Workiva Announces Fourth Quarter and Full Year 2015 Financial Results

Q4 Revenue of $39.9 million, Up 32% from Q4 of 2014

Full Year 2015 Revenue of $145.3 million, Up 29% from 2014

01 Mar, 2016, 16:15 ET from Workiva Inc.

AMES, Iowa, March 1, 2016 /PRNewswire/ -- Workiva Inc. (NYSE: WK), creator of the Wdesk cloud-based productivity platform for enterprises, today announced financial results for its fourth quarter and fiscal year ended December 31, 2015 and announced its first quarter and full-year 2016 guidance.

"We are happy to report strong revenue growth for the fourth quarter and full-year 2015," said Matt Rizai, Chairman and Chief Executive Officer of Workiva. "Revenue growth in the fourth quarter was 32.4% over the same quarter last year, which was ahead of our guidance. Total revenue for the year ended December 31, 2015 was $145.3 million, an increase of 28.9% over full-year 2014."

"We continue to add new Wdesk customers and seats across our customers' organizations for use cases in Sarbanes-Oxley (SOX), management reporting, risk processes and auditing," said Rizai. "Non-SEC use cases contributed 25% of our subscription bookings in 2014 and 39% in 2015," said Rizai. "In 2016, we expect that non-SEC use cases will contribute more than 50% of our subscription bookings."

"To capitalize on these expanded market opportunities, we will continue to invest in software development, sales and marketing," added Rizai.

"We anticipate cash usage from operations to improve in 2016, and then improve again in 2017," said Rizai. "We believe that we raised enough capital at our IPO to get to positive annual operating cash flow without needing to return to the equity market."

Fourth Quarter 2015 Financial Highlights

  • Revenue: Total revenue for the quarter ended December 31, 2015 was $39.9 million, an increase of 32.4% from $30.1 million in the fourth quarter of 2014. Subscription and support revenue was $32.1 million, an increase of 28.4% versus results in the fourth quarter of 2014. Professional services revenue was $7.8 million, an increase of 52.0% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the quarter ended December 31, 2015 was $28.9 million compared with $20.2 million in the same quarter of the prior year. GAAP gross margin was 72.4% in the fourth quarter of 2015 versus 66.9% in the fourth quarter of 2014. Non-GAAP gross profit for the quarter ended December 31, 2015 was $29.1 million, an increase of 42.8% compared with the prior year's fourth quarter, and non-GAAP gross margin was 72.9% compared to 67.5% in the fourth quarter of 2014.
  • Loss from Operations: GAAP loss from operations for the quarter ended December 31, 2015 was $11.8 million compared with a loss of $11.6 million in the prior year's fourth quarter. Non-GAAP loss from operations for the quarter ended December 31, 2015 was $8.7 million, compared with non-GAAP loss from operations of $9.8 million in the fourth quarter of 2014.
  • Net Loss: GAAP net loss for the quarter ended December 31, 2015 was $10.3 million compared with a net loss of $12.7 million for the prior year's fourth quarter. GAAP net loss per basic and diluted share for the quarter ended December 31, 2015 was $0.26, based on 40.2 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.38, based on 33.1 million weighted-average shares outstanding in the fourth quarter of 2014.
  • Non-GAAP net loss for the quarter ended December 31, 2015 was $7.2 million compared with a net loss of $10.8 million in the prior year's fourth quarter. Non-GAAP net loss per basic and diluted share for the quarter ended December 31, 2015 was $0.18, based on 40.2 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.33, based on 33.1 million weighted-average shares outstanding in the fourth quarter of 2014.

Full Year 2015 Financial Highlights

  • Revenue: Total revenue for the year ended December 31, 2015 was $145.3 million, an increase of 28.9% compared with $112.7 million in the prior year. Subscription and support revenue was $116.3 million, an increase of 27.3% on a year-over-year basis. Professional services revenue was $29.0 million, an increase of 35.6% on a year-over-year basis.
  • Gross Profit: GAAP gross profit for the year ended December 31, 2015 was $105.1 million compared with $78.8 million in the prior year, and GAAP gross margin was 72.3%. Non-GAAP gross profit for the year ended December 31, 2015 was $105.8 million, an increase of 32.8% compared with the prior year, and non-GAAP gross margin was 72.8%.
  • Loss from Operations: GAAP loss from operations for the year ended December 31, 2015 was $43.7 million compared with a loss of $38.6 million in the prior year. Non-GAAP loss from operations for the year ended December 31, 2015 was $32.7 million compared with a loss of $31.2 million in the prior year.
  • Net Loss: GAAP net loss for the year ended December 31, 2015 was $43.4 million compared with a net loss of $41.2 million in the prior year. GAAP net loss per share for the year ended December 31, 2015 was $1.09 based on 39.9 million weighted-average shares outstanding compared with a loss per share of $1.28 based on 32.2 million weighted-average shares outstanding in the prior year.
  • Non-GAAP net loss for the year ended December 31, 2015 was $32.4 million compared with a net loss of $33.8 million in the prior year. Non-GAAP net loss per share for the year ended December 31, 2015 was $0.81 based on 39.9 million weighted-average shares outstanding compared with a non-GAAP net loss per share of $1.05 based on 32.2 million weighted-average shares in the prior year.
  • Balance Sheet: As of December 31, 2015, Workiva had cash, cash equivalents and marketable securities totaling $76.2 million, compared with $81.8 million as of September 30, 2015. Debt, including capital lease and financing obligations, totaled $23.0 million as of December 31, 2015.
  • Cash Flow: Net cash used in operating activities was $21.6 million in 2015, compared to cash used in operating activities of $3.5 million in 2014.

Operating Metrics

  • Customers: Workiva had 2,524 customers as of December 31, 2015, a net increase of 263 customers from December 31, 2014.
  • Revenue Retention Rate: As of December 31, 2015, Workiva's revenue retention rate (excluding add-on revenue) was 95.8%, and the revenue retention rate including add-on revenue was 112.5%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook

As of March 1, 2016, Workiva is providing guidance for its first quarter 2016 and full year 2016 as follows:

First Quarter 2016 Guidance:

  • Total revenue is expected to be in the range of $42.3 million to $42.8 million.
  • Non-GAAP loss from operations is expected to be in the range of $10.4 million to $10.9 million.
  • GAAP loss from operations is expected to be in the range of $13.9 million to $14.4 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.26 to $0.28.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.35 to $0.37.
  • Net loss per basic and diluted share is based on 40.5 million weighted-average shares outstanding.

Full Year 2016 Guidance:

  • Total revenue is expected to be in the range of $177.0 million to $180.0 million.
  • Non-GAAP loss from operations is expected to be in the range of $46.0 million to $49.0 million.
  • GAAP loss from operations is expected to be in the range of $60.8 million to $63.8 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $1.16 to $1.23.
  • GAAP net loss per basic and diluted share is expected to be in the range of $1.52 to $1.59.
  • Net loss per basic and diluted share is based on 41.0 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 fourth quarter and full year 2015, in addition to discussing the Company's outlook for the first quarter and full year 2016. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 25297720. 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 March 8, 2016 at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 25297720. 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) created Wdesk, a cloud-based productivity platform for enterprises to collect, link, report and analyze business data with control and accountability. Thousands of organizations, including over 65% of the Fortune 500, use Wdesk. The platform's proprietary word processing, spreadsheet and presentation applications are integrated and built upon a data management engine, offering synchronized data, controlled collaboration, granular permissions and a full audit trail. Wdesk helps mitigate enterprise risk, improve productivity and give users confidence to make decisions with real-time data. Workiva employs more than 1,100 people with offices in 16 cities. The company is headquartered in Ames, Iowa. For more information, visit workiva.com.

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.

Investor Contact:

Media Contact:

Adam Rogers

Kevin McCarthy

Workiva Inc.

Workiva Inc.

investor@workiva.com

press@workiva.com

(515) 663-4493

(515) 663-4471

 

WORKIVA INC.

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

Three months ended

December 31,

Year ended December 31,

2015

2014

2015

2014

Revenue

Subscription and support

$

32,102

$

25,011

$

116,288

$

91,317

Professional services

7,780

5,118

28,984

21,377

Total revenue

39,882

30,129

145,272

112,694

Cost of revenue

Subscription and support (1)

5,791

6,097

22,559

21,182

Professional services (1)

5,222

3,864

17,645

12,696

Total cost of revenue

11,013

9,961

40,204

33,878

Gross profit

28,869

20,168

105,068

78,816

Operating expenses

Research and development (1)

13,496

11,911

50,466

44,145

Sales and marketing (1)

18,632

14,063

69,569

53,498

General and administrative (1)

8,538

5,797

28,716

19,783

Total operating expenses

40,666

31,771

148,751

117,426

Loss from operations

(11,797)

(11,603)

(43,683)

(38,610)

Interest expense

(508)

(763)

(2,025)

(2,044)

Other income and (expense), net

2,014

(259)

2,302

(468)

Loss before provision for income taxes

(10,291)

(12,625)

(43,406)

(41,122)

Provision (benefit) for income taxes

2

32

(7)

32

Net loss

$

(10,293)

$

(12,657)

$

(43,399)

$

(41,154)

Net loss per common share:

Basic and diluted

$

(0.26)

$

(0.38)

$

(1.09)

$

(1.28)

Weighted average common shares outstanding - basic and diluted

40,204,367

33,117,423

39,852,624

32,156,060

(1)

 Includes stock-based compensation expense as follows:

 

Three months ended December 31,

Year ended December 31,

2015

2014

2015

2014

Cost of revenue

Subscription and support

$

88

$

99

$

363

$

502

Professional services

98

73

349

337

Operating expenses

Research and development

635

314

1,924

1,757

Sales and marketing

484

352

1,727

1,241

General and administrative

1,819

1,008

6,637

3,548

 

WORKIVA INC.

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands)

As of December 31,

2015

2014

Assets

Current assets

Cash and cash equivalents

$

58,750

$

101,131

Marketable securities

17,420

Accounts receivable, net

15,647

11,120

Deferred commissions

1,368

852

Other receivables

818

295

Prepaid expenses and other current assets

3,875

3,143

Total current assets

97,878

116,541

Restricted cash

401

Property and equipment, net

44,410

46,265

Intangible assets, net

896

549

Other assets

711

795

Total assets

$

143,895

$

164,551

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

5,138

$

3,011

Accrued expenses and other current liabilities

20,394

16,765

Deferred revenue

55,741

42,605

Deferred government grant obligation

985

2,324

Current portion of capital lease and financing obligations

1,808

1,941

Current portion of long-term debt

18

84

Total current liabilities

84,084

66,730

Deferred revenue

7,597

13,671

Deferred government grant obligation

1,996

3,424

Other long-term liabilities

3,343

2,069

Capital lease and financing obligations

21,083

22,747

Long-term debt

73

91

Total liabilities

118,176

108,732

Stockholders' equity

Common stock

41

39

Additional paid-in-capital

202,371

189,168

Accumulated deficit

(176,934)

(133,535)

Accumulated other comprehensive income

241

147

Total stockholders' equity

25,719

55,819

Total liabilities and stockholders' equity

$

143,895

$

164,551

 

WORKIVA INC.

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three months ended

December 31,

Year ended December 31,

2015

2014

2015

2014

Cash flows from operating activities

Net loss

$

(10,293)

$

(12,657)

$

(43,399)

$

(41,154)

Adjustments to reconcile net loss to net cash used in operating activities

Depreciation and amortization

1,056

1,125

4,410

3,877

Stock-based compensation expense

3,124

1,846

11,000

7,385

Provision for (recovery of) doubtful accounts

101

(5)

449

123

Accretion of discount on convertible note

133

266

Paid-in-kind interest on convertible note

76

134

Change in fair value of derivative liability

145

193

Loss on early extinguishment of convertible note

111

111

Realized (gain) loss on sale of available-for-sale securities

(6)

(13)

136

Amortization (accretion) of premiums and discounts on marketable securities, net

45

77

Recognition of deferred government grant obligation

(1,875)

(48)

(2,383)

(99)

Deferred income tax

(76)

(76)

Changes in assets and liabilities:

Accounts receivable

(3,632)

18

(5,080)

2,602

Deferred commissions

(416)

(142)

(520)

(553)

Other receivables

133

(85)

(523)

155

Prepaid expenses and other

(595)

(1,309)

(734)

(2,251)

Other assets

(85)

113

81

(52)

Accounts payable

55

(1,901)

2,331

(1,530)

Deferred revenue

3,769

4,444

7,297

19,961

Accrued expenses and other liabilities

3,658

3,529

5,390

7,137

Change in restricted cash

101

54

Net cash used in operating activities

(5,037)

(4,607)

(21,592)

(3,505)

Cash flows from investing activities

Purchase of property and equipment

(184)

(522)

(1,843)

(8,566)

Purchase of marketable securities

(8,377)

(24,069)

Sale of marketable securities

3,509

6,521

4,864

Purchase of intangible assets

(42)

(157)

(386)

(394)

Net cash used in investing activities

(5,094)

(679)

(19,777)

(4,096)

Cash flows from financing activities

Payment of equity issuance costs

(1,346)

Proceeds from public offering, net of underwriters' discount and offering costs

91,826

91,769

Proceeds from issuance of convertible notes

5,000

Proceeds from option exercises

749

217

2,244

580

Changes in restricted cash

25

300

(275)

Repayment of other long-term debt

(2,167)

(84)

(2,365)

Principal payments on capital lease and financing obligations

(599)

(557)

(2,282)

(1,338)

Distributions to members

(346)

(228)

(381)

(279)

Proceeds from borrowings on line of credit

3,020

Proceeds from government grants

548

2,194

Payments of issuance costs on line of credit

(14)

(113)

Repayment of line of credit

(3,000)

(5,038)

Repayment of government grant

(101)

(101)

Net cash (used in) provided by financing activities

(297)

86,102

(1,102)

93,155

Effect of foreign exchange rates on cash

84

40

90

62

Net (decrease) increase in cash and cash equivalents

(10,344)

80,856

(42,381)

85,616

Cash and cash equivalents at beginning of period

69,094

20,275

101,131

15,515

Cash and cash equivalents at end of period

$

58,750

$

101,131

$

58,750

$

101,131

 

TABLE I

WORKIVA INC.

RECONCILIATION OF NON-GAAP INFORMATION

(in thousands, except share and per share data)

Three months ended

December 31,

Year ended December 31,

2015

2014

2015

2014

Gross profit, subscription and support

$

26,311

$

18,914

$

93,729

$

70,135

Add back: Stock-based compensation

88

99

363

502

Gross profit, subscription and support, non-GAAP

$

26,399

$

19,013

$

94,092

$

70,637

As a percentage of subscription and support revenue

82.2

%

76.0

%

80.9

%

77.4

%

Gross profit, professional services

$

2,558

$

1,254

$

11,339

$

8,681

Add back: Stock-based compensation

98

73

349

337

Gross profit, professional services, non-GAAP

$

2,656

$

1,327

$

11,688

$

9,018

As a percentage of professional services revenue

34.1

%

25.9

%

40.3

%

42.2

%

Gross profit, as reported

$

28,869

$

20,168

$

105,068

$

78,816

Add back: Stock-based compensation

186

172

712

839

Gross profit, non-GAAP

$

29,055

$

20,340

$

105,780

$

79,655

As percentage of revenue, non-GAAP

72.9

%

67.5

%

72.8

%

70.7

%

Research and development, as reported

$

13,496

$

11,911

$

50,466

$

44,145

Less: Stock-based compensation

635

314

1,924

1,757

Research and development, non-GAAP

$

12,861

$

11,597

$

48,542

$

42,388

As percentage of revenue, non-GAAP

32.2

%

38.5

%

33.4

%

37.6

%

Sales and marketing, as reported

$

18,632

$

14,063

$

69,569

$

53,498

Less: Stock-based compensation

484

352

1,727

1,241

Sales and marketing, non-GAAP

$

18,148

$

13,711

$

67,842

$

52,257

As percentage of revenue, non-GAAP

45.5

%

45.5

%

46.7

%

46.4

%

General and administrative, as reported

$

8,538

$

5,797

$

28,716

$

19,783

Less: Stock-based compensation

1,819

1,008

6,637

3,548

General and administrative, non-GAAP

$

6,719

$

4,789

$

22,079

$

16,235

As percentage of revenue, non-GAAP

16.8

%

15.9

%

15.2

%

14.4

%

Loss from operations

$

(11,797)

$

(11,603)

$

(43,683)

$

(38,610)

Add back: Stock-based compensation

3,124

1,846

11,000

7,385

Loss from operations, non-GAAP

$

(8,673)

$

(9,757)

$

(32,683)

$

(31,225)

As percentage of revenue, non-GAAP

(21.7)

%

(32.4)

%

(22.5)

%

(27.7)

%

Net loss

$

(10,293)

$

(12,657)

$

(43,399)

$

(41,154)

Add back: Stock-based compensation

3,124

1,846

11,000

7,385

Net loss, non-GAAP

$

(7,169)

$

(10,811)

$

(32,399)

$

(33,769)

As percentage of revenue, non-GAAP

(18.0)

%

(35.9)

%

(22.3)

%

(30.0)

%

Net loss per share, non-GAAP:

Basic and diluted, non-GAAP

$

(0.18)

$

(0.33)

$

(0.81)

$

(1.05)

Weighted average common shares outstanding - basic and diluted, non-GAAP

40,204,367

33,117,423

39,852,624

32,156,060

 

TABLE II

WORKIVA INC.

RECONCILIATION OF NON-GAAP GUIDANCE

(in thousands, except share and per share data)

Three months ending

March 31, 2016

Year ending December 31, 2016

Loss from operations, GAAP range

$

(13,900)

-

$

(14,400)

$

(60,800)

-

$

(63,800)

Add back: Stock-based compensation

3,500

3,500

14,800

14,800

Loss from operations, non-GAAP range

$

(10,400)

-

$

(10,900)

$

(46,000)

-

$

(49,000)

Net loss per share, GAAP range

$

(0.35)

-

$

(0.37)

$

(1.52)

-

$

(1.59)

Add back: Stock-based compensation

0.09

0.09

0.36

0.36

Net loss per share, non-GAAP range

$

(0.26)

-

$

(0.28)

$

(1.16)

-

$

(1.23)

Weighted average common shares outstanding - basic and diluted

40,500,000

40,500,000

41,000,000

41,000,000

Logo - http://photos.prnewswire.com/prnh/20150213/175372LOGO

SOURCE Workiva Inc.



RELATED LINKS

http://workiva.com