Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Workiva Inc. Announces Third Quarter 2021 Financial Results By: Workiva Inc. via Business Wire November 03, 2021 at 16:15 PM EDT Increased Q3 2021 Subscription & Support Revenue by 30.4% over Q3 2020 Generated Total Q3 2021 Revenue of $112.7 Million, up 27.9% over Q3 2020 Achieved 41.3% YOY Growth of Customers with Annual Contract Value Over $150K Raises Full-Year 2021 Revenue Guidance Workiva Inc. (NYSE:WK), the company that simplifies complex work, today announced financial results for its third quarter ended September 30, 2021. "Workiva delivered another strong quarter, beating third quarter guidance for revenue and operating results," said Marty Vanderploeg, Chief Executive Officer. "We achieved 30.4% organic growth in subscription & support revenue, and 27.9% in total revenue." "We continue to build on our market leadership and the increased demand for financial and ESG reporting solutions that drive digital transformations," Vanderploeg added. "Due to our continued outperformance, we are raising our full-year guidance," said Jill Klindt, Chief Financial Officer. "We now expect total revenue to range from $439 million to $440 million, and non-GAAP operating income to range from $15 million to $16 million." Third Quarter 2021 Financial Highlights Revenue: Total revenue for the third quarter of 2021 reached $112.7 million, an increase of 27.9% from $88.1 million in the third quarter of 2020. Subscription and support revenue contributed $98.9 million, up 30.4% versus the third quarter of 2020. Professional services revenue was $13.8 million, an increase of 12.5% compared to the same quarter in the prior year. Gross Profit: GAAP gross profit for the third quarter of 2021 was $86.3 million compared with $66.2 million in the same quarter of 2020. GAAP gross margin was 76.6% versus 75.2% in the third quarter of 2020. Non-GAAP gross profit for the third quarter of 2021 was $87.4 million, an increase of 30.7% compared with the prior year's third quarter, and non-GAAP gross margin was 77.6% compared to 75.9% in the third quarter of 2020. Results from Operations: GAAP loss from operations for the third quarter of 2021 was $8.0 million compared with a loss of $6.9 million in the prior year's third quarter. Non-GAAP income from operations was $5.0 million, compared with non-GAAP income from operations of $3.7 million in the third quarter of 2020. GAAP Net Loss: GAAP net loss for the third quarter of 2021 was $6.6 million compared with a net loss of $10.4 million for the prior year's third quarter. GAAP net loss per basic and diluted share was $0.13 compared with a net loss per basic and diluted share of $0.21 in the third quarter of 2020. Non-GAAP Net Income: Non-GAAP net income for the third quarter of 2021 was $8.7 million compared with net income of $2.5 million in the prior year's third quarter. Non-GAAP net income per basic share and diluted share was $0.17 and $0.15, respectively, compared with net income per basic and diluted share of $0.05 in the third quarter of 2020. Liquidity: As of September 30, 2021, Workiva had cash, cash equivalents and marketable securities totaling $522.3 million, compared with $530.0 million as of December 31, 2020. Workiva had $345.0 million aggregate principal amount of 1.125% convertible senior notes due in 2026 and $17.1 million of finance lease obligations outstanding as of September 30, 2021. Key Metrics and Recent Business Highlights Customers: Workiva had 4,146 customers as of September 30, 2021, a net increase of 563 customers from September 30, 2020. Revenue Retention Rate: As of September 30, 2021, Workiva's revenue retention rate (excluding add-on revenue) was 96.5%, and the revenue retention rate including add-on revenue was 111.1%. Add-on revenue includes changes in both solutions and pricing for existing customers. Large Contracts: As of September 30, 2021, Workiva had 1,043 customers with an annual contract value (ACV) of more than $100,000, up 33% from 785 customers at September 30, 2020. Workiva had 541 customers with an ACV of more than $150,000, up 41% from 383 customers in the third quarter of 2020. On July 30, 2021, we acquired all of the equity interest in OneCloud, Inc., an integration platform as a service (iPaaS) company, in order to extend our integration and data preparation capabilities. Financial Outlook As of November 3, 2021, Workiva is providing guidance as follows: Fourth Quarter 2021 Guidance: Total revenue is expected to be in the range of $116.5 million to $117.5 million. GAAP loss from operations is expected to be in the range of $15.6 million to $14.6 million. Non-GAAP loss from operations is expected to be in the range of $2.8 million to $1.8 million. GAAP net loss per basic and diluted share is expected to be in the range of $0.37 to $0.35. Non-GAAP net loss per basic share is expected to be in the range of $0.07 to $0.05. Net loss per basic share is based on 51.7 million weighted-average shares outstanding. Full Year 2021 Guidance: Total revenue is expected to be in the range of $439.0 million to $440.0 million. GAAP loss from operations is expected to be in the range of $33.5 million to $32.5 million. Non-GAAP income from operations is expected to be in the range of $15.0 million to $16.0 million. GAAP net loss per basic and diluted share is expected to be in the range of $0.83 to $0.81. Non-GAAP net income per basic and diluted share is expected to be in the range of $0.30 to $0.32. Net income (loss) per basic and diluted share is based on 51.1 million weighted-average shares outstanding. 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. These statements are forward-looking, and actual results may differ materially, as further discussed below under the heading "Safe Harbor Statement". 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, in addition to discussing the Company’s outlook for the fourth quarter and full year 2021. To access this call, dial 833-968-1977 (U.S. domestic) or 647-689-6649 (international). The conference ID is 8009407. 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 10, 2021, at 800-585-8367 (U.S. domestic) or 416-621-4642 (international). The replay pass code is 8009407. 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 Inc. (NYSE: WK) simplifies complex work for thousands of organizations worldwide. Customers trust Workiva’s open, intelligent and intuitive platform to connect data, documents and teams. The results: more efficiency, greater transparency and less risk. Learn more at 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 Non-GAAP Financial Measures The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation and non-cash interest 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 income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (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 income (loss) from operations is calculated by excluding stock-based compensation expense and amortization expense for acquisition-related intangible assets from loss from operations. Non-GAAP net income (loss) is calculated by excluding stock-based compensation expense, net of tax, amortization expense for acquisition-related intangible assets, and non-cash interest expense related to our convertible senior notes from net loss. Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (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. For business combinations, we generally allocate a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition and thus we do not believe it is reflective of ongoing operations. 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. 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, 2021 2020 2021 2020 (unaudited) Revenue Subscription and support $ 98,912 $ 75,850 $ 275,053 $ 214,907 Professional services 13,781 12,249 47,449 42,853 Total revenue 112,693 88,099 322,502 257,760 Cost of revenue Subscription and support (1) 15,606 12,013 42,906 36,264 Professional services (1) 10,799 9,873 31,766 30,262 Total cost of revenue 26,405 21,886 74,672 66,526 Gross profit 86,288 66,213 247,830 191,234 Operating expenses Research and development (1) 29,841 23,956 84,305 70,458 Sales and marketing (1) 46,026 35,487 128,586 106,874 General and administrative (1) 18,390 13,642 52,795 46,564 Total operating expenses 94,257 73,085 265,686 223,896 Loss from operations (7,969 ) (6,872 ) (17,856 ) (32,662 ) Interest income 219 471 834 2,832 Interest expense (3,508 ) (3,500 ) (10,495 ) (10,467 ) Other income (expense), net 3,805 (387 ) 3,265 263 Loss before (benefit) provision for income taxes (7,453 ) (10,288 ) (24,252 ) (40,034 ) (Benefit) provision for income taxes (885 ) 67 (846 ) 351 Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Net loss per common share: Basic and diluted $ (0.13 ) $ (0.21 ) $ (0.46 ) $ (0.84 ) Weighted-average common shares outstanding - basic and diluted 51,441,688 48,840,131 50,921,612 48,188,183 (1) Includes stock-based compensation expense as follows: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (unaudited) Cost of revenue Subscription and support $ 731 $ 426 $ 1,824 $ 1,293 Professional services 407 272 1,183 1,062 Operating expenses Research and development 2,347 2,167 7,195 5,790 Sales and marketing 4,095 2,687 10,481 8,367 General and administrative 5,107 5,049 14,679 18,919 WORKIVA INC. CONSOLIDATED BALANCE SHEETS (in thousands) September 30, 2021 December 31, 2020 (unaudited) Assets Current assets Cash and cash equivalents $ 291,125 $ 322,831 Marketable securities 231,224 207,207 Accounts receivable, net 64,099 68,922 Deferred costs 28,021 21,923 Other receivables 3,354 3,155 Prepaid expenses and other 13,092 9,047 Total current assets 630,915 633,085 Property and equipment, net 28,490 29,365 Operating lease right-of-use assets 14,536 15,844 Deferred costs, non-current 29,234 23,421 Goodwill 34,279 — Intangible assets, net 8,193 1,583 Other assets 4,568 3,708 Total assets $ 750,215 $ 707,006 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 4,018 $ 2,843 Accrued expenses and other current liabilities 78,799 68,256 Deferred revenue 235,754 208,990 Convertible senior notes, current 296,341 — Finance lease obligations 1,776 1,705 Total current liabilities 616,688 281,794 Convertible senior notes, net — 289,490 Deferred revenue, non-current 31,463 35,894 Other long-term liabilities 1,335 1,680 Operating lease liabilities, non-current 15,231 17,209 Finance lease obligations, non-current 15,320 16,662 Total liabilities 680,037 642,729 Stockholders’ equity Common stock 51 49 Additional paid-in-capital 508,025 478,698 Accumulated deficit (438,106 ) (414,700 ) Accumulated other comprehensive income 208 230 Total stockholders’ equity 70,178 64,277 Total liabilities and stockholders’ equity $ 750,215 $ 707,006 WORKIVA INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (unaudited) Cash flows from operating activities Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,429 1,080 3,580 3,195 Stock-based compensation expense 12,687 10,601 35,362 35,431 Recovery of doubtful accounts (61 ) (550 ) (162 ) (191 ) Amortization of premiums and discounts on marketable securities, net 811 106 2,199 319 Gain on settlement of equity securities (3,698 ) — (3,698 ) — Amortization of debt discount and issuance costs 2,301 2,231 6,851 6,641 Deferred income tax (930 ) 63 (914 ) (68 ) Changes in assets and liabilities: Accounts receivable 2,074 (13,307 ) 5,233 4,805 Deferred costs (2,027 ) (4,818 ) (12,104 ) (6,381 ) Operating lease right-of-use asset 985 1,019 2,906 2,992 Other receivables (628 ) 224 (204 ) 29 Prepaid expenses (1,024 ) (211 ) (4,049 ) (3,056 ) Other assets (514 ) 83 (1,197 ) (600 ) Accounts payable 478 (181 ) 1,214 (3,255 ) Deferred revenue 9,949 16,182 22,028 11,314 Operating lease liability (1,112 ) (1,115 ) (3,390 ) (3,438 ) Accrued expenses and other liabilities 2,161 6,822 10,327 12,538 Net cash provided by operating activities 16,313 7,874 40,576 19,890 Cash flows from investing activities Purchase of property and equipment (771 ) (379 ) (2,431 ) (1,763 ) Purchase of marketable securities (48,213 ) (7,980 ) (143,085 ) (45,269 ) Sale of marketable securities — — 250 11,423 Maturities of marketable securities 45,579 16,300 116,371 42,337 Business combinations, net of cash acquired (35,067 ) — (35,067 ) — Purchase of intangible assets (64 ) (102 ) (187 ) (253 ) Other investments — — (750 ) — Net cash (used in) provided by investing activities (38,536 ) 7,839 (64,899 ) 6,475 Cash flows from financing activities Proceeds from option exercises 3,174 4,795 8,792 14,253 Taxes paid related to net share settlements of stock-based compensation awards (15,809 ) — (23,686 ) (2,111 ) Proceeds from shares issued in connection with employee stock purchase plan 4,624 3,567 8,861 7,227 Principal payments on finance lease obligations (430 ) (410 ) (1,271 ) (1,212 ) Net cash (used in) provided by financing activities (8,441 ) 7,952 (7,304 ) 18,157 Effect of foreign exchange rates on cash (405 ) 346 (79 ) (132 ) Net (decrease) increase in cash and cash equivalents (31,069 ) 24,011 (31,706 ) 44,390 Cash and cash equivalents at beginning of period 322,194 402,121 322,831 381,742 Cash and cash equivalents at end of period $ 291,125 $ 426,132 $ 291,125 $ 426,132 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, 2021 2020 2021 2020 Gross profit, subscription and support $ 83,306 $ 63,837 $ 232,147 $ 178,643 Add back: Stock-based compensation 731 426 1,824 1,293 Gross profit, subscription and support, non-GAAP $ 84,037 $ 64,263 $ 233,971 $ 179,936 As a percentage of subscription and support revenue, non-GAAP 85.0 % 84.7 % 85.1 % 83.7 % Gross profit, professional services $ 2,982 $ 2,376 $ 15,683 $ 12,591 Add back: Stock-based compensation 407 272 1,183 1,062 Gross profit, professional services, non-GAAP $ 3,389 $ 2,648 $ 16,866 $ 13,653 As a percentage of professional services revenue, non-GAAP 24.6 % 21.6 % 35.5 % 31.9 % Gross profit $ 86,288 $ 66,213 $ 247,830 $ 191,234 Add back: Stock-based compensation 1,138 698 3,007 2,355 Gross profit, non-GAAP $ 87,426 $ 66,911 $ 250,837 $ 193,589 As percentage of revenue, non-GAAP 77.6 % 75.9 % 77.8 % 75.1 % Cost of revenue, subscription and support $ 15,606 $ 12,013 $ 42,906 $ 36,264 Less: Stock-based compensation 731 426 1,824 1,293 Cost of revenue, subscription and support, non-GAAP $ 14,875 $ 11,587 $ 41,082 $ 34,971 As percentage of revenue, non-GAAP 13.2 % 13.2 % 12.7 % 13.6 % Cost of revenue, professional services $ 10,799 $ 9,873 $ 31,766 $ 30,262 Less: Stock-based compensation 407 272 1,183 1,062 Cost of revenue, professional services, non-GAAP $ 10,392 $ 9,601 $ 30,583 $ 29,200 As percentage of revenue, non-GAAP 9.2 % 10.9 % 9.5 % 11.3 % Research and development $ 29,841 $ 23,956 $ 84,305 $ 70,458 Less: Stock-based compensation 2,347 2,167 7,195 5,790 Less: Amortization of acquisition-related intangibles 275 — 275 — Research and development, non-GAAP $ 27,219 $ 21,789 $ 76,835 $ 64,668 As percentage of revenue, non-GAAP 24.2 % 24.7 % 23.8 % 25.1 % Sales and marketing $ 46,026 $ 35,487 $ 128,586 $ 106,874 Less: Stock-based compensation 4,095 2,687 10,481 8,367 Less: Amortization of acquisition-related intangibles 13 — 13 — Sales and marketing, non-GAAP $ 41,918 $ 32,800 $ 118,092 $ 98,507 As percentage of revenue, non-GAAP 37.2 % 37.2 % 36.6 % 38.2 % General and administrative $ 18,390 $ 13,642 $ 52,795 $ 46,564 Less: Stock-based compensation 5,107 5,049 14,679 18,919 General and administrative, non-GAAP $ 13,283 $ 8,593 $ 38,116 $ 27,645 As percentage of revenue, non-GAAP 11.8 % 9.8 % 11.8 % 10.7 % Loss from operations $ (7,969 ) $ (6,872 ) $ (17,856 ) $ (32,662 ) Add back: Stock-based compensation 12,687 10,601 35,362 35,431 Add back: Amortization of acquisition-related intangibles 288 — 288 — Income from operations, non-GAAP $ 5,006 $ 3,729 $ 17,794 $ 2,769 As percentage of revenue, non-GAAP 4.4 % 4.2 % 5.5 % 1.1 % Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Add back: Stock-based compensation 12,687 10,601 35,362 35,431 Add back: Amortization of acquisition-related intangibles 288 — 288 — Add back: Non-cash interest expense related to convertible senior notes 2,301 2,231 6,851 6,641 Net income, non-GAAP $ 8,708 $ 2,477 $ 19,095 $ 1,687 As percentage of revenue, non-GAAP 7.7 % 2.8 % 5.9 % 0.7 % Net loss per basic and diluted share: $ (0.13 ) $ (0.21 ) $ (0.46 ) $ (0.84 ) Add back: Stock-based compensation 0.25 0.21 0.69 0.74 Add back: Amortization of acquisition-related intangibles 0.01 — 0.01 — Add back: Non-cash interest expense related to convertible senior notes 0.04 0.05 0.13 0.14 Net income per basic share, non-GAAP $ 0.17 $ 0.05 $ 0.37 $ 0.04 Net income per diluted share, non-GAAP $ 0.15 $ 0.05 $ 0.34 $ 0.03 Weighted-average common shares outstanding - basic, non-GAAP 51,441,688 48,840,131 50,921,612 48,188,183 Weighted-average common shares outstanding - diluted, non-GAAP 56,563,730 53,209,214 55,687,528 52,417,046 TABLE II WORKIVA INC. RECONCILIATION OF NON-GAAP GUIDANCE (in thousands, except share and per share data) Three months ending December 31, 2021 Year ending December 31, 2021 Loss from operations, GAAP range $ (15,611 ) - $ (14,611 ) $ (33,467 ) - $ (32,467 ) Add back: Stock-based compensation 12,384 12,384 47,746 47,746 Add back: Amortization of acquisition-related intangibles 433 433 721 721 Net (loss) income from operations, non-GAAP range $ (2,794 ) - $ (1,794 ) $ 15,000 - $ 16,000 Net loss per share, GAAP range $ (0.37 ) - $ (0.35 ) $ (0.83 ) - $ (0.81 ) Add back: Stock-based compensation 0.24 0.24 0.93 0.93 Add back: Amortization of acquisition-related intangibles 0.01 0.01 0.01 0.01 Add back: Non-cash interest expense related to convertible senior notes 0.05 0.05 0.19 0.19 Net (loss) income per share, non-GAAP range $ (0.07 ) - $ (0.05 ) $ 0.30 - $ 0.32 Weighted-average common shares outstanding - basic 51,700,000 51,700,000 51,100,000 51,100,000 View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005827/en/Contacts Investor Contact: Adam Terese Workiva Inc. investor@workiva.com (515) 663-4493 Media Contact: Kevin McCarthy Workiva Inc. press@workiva.com (515) 663-4471 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. 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Workiva Inc. Announces Third Quarter 2021 Financial Results By: Workiva Inc. via Business Wire November 03, 2021 at 16:15 PM EDT Increased Q3 2021 Subscription & Support Revenue by 30.4% over Q3 2020 Generated Total Q3 2021 Revenue of $112.7 Million, up 27.9% over Q3 2020 Achieved 41.3% YOY Growth of Customers with Annual Contract Value Over $150K Raises Full-Year 2021 Revenue Guidance Workiva Inc. (NYSE:WK), the company that simplifies complex work, today announced financial results for its third quarter ended September 30, 2021. "Workiva delivered another strong quarter, beating third quarter guidance for revenue and operating results," said Marty Vanderploeg, Chief Executive Officer. "We achieved 30.4% organic growth in subscription & support revenue, and 27.9% in total revenue." "We continue to build on our market leadership and the increased demand for financial and ESG reporting solutions that drive digital transformations," Vanderploeg added. "Due to our continued outperformance, we are raising our full-year guidance," said Jill Klindt, Chief Financial Officer. "We now expect total revenue to range from $439 million to $440 million, and non-GAAP operating income to range from $15 million to $16 million." Third Quarter 2021 Financial Highlights Revenue: Total revenue for the third quarter of 2021 reached $112.7 million, an increase of 27.9% from $88.1 million in the third quarter of 2020. Subscription and support revenue contributed $98.9 million, up 30.4% versus the third quarter of 2020. Professional services revenue was $13.8 million, an increase of 12.5% compared to the same quarter in the prior year. Gross Profit: GAAP gross profit for the third quarter of 2021 was $86.3 million compared with $66.2 million in the same quarter of 2020. GAAP gross margin was 76.6% versus 75.2% in the third quarter of 2020. Non-GAAP gross profit for the third quarter of 2021 was $87.4 million, an increase of 30.7% compared with the prior year's third quarter, and non-GAAP gross margin was 77.6% compared to 75.9% in the third quarter of 2020. Results from Operations: GAAP loss from operations for the third quarter of 2021 was $8.0 million compared with a loss of $6.9 million in the prior year's third quarter. Non-GAAP income from operations was $5.0 million, compared with non-GAAP income from operations of $3.7 million in the third quarter of 2020. GAAP Net Loss: GAAP net loss for the third quarter of 2021 was $6.6 million compared with a net loss of $10.4 million for the prior year's third quarter. GAAP net loss per basic and diluted share was $0.13 compared with a net loss per basic and diluted share of $0.21 in the third quarter of 2020. Non-GAAP Net Income: Non-GAAP net income for the third quarter of 2021 was $8.7 million compared with net income of $2.5 million in the prior year's third quarter. Non-GAAP net income per basic share and diluted share was $0.17 and $0.15, respectively, compared with net income per basic and diluted share of $0.05 in the third quarter of 2020. Liquidity: As of September 30, 2021, Workiva had cash, cash equivalents and marketable securities totaling $522.3 million, compared with $530.0 million as of December 31, 2020. Workiva had $345.0 million aggregate principal amount of 1.125% convertible senior notes due in 2026 and $17.1 million of finance lease obligations outstanding as of September 30, 2021. Key Metrics and Recent Business Highlights Customers: Workiva had 4,146 customers as of September 30, 2021, a net increase of 563 customers from September 30, 2020. Revenue Retention Rate: As of September 30, 2021, Workiva's revenue retention rate (excluding add-on revenue) was 96.5%, and the revenue retention rate including add-on revenue was 111.1%. Add-on revenue includes changes in both solutions and pricing for existing customers. Large Contracts: As of September 30, 2021, Workiva had 1,043 customers with an annual contract value (ACV) of more than $100,000, up 33% from 785 customers at September 30, 2020. Workiva had 541 customers with an ACV of more than $150,000, up 41% from 383 customers in the third quarter of 2020. On July 30, 2021, we acquired all of the equity interest in OneCloud, Inc., an integration platform as a service (iPaaS) company, in order to extend our integration and data preparation capabilities. Financial Outlook As of November 3, 2021, Workiva is providing guidance as follows: Fourth Quarter 2021 Guidance: Total revenue is expected to be in the range of $116.5 million to $117.5 million. GAAP loss from operations is expected to be in the range of $15.6 million to $14.6 million. Non-GAAP loss from operations is expected to be in the range of $2.8 million to $1.8 million. GAAP net loss per basic and diluted share is expected to be in the range of $0.37 to $0.35. Non-GAAP net loss per basic share is expected to be in the range of $0.07 to $0.05. Net loss per basic share is based on 51.7 million weighted-average shares outstanding. Full Year 2021 Guidance: Total revenue is expected to be in the range of $439.0 million to $440.0 million. GAAP loss from operations is expected to be in the range of $33.5 million to $32.5 million. Non-GAAP income from operations is expected to be in the range of $15.0 million to $16.0 million. GAAP net loss per basic and diluted share is expected to be in the range of $0.83 to $0.81. Non-GAAP net income per basic and diluted share is expected to be in the range of $0.30 to $0.32. Net income (loss) per basic and diluted share is based on 51.1 million weighted-average shares outstanding. 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. These statements are forward-looking, and actual results may differ materially, as further discussed below under the heading "Safe Harbor Statement". 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, in addition to discussing the Company’s outlook for the fourth quarter and full year 2021. To access this call, dial 833-968-1977 (U.S. domestic) or 647-689-6649 (international). The conference ID is 8009407. 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 10, 2021, at 800-585-8367 (U.S. domestic) or 416-621-4642 (international). The replay pass code is 8009407. 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 Inc. (NYSE: WK) simplifies complex work for thousands of organizations worldwide. Customers trust Workiva’s open, intelligent and intuitive platform to connect data, documents and teams. The results: more efficiency, greater transparency and less risk. Learn more at 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 Non-GAAP Financial Measures The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation and non-cash interest 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 income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (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 income (loss) from operations is calculated by excluding stock-based compensation expense and amortization expense for acquisition-related intangible assets from loss from operations. Non-GAAP net income (loss) is calculated by excluding stock-based compensation expense, net of tax, amortization expense for acquisition-related intangible assets, and non-cash interest expense related to our convertible senior notes from net loss. Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (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. For business combinations, we generally allocate a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition and thus we do not believe it is reflective of ongoing operations. 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. 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, 2021 2020 2021 2020 (unaudited) Revenue Subscription and support $ 98,912 $ 75,850 $ 275,053 $ 214,907 Professional services 13,781 12,249 47,449 42,853 Total revenue 112,693 88,099 322,502 257,760 Cost of revenue Subscription and support (1) 15,606 12,013 42,906 36,264 Professional services (1) 10,799 9,873 31,766 30,262 Total cost of revenue 26,405 21,886 74,672 66,526 Gross profit 86,288 66,213 247,830 191,234 Operating expenses Research and development (1) 29,841 23,956 84,305 70,458 Sales and marketing (1) 46,026 35,487 128,586 106,874 General and administrative (1) 18,390 13,642 52,795 46,564 Total operating expenses 94,257 73,085 265,686 223,896 Loss from operations (7,969 ) (6,872 ) (17,856 ) (32,662 ) Interest income 219 471 834 2,832 Interest expense (3,508 ) (3,500 ) (10,495 ) (10,467 ) Other income (expense), net 3,805 (387 ) 3,265 263 Loss before (benefit) provision for income taxes (7,453 ) (10,288 ) (24,252 ) (40,034 ) (Benefit) provision for income taxes (885 ) 67 (846 ) 351 Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Net loss per common share: Basic and diluted $ (0.13 ) $ (0.21 ) $ (0.46 ) $ (0.84 ) Weighted-average common shares outstanding - basic and diluted 51,441,688 48,840,131 50,921,612 48,188,183 (1) Includes stock-based compensation expense as follows: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (unaudited) Cost of revenue Subscription and support $ 731 $ 426 $ 1,824 $ 1,293 Professional services 407 272 1,183 1,062 Operating expenses Research and development 2,347 2,167 7,195 5,790 Sales and marketing 4,095 2,687 10,481 8,367 General and administrative 5,107 5,049 14,679 18,919 WORKIVA INC. CONSOLIDATED BALANCE SHEETS (in thousands) September 30, 2021 December 31, 2020 (unaudited) Assets Current assets Cash and cash equivalents $ 291,125 $ 322,831 Marketable securities 231,224 207,207 Accounts receivable, net 64,099 68,922 Deferred costs 28,021 21,923 Other receivables 3,354 3,155 Prepaid expenses and other 13,092 9,047 Total current assets 630,915 633,085 Property and equipment, net 28,490 29,365 Operating lease right-of-use assets 14,536 15,844 Deferred costs, non-current 29,234 23,421 Goodwill 34,279 — Intangible assets, net 8,193 1,583 Other assets 4,568 3,708 Total assets $ 750,215 $ 707,006 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 4,018 $ 2,843 Accrued expenses and other current liabilities 78,799 68,256 Deferred revenue 235,754 208,990 Convertible senior notes, current 296,341 — Finance lease obligations 1,776 1,705 Total current liabilities 616,688 281,794 Convertible senior notes, net — 289,490 Deferred revenue, non-current 31,463 35,894 Other long-term liabilities 1,335 1,680 Operating lease liabilities, non-current 15,231 17,209 Finance lease obligations, non-current 15,320 16,662 Total liabilities 680,037 642,729 Stockholders’ equity Common stock 51 49 Additional paid-in-capital 508,025 478,698 Accumulated deficit (438,106 ) (414,700 ) Accumulated other comprehensive income 208 230 Total stockholders’ equity 70,178 64,277 Total liabilities and stockholders’ equity $ 750,215 $ 707,006 WORKIVA INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (unaudited) Cash flows from operating activities Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,429 1,080 3,580 3,195 Stock-based compensation expense 12,687 10,601 35,362 35,431 Recovery of doubtful accounts (61 ) (550 ) (162 ) (191 ) Amortization of premiums and discounts on marketable securities, net 811 106 2,199 319 Gain on settlement of equity securities (3,698 ) — (3,698 ) — Amortization of debt discount and issuance costs 2,301 2,231 6,851 6,641 Deferred income tax (930 ) 63 (914 ) (68 ) Changes in assets and liabilities: Accounts receivable 2,074 (13,307 ) 5,233 4,805 Deferred costs (2,027 ) (4,818 ) (12,104 ) (6,381 ) Operating lease right-of-use asset 985 1,019 2,906 2,992 Other receivables (628 ) 224 (204 ) 29 Prepaid expenses (1,024 ) (211 ) (4,049 ) (3,056 ) Other assets (514 ) 83 (1,197 ) (600 ) Accounts payable 478 (181 ) 1,214 (3,255 ) Deferred revenue 9,949 16,182 22,028 11,314 Operating lease liability (1,112 ) (1,115 ) (3,390 ) (3,438 ) Accrued expenses and other liabilities 2,161 6,822 10,327 12,538 Net cash provided by operating activities 16,313 7,874 40,576 19,890 Cash flows from investing activities Purchase of property and equipment (771 ) (379 ) (2,431 ) (1,763 ) Purchase of marketable securities (48,213 ) (7,980 ) (143,085 ) (45,269 ) Sale of marketable securities — — 250 11,423 Maturities of marketable securities 45,579 16,300 116,371 42,337 Business combinations, net of cash acquired (35,067 ) — (35,067 ) — Purchase of intangible assets (64 ) (102 ) (187 ) (253 ) Other investments — — (750 ) — Net cash (used in) provided by investing activities (38,536 ) 7,839 (64,899 ) 6,475 Cash flows from financing activities Proceeds from option exercises 3,174 4,795 8,792 14,253 Taxes paid related to net share settlements of stock-based compensation awards (15,809 ) — (23,686 ) (2,111 ) Proceeds from shares issued in connection with employee stock purchase plan 4,624 3,567 8,861 7,227 Principal payments on finance lease obligations (430 ) (410 ) (1,271 ) (1,212 ) Net cash (used in) provided by financing activities (8,441 ) 7,952 (7,304 ) 18,157 Effect of foreign exchange rates on cash (405 ) 346 (79 ) (132 ) Net (decrease) increase in cash and cash equivalents (31,069 ) 24,011 (31,706 ) 44,390 Cash and cash equivalents at beginning of period 322,194 402,121 322,831 381,742 Cash and cash equivalents at end of period $ 291,125 $ 426,132 $ 291,125 $ 426,132 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, 2021 2020 2021 2020 Gross profit, subscription and support $ 83,306 $ 63,837 $ 232,147 $ 178,643 Add back: Stock-based compensation 731 426 1,824 1,293 Gross profit, subscription and support, non-GAAP $ 84,037 $ 64,263 $ 233,971 $ 179,936 As a percentage of subscription and support revenue, non-GAAP 85.0 % 84.7 % 85.1 % 83.7 % Gross profit, professional services $ 2,982 $ 2,376 $ 15,683 $ 12,591 Add back: Stock-based compensation 407 272 1,183 1,062 Gross profit, professional services, non-GAAP $ 3,389 $ 2,648 $ 16,866 $ 13,653 As a percentage of professional services revenue, non-GAAP 24.6 % 21.6 % 35.5 % 31.9 % Gross profit $ 86,288 $ 66,213 $ 247,830 $ 191,234 Add back: Stock-based compensation 1,138 698 3,007 2,355 Gross profit, non-GAAP $ 87,426 $ 66,911 $ 250,837 $ 193,589 As percentage of revenue, non-GAAP 77.6 % 75.9 % 77.8 % 75.1 % Cost of revenue, subscription and support $ 15,606 $ 12,013 $ 42,906 $ 36,264 Less: Stock-based compensation 731 426 1,824 1,293 Cost of revenue, subscription and support, non-GAAP $ 14,875 $ 11,587 $ 41,082 $ 34,971 As percentage of revenue, non-GAAP 13.2 % 13.2 % 12.7 % 13.6 % Cost of revenue, professional services $ 10,799 $ 9,873 $ 31,766 $ 30,262 Less: Stock-based compensation 407 272 1,183 1,062 Cost of revenue, professional services, non-GAAP $ 10,392 $ 9,601 $ 30,583 $ 29,200 As percentage of revenue, non-GAAP 9.2 % 10.9 % 9.5 % 11.3 % Research and development $ 29,841 $ 23,956 $ 84,305 $ 70,458 Less: Stock-based compensation 2,347 2,167 7,195 5,790 Less: Amortization of acquisition-related intangibles 275 — 275 — Research and development, non-GAAP $ 27,219 $ 21,789 $ 76,835 $ 64,668 As percentage of revenue, non-GAAP 24.2 % 24.7 % 23.8 % 25.1 % Sales and marketing $ 46,026 $ 35,487 $ 128,586 $ 106,874 Less: Stock-based compensation 4,095 2,687 10,481 8,367 Less: Amortization of acquisition-related intangibles 13 — 13 — Sales and marketing, non-GAAP $ 41,918 $ 32,800 $ 118,092 $ 98,507 As percentage of revenue, non-GAAP 37.2 % 37.2 % 36.6 % 38.2 % General and administrative $ 18,390 $ 13,642 $ 52,795 $ 46,564 Less: Stock-based compensation 5,107 5,049 14,679 18,919 General and administrative, non-GAAP $ 13,283 $ 8,593 $ 38,116 $ 27,645 As percentage of revenue, non-GAAP 11.8 % 9.8 % 11.8 % 10.7 % Loss from operations $ (7,969 ) $ (6,872 ) $ (17,856 ) $ (32,662 ) Add back: Stock-based compensation 12,687 10,601 35,362 35,431 Add back: Amortization of acquisition-related intangibles 288 — 288 — Income from operations, non-GAAP $ 5,006 $ 3,729 $ 17,794 $ 2,769 As percentage of revenue, non-GAAP 4.4 % 4.2 % 5.5 % 1.1 % Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Add back: Stock-based compensation 12,687 10,601 35,362 35,431 Add back: Amortization of acquisition-related intangibles 288 — 288 — Add back: Non-cash interest expense related to convertible senior notes 2,301 2,231 6,851 6,641 Net income, non-GAAP $ 8,708 $ 2,477 $ 19,095 $ 1,687 As percentage of revenue, non-GAAP 7.7 % 2.8 % 5.9 % 0.7 % Net loss per basic and diluted share: $ (0.13 ) $ (0.21 ) $ (0.46 ) $ (0.84 ) Add back: Stock-based compensation 0.25 0.21 0.69 0.74 Add back: Amortization of acquisition-related intangibles 0.01 — 0.01 — Add back: Non-cash interest expense related to convertible senior notes 0.04 0.05 0.13 0.14 Net income per basic share, non-GAAP $ 0.17 $ 0.05 $ 0.37 $ 0.04 Net income per diluted share, non-GAAP $ 0.15 $ 0.05 $ 0.34 $ 0.03 Weighted-average common shares outstanding - basic, non-GAAP 51,441,688 48,840,131 50,921,612 48,188,183 Weighted-average common shares outstanding - diluted, non-GAAP 56,563,730 53,209,214 55,687,528 52,417,046 TABLE II WORKIVA INC. RECONCILIATION OF NON-GAAP GUIDANCE (in thousands, except share and per share data) Three months ending December 31, 2021 Year ending December 31, 2021 Loss from operations, GAAP range $ (15,611 ) - $ (14,611 ) $ (33,467 ) - $ (32,467 ) Add back: Stock-based compensation 12,384 12,384 47,746 47,746 Add back: Amortization of acquisition-related intangibles 433 433 721 721 Net (loss) income from operations, non-GAAP range $ (2,794 ) - $ (1,794 ) $ 15,000 - $ 16,000 Net loss per share, GAAP range $ (0.37 ) - $ (0.35 ) $ (0.83 ) - $ (0.81 ) Add back: Stock-based compensation 0.24 0.24 0.93 0.93 Add back: Amortization of acquisition-related intangibles 0.01 0.01 0.01 0.01 Add back: Non-cash interest expense related to convertible senior notes 0.05 0.05 0.19 0.19 Net (loss) income per share, non-GAAP range $ (0.07 ) - $ (0.05 ) $ 0.30 - $ 0.32 Weighted-average common shares outstanding - basic 51,700,000 51,700,000 51,100,000 51,100,000 View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005827/en/Contacts Investor Contact: Adam Terese Workiva Inc. investor@workiva.com (515) 663-4493 Media Contact: Kevin McCarthy Workiva Inc. press@workiva.com (515) 663-4471
Increased Q3 2021 Subscription & Support Revenue by 30.4% over Q3 2020 Generated Total Q3 2021 Revenue of $112.7 Million, up 27.9% over Q3 2020 Achieved 41.3% YOY Growth of Customers with Annual Contract Value Over $150K Raises Full-Year 2021 Revenue Guidance
Workiva Inc. (NYSE:WK), the company that simplifies complex work, today announced financial results for its third quarter ended September 30, 2021. "Workiva delivered another strong quarter, beating third quarter guidance for revenue and operating results," said Marty Vanderploeg, Chief Executive Officer. "We achieved 30.4% organic growth in subscription & support revenue, and 27.9% in total revenue." "We continue to build on our market leadership and the increased demand for financial and ESG reporting solutions that drive digital transformations," Vanderploeg added. "Due to our continued outperformance, we are raising our full-year guidance," said Jill Klindt, Chief Financial Officer. "We now expect total revenue to range from $439 million to $440 million, and non-GAAP operating income to range from $15 million to $16 million." Third Quarter 2021 Financial Highlights Revenue: Total revenue for the third quarter of 2021 reached $112.7 million, an increase of 27.9% from $88.1 million in the third quarter of 2020. Subscription and support revenue contributed $98.9 million, up 30.4% versus the third quarter of 2020. Professional services revenue was $13.8 million, an increase of 12.5% compared to the same quarter in the prior year. Gross Profit: GAAP gross profit for the third quarter of 2021 was $86.3 million compared with $66.2 million in the same quarter of 2020. GAAP gross margin was 76.6% versus 75.2% in the third quarter of 2020. Non-GAAP gross profit for the third quarter of 2021 was $87.4 million, an increase of 30.7% compared with the prior year's third quarter, and non-GAAP gross margin was 77.6% compared to 75.9% in the third quarter of 2020. Results from Operations: GAAP loss from operations for the third quarter of 2021 was $8.0 million compared with a loss of $6.9 million in the prior year's third quarter. Non-GAAP income from operations was $5.0 million, compared with non-GAAP income from operations of $3.7 million in the third quarter of 2020. GAAP Net Loss: GAAP net loss for the third quarter of 2021 was $6.6 million compared with a net loss of $10.4 million for the prior year's third quarter. GAAP net loss per basic and diluted share was $0.13 compared with a net loss per basic and diluted share of $0.21 in the third quarter of 2020. Non-GAAP Net Income: Non-GAAP net income for the third quarter of 2021 was $8.7 million compared with net income of $2.5 million in the prior year's third quarter. Non-GAAP net income per basic share and diluted share was $0.17 and $0.15, respectively, compared with net income per basic and diluted share of $0.05 in the third quarter of 2020. Liquidity: As of September 30, 2021, Workiva had cash, cash equivalents and marketable securities totaling $522.3 million, compared with $530.0 million as of December 31, 2020. Workiva had $345.0 million aggregate principal amount of 1.125% convertible senior notes due in 2026 and $17.1 million of finance lease obligations outstanding as of September 30, 2021. Key Metrics and Recent Business Highlights Customers: Workiva had 4,146 customers as of September 30, 2021, a net increase of 563 customers from September 30, 2020. Revenue Retention Rate: As of September 30, 2021, Workiva's revenue retention rate (excluding add-on revenue) was 96.5%, and the revenue retention rate including add-on revenue was 111.1%. Add-on revenue includes changes in both solutions and pricing for existing customers. Large Contracts: As of September 30, 2021, Workiva had 1,043 customers with an annual contract value (ACV) of more than $100,000, up 33% from 785 customers at September 30, 2020. Workiva had 541 customers with an ACV of more than $150,000, up 41% from 383 customers in the third quarter of 2020. On July 30, 2021, we acquired all of the equity interest in OneCloud, Inc., an integration platform as a service (iPaaS) company, in order to extend our integration and data preparation capabilities. Financial Outlook As of November 3, 2021, Workiva is providing guidance as follows: Fourth Quarter 2021 Guidance: Total revenue is expected to be in the range of $116.5 million to $117.5 million. GAAP loss from operations is expected to be in the range of $15.6 million to $14.6 million. Non-GAAP loss from operations is expected to be in the range of $2.8 million to $1.8 million. GAAP net loss per basic and diluted share is expected to be in the range of $0.37 to $0.35. Non-GAAP net loss per basic share is expected to be in the range of $0.07 to $0.05. Net loss per basic share is based on 51.7 million weighted-average shares outstanding. Full Year 2021 Guidance: Total revenue is expected to be in the range of $439.0 million to $440.0 million. GAAP loss from operations is expected to be in the range of $33.5 million to $32.5 million. Non-GAAP income from operations is expected to be in the range of $15.0 million to $16.0 million. GAAP net loss per basic and diluted share is expected to be in the range of $0.83 to $0.81. Non-GAAP net income per basic and diluted share is expected to be in the range of $0.30 to $0.32. Net income (loss) per basic and diluted share is based on 51.1 million weighted-average shares outstanding. 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. These statements are forward-looking, and actual results may differ materially, as further discussed below under the heading "Safe Harbor Statement". 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, in addition to discussing the Company’s outlook for the fourth quarter and full year 2021. To access this call, dial 833-968-1977 (U.S. domestic) or 647-689-6649 (international). The conference ID is 8009407. 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 10, 2021, at 800-585-8367 (U.S. domestic) or 416-621-4642 (international). The replay pass code is 8009407. 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 Inc. (NYSE: WK) simplifies complex work for thousands of organizations worldwide. Customers trust Workiva’s open, intelligent and intuitive platform to connect data, documents and teams. The results: more efficiency, greater transparency and less risk. Learn more at 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 Non-GAAP Financial Measures The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation and non-cash interest 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 income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (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 income (loss) from operations is calculated by excluding stock-based compensation expense and amortization expense for acquisition-related intangible assets from loss from operations. Non-GAAP net income (loss) is calculated by excluding stock-based compensation expense, net of tax, amortization expense for acquisition-related intangible assets, and non-cash interest expense related to our convertible senior notes from net loss. Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (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. For business combinations, we generally allocate a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition and thus we do not believe it is reflective of ongoing operations. 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. 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, 2021 2020 2021 2020 (unaudited) Revenue Subscription and support $ 98,912 $ 75,850 $ 275,053 $ 214,907 Professional services 13,781 12,249 47,449 42,853 Total revenue 112,693 88,099 322,502 257,760 Cost of revenue Subscription and support (1) 15,606 12,013 42,906 36,264 Professional services (1) 10,799 9,873 31,766 30,262 Total cost of revenue 26,405 21,886 74,672 66,526 Gross profit 86,288 66,213 247,830 191,234 Operating expenses Research and development (1) 29,841 23,956 84,305 70,458 Sales and marketing (1) 46,026 35,487 128,586 106,874 General and administrative (1) 18,390 13,642 52,795 46,564 Total operating expenses 94,257 73,085 265,686 223,896 Loss from operations (7,969 ) (6,872 ) (17,856 ) (32,662 ) Interest income 219 471 834 2,832 Interest expense (3,508 ) (3,500 ) (10,495 ) (10,467 ) Other income (expense), net 3,805 (387 ) 3,265 263 Loss before (benefit) provision for income taxes (7,453 ) (10,288 ) (24,252 ) (40,034 ) (Benefit) provision for income taxes (885 ) 67 (846 ) 351 Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Net loss per common share: Basic and diluted $ (0.13 ) $ (0.21 ) $ (0.46 ) $ (0.84 ) Weighted-average common shares outstanding - basic and diluted 51,441,688 48,840,131 50,921,612 48,188,183 (1) Includes stock-based compensation expense as follows: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (unaudited) Cost of revenue Subscription and support $ 731 $ 426 $ 1,824 $ 1,293 Professional services 407 272 1,183 1,062 Operating expenses Research and development 2,347 2,167 7,195 5,790 Sales and marketing 4,095 2,687 10,481 8,367 General and administrative 5,107 5,049 14,679 18,919 WORKIVA INC. CONSOLIDATED BALANCE SHEETS (in thousands) September 30, 2021 December 31, 2020 (unaudited) Assets Current assets Cash and cash equivalents $ 291,125 $ 322,831 Marketable securities 231,224 207,207 Accounts receivable, net 64,099 68,922 Deferred costs 28,021 21,923 Other receivables 3,354 3,155 Prepaid expenses and other 13,092 9,047 Total current assets 630,915 633,085 Property and equipment, net 28,490 29,365 Operating lease right-of-use assets 14,536 15,844 Deferred costs, non-current 29,234 23,421 Goodwill 34,279 — Intangible assets, net 8,193 1,583 Other assets 4,568 3,708 Total assets $ 750,215 $ 707,006 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 4,018 $ 2,843 Accrued expenses and other current liabilities 78,799 68,256 Deferred revenue 235,754 208,990 Convertible senior notes, current 296,341 — Finance lease obligations 1,776 1,705 Total current liabilities 616,688 281,794 Convertible senior notes, net — 289,490 Deferred revenue, non-current 31,463 35,894 Other long-term liabilities 1,335 1,680 Operating lease liabilities, non-current 15,231 17,209 Finance lease obligations, non-current 15,320 16,662 Total liabilities 680,037 642,729 Stockholders’ equity Common stock 51 49 Additional paid-in-capital 508,025 478,698 Accumulated deficit (438,106 ) (414,700 ) Accumulated other comprehensive income 208 230 Total stockholders’ equity 70,178 64,277 Total liabilities and stockholders’ equity $ 750,215 $ 707,006 WORKIVA INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (unaudited) Cash flows from operating activities Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,429 1,080 3,580 3,195 Stock-based compensation expense 12,687 10,601 35,362 35,431 Recovery of doubtful accounts (61 ) (550 ) (162 ) (191 ) Amortization of premiums and discounts on marketable securities, net 811 106 2,199 319 Gain on settlement of equity securities (3,698 ) — (3,698 ) — Amortization of debt discount and issuance costs 2,301 2,231 6,851 6,641 Deferred income tax (930 ) 63 (914 ) (68 ) Changes in assets and liabilities: Accounts receivable 2,074 (13,307 ) 5,233 4,805 Deferred costs (2,027 ) (4,818 ) (12,104 ) (6,381 ) Operating lease right-of-use asset 985 1,019 2,906 2,992 Other receivables (628 ) 224 (204 ) 29 Prepaid expenses (1,024 ) (211 ) (4,049 ) (3,056 ) Other assets (514 ) 83 (1,197 ) (600 ) Accounts payable 478 (181 ) 1,214 (3,255 ) Deferred revenue 9,949 16,182 22,028 11,314 Operating lease liability (1,112 ) (1,115 ) (3,390 ) (3,438 ) Accrued expenses and other liabilities 2,161 6,822 10,327 12,538 Net cash provided by operating activities 16,313 7,874 40,576 19,890 Cash flows from investing activities Purchase of property and equipment (771 ) (379 ) (2,431 ) (1,763 ) Purchase of marketable securities (48,213 ) (7,980 ) (143,085 ) (45,269 ) Sale of marketable securities — — 250 11,423 Maturities of marketable securities 45,579 16,300 116,371 42,337 Business combinations, net of cash acquired (35,067 ) — (35,067 ) — Purchase of intangible assets (64 ) (102 ) (187 ) (253 ) Other investments — — (750 ) — Net cash (used in) provided by investing activities (38,536 ) 7,839 (64,899 ) 6,475 Cash flows from financing activities Proceeds from option exercises 3,174 4,795 8,792 14,253 Taxes paid related to net share settlements of stock-based compensation awards (15,809 ) — (23,686 ) (2,111 ) Proceeds from shares issued in connection with employee stock purchase plan 4,624 3,567 8,861 7,227 Principal payments on finance lease obligations (430 ) (410 ) (1,271 ) (1,212 ) Net cash (used in) provided by financing activities (8,441 ) 7,952 (7,304 ) 18,157 Effect of foreign exchange rates on cash (405 ) 346 (79 ) (132 ) Net (decrease) increase in cash and cash equivalents (31,069 ) 24,011 (31,706 ) 44,390 Cash and cash equivalents at beginning of period 322,194 402,121 322,831 381,742 Cash and cash equivalents at end of period $ 291,125 $ 426,132 $ 291,125 $ 426,132 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, 2021 2020 2021 2020 Gross profit, subscription and support $ 83,306 $ 63,837 $ 232,147 $ 178,643 Add back: Stock-based compensation 731 426 1,824 1,293 Gross profit, subscription and support, non-GAAP $ 84,037 $ 64,263 $ 233,971 $ 179,936 As a percentage of subscription and support revenue, non-GAAP 85.0 % 84.7 % 85.1 % 83.7 % Gross profit, professional services $ 2,982 $ 2,376 $ 15,683 $ 12,591 Add back: Stock-based compensation 407 272 1,183 1,062 Gross profit, professional services, non-GAAP $ 3,389 $ 2,648 $ 16,866 $ 13,653 As a percentage of professional services revenue, non-GAAP 24.6 % 21.6 % 35.5 % 31.9 % Gross profit $ 86,288 $ 66,213 $ 247,830 $ 191,234 Add back: Stock-based compensation 1,138 698 3,007 2,355 Gross profit, non-GAAP $ 87,426 $ 66,911 $ 250,837 $ 193,589 As percentage of revenue, non-GAAP 77.6 % 75.9 % 77.8 % 75.1 % Cost of revenue, subscription and support $ 15,606 $ 12,013 $ 42,906 $ 36,264 Less: Stock-based compensation 731 426 1,824 1,293 Cost of revenue, subscription and support, non-GAAP $ 14,875 $ 11,587 $ 41,082 $ 34,971 As percentage of revenue, non-GAAP 13.2 % 13.2 % 12.7 % 13.6 % Cost of revenue, professional services $ 10,799 $ 9,873 $ 31,766 $ 30,262 Less: Stock-based compensation 407 272 1,183 1,062 Cost of revenue, professional services, non-GAAP $ 10,392 $ 9,601 $ 30,583 $ 29,200 As percentage of revenue, non-GAAP 9.2 % 10.9 % 9.5 % 11.3 % Research and development $ 29,841 $ 23,956 $ 84,305 $ 70,458 Less: Stock-based compensation 2,347 2,167 7,195 5,790 Less: Amortization of acquisition-related intangibles 275 — 275 — Research and development, non-GAAP $ 27,219 $ 21,789 $ 76,835 $ 64,668 As percentage of revenue, non-GAAP 24.2 % 24.7 % 23.8 % 25.1 % Sales and marketing $ 46,026 $ 35,487 $ 128,586 $ 106,874 Less: Stock-based compensation 4,095 2,687 10,481 8,367 Less: Amortization of acquisition-related intangibles 13 — 13 — Sales and marketing, non-GAAP $ 41,918 $ 32,800 $ 118,092 $ 98,507 As percentage of revenue, non-GAAP 37.2 % 37.2 % 36.6 % 38.2 % General and administrative $ 18,390 $ 13,642 $ 52,795 $ 46,564 Less: Stock-based compensation 5,107 5,049 14,679 18,919 General and administrative, non-GAAP $ 13,283 $ 8,593 $ 38,116 $ 27,645 As percentage of revenue, non-GAAP 11.8 % 9.8 % 11.8 % 10.7 % Loss from operations $ (7,969 ) $ (6,872 ) $ (17,856 ) $ (32,662 ) Add back: Stock-based compensation 12,687 10,601 35,362 35,431 Add back: Amortization of acquisition-related intangibles 288 — 288 — Income from operations, non-GAAP $ 5,006 $ 3,729 $ 17,794 $ 2,769 As percentage of revenue, non-GAAP 4.4 % 4.2 % 5.5 % 1.1 % Net loss $ (6,568 ) $ (10,355 ) $ (23,406 ) $ (40,385 ) Add back: Stock-based compensation 12,687 10,601 35,362 35,431 Add back: Amortization of acquisition-related intangibles 288 — 288 — Add back: Non-cash interest expense related to convertible senior notes 2,301 2,231 6,851 6,641 Net income, non-GAAP $ 8,708 $ 2,477 $ 19,095 $ 1,687 As percentage of revenue, non-GAAP 7.7 % 2.8 % 5.9 % 0.7 % Net loss per basic and diluted share: $ (0.13 ) $ (0.21 ) $ (0.46 ) $ (0.84 ) Add back: Stock-based compensation 0.25 0.21 0.69 0.74 Add back: Amortization of acquisition-related intangibles 0.01 — 0.01 — Add back: Non-cash interest expense related to convertible senior notes 0.04 0.05 0.13 0.14 Net income per basic share, non-GAAP $ 0.17 $ 0.05 $ 0.37 $ 0.04 Net income per diluted share, non-GAAP $ 0.15 $ 0.05 $ 0.34 $ 0.03 Weighted-average common shares outstanding - basic, non-GAAP 51,441,688 48,840,131 50,921,612 48,188,183 Weighted-average common shares outstanding - diluted, non-GAAP 56,563,730 53,209,214 55,687,528 52,417,046 TABLE II WORKIVA INC. RECONCILIATION OF NON-GAAP GUIDANCE (in thousands, except share and per share data) Three months ending December 31, 2021 Year ending December 31, 2021 Loss from operations, GAAP range $ (15,611 ) - $ (14,611 ) $ (33,467 ) - $ (32,467 ) Add back: Stock-based compensation 12,384 12,384 47,746 47,746 Add back: Amortization of acquisition-related intangibles 433 433 721 721 Net (loss) income from operations, non-GAAP range $ (2,794 ) - $ (1,794 ) $ 15,000 - $ 16,000 Net loss per share, GAAP range $ (0.37 ) - $ (0.35 ) $ (0.83 ) - $ (0.81 ) Add back: Stock-based compensation 0.24 0.24 0.93 0.93 Add back: Amortization of acquisition-related intangibles 0.01 0.01 0.01 0.01 Add back: Non-cash interest expense related to convertible senior notes 0.05 0.05 0.19 0.19 Net (loss) income per share, non-GAAP range $ (0.07 ) - $ (0.05 ) $ 0.30 - $ 0.32 Weighted-average common shares outstanding - basic 51,700,000 51,700,000 51,100,000 51,100,000 View source version on businesswire.com: https://www.businesswire.com/news/home/20211103005827/en/
Investor Contact: Adam Terese Workiva Inc. investor@workiva.com (515) 663-4493 Media Contact: Kevin McCarthy Workiva Inc. press@workiva.com (515) 663-4471
