Workiva Announces Third Quarter 2019 Financial Results

Q3 Subscription and Support Revenue of $63.0 Million, up 22.8% from Q3 2018

Q3 Total Revenue of $74.2 Million, up 21.9% from Q3 2018

AMES, Iowa - November 6, 2019 —Workiva (NYSE:WK), provider of the world’s leading connected reporting and compliance platform, today announced financial results for its third quarter ended September 30, 2019.

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

"We are pleased with our progress across our four growth vectors: Europe, Wdata, integrated risk solutions and global statutory reporting," said Vanderploeg.

Third Quarter 2019 Financial Highlights

  • Revenue: Total revenue for the third quarter of 2019 reached $74.2 million, an increase of 21.9% from $60.9 million in the third quarter of 2018. Subscription and support revenue contributed $63.0 million, up 22.8% versus the third quarter of 2018. Professional services revenue was $11.2 million, an increase of 16.6% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the third quarter of 2019 was $52.4 million compared with $45.2 million in the same quarter of 2018. GAAP gross margin was 70.7% versus 74.2% in the third quarter of 2018. Non-GAAP gross profit for the third quarter of 2019 was $53.3 million, an increase of 17.0% compared with the prior year's third quarter, and non-GAAP gross margin was 71.8% compared to 74.8% in the third quarter of 2018.
  • Loss from Operations: GAAP loss from operations for the third quarter of 2019 was $15.5 million compared with a loss of $10.7 million in the prior year's third quarter. Non-GAAP loss from operations was $6.3 million, compared with non-GAAP loss from operations of $3.8 million in the third quarter of 2018.
  • Net Loss: GAAP net loss for the third quarter of 2019 was $16.1 million compared with a net loss of $11.0 million for the prior year's third quarter. GAAP net loss per basic and diluted share was $0.34 compared with a net loss per basic and diluted share of $0.25 in the third quarter of 2018.
  • Non-GAAP net loss for the third quarter of 2019 was $5.7 million compared with a net loss of $4.0 million in the prior year's third quarter. Non-GAAP net loss per basic and diluted share was $0.12, compared with a net loss per basic and diluted share of $0.09 in the third quarter of 2018.
  • Liquidity: As of September 30, 2019, Workiva had cash, cash equivalents and marketable securities totaling $484.8 million, compared with $98.3 million as of December 31, 2018. In August 2019, we issued $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026. In addition, financing obligations totaled $17.5 million as of September 30, 2019.

  • Key Metrics

  • Customers: Workiva had 3,454 customers as of September 30, 2019, a net increase of 165 customers from September 30, 2018.
  • Revenue Retention Rate: As of September 30, 2019, Workiva's revenue retention rate (excluding add-on revenue) was 94.5%, and the revenue retention rate including add-on revenue was 112.8%. Add-on revenue includes changes for existing customers in new solutions, new seats and pricing.
  • Large Contracts: As of September 30, 2019, Workiva had 611 customers with an annual contract value (ACV) of more than $100,000, up 53.5% from 398 customers at September 30, 2018. Workiva had 261 customers with an ACV of more than $150,000, up 50.9% from 173 customers in the third quarter of 2018.

  • Other Recent Business Highlights

  • Julie Iskow named Executive Vice President and Chief Operating Officer as of October 1, 2019.

  • Financial Outlook

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

    Fourth Quarter 2019 Guidance:

  • Total revenue is expected to be in the range of $75.3 million to $75.8 million.
  • GAAP loss from operations is expected to be in the range of $18.3 million to $18.8 million.
  • Non-GAAP loss from operations is expected to be in the range of $8.3 million to $8.8 million.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.41 to $0.42.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.15 to $0.16.
  • Net loss per basic and diluted share is based on 47.0 million weighted-average shares outstanding.

  • Full Year 2019 Guidance:

  • Total revenue is expected to be in the range of $292.9 million to $293.4 million.
  • GAAP loss from operations is expected to be in the range of $49.5 million to $50.0 million.
  • Non-GAAP loss from operations is expected to be in the range of $13.6 million to $14.1 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 $1.10 to $1.11.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.26 to $0.27.
  • Net loss per basic and diluted share is based on 46.3 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 2019, in addition to discussing the Company’s outlook for the fourth quarter and full year 2019. To access this call, dial 833-287-0800 (U.S. domestic) or 647-689-4459 (international). The conference ID is 9773529. 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 13, 2019 at 800-585-8367 (U.S. domestic) or 416-621-4642 (international). The replay pass code is 9773529. 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, provider of the world’s leading connected reporting and compliance platform, 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. For more information about Workiva (NYSE:WK), please 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, non-cash interest expense 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 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 and CEO separation expense from loss from operations. Non-GAAP net loss is calculated by excluding stock-based compensation expense, net of tax, CEO separation expense, and non-cash interest expense related to our convertible senior notes 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. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be accounted for as separate liability and equity components in a manner that reflects our non-convertible debt borrowing rate. This results in the debt component being treated as though it was issued at a discount, with the debt discount being accreted as additional non-cash interest expense over the term of the notes using the effective interest method. As a result, we believe that excluding this non-cash interest expense attributable to the debt discount in calculating our non-GAAP measures is useful because this interest expense does not represent a cash outflow and is not indicative of our ongoing operational performance. 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 September 30,Nine months ended September 30,
    2019201820192018
    (unaudited)
    Revenue
    Subscription and support$63,022  $51,306  $179,617  $146,613  
    Professional services11,157  9,567  38,009  33,296  
    Total revenue74,179  60,873  217,626  179,909  
    Cost of revenue
    Subscription and support (1)
    10,924  8,139  30,935  25,578  
    Professional services (1)
    10,827  7,520  31,029  22,888  
    Total cost of revenue21,751  15,659  61,964  48,466  
    Gross profit52,428  45,214  155,662  131,443  
    Operating expenses
    Research and development (1)
    22,899  19,984  66,705  60,829  
    Sales and marketing (1)
    32,990  24,068  86,568  67,326  
    General and administrative (1)
    12,017  11,864  33,626  45,286  
    Total operating expenses67,906  55,916  186,899  173,441  
    Loss from operations  (15,478) (10,702) (31,237) (41,998) 
    Interest income1,460  341  2,593  843  
    Interest expense(1,959) (448) (2,832) (1,347) 
    Other income and (expense), net 24  (138) (259) 195  
    Loss before provision for income taxes  (15,953) (10,947) (31,735) (42,307) 
    Provision for income taxes  98  17  101  43  
    Net loss  $(16,051) $(10,964) $(31,836) $(42,350) 
    Net loss per common share:  
    Basic and diluted$(0.34) $(0.25) $(0.69) $(0.98) 
    Weighted-average common shares outstanding - basic and diluted46,731,663  43,973,428  46,048,037  43,359,939  

    (1) Includes stock-based compensation expense as follows:
    Three months ended September 30,Nine months ended September 30,
    2019201820192018
    (unaudited)
    Cost of revenue
    Subscription and support$386  $161  $1,142  $560  
    Professional services456  153  1,296  449  
    Operating expenses
    Research and development2,265  1,624  6,016  4,140  
    Sales and marketing2,203  1,397  6,199  3,950  
    General and administrative3,913  3,614  11,276  14,220  




    WORKIVA INC.

    CONSOLIDATED BALANCE SHEETS
    (in thousands)
    September 30, 2019December 31, 2018
    (unaudited)
    Assets
    Current assets
    Cash and cash equivalents$389,124  $77,584  
    Marketable securities95,644  20,764  
    Accounts receivable, net43,590  65,107  
    Deferred commissions12,740  8,178  
    Other receivables1,651  1,181  
    Prepaid expenses and other8,148  4,417  
    Total current assets550,897  177,231  
    Property and equipment, net40,292  41,468  
    Operating lease right-of-use assets15,917  —  
    Deferred commissions, non-current13,940  10,569  
    Intangible assets, net1,795  1,266  
    Other assets3,920  577  
    Total assets$626,761  $231,111  
    Liabilities and Stockholders’ Equity (Deficit) 
    Current liabilities
    Accounts payable$4,895  $5,461  
    Accrued expenses and other current liabilities47,302  36,353  
    Deferred revenue156,352  148,545  
    Current portion of financing obligations1,295  1,222  
    Total current liabilities209,844  191,581  
    Convertible senior notes, net278,422  —  
    Deferred revenue, non-current31,467  25,171  
    Other long-term liabilities1,387  6,891  
    Operating lease liabilities, non-current19,273  —  
    Financing obligations, non-current16,234  17,208  
    Total liabilities556,627  240,851  
    Stockholders’ equity (deficit) 
    Common stock47  44  
    Additional paid-in-capital408,656  297,145  
    Accumulated deficit(338,863) (307,027) 
    Accumulated other comprehensive income294  98  
    Total stockholders’ equity (deficit) 70,134  (9,740) 
    Total liabilities and stockholders’ equity (deficit) $626,761  $231,111  




    WORKIVA INC.

    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)
    Three months ended September 30,Nine months ended September 30,
    2019201820192018
    (unaudited)
    Cash flows from operating activities
    Net loss  $(16,051) $(10,964) $(31,836) $(42,350) 
    Adjustments to reconcile net loss to net cash provided by operating activities:  
    Depreciation and amortization1,058  1,133  2,932  2,881  
    Stock-based compensation expense9,223  6,949  25,929  23,319  
    (Recovery of) provision for doubtful accounts (104) 128  (58) 311  
    Amortization (accretion) of premiums and discounts on marketable securities, net 15  (66) (89) (63) 
    Amortization of debt discount and issuance costs1,083  —  1,083  —  
    Deferred income tax(21) (4) (67) (4) 
    Changes in assets and liabilities:
    Accounts receivable3,579  (1,691) 21,530  4,615  
    Deferred commissions(2,106) (1,939) (7,968) (5,608) 
    Operating lease right-of-use asset581  —  1,805  —  
    Other receivables(417) (591) (470) (416) 
    Prepaid expenses(191) 2,501  (3,737) 712  
    Other assets(943) (389) (2,349) (557) 
    Accounts payable516  616  160  1,999  
    Deferred revenue3,830  8,630  14,112  15,032  
    Operating lease liability(758) —  (2,226) —  
    Accrued expenses and other liabilities5,403  3,269  9,828  6,948  
    Net cash provided by operating activities  4,697  7,582  28,579  6,819  
    Cash flows from investing activities
    Purchase of property and equipment(663) (523) (2,860) (742) 
    Purchase of marketable securities(54,749) (6,441) (95,466) (17,724) 
    Maturities of marketable securities1,500  4,600  20,390  9,000  
    Sale of marketable securities
    498  —  498  —  
    Purchase of intangible assets(51) (46) (712) (174) 
    Other(1,000) —  (1,000) —  
    Net cash used in investing activities  (54,465) (2,410) (79,150) (9,640) 


    WORKIVA INC.

    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in thousands)
    Three months ended September 30,Nine months ended September 30,
    2019201820192018
    (unaudited)
    Cash flows from financing activities
    Proceeds from option exercises5,940  7,534  22,493  13,927  
    Taxes paid related to net share settlements of stock-based compensation awards—  —  (390) (1,861) 
    Proceeds from shares issued in connection with employee stock purchase plan2,773  1,846  4,922  3,216  
    Proceeds from the issuance of convertible senior notes, net of issuance costs335,899  —  335,899  —  
    Principal payments on capital lease and financing obligations(306) (287) (901) (879) 
    Proceeds from government grants
    —  —  —  22  
    Net cash provided by financing activities  344,306  9,093  362,023  14,425  
    Effect of foreign exchange rates on cash(127) 83  88  (94) 
    Net increase in cash and cash equivalents  294,411  14,348  311,540  11,510  
    Cash and cash equivalents at beginning of period94,713  57,495  77,584  60,333  
    Cash and cash equivalents at end of period$389,124  $71,843  $389,124  $71,843  




    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,
    2019201820192018
    Gross profit, subscription and support$52,098  $43,167  $148,682  $121,035  
    Add back: Stock-based compensation386  161  1,142  560  
    Gross profit, subscription and support, non-GAAP$52,484  $43,328  $149,824  $121,595  
    As a percentage of subscription and support revenue, non-GAAP83.3 %84.5 %83.4 %82.9 %
    Gross profit, professional services$330  $2,047  $6,980  $10,408  
    Add back: Stock-based compensation456  153  1,296  449  
    Gross profit, professional services, non-GAAP$786  $2,200  $8,276  $10,857  
    As a percentage of professional services revenue, non-GAAP7.0 %23.0 %21.8 %32.6 %
    Gross profit$52,428  $45,214  $155,662  $131,443  
    Add back: Stock-based compensation842  314  2,438  1,009  
    Gross profit, non-GAAP$53,270  $45,528  $158,100  $132,452  
    As percentage of revenue, non-GAAP71.8 %74.8 %72.6 %73.6 %
    Cost of revenue, subscription and support$10,924  $8,139  $30,935  $25,578  
    Less: Stock-based compensation386  161  1,142  560  
    Cost of revenue, subscription and support, non-GAAP$10,538  $7,978  $29,793  $25,018  
    As percentage of revenue, non-GAAP14.2 %13.1 %13.7 %13.9 %
    Cost of revenue, professional services$10,827  $7,520  $31,029  $22,888  
    Less: Stock-based compensation456  153  1,296  449  
    Cost of revenue, professional services, non-GAAP$10,371  $7,367  $29,733  $22,439  
    As percentage of revenue, non-GAAP14.0 %12.1 %13.7 %12.5 %
    Research and development$22,899  $19,984  $66,705  $60,829  
    Less: Stock-based compensation2,265  1,624  6,016  4,140  
    Research and development, non-GAAP$20,634  $18,360  $60,689  $56,689  
    As percentage of revenue, non-GAAP27.8 %30.2 %27.9 %31.5 %
    Sales and marketing$32,990  $24,068  $86,568  $67,326  
    Less: Stock-based compensation2,203  1,397  6,199  3,950  
    Sales and marketing, non-GAAP$30,787  $22,671  $80,369  $63,376  
    As percentage of revenue, non-GAAP41.5 %37.2 %36.9 %35.2 %


    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,
    2019201820192018
    General and administrative$12,017  $11,864  $33,626  $45,286  
    Less: Stock-based compensation3,913  3,614  11,276  10,599  
    Less: CEO separation expense(1)
    —  —  —  9,527  
    General and administrative, non-GAAP$8,104  $8,250  $22,350  $25,160  
    As percentage of revenue, non-GAAP10.9 %13.6 %10.3 %14.0 %
    Loss from operations$(15,478) $(10,702) $(31,237) $(41,998) 
    Add back: Stock-based compensation9,223  6,949  25,929  19,698  
    Add back: CEO separation expense(1)
    —  —  —  9,527  
    Loss from operations, non-GAAP$(6,255) $(3,753) $(5,308) $(12,773) 
    As percentage of revenue, non-GAAP(8.4)%(6.2)%(2.4)%(7.1)%
    Net loss$(16,051) $(10,964) $(31,836) $(42,350) 
    Add back: Stock-based compensation9,223  6,949  25,929  19,698  
    Add back: Non-cash interest expense related to convertible senior notes1,083  —  1,083  —  
    Add back: CEO separation expense(1)
    —  —  —  9,527  
    Net loss, non-GAAP$(5,745) $(4,015) $(4,824) $(13,125) 
    As percentage of revenue, non-GAAP(7.7)%(6.6)%(2.2)%(7.3)%
    Net loss per basic and diluted share:$(0.34) $(0.25) $(0.69) $(0.98) 
    Add back: Stock-based compensation0.20  0.16  0.57  0.46  
    Add back: Non-cash interest expense related to convertible senior notes0.02  —  0.02  —  
    Add back: CEO separation expense(1)
    —  —  —  0.22  
    Net loss per basic and diluted share, non-GAAP$(0.12) $(0.09) $(0.10) $(0.30) 
    Weighted-average common shares outstanding - basic and diluted, non-GAAP46,731,663  43,973,428  46,048,037  43,359,939  

    (1) CEO separation expense in the nine months ended September 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 December 31, 2019Year ending December 31, 2019
    Loss from operations, GAAP range$(18,300) -$(18,800) $(49,500) -$(50,000) 
    Add back: Stock-based compensation
    10,000  10,000  35,900  35,900  
    Loss from operations, non-GAAP range$(8,300) -$(8,800) $(13,600) -$(14,100) 
    Net loss per share, GAAP range$(0.41) -$(0.42) $(1.10) -$(1.11) 
    Add back: Stock-based compensation
    0.21  0.21  0.77  0.77  
    Add back: Non-cash interest expense related to convertible senior notes0.05  0.05  0.07  0.07  
    Net loss per share, non-GAAP range$(0.15) -$(0.16) $(0.26) -$(0.27) 
    Weighted-average common shares outstanding - basic and diluted
    47,000,000  47,000,000  46,300,000  46,300,000  

    Investor Relations Contact 
    Adam Terese
    Workiva Inc.
    investor@workiva.com
    1.515.663.4471
    Media Contact 
    Kevin McCarthy
    Workiva Inc.
    press@workiva.com
    1.515.663.4471