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Workiva Announces Third Quarter 2019 Financial Results

November 6, 2019

AMES, Iowa--(BUSINESS WIRE)--Nov 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

Key Metrics

Other Recent Business Highlights

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:

Full Year 2019 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 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.

Read the Workiva blog: www.workiva.com/blog
Follow Workiva on LinkedIn: www.linkedin.com/company/workiva
Like Workiva on Facebook: www.facebook.com/workiva
Follow Workiva on Twitter: www.twitter.com/workiva

FORTUNE ® and FORTUNE 500 ® are registered trademarks of Fortune Media IP Limited and are used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, Workiva Inc. Note: Claim not confirmed by FORTUNE ® or Fortune Media IP Limited.

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.

 

WORKIVA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

 

Three months ended
September 30,

 

Nine months ended September
30,

 

2019

 

2018

 

2019

 

2018

 

(unaudited)

Revenue

 

 

 

 

 

 

 

Subscription and support

$

63,022

 

$

51,306

 

$

179,617

 

$

146,613

Professional services

11,157

 

9,567

 

38,009

 

33,296

Total revenue

74,179

 

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 revenue

21,751

 

15,659

 

61,964

 

48,466

Gross profit

52,428

 

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 expenses

67,906

 

55,916

 

186,899

 

173,441

Loss from operations

(15,478)

 

(10,702)

 

(31,237)

 

(41,998)

Interest income

1,460

 

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 diluted

46,731,663

 

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,

 

2019

 

2018

 

2019

 

2018

 

(unaudited)

Cost of revenue

 

 

 

 

 

 

 

Subscription and support

$

386

 

$

161

 

$

1,142

 

$

560

Professional services

456

 

153

 

1,296

 

449

Operating expenses

 

 

 

 

 

 

 

Research and development

2,265

 

1,624

 

6,016

 

4,140

Sales and marketing

2,203

 

1,397

 

6,199

 

3,950

General and administrative

3,913

 

3,614

 

11,276

 

14,220

 

WORKIVA INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)

 

September 30, 2019

 

December 31, 2018

 

(unaudited)

 

 

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

389,124

 

$

77,584

Marketable securities

95,644

 

20,764

Accounts receivable, net

43,590

 

65,107

Deferred commissions

12,740

 

8,178

Other receivables

1,651

 

1,181

Prepaid expenses and other

8,148

 

4,417

Total current assets

550,897

 

177,231

Property and equipment, net

40,292

 

41,468

Operating lease right-of-use assets

15,917

 

Deferred commissions, non-current

13,940

 

10,569

Intangible assets, net

1,795

 

1,266

Other assets

3,920

 

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 liabilities

47,302

 

36,353

Deferred revenue

156,352

 

148,545

Current portion of financing obligations

1,295

 

1,222

Total current liabilities

209,844

 

191,581

Convertible senior notes, net

278,422

 

Deferred revenue, non-current

31,467

 

25,171

Other long-term liabilities

1,387

 

6,891

Operating lease liabilities, non-current

19,273

 

Financing obligations, non-current

16,234

 

17,208

Total liabilities

556,627

 

240,851

Stockholders’ equity (deficit)

 

 

 

Common stock

47

 

44

Additional paid-in-capital

408,656

 

297,145

Accumulated deficit

(338,863)

 

(307,027)

Accumulated other comprehensive income

294

 

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,

 

2019

 

2018

 

2019

 

2018

 

(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 amortization

1,058

 

1,133

 

2,932

 

2,881

Stock-based compensation expense

9,223

 

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 costs

1,083

 

 

1,083

 

Deferred income tax

(21)

 

(4)

 

(67)

 

(4)

Changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

3,579

 

(1,691)

 

21,530

 

4,615

Deferred commissions

(2,106)

 

(1,939)

 

(7,968)

 

(5,608)

Operating lease right-of-use asset

581

 

 

1,805

 

Other receivables

(417)

 

(591)

 

(470)

 

(416)

Prepaid expenses

(191)

 

2,501

 

(3,737)

 

712

Other assets

(943)

 

(389)

 

(2,349)

 

(557)

Accounts payable

516

 

616

 

160

 

1,999

Deferred revenue

3,830

 

8,630

 

14,112

 

15,032

Operating lease liability

(758)

 

 

(2,226)

 

Accrued expenses and other liabilities

5,403

 

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 securities

1,500

 

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)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from option exercises

5,940

 

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 plan

2,773

 

1,846

 

4,922

 

3,216

Proceeds from the issuance of convertible senior notes, net of issuance costs

335,899

 

 

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 period

94,713

 

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,

 

2019

 

2018

 

2019

 

2018

Gross profit, subscription and support

$

52,098

 

$

43,167

 

$

148,682

 

$

121,035

Add back: Stock-based compensation

386

 

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-GAAP

83.3%

 

84.5%

 

83.4%

 

82.9%

 

 

 

 

 

 

 

 

Gross profit, professional services

$

330

 

$

2,047

 

$

6,980

 

$

10,408

Add back: Stock-based compensation

456

 

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-GAAP

7.0%

 

23.0%

 

21.8%

 

32.6%

 

 

 

 

 

 

 

 

Gross profit

$

52,428

 

$

45,214

 

$

155,662

 

$

131,443

Add back: Stock-based compensation

842

 

314

 

2,438

 

1,009

Gross profit, non-GAAP

$

53,270

 

$

45,528

 

$

158,100

 

$

132,452

As percentage of revenue, non-GAAP

71.8%

 

74.8%

 

72.6%

 

73.6%

 

 

 

 

 

 

 

 

Cost of revenue, subscription and support

$

10,924

 

$

8,139

 

$

30,935

 

$

25,578

Less: Stock-based compensation

386

 

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-GAAP

14.2%

 

13.1%

 

13.7%

 

13.9%

 

 

 

 

 

 

 

 

Cost of revenue, professional services

$

10,827

 

$

7,520

 

$

31,029

 

$

22,888

Less: Stock-based compensation

456

 

153

 

1,296

 

449

Cost of revenue, professional services, non-GAAP

$

10,371

 

$

7,367

 

$

29,733

 

$

22,439

As percentage of revenue, non-GAAP

14.0%

 

12.1%

 

13.7%

 

12.5%

 

 

 

 

 

 

 

 

Research and development

$

22,899

 

$

19,984

 

$

66,705

 

$

60,829

Less: Stock-based compensation

2,265

 

1,624

 

6,016

 

4,140

Research and development, non-GAAP

$

20,634

 

$

18,360

 

$

60,689

 

$

56,689

As percentage of revenue, non-GAAP

27.8%

 

30.2%

 

27.9%

 

31.5%

 

 

 

 

 

 

 

 

Sales and marketing

$

32,990

 

$

24,068

 

$

86,568

 

$

67,326

Less: Stock-based compensation

2,203

 

1,397

 

6,199

 

3,950

Sales and marketing, non-GAAP

$

30,787

 

$

22,671

 

$

80,369

 

$

63,376

As percentage of revenue, non-GAAP

41.5%

 

37.2%

 

36.9%

 

35.2%

 

 

 

 

 

 

 

 

General and administrative

$

12,017

 

$

11,864

 

$

33,626

 

$

45,286

Less: Stock-based compensation

3,913

 

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-GAAP

10.9%

 

13.6%

 

10.3%

 

14.0%

 

 

 

 

 

 

 

 

Loss from operations

$

(15,478)

 

$

(10,702)

 

$

(31,237)

 

$

(41,998)

Add back: Stock-based compensation

9,223

 

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 compensation

9,223

 

6,949

 

25,929

 

19,698

Add back: Non-cash interest expense related to convertible senior notes

1,083

 

 

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 compensation

0.20

 

0.16

 

0.57

 

0.46

Add back: Non-cash interest expense related to convertible senior notes

0.02

 

 

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-GAAP

46,731,663

 

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, 2019

 

Year 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 notes

0.05

 

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

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191106006022/en/

CONTACT: Investor Contact:

Adam Terese

Workiva Inc.

investor@workiva.com

(515) 663-4493Media Contact:

Kevin McCarthy

Workiva Inc.

press@workiva.com

(515) 663-4471

KEYWORD: IOWA UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: PROFESSIONAL SERVICES DATA MANAGEMENT TECHNOLOGY SOFTWARE FINANCE NETWORKS INTERNET

SOURCE: Workiva

Copyright Business Wire 2019.

PUB: 11/06/2019 04:15 PM/DISC: 11/06/2019 04:15 PM

http://www.businesswire.com/news/home/20191106006022/en