AMES, Iowa--(BUSINESS WIRE)--Workiva Inc. (NYSE: WK), a leading provider of solutions for enterprise productivity, today announced financial results for its first quarter ended March 31, 2017.
“We posted strong results in the first quarter, highlighted by 16.5% revenue growth over the same quarter last year,” said Matt Rizai, Chairman and Chief Executive Officer of Workiva. “We outperformed our guidance for quarterly revenue, operating loss and loss per share.”
“We continue to invest in technology and talent to execute our platform strategy,” said Rizai. “We also continue to sign more partners. Our consulting and accounting partners will offer our customers more services and capabilities. Our technology partners will enable data and process integrations to further streamline critical business functions as we capitalize on growing Wdesk demand for broader-based, enterprise-wide opportunities.”
First Quarter 2017 Financial Highlights
- Revenue: Total revenue for the quarter ended March 31, 2017 was $51.9 million, an increase of 16.5% from $44.6 million in the first quarter of 2016. Subscription and support revenue was $39.5 million, an increase of 17.7% versus results in the first quarter of 2016. Professional services revenue was $12.4 million, an increase of 12.7% compared to the same quarter in the prior year.
- Gross Profit: GAAP gross profit for the quarter ended March 31, 2017 was $37.7 million compared with $31.4 million in the same quarter of the prior year. GAAP gross margin was 72.6% in the first quarter of 2017 versus 70.6% in the first quarter of 2016. Non-GAAP gross profit for the quarter ended March 31, 2017 was $37.9 million, an increase of 19.7% compared with the prior year's first quarter, and non-GAAP gross margin was 73.1% compared to 71.1% in the first quarter of 2016.
- Loss from Operations: GAAP loss from operations for the quarter ended March 31, 2017 was $6.0 million compared with a loss of $12.1 million in the prior year's first quarter. Non-GAAP loss from operations for the quarter ended March 31, 2017 was $1.8 million, compared with non-GAAP loss from operations of $8.7 million in the first quarter of 2016. Non-GAAP loss from operations as a percentage of revenue improved 1,600 basis points for the quarter ended March 31, 2017 compared to the first quarter of 2016.
- Net Loss: GAAP net loss for the quarter ended March 31, 2017 was $5.8 million compared with a net loss of $12.0 million for the prior year's first quarter. GAAP net loss per basic and diluted share for the quarter ended March 31, 2017 was $0.14, based on 41.1 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.30, based on 40.5 million weighted-average shares outstanding in the first quarter of 2016.
- Non-GAAP net loss for the quarter ended March 31, 2017 was $1.7 million compared with a net loss of $8.7 million in the prior year's first quarter. Non-GAAP net loss per basic and diluted share for the quarter ended March 31, 2017 was $0.04, based on 41.1 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.21, based on 40.5 million weighted-average shares outstanding in the first quarter of 2016.
Operating Metrics
- Customers: Workiva had 2,825 customers as of March 31, 2017, a net increase of 268 customers from March 31, 2016.
- Revenue Retention Rate: As of March 31, 2017, Workiva's revenue retention rate (excluding add-on revenue) was 95.1%, and the revenue retention rate including add-on revenue was 106.6%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.
Financial Outlook
As of May 4, 2017, Workiva is providing guidance for its second quarter 2017 and full year 2017 as follows:
Second Quarter 2017 Guidance:
- Total revenue is expected to be in the range of $48.1 million to $48.6 million.
- GAAP loss from operations is expected to be in the range of $12.5 million to $13.0 million.
- Non-GAAP loss from operations is expected to be in the range of $8.0 million to $8.5 million.
- GAAP net loss per basic and diluted share is expected to be in the range of $0.31 to $0.32.
- Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.20 to $0.21.
- Net loss per basic and diluted share is based on 41.3 million weighted-average shares outstanding.
Full Year 2017 Guidance:
- Total revenue is expected to be in the range of $204.0 million to $206.0 million.
- GAAP loss from operations is expected to be in the range of $44.0 million to $46.0 million.
- Non-GAAP loss from operations is expected to be in the range of $26.0 million to $28.0 million.
- GAAP net loss per basic and diluted share is expected to be in the range of $1.08 to $1.13.
- Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.64 to $0.69.
- Net loss per basic and diluted share is based on 41.4 million weighted-average shares outstanding.
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 first quarter 2017, in addition to discussing the Company’s outlook for the second quarter and full year 2017. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 91262090. 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 May 11, 2017 at 800-585-8367 (domestic) or 416-621-4642 (international). The replay pass code is 91262090. An archived webcast of this conference call will also be available an hour after the completion of the call in the “Investor Relations” section of the Company’s website at www.workiva.com.
About Workiva
Workiva (NYSE:WK) delivers Wdesk, an intuitive cloud platform that modernizes how people work within thousands of organizations, including over 70 percent of the FORTUNE 500®. Wdesk is built upon a data management engine, offering controlled collaboration, data integration, granular permissions and a full audit trail. Wdesk helps mitigate risk, improves productivity and gives users confidence in their data-driven decisions. Workiva employs more than 1,200 people with offices in 16 cities. The company is headquartered in Ames, Iowa. For more information, visit workiva.com.
Claim not confirmed by FORTUNE or Time Inc. FORTUNE 500® is a registered trademark of Time Inc. and is used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Workiva Inc.
Non-GAAP Financial Measures
The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation. A reconciliation of GAAP to non-GAAP historical financial measures has been provided in Table I at the end of this press release. A reconciliation of GAAP to non-GAAP guidance has been provided in Table II at the end of this press release.
Workiva believes that the use of non-GAAP gross profit and gross margin, non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss per share is helpful to its investors. These measures, which are referred to as non-GAAP financial measures, are not prepared in accordance with generally accepted accounting principles in the United States, or GAAP. Non-GAAP gross profit is calculated by excluding stock-based compensation expense attributable to cost of revenues from gross profit. Non-GAAP gross margin is the ratio calculated by dividing non-GAAP gross profit by revenues. Non-GAAP loss from operations is calculated by excluding stock-based compensation expense from loss from operations. Non-GAAP net loss is calculated by excluding stock-based compensation expense, net of tax, from net loss. Non-GAAP net loss per share is calculated by dividing non-GAAP net loss by the weighted- average shares outstanding as presented in the calculation of GAAP net loss per share. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash expenses, Workiva believes that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between its operating results from period to period. Workiva’s management uses these non-GAAP financial measures as tools for financial and operational decision making and for evaluating Workiva’s own operating results over different periods of time.
Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in Workiva’s industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Workiva’s reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in Workiva’s business and an important part of the compensation provided to its employees. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Investors should review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate Workiva’s business.
Safe Harbor Statement
Certain statements in this press release are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company’s future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about the Company’s expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “outlook,” “guidance” or the negative of those terms or other comparable terminology.
Please see the Company’s documents filed or to be filed with the Securities and Exchange Commission, including the Company’s annual reports filed on Form 10-K and quarterly reports on Form 10-Q, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this report. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company’s control. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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WORKIVA INC. |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except share and per share amounts) |
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| Three months ended March 31, | ||||||||||
| 2017 | 2016 | |||||||||
| (unaudited) | ||||||||||
| Revenue | ||||||||||
| Subscription and support | $ | 39,540 | $ | 33,585 | ||||||
| Professional services | 12,364 | 10,966 | ||||||||
| Total revenue | 51,904 | 44,551 | ||||||||
| Cost of revenue | ||||||||||
| Subscription and support (1) | 7,637 | 6,918 | ||||||||
| Professional services (1) | 6,581 | 6,188 | ||||||||
| Total cost of revenue | 14,218 | 13,106 | ||||||||
| Gross profit | 37,686 | 31,445 | ||||||||
| Operating expenses | ||||||||||
| Research and development (1) | 15,536 | 14,516 | ||||||||
| Sales and marketing (1) | 18,713 | 20,088 | ||||||||
| General and administrative (1) | 9,421 | 8,953 | ||||||||
| Total operating expenses | 43,670 | 43,557 | ||||||||
| Loss from operations | (5,984 | ) | (12,112 | ) | ||||||
| Interest expense | (455 | ) | (490 | ) | ||||||
| Other income, net | 612 | 576 | ||||||||
| Loss before provision for income taxes | (5,827 | ) | (12,026 | ) | ||||||
| Provision for income taxes | 9 | 19 | ||||||||
| Net loss | $ | (5,836 | ) | $ | (12,045 | ) | ||||
| Net loss per common share: | ||||||||||
| Basic and diluted | $ | (0.14 | ) | $ | (0.30 | ) | ||||
| Weighted-average common shares outstanding - basic and diluted | 41,108,611 | 40,451,668 | ||||||||
(1) Includes stock-based compensation expense as follows:
| Three months ended March 31, | |||||||||
| 2017 | 2016 | ||||||||
| (unaudited) | |||||||||
| Cost of revenue | |||||||||
| Subscription and support | $ | 140 | $ | 118 | |||||
| Professional services | 100 | 122 | |||||||
| Operating expenses | |||||||||
| Research and development | 493 | 584 | |||||||
| Sales and marketing | 659 | 455 | |||||||
| General and administrative | 2,747 | 2,111 | |||||||
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WORKIVA INC. |
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CONSOLIDATED BALANCE SHEETS |
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(in thousands) |
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| March 31, 2017 | December 31, 2016 | |||||||||
| (unaudited) | ||||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | $ | 52,204 | $ | 51,281 | ||||||
| Marketable securities | 12,498 | 11,435 | ||||||||
| Accounts receivable, net | 19,580 | 22,535 | ||||||||
| Deferred commissions | 1,867 | 1,864 | ||||||||
| Other receivables | 705 | 1,545 | ||||||||
| Prepaid expenses | 8,580 | 9,382 | ||||||||
| Total current assets | 95,434 | 98,042 | ||||||||
| Property and equipment, net | 41,949 | 42,590 | ||||||||
| Intangible assets, net | 1,021 | 1,012 | ||||||||
| Other assets | 1,418 | 1,499 | ||||||||
| Total assets | $ | 139,822 | $ | 143,143 | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||||
| Current liabilities | ||||||||||
| Accounts payable | $ | 1,867 | $ | 849 | ||||||
| Accrued expenses and other current liabilities | 14,898 | 20,695 | ||||||||
| Deferred revenue | 79,087 | 76,016 | ||||||||
| Deferred government grant obligation | 832 | 1,022 | ||||||||
| Current portion of capital lease and financing obligations | 1,258 | 1,285 | ||||||||
| Current portion of long-term debt | 20 | 20 | ||||||||
| Total current liabilities | 97,962 | 99,887 | ||||||||
| Deferred revenue | 22,573 | 21,485 | ||||||||
| Deferred government grant obligation | 653 | 1,000 | ||||||||
| Other long-term liabilities | 4,092 | 4,100 | ||||||||
| Capital lease and financing obligations | 19,473 | 19,743 | ||||||||
| Long-term debt | 53 | 53 | ||||||||
| Total liabilities | 144,806 | 146,268 | ||||||||
| Stockholders’ deficit | ||||||||||
| Common stock | 41 | 41 | ||||||||
| Additional paid-in-capital | 221,463 | 217,454 | ||||||||
| Accumulated deficit | (226,747 | ) | (220,911 | ) | ||||||
| Accumulated other comprehensive income | 259 | 291 | ||||||||
| Total stockholders’ deficit | (4,984 | ) | (3,125 | ) | ||||||
| Total liabilities and stockholders’ deficit | $ | 139,822 | $ | 143,143 | ||||||
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WORKIVA INC. |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in thousands) |
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| Three months ended March 31, | ||||||||||
| 2017 | 2016 | |||||||||
| (unaudited) | ||||||||||
| Cash flows from operating activities | ||||||||||
| Net loss | $ | (5,836 | ) | $ | (12,045 | ) | ||||
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities |
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| Depreciation and amortization | 891 | 997 | ||||||||
| Stock-based compensation expense | 4,139 | 3,390 | ||||||||
| Provision for doubtful accounts | 286 | 122 | ||||||||
| Realized gain on sale of available-for-sale securities, net | — | (2 | ) | |||||||
| Amortization of premiums and discounts on marketable securities, net | 31 | 39 | ||||||||
| Recognition of deferred government grant obligation | (538 | ) | (433 | ) | ||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable | 2,686 | (881 | ) | |||||||
| Deferred commissions | (2 | ) | (12 | ) | ||||||
| Other receivables | 840 | (224 | ) | |||||||
| Prepaid expenses | 804 | (186 | ) | |||||||
| Other assets | (23 | ) | (63 | ) | ||||||
| Accounts payable | 1,017 | (696 | ) | |||||||
| Deferred revenue | 4,096 | (3,215 | ) | |||||||
| Accrued expenses and other liabilities | (5,811 | ) | (5,869 | ) | ||||||
| Net cash provided by (used in) operating activities | 2,580 | (19,078 | ) | |||||||
| Cash flows from investing activities | ||||||||||
| Purchase of property and equipment | (121 | ) | (412 | ) | ||||||
| Purchase of marketable securities | (4,091 | ) | — | |||||||
| Maturities of marketable securities | 3,001 | — | ||||||||
| Sale of marketable securities | — | 4,793 | ||||||||
| Purchase of intangible assets | (31 | ) | (55 | ) | ||||||
| Net cash (used in) provided by investing activities | (1,242 | ) | 4,326 | |||||||
| Cash flows from financing activities | ||||||||||
| Proceeds from option exercises | 806 | 284 | ||||||||
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Taxes paid related to net share settlements of stock-based compensation awards |
(936 | ) | (761 | ) | ||||||
| Principal payments on capital lease and financing obligations | (297 | ) | (432 | ) | ||||||
| Proceeds from government grants | — | 183 | ||||||||
| Net cash used in financing activities | (427 | ) | (726 | ) | ||||||
| Effect of foreign exchange rates on cash | 12 | (46 | ) | |||||||
| Net increase (decrease) in cash and cash equivalents | 923 | (15,524 | ) | |||||||
| Cash and cash equivalents at beginning of period | 51,281 | 58,750 | ||||||||
| Cash and cash equivalents at end of period | $ | 52,204 | $ | 43,226 | ||||||
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TABLE I |
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WORKIVA INC. |
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RECONCILIATION OF NON-GAAP INFORMATION |
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(in thousands, except share and per share) |
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| Three months ended March 31, | ||||||||||
| 2017 | 2016 | |||||||||
| Gross profit, subscription and support | $ | 31,903 | $ | 26,667 | ||||||
| Add back: Stock-based compensation | 140 | 118 | ||||||||
| Gross profit, subscription and support, non-GAAP | $ | 32,043 | $ | 26,785 | ||||||
| As a percentage of subscription and support revenue, non-GAAP | 81.0 | % | 79.8 | % | ||||||
| Gross profit, professional services | $ | 5,783 | $ | 4,778 | ||||||
| Add back: Stock-based compensation | 100 | 122 | ||||||||
| Gross profit, professional services, non-GAAP | $ | 5,883 | $ | 4,900 | ||||||
| As a percentage of professional services revenue, non-GAAP | 47.6 | % | 44.7 | % | ||||||
| Gross profit, as reported | $ | 37,686 | $ | 31,445 | ||||||
| Add back: Stock-based compensation | 240 | 240 | ||||||||
| Gross profit, non-GAAP | $ | 37,926 | $ | 31,685 | ||||||
| As percentage of revenue, non-GAAP | 73.1 | % | 71.1 | % | ||||||
| Research and development, as reported | $ | 15,536 | $ | 14,516 | ||||||
| Less: Stock-based compensation | 493 | 584 | ||||||||
| Research and development, non-GAAP | $ | 15,043 | $ | 13,932 | ||||||
| As percentage of revenue, non-GAAP | 29.0 | % | 31.3 | % | ||||||
| Sales and marketing, as reported | $ | 18,713 | $ | 20,088 | ||||||
| Less: Stock-based compensation | 659 | 455 | ||||||||
| Sales and marketing, non-GAAP | $ | 18,054 | $ | 19,633 | ||||||
| As percentage of revenue, non-GAAP | 34.8 | % | 44.1 | % | ||||||
| General and administrative, as reported | $ | 9,421 | $ | 8,953 | ||||||
| Less: Stock-based compensation | 2,747 | 2,111 | ||||||||
| General and administrative, non-GAAP | $ | 6,674 | $ | 6,842 | ||||||
| As percentage of revenue, non-GAAP | 12.9 | % | 15.4 | % | ||||||
| Loss from operations | $ | (5,984 | ) | $ | (12,112 | ) | ||||
| Add back: Stock-based compensation | 4,139 | 3,390 | ||||||||
| Loss from operations, non-GAAP | $ | (1,845 | ) | $ | (8,722 | ) | ||||
| As percentage of revenue, non-GAAP | (3.6 | )% | (19.6 | )% | ||||||
| Net loss | $ | (5,836 | ) | $ | (12,045 | ) | ||||
| Add back: Stock-based compensation | 4,139 | 3,390 | ||||||||
| Net loss, non-GAAP | $ | (1,697 | ) | $ | (8,655 | ) | ||||
| As percentage of revenue, non-GAAP | (3.3 | )% | (19.4 | )% | ||||||
| Net loss per basic and diluted share: | $ | (0.14 | ) | $ | (0.30 | ) | ||||
| Add back: Stock-based compensation | 0.10 | 0.09 | ||||||||
| Net loss per basic and diluted share, non-GAAP | $ | (0.04 | ) | $ | (0.21 | ) | ||||
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Weighted-average common shares outstanding - basic and diluted, non-GAAP |
41,108,611 | 40,451,668 | ||||||||
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TABLE II |
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WORKIVA INC. |
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RECONCILIATION OF NON-GAAP GUIDANCE |
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(in thousands, except share and per share data) |
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Three months ending June 30, |
Year ending December 31, |
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| Loss from operations, GAAP range | $ | (12,500 | ) | - | $ | (13,000 | ) | $ | (44,000 | ) | - | $ | (46,000 | ) | ||||||
| Add back: Stock-based compensation | 4,500 | 4,500 | 18,000 | 18,000 | ||||||||||||||||
| Loss from operations, non-GAAP range | $ | (8,000 | ) | - | $ | (8,500 | ) | $ | (26,000 | ) | - | $ | (28,000 | ) | ||||||
| Net loss per share, GAAP range | $ | (0.31 | ) | - | $ | (0.32 | ) | $ | (1.08 | ) | - | $ | (1.13 | ) | ||||||
| Add back: Stock-based compensation | 0.11 | 0.11 | 0.44 | 0.44 | ||||||||||||||||
| Net loss per share, non-GAAP range | $ | (0.20 | ) | - | $ | (0.21 | ) | $ | (0.64 | ) | - | $ | (0.69 | ) | ||||||
| Weighted-average common shares outstanding - basic and diluted | 41,300,000 | 41,300,000 | 41,400,000 | 41,400,000 | ||||||||||||||||
