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Workiva Announces Second Quarter 2017 Financial Results

August 3, 2017 4:16 PM

Q2 Revenue of $49.4 million, Up 14.8% from Q2 of 2016

Q2 Subscription and Support Revenue of $41.0 million, Up 17.2% from Q2 of 2016

AMES, Iowa--(BUSINESS WIRE)-- Workiva Inc. (NYSE: WK), a leading provider of solutions for enterprise productivity, today announced financial results for its second quarter ended June 30, 2017.

“We posted strong results in the second quarter, highlighted by 14.8% 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 technology and talent to execute our platform strategy,” said Rizai. “We are increasing the number of Wdesk data and process integrations to help our customers further improve a wide range of financial, regulatory and Corporate Performance Management functions. Expanding the amount of data that Wdesk users can directly access amplifies the power of Wdesk throughout our customers’ organizations.”

Second Quarter 2017 Financial Highlights

Operating Metrics

Financial Outlook

As of August 3, 2017, Workiva is providing guidance for the third quarter and full year 2017 as follows:

Third Quarter 2017 Guidance:

Full Year 2017 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 2017, in addition to discussing the Company’s outlook for the third quarter and full year 2017. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 44634049. 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 10, 2017 at 800-585-8367 (domestic) or 416-621-4642 (international). The replay pass code is 44634049. 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.

Claim not confirmed by FORTUNE or Time Inc. FORTUNE 500 is a registered trademark of Time Inc. and is used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Workiva Inc.

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 June 30, Six months ended June 30,
2017 2016 2017 2016
Revenue
Subscription and support $ 40,980 $ 34,969 $ 80,520 $ 68,554
Professional services 8,411

8,042

20,775

19,008

Total revenue

49,391

43,011

101,295

87,562

Cost of revenue
Subscription and support (1)

7,758

7,039

15,395

13,957

Professional services (1)

6,528

5,538

13,109

11,726

Total cost of revenue

14,286

12,577

28,504

25,683

Gross profit

35,105

30,434

72,791

61,879

Operating expenses
Research and development (1)

16,239

14,047

31,775

28,563

Sales and marketing (1)

19,787

19,828

38,500

39,916

General and administrative (1)

8,943

7,882

18,364

16,835

Total operating expenses

44,969

41,757

88,639

85,314

Loss from operations

(9,864

)

(11,323

)

(15,848

)

(23,435

)
Interest expense

(475

)

(468

)

(930

)

(958

)
Other income, net

176

278

788

854

Loss before provision for income taxes

(10,163

)

(11,513

)

(15,990

)

(23,539

)
Provision for income taxes

33

12

42

31

Net loss $ (10,196 ) $ (11,525 ) $ (16,032 ) $ (23,570 )
Net loss per common share:
Basic and diluted $ (0.25 ) $ (0.28 ) $ (0.39 ) $ (0.58 )
Weighted-average common shares outstanding - basic and diluted

41,429,691

40,593,908

41,270,038

40,522,790

(1) Includes stock-based compensation expense as follows:

Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Cost of revenue
Subscription and support $ 178 $ 125 $ 318 $ 243
Professional services

100

93

200

215

Operating expenses
Research and development

472

609

965

1,193

Sales and marketing

694

449

1,353

904

General and administrative

2,953

2,226

5,700

4,337

WORKIVA INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30, 2017 December 31, 2016
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 59,986 $ 51,281
Marketable securities 12,877 11,435
Accounts receivable, net 22,733 22,535
Deferred commissions 2,021 1,864
Other receivables 1,573 1,545
Prepaid expenses 11,416 9,382
Total current assets 110,606 98,042
Property and equipment, net 41,138 42,590
Intangible assets, net 1,056 1,012
Other assets 1,393 1,499
Total assets $ 154,193 $ 143,143
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable $ 1,191 $ 849
Accrued expenses and other current liabilities 17,286 20,695
Deferred revenue 91,914 76,016
Deferred government grant obligation 904 1,022
Current portion of capital lease and financing obligations 1,242 1,285
Current portion of long-term debt 21 20
Total current liabilities 112,558 99,887
Deferred revenue 24,342 21,485
Deferred government grant obligation 405 1,000
Other long-term liabilities 3,985 4,100
Capital lease and financing obligations 18,999 19,743
Long-term debt 32 53
Total liabilities 160,321 146,268
Stockholders’ deficit
Common stock 42 41
Additional paid-in-capital 230,568 217,454
Accumulated deficit (236,943 ) (220,911 )
Accumulated other comprehensive income 205 291
Total stockholders’ deficit (6,128 ) (3,125 )
Total liabilities and stockholders’ deficit $ 154,193 $ 143,143
WORKIVA INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
Cash flows from operating activities
Net loss $ (10,196 ) $ (11,525 ) $ (16,032 ) $ (23,570 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization 867 975 1,758 1,972
Stock-based compensation expense 4,397 3,502 8,536 6,892
Provision for doubtful accounts 146 48 432 170
Realized gain on sale of available-for-sale securities, net — (4 ) — (6 )
Amortization of premiums and discounts on marketable securities, net 28 36 59 75
Recognition of deferred government grant obligation (198 ) (230 ) (736 ) (663 )
Deferred income tax — (12 ) — (12 )
Changes in assets and liabilities:
Accounts receivable (3,228 ) (1,844 ) (542 ) (2,725 )
Deferred commissions (149 ) (117 ) (151 ) (129 )
Other receivables (865 ) 142 (25 ) (82 )
Prepaid expenses (2,830 ) (1,327 ) (2,026 ) (1,513 )
Other assets 36 (323 ) 13 (386 )
Accounts payable (678 ) 797 339 101
Deferred revenue 14,398 5,399 18,494 2,184
Accrued expenses and other liabilities 2,254 447 (3,557 ) (5,422 )
Net cash provided by (used in) operating activities 3,982 (4,036 ) 6,562 (23,114 )
Cash flows from investing activities
Purchase of property and equipment (26 ) (597 ) (147 ) (1,009 )
Purchase of marketable securities (2,259 ) (802 ) (6,350 ) (802 )
Maturities of marketable securities 1,850 — 4,851 —
Sale of marketable securities — 2,404 — 7,197
Purchase of intangible assets (58 ) (59 ) (89 ) (114 )
Net cash (used in) provided by investing activities (493 ) 946 (1,735 ) 5,272
Cash flows from financing activities
Proceeds from option exercises 4,709 236 5,515 520
Taxes paid related to net share settlements of stock-based compensation awards — — (936 ) (761 )
Repayment of other long-term debt (20 ) (18 ) (20 ) (18 )
Principal payments on capital lease and financing obligations (490 ) (476 ) (787 ) (908 )
Proceeds from government grants 22 — 22 183
Payments of issuance costs on line of credit (10 ) (33 ) (10 ) (33 )
Net cash provided by (used in) financing activities 4,211 (291 ) 3,784 (1,017 )
Effect of foreign exchange rates on cash 82 40 94 (6 )
Net increase (decrease) in cash and cash equivalents 7,782 (3,341 ) 8,705 (18,865 )
Cash and cash equivalents at beginning of period 52,204 43,226 51,281 58,750
Cash and cash equivalents at end of period $ 59,986 $ 39,885 $ 59,986 $ 39,885
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,
2017 2016 2017 2016
Gross profit, subscription and support $ 33,222 $ 27,930 $ 65,125 $ 54,597
Add back: Stock-based compensation 178 125 318 243
Gross profit, subscription and support, non-GAAP $ 33,400 $ 28,055 $ 65,443 $ 54,840
As a percentage of subscription and support revenue, non-GAAP 81.5 % 80.2 % 81.3 % 80.0 %
Gross profit, professional services $ 1,883 $ 2,504 $ 7,666 $ 7,282
Add back: Stock-based compensation 100 93 200 215
Gross profit, professional services, non-GAAP $ 1,983 $ 2,597 $ 7,866 $ 7,497
As a percentage of professional services revenue, non-GAAP 23.6 % 32.3 % 37.9 % 39.4 %
Gross profit, as reported $ 35,105 $ 30,434 $ 72,791 $ 61,879
Add back: Stock-based compensation 278 218 518 458
Gross profit, non-GAAP $ 35,383 $ 30,652 $ 73,309 $ 62,337
As percentage of revenue, non-GAAP 71.6 % 71.3 % 72.4 % 71.2 %
Research and development, as reported $ 16,239 $ 14,047 $ 31,775 $ 28,563
Less: Stock-based compensation 472 609 965 1,193
Research and development, non-GAAP $ 15,767 $ 13,438 $ 30,810 $ 27,370
As percentage of revenue, non-GAAP 31.9 % 31.2 % 30.4 % 31.3 %
Sales and marketing, as reported $ 19,787 $ 19,828 $ 38,500 $ 39,916
Less: Stock-based compensation 694 449 1,353 904
Sales and marketing, non-GAAP $ 19,093 $ 19,379 $ 37,147 $ 39,012
As percentage of revenue, non-GAAP 38.7 % 45.1 % 36.7 % 44.6 %
General and administrative, as reported $ 8,943 $ 7,882 $ 18,364 $ 16,835
Less: Stock-based compensation 2,953 2,226 5,700 4,337
General and administrative, non-GAAP $ 5,990 $ 5,656 $ 12,664 $ 12,498
As percentage of revenue, non-GAAP 12.1 % 13.2 % 12.5 % 14.3 %
Loss from operations $ (9,864 ) $ (11,323 ) $ (15,848 ) $ (23,435 )
Add back: Stock-based compensation 4,397 3,502 8,536 6,892
Loss from operations, non-GAAP $ (5,467 ) $ (7,821 ) $ (7,312 ) $ (16,543 )
As percentage of revenue, non-GAAP (11.1 )% (18.2 )% (7.2 )% (18.9 )%
Net loss $ (10,196 ) $ (11,525 ) $ (16,032 ) $ (23,570 )
Add back: Stock-based compensation 4,397 3,502 8,536 6,892
Net loss, non-GAAP $ (5,799 ) $ (8,023 ) $ (7,496 ) $ (16,678 )
As percentage of revenue, non-GAAP (11.7 )% (18.7 )% (7.4 )% (19.0 )%
Net loss per basic and diluted share: $ (0.25 ) $ (0.28 ) $ (0.39 ) $ (0.58 )
Add back: Stock-based compensation 0.11 0.08 0.21 0.17
Net loss per basic and diluted share, non-GAAP $ (0.14 ) $ (0.20 ) $ (0.18 ) $ (0.41 )
Weighted-average common shares outstanding - basic and diluted, non-GAAP 41,429,691 40,593,908 41,270,038 40,522,790
TABLE II

WORKIVA INC.

RECONCILIATION OF NON-GAAP GUIDANCE

(in thousands, except share and per share data)

Three months endingSeptember 30, 2017

Year ending December 31,2017

Loss from operations, GAAP range $ (16,400 ) - $ (16,800 ) $ (42,700 ) - $ (43,700 )
Add back: Stock-based compensation 4,600 4,600 17,700 17,700
Loss from operations, non-GAAP range $ (11,800 ) - $ (12,200 ) $ (25,000 ) - $ (26,000 )
Net loss per share, GAAP range $ (0.40 ) - $ (0.41 ) $ (1.04 ) - $ (1.06 )
Add back: Stock-based compensation 0.11 0.11 0.42 0.42
Net loss per share, non-GAAP range $ (0.29 ) - $ (0.30 ) $ (0.62 ) - $ (0.64 )
Weighted-average common shares outstanding - basic and diluted 42,000,000 42,000,000 41,700,000 41,700,000

Investor Contact:

Workiva Inc.

Adam Rogers, 515-663-4493

[email protected]

or

Media Contact:

Workiva Inc.

Kevin McCarthy, 515-663-4471

[email protected]

Source: Workiva Inc.

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