Workiva (NYSE: WK) reported Q3 EPS of $0.00, $0.12 better than the analyst estimate of ($0.12). Revenue for the quarter came in at $88.1 million versus the consensus estimate of $84.47 million.

Third Quarter 2020 Financial Highlights

• Revenue: Total revenue for the third quarter of 2020 reached $88.1 million, an increase of 18.8% from $74.2 million in the third quarter of 2019. Subscription and support revenue contributed $75.9 million, up 20.4% versus the third quarter of 2019. Professional services revenue was $12.2 million, an increase of 9.8% compared to the same quarter in the prior year.
• Gross Profit: GAAP gross profit for the third quarter of 2020 was $66.2 million compared with $52.4 million in the same quarter of 2019. GAAP gross margin was 75.2% versus 70.7% in the third quarter of 2019. Non-GAAP gross profit for the third quarter of 2020 was $66.9 million, an increase of 25.6% compared with the prior year's third quarter, and non-GAAP gross margin was 75.9% compared to 71.8% in the third quarter of 2019.
• Results from Operations: GAAP loss from operations for the third quarter of 2020 was $7.0 million compared with a loss of $15.5 million in the prior year's third quarter. Non-GAAP income from operations was $3.6 million, compared with non-GAAP loss from operations of $6.3 million in the third quarter of 2019.
• GAAP Net Loss: GAAP net loss for the third quarter of 2020 was $10.5 million compared with a net loss of $16.1 million for the prior year's third quarter. GAAP net loss per basic and diluted share was $0.22 compared with a net loss per basic and diluted share of $0.34 in the third quarter of 2019.
• Non-GAAP Net Income/Loss: Non-GAAP net income for the third quarter of 2020 was $2.3 million compared with a net loss of $5.7 million in the prior year's third quarter. Non-GAAP net income per basic and diluted share was $0.05 and $0.04, respectively, compared with a net loss per basic and diluted share of $0.12, in the third quarter of 2019.
• Liquidity: As of September 30, 2020, Workiva had cash, cash equivalents and marketable securities totaling $523.9 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 in 2026 and $16.2 million of other financing obligations outstanding as of September 30, 2020.

"We are pleased with our financial results, which beat guidance for revenue and operating income," said Marty Vanderploeg, Chief Executive Officer. "We executed on our initiatives, resulting in record bookings in the third quarter."

"Both transaction volume and average deal size exceeded our expectations in the third quarter," said Stuart Miller, Chief Financial Officer. "As a result, we are raising guidance for the fourth quarter."

"The global trends of online collaboration and remote work continue to benefit Workiva," said Vanderploeg. "In the third quarter, we saw broad demand across key solutions, particularly in global statutory reporting, management reporting and capital markets."

"We continued to make great progress upgrading customers to our next-generation platform during the third quarter," said Vanderploeg. "Customers accounting for over 90% of our Annual Contract Value have upgraded. The Workiva platform continues to be a key enabler of our growth strategy."

GUIDANCE:

Workiva sees Q4 2020 EPS of $0.00-$0.01, versus the consensus of ($0.09). Workiva sees Q4 2020 revenue of $90.2-90.7 million, versus the consensus of $87.98 million.

Workiva sees FY2020 EPS of $0.02-$0.03, versus the consensus of ($0.24). Workiva sees FY2020 revenue of $348-348.5 million, versus the consensus of $342.19 million.

As of November 4, 2020, Workiva is providing guidance as follows:

Fourth Quarter 2020 Guidance:

• Total revenue is expected to be in the range of $90.2 million to $90.7 million.
• GAAP loss from operations is expected to be in the range of $10.0 million to $9.5 million.
• Non-GAAP income from operations is expected to be in the range of $0.5 million to $1.0 million.
• GAAP net loss per basic and diluted share is expected to be in the range of $0.26 to $0.25.
• Non-GAAP net income per basic share is expected to be in the range of $0.00 to $0.01.
• Net income (loss) per basic share is based on 49.1 million weighted-average shares outstanding.

Full Year 2020 Guidance:

• Total revenue is expected to be in the range of $348.0 million to $348.5 million.
• GAAP loss from operations is expected to be in the range of $42.9 million to $42.4 million.
• Non-GAAP income from operations is expected to be in the range of $3.0 million to $3.5 million.
• GAAP net loss per basic and diluted share is expected to be in the range of $1.11 to $1.10.
• Non-GAAP net income per basic share is expected to be in the range of $0.02 to $0.03.
• Net income (loss) per basic share is based on 48.5 million weighted-average shares outstanding.

"On a preliminary basis, we expect total revenue to exceed $401 million in 2021. We expect the growth rate of revenue from subscription and support to exceed the growth rate of revenue from professional services. In addition, we expect non-GAAP operating loss as a percentage of revenue to be a low single digit in 2021," said Miller.

Workiva has factored into its guidance the expected impacts of COVID-19 on its business and results of operations based on currently available information. Significant variation from these assumptions could cause the company to change its guidance, and it undertakes no obligation to update its assumptions, expectations or guidance

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