Workiva (WK) Tops Q2 EPS by 9c, Revenues Beat; Reinstates 3Q & FY20 EPS/Revenue Guidance Above Consensus

Workiva (NYSE: WK) reported Q2 EPS of ($0.06), $0.09 better than the analyst estimate of ($0.15). Revenue for the quarter came in at $83.4 million versus the consensus estimate of $80.64 million.

Second Quarter 2020 Financial Highlights

• Revenue: Total revenue for the second quarter of 2020 reached $83.9 million, an increase of 14.1% from $73.5 million in the second quarter of 2019. Subscription and support revenue contributed $70.7 million, up 16.9% versus the second quarter of 2019. Professional services revenue was $13.2 million, an increase of 1.2% compared to the same quarter in the prior year.
• Gross Profit: GAAP gross profit for the second quarter of 2020 was $61.6 million compared with $52.8 million in the same quarter of 2019. GAAP gross margin was 73.5% versus 71.8% in the second quarter of 2019. Non-GAAP gross profit for the second quarter of 2020 was $62.4 million, an increase of 16.4% compared with the prior year's second quarter, and non-GAAP gross margin was 74.4% compared to 73.0% in the second quarter of 2019.
• Results from Operations: GAAP loss from operations for the second quarter of 2020 was $16.8 million compared with a loss of $8.4 million in the prior year's second quarter. Non-GAAP loss from operations was $1.9 million, compared with non-GAAP income from operations of $0.1 million in the second quarter of 2019.
• GAAP Net Loss: GAAP net loss for the second quarter of 2020 was $19.8 million compared with a net loss of $8.3 million for the prior year's second quarter. GAAP net loss per basic and diluted share was $0.41 compared with a net loss per basic and diluted share of $0.18 in the second quarter of 2019.
• Non-GAAP Net Loss: Non-GAAP net loss for the second quarter of 2020 was $2.7 million compared with a net income of $0.2 million in the prior year's second quarter. Non-GAAP net loss per basic and diluted share was $0.06, compared with a net income per basic and diluted share of $0.00, in the second quarter of 2019.
• Liquidity: As of June 30, 2020, Workiva had cash, cash equivalents and marketable securities totaling $508.6 million, compared with $488.0 million as of December 31, 2019. Workiva had $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026 and other financing obligations totaled $16.6 million outstanding as of June 30, 2020.

"Despite challenges from the COVID-19 pandemic, we are pleased with our second quarter 2020 financial results, which exceeded guidance for revenue and operating results," said Marty Vanderploeg, Chief Executive Officer.

"We are reinstating guidance for full year 2020 because we believe visibility on closing new business has substantially improved," said Stuart Miller, Chief Financial Officer.

"Our sales and marketing teams are succeeding in a virtual environment," said Vanderploeg. "In the second quarter, demand for our platform improved across all of our growth vectors, which include EMEA, Wdata and our platform solutions for Integrated Risk, Global Statutory Reporting and the U.S. Government."

"Our new platform increases flexibility and speed when developing new solutions, enabling us to enter more markets faster than before," said Vanderploeg. "Developing and delivering new solutions on our platform will continue to be key drivers to our success."

GUIDANCE:

Workiva sees Q3 2020 EPS of ($0.13)-($0.12), versus the consensus of ($0.19). Workiva sees Q3 2020 revenue of $84.3-84.8 million, versus the consensus of $81.54 million.

Workiva sees FY2020 EPS of ($0.26)-($0.23), versus the consensus of ($0.51). Workiva sees FY2020 revenue of $341.5-342.5 million, versus the consensus of $334.77 million.

Third Quarter 2020 Guidance:

• Total revenue is expected to be in the range of $84.3 million to $84.8 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 $5.2 million to $5.7 million.
• GAAP net loss per basic and diluted share is expected to be in the range of $0.39 to $0.40.
• Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.12 to $0.13.
• Net loss per basic and diluted share is based on 48.9 million weighted-average shares outstanding.

Full Year 2020 Guidance:

• Total revenue is expected to be in the range of $341.5 million to $342.5 million.
• GAAP loss from operations is expected to be in the range of $56.5 million to $58.0 million.
• Non-GAAP loss from operation is expected to be in the range of $10.0 million to $11.5 million.
• GAAP net loss per basic and diluted share is expected to be in the range of $1.37 to $1.40.
• Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.23 to $0.26.
• Net loss per basic and diluted share is based on 48.5 million weighted-average shares outstanding.

We are reinstating our 2020 full year guidance based on increased visibility into deal closings. In our third quarter and full year 2020 guidance, we factor in the expected impacts of COVID-19 on our business and results of operations based on information available to us today. Significant variation from these assumptions could cause us to change our guidance, and we undertake no obligation to update our assumptions, expectations or our guidance. These statements are forward-looking, and actual results may differ materially, as further discussed below under the heading “Safe Harbor Statement.”

For earnings history and earnings-related data on Workiva (WK) click here.

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