Recognition of deferred government grant obligation
(207
)
 
(247
)
 
(943
)
 
(910
)
Deferred income tax

 
5

 

 
(7
)
Changes in assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable
(757
)
 
(4,009
)
 
(1,299
)
 
(6,734
)
Deferred commissions
(179
)
 
(135
)
 
(330
)
 
(264
)
Other receivables
468

 
(365
)
 
443

 
(447
)
Prepaid expenses
5,123

 
415

 
3,097

 
(1,098
)
Other assets
(87
)
 
(455
)
 
(74
)
 
(841
)
Accounts payable
669

 
279

 
1,008

 
380

Deferred revenue
5,904

 
13,228

 
24,398

 
15,412

Accrued expenses and other liabilities
3,474

 
2,410

 
(83
)
 
(3,012
)
Net cash provided by (used in) operating activities
5,186

 
2,793

 
11,748

 
(20,321
)
Cash flows from investing activities
 
 
 
 
 
 
 
Purchase of property and equipment
(987
)
 
(91
)
 
(1,134
)
 
(1,100
)
Purchase of marketable securities
(5,017
)
 

 
(11,367
)
 
(802
)
Maturities of marketable securities
2,830

 

 
7,681

 

Sale of marketable securities

 

 

 
7,197

Purchase of intangible assets
(55
)
 
(38
)
 
(144
)
 
(152
)
Net cash (used in) provided by investing activities
(3,229
)
 
(129
)
 
(4,964
)
 
5,143

Cash flows from financing activities
 
 
 
 
 
 
 
Proceeds from option exercises
1,154

 
840

 
6,669

 
1,360

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

 

 
(936
)
 
(761
)
Repayment of other long-term debt
(53
)
 

 
(73
)
 
(18
)
Principal payments on capital lease and financing obligations
(348
)
 
(538
)
 
(1,135
)
 
(1,446
)
Proceeds from government grants

 

 
22

 
183

Payments of issuance costs on line of credit
(71
)
 

 
(81
)
 
(33
)
Net cash provided by (used in) financing activities
682

 
302

 
4,466

 
(715
)
Effect of foreign exchange rates on cash
93

 
(9
)
 
187

 
(15
)
Net increase (decrease) in cash and cash equivalents
2,732

 
2,957

 
11,437

 
(15,908
)
Cash and cash equivalents at beginning of period
59,986

 
39,885

 
51,281

 
58,750

Cash and cash equivalents at end of period
$
62,718

 
$
42,842

 
$
62,718

 
$
42,842





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


Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016
Gross profit, subscription and support
$
34,742


$
29,543


$
99,867

 
$
84,140

Add back: Stock-based compensation
204


122


522

 
365

Gross profit, subscription and support, non-GAAP
$
34,946


$
29,665


$
100,389

 
$
84,505

As a percentage of subscription and support revenue, non-GAAP
80.9
 %

81.9
 %

81.1
 %
 
80.6
 %
 




 
 
 
Gross profit, professional services
$
1,674


$
2,433


$
9,340

 
$
9,715

Add back: Stock-based compensation
129


100


329

 
315

Gross profit, professional services, non-GAAP
$
1,803


$
2,533


$
9,669

 
$
10,030

As a percentage of professional services revenue, non-GAAP
20.4
 %

29.9
 %

32.6
 %
 
36.5
 %
 




 
 
 
Gross profit, as reported
$
36,416


$
31,976


$
109,207

 
$
93,855

Add back: Stock-based compensation
333


222


851

 
680

Gross profit, non-GAAP
$
36,749


$
32,198


$
110,058

 
$
94,535

As percentage of revenue, non-GAAP
70.6
 %

72.0
 %

71.8
 %
 
71.5
 %
 




 
 
 
Research and development, as reported
$
17,527


$
14,342


$
49,302

 
$
42,905

Less: Stock-based compensation
601


594


1,566

 
1,787

Research and development, non-GAAP
$
16,926


$
13,748


$
47,736

 
$
41,118

As percentage of revenue, non-GAAP
32.5
 %

30.7
 %

31.1
 %
 
31.1
 %
 
 
 
 
 
 
 
 
Sales and marketing, as reported
$
23,712


$
22,354


$
62,212

 
$
62,270

Less: Stock-based compensation
788


567


2,141

 
1,471

Sales and marketing, non-GAAP
$
22,924


$
21,787


$
60,071

 
$
60,799

As percentage of revenue, non-GAAP
44.0
 %

48.7
 %

39.2
 %
 
46.0
 %
 
 
 
 
 
 
 
 
General and administrative, as reported
$
8,959


$
8,015


$
27,323

 
$
24,850

Less: Stock-based compensation
2,942


2,287


8,642

 
6,624

General and administrative, non-GAAP
$
6,017


$
5,728


$
18,681

 
$
18,226

As percentage of revenue, non-GAAP
11.6
 %

12.8
 %

12.2
 %
 
13.8
 %
 
 
 
 
 
 
 
 
Loss from operations
$
(13,782
)

$
(12,735
)

$
(29,630
)
 
$
(36,170
)
Add back: Stock-based compensation
4,664


3,670


13,200

 
10,562

Loss from operations, non-GAAP
$
(9,118
)

$
(9,065
)

$
(16,430
)
 
$
(25,608
)
As percentage of revenue, non-GAAP
(17.5
)%

(20.3
)%

(10.7
)%
 
(19.4
)%
 
 
 
 
 
 
 
 
Net loss
$
(14,073
)

$
(12,891
)

$
(30,105
)
 
$
(36,461
)
Add back: Stock-based compensation
4,664


3,670


13,200

 
10,562

Net loss, non-GAAP
$
(9,409
)

$
(9,221
)

$
(16,905
)
 
$
(25,899
)
As percentage of revenue, non-GAAP
(18.1
)%

(20.6
)%

(11.0
)%
 
(19.6
)%
 
 
 
 
 
 
 
 
Net loss per basic and diluted share:
$
(0.34
)
 
$
(0.32
)
 
$
(0.73
)
 
$
(0.90
)
Add back: Stock-based compensation
0.11


0.09

 
0.32

 
0.26

Net loss per basic and diluted share, non-GAAP
$
(0.23
)
 
$
(0.23
)
 
$
(0.41
)
 
$
(0.64
)
Weighted-average common shares outstanding - basic and diluted, non-GAAP
41,815,139

 
40,762,960

 
41,453,736

 
40,603,430





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

 
Three months ending December 31, 2017
 
Year ending December 31, 2017
 
 
 
 
 
 
 
 
Loss from operations, GAAP range
$
(15,600
)
-
$
(16,000
)
 
$
(45,200
)
-
$
(45,600
)
Add back: Stock-based compensation
6,800

 
6,800

 
20,000

 
20,000

Loss from operations, non-GAAP range
$
(8,800
)
-
$
(9,200
)
 
$
(25,200
)
-
$
(25,600
)
 
 
 
 
 
 
 
 
Net loss per share, GAAP range
$
(0.38
)
-
$
(0.39
)
 
$
(1.11
)
-
$
(1.12
)
Add back: Stock-based compensation
0.16

 
0.16

 
0.48

 
0.48

Net loss per share, non-GAAP range
$
(0.22
)
-
$
(0.23
)
 
$
(0.63
)
-
$
(0.64
)
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding - basic and diluted
42,000,000

 
42,000,000

 
41,600,000

 
41,600,000



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