Workiva Announces Second Quarter 2015 Financial Results

Total Quarterly Revenue of $34 million, up 28% from Q2 of 2014

Aug 05, 2015, 16:05 ET from Workiva Inc.

AMES, Iowa, Aug. 5, 2015 /PRNewswire/ -- Workiva Inc. (NYSE: WK), creator of the Wdesk cloud-based productivity platform for enterprises, today announced financial results for its second quarter ended June 30, 2015 and increased its full-year 2015 revenue guidance.

"We had a strong second quarter with 28% revenue growth over the same quarter last year," said Matt Rizai, Chairman and Chief Executive Officer of Workiva. "We continued to add Wdesk customers and seats across all of our solutions, including Sarbanes-Oxley (SOX) and SEC compliance, risk processes and management reporting."

"We now have more than 200 SOX customers, which indicates our growth in a market that spans across organizations," Rizai added. "The unique capabilities of Wdesk that appeal to the SOX market are also attracting many new users to our platform who work in the areas of Governance, Risk and Compliance (GRC), including related policies and procedures, audit, and risk and controls management."

The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation.

Second Quarter 2015 Financial Highlights

  • Revenue: Total revenue for the quarter ended June 30, 2015 was $34.0 million, an increase of 28.1% from $26.5 million in the second quarter of 2014. Subscription and support revenue was $28.1 million, an increase of 27.8% versus results in the second quarter of 2014. Professional services revenue was $5.9 million, an increase of 29.4% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the quarter ended June 30, 2015 was $24.2 million compared with $18.6 million in the same quarter of the prior year. GAAP gross margin was 71.3% in the second quarter of 2015 versus 70.2% in the second quarter of 2014. Non-GAAP gross profit for the quarter ended June 30, 2015 was $24.4 million, an increase of 30.2% compared with the prior year's second quarter, and non-GAAP gross margin was 71.8% compared to 70.7% in the second quarter of 2014.
  • Loss from Operations: GAAP loss from operations for the quarter ended June 30, 2015 was $10.6 million compared with a loss of $10.1 million in the prior year's second quarter. Non-GAAP loss from operations for the quarter ended June 30, 2015 was $8.0 million, compared with non-GAAP loss from operations of $7.9 million in the second quarter of 2014.
  • Net Loss: GAAP net loss for the quarter ended June 30, 2015 was $11.0 million compared with a net loss of $10.6 million for the prior year's second quarter. GAAP net loss per basic and diluted share for the quarter ended June 30, 2015 was $0.28, based on 39.6 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.33, based on 31.9 million weighted-average shares outstanding in the second quarter of 2014.
  • Non-GAAP net loss for the quarter ended June 30, 2015 was $8.4 million compared with a net loss of $8.4 million in the prior year's second quarter. Non-GAAP net loss per basic and diluted share for the quarter ended June 30, 2015 was $0.21, based on 39.6 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.26, based on 31.9 million weighted-average shares outstanding in the second quarter of 2014.
  • Balance Sheet: As of June 30, 2015, Workiva had cash and cash equivalents of $86.4 million, compared with $89.9 million as of March 31, 2015. Debt, including capital lease and financing obligations, totaled $24.2 million as of June 30, 2015.
  • Cash Flow: Net cash used in operating activities was $11.8 million for the six months ended June 30, 2015, compared to cash provided by operating activities of $5.7 million in the first half of 2014.

Operating Metrics

  • Customers: Workiva had 2,390 customers as of June 30, 2015, a net increase of 287 customers from 2,103 as of June 30, 2014.
  • Revenue Retention Rate: As of June 30, 2015, Workiva's revenue retention rate (excluding add-on revenue) was 96.3%, and the revenue retention rate (including add-on revenue) was 108.4%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook

As of August 5, 2015, Workiva is raising its revenue guidance for the full year 2015, while our loss and loss per share guidance are unchanged for the full year 2015. Workiva is also providing guidance for its third quarter 2015 as follows:

Third Quarter 2015 Guidance:

  • Total revenue is expected to be in the range of $35.1 million to $35.6 million.
  • Non-GAAP loss from operations is expected to be in the range of $14.1 million to $14.6 million.
  • GAAP loss from operations is expected to be in the range of $17.2 million to $17.7 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.36 to $0.37.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.44 to $0.45.
  • Net loss per basic and diluted share is based on 40 million weighted-average shares outstanding.

Full Year 2015 Guidance:

  • Total revenue is expected to be in the range of $141.5 million to $143.0 million, compared with the prior outlook for revenue of $140.5 million to $142.5 million.
  • Non-GAAP loss from operations is expected to be in the range of $36.0 million to $38.0 million, unchanged from the prior outlook for non-GAAP loss from operations.
  • GAAP loss from operations is expected to be in the range of $47.0 million to $49.0 million, unchanged from the prior outlook for GAAP loss from operations.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.90 to $0.95, unchanged from the prior outlook for non-GAAP net loss per basic and diluted share.
  • GAAP net loss per basic and diluted share is expected to be in the range of $1.17 to $1.22, unchanged from the prior outlook for GAAP net loss per basic and diluted share.
  • Net loss per basic and diluted share continues to be based on 40 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 second quarter of 2015, in addition to discussing the Company's outlook for the third quarter and full year 2015. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 76866145. 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 August 12, 2015 at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 76866145. 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 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 for risk, compliance or management reporting. Wdesk 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 1,000 people with offices in 15 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. AND SUBSIDIARIES

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Revenue

Subscription and support

$

28,085

$

21,968

$

54,354

$

42,616

Professional services

5,883

4,546

14,768

12,030

Total revenue

33,968

26,514

69,122

54,646

Cost of revenue

Subscription and support (1)

5,564

5,029

11,449

9,698

Professional services (1)

4,189

2,882

7,966

5,680

Total cost of revenue

9,753

7,911

19,415

15,378

Gross profit

24,215

18,603

49,707

39,268

Operating expenses

Research and development (1)

12,196

10,772

24,204

21,059

Sales and marketing (1)

16,329

12,747

30,034

23,187

General and administrative (1)

6,291

5,186

13,025

9,414

Total operating expenses

34,816

28,705

67,263

53,660

Loss from operations

(10,601)

(10,102)

(17,556)

(14,392)

Interest expense

(513)

(316)

(1,023)

(581)

Other income and (expense), net

191

(145)

125

(142)

Loss before income tax expense

(10,923)

(10,563)

(18,454)

(15,115)

Income tax expense

106

22

Net loss

$

(11,029)

$

(10,563)

$

(18,476)

$

(15,115)

Net loss per common share:

Basic and diluted

$

(0.28)

$

(0.33)

$

(0.47)

$

(0.48)

Weighted average common shares outstanding - basic and diluted

39,627,842

31,850,307

39,610,905

31,809,382

(1) Includes stock-based compensation expense as follows:

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Cost of revenue

Subscription and support

$

87

$

85

$

183

$

315

Professional services

89

47

161

217

Operating expenses

Research and development

369

337

703

1,102

Sales and marketing

432

251

782

601

General and administrative

1,643

1,450

2,965

1,891

 

WORKIVA INC. AND SUBSIDIARIES

 

CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30, 2015

December 31, 2014

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

86,432

$

101,131

Accounts receivable, net

12,452

11,120

Deferred commissions

738

852

Other receivables

907

295

Prepaid expenses and other current assets

3,064

3,143

Total current assets

103,593

116,541

Restricted cash

401

Property and equipment, net

46,226

46,265

Intangible assets, net

812

549

Other assets

699

795

Total assets

$

151,330

$

164,551

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

3,875

$

3,011

Accrued expenses and other current liabilities

13,830

16,765

Deferred revenue

47,786

42,605

Deferred government grant obligation

2,642

2,324

Current portion of capital lease and financing obligations

2,072

1,941

Current portion of long-term debt

35

84

Total current liabilities

70,240

66,730

Deferred revenue

10,262

13,671

Deferred government grant obligation

3,147

3,424

Other long-term liabilities

3,049

2,069

Capital lease and financing obligations

21,982

22,747

Long-term debt

73

91

Total liabilities

108,753

108,732

Stockholders' equity

Common stock

40

39

Additional paid-in-capital

194,356

189,168

Accumulated deficit

(152,011)

(133,535)

Accumulated other comprehensive income

192

147

Total stockholders' equity

42,577

55,819

Total liabilities and stockholders' equity

$

151,330

$

164,551

 

WORKIVA INC. AND SUBSIDIARIES

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Cash flows from operating activities

Net loss

$

(11,029)

$

(10,563)

$

(18,476)

$

(15,115)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities

Depreciation and amortization

1,127

852

2,296

1,620

Stock-based compensation expense

2,620

2,169

4,794

4,126

Provision for (recovery of) doubtful accounts

52

(100)

126

24

Realized losses on sale of available-for-sale securities

136

136

Recognition of deferred government grant obligation

(206)

(12)

(272)

(12)

Changes in assets and liabilities:

Accounts receivable

(584)

3,854

(1,495)

4,378

Deferred commissions

(32)

(178)

113

(210)

Other receivables

(424)

74

(612)

132

Prepaid expenses and other

(65)

(347)

79

(1,173)

Other assets

38

94

36

Accounts payable

1,262

1,002

1,419

(1,356)

Deferred revenue

2,514

5,156

1,842

12,306

Accrued expenses and other liabilities

2,046

2,139

(1,846)

782

Change in restricted cash

73

101

54

Net cash (used in) provided by operating activities

(2,608)

4,182

(11,837)

5,728

Cash flows from investing activities:

Purchase of property and equipment

(159)

(3,526)

(1,030)

(5,276)

Sale of marketable securities

4,864

4,864

Purchase of intangible assets

(195)

(98)

(278)

(116)

Net cash (used in) provided by investing activities

(354)

1,240

(1,308)

(528)

 

WORKIVA INC. AND SUBSIDIARIES

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Cash flows from financing activities:

Payment of equity issuance costs

(273)

(1,346)

Proceeds from option exercises

353

187

433

205

Changes in restricted cash

(300)

300

(300)

Repayment of other long-term debt

(42)

(48)

(67)

(102)

Principal payments on capital lease and financing obligations

(483)

(294)

(1,161)

(465)

Distributions to members

(35)

(34)

(35)

(34)

Proceeds from borrowings on line of credit

8

20

Proceeds from government for training reimbursement

4

138

Repayment of line of credit

(2,038)

(2,038)

Government grant awards

313

2,000

Net cash used in financing activities

(480)

(2,515)

(1,563)

(576)

Effect of foreign exchange rates on cash

(19)

(29)

9

(4)

Net (decrease) increase in cash and cash equivalents

(3,461)

2,878

(14,699)

4,620

Cash and cash equivalents at beginning of period

89,893

17,257

101,131

15,515

Cash and cash equivalents at end of period

$

86,432

$

20,135

$

86,432

$

20,135

 

TABLE I

WORKIVA INC.

RECONCILIATION OF NON-GAAP INFORMATION

(in thousands, except share and per share data)

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

Gross profit, subscription and support

$

22,521

$

16,939

$

42,905

$

32,918

Add back: Stock-based compensation

87

85

183

315

Gross profit, subscription and support, non-GAAP

$

22,608

$

17,024

$

43,088

$

33,233

As a percentage of subscription and support revenue

80.5

%

77.5

%

79.3

%

78.0

%

Gross profit, professional services

$

1,694

$

1,664

$

6,802

$

6,350

Add back: Stock-based compensation

89

47

161

217

Gross profit, professional services, non-GAAP

$

1,783

$

1,711

$

6,963

$

6,567

As a percentage of professional services revenue

30.3

%

37.6

%

47.1

%

54.6

%

Gross profit, as reported

$

24,215

$

18,603

$

49,707

$

39,268

Add back: Stock-based compensation

176

132

344

532

Gross profit, non-GAAP

$

24,391

$

18,735

$

50,051

$

39,800

As percentage of revenue, non-GAAP

71.8

%

70.7

%

72.4

%

72.8

%

Research and development, as reported

$

12,196

$

10,772

$

24,204

$

21,059

Less: Stock-based compensation

369

337

703

1,102

Research and development, non-GAAP

$

11,827

$

10,435

$

23,501

$

19,957

As percentage of revenue, non-GAAP

34.8

%

39.4

%

34.0

%

36.5

%

Sales and marketing, as reported

$

16,329

$

12,747

$

30,034

$

23,187

Less: Stock-based compensation

432

251

782

601

Sales and marketing, non-GAAP

$

15,897

$

12,496

$

29,252

$

22,586

As percentage of revenue, non-GAAP

46.8

%

47.1

%

42.3

%

41.3

%

General and administrative, as reported

$

6,291

$

5,186

$

13,025

$

9,414

Less: Stock-based compensation

1,643

1,450

2,965

1,891

General and administrative, non-GAAP

$

4,648

$

3,736

$

10,060

$

7,523

As percentage of revenue, non-GAAP

13.7

%

14.1

%

14.6

%

13.8

%

Loss from operations

$

(10,601)

$

(10,102)

$

(17,556)

$

(14,392)

Add back: Stock-based compensation

2,620

2,170

4,794

4,126

Operating loss, non-GAAP

$

(7,981)

$

(7,932)

$

(12,762)

$

(10,266)

As percentage of revenue, non-GAAP

(23.5)%

(29.9)%

(18.5)%

(18.8)%

Net loss

$

(11,029)

$

(10,563)

$

(18,476)

$

(15,115)

Add back: Stock-based compensation

2,620

2,170

4,794

4,126

Net loss, non-GAAP

$

(8,409)

$

(8,393)

$

(13,682)

$

(10,989)

As percentage of revenue, non-GAAP

(24.8)%

(31.7)%

(19.8)%

(20.1)%

Net loss per share, non-GAAP:

Basic and diluted, non-GAAP

$

(0.21)

$

(0.26)

$

(0.35)

$

(0.35)

Weighted average common shares outstanding - basic and diluted

39,627,842

31,850,307

39,610,905

31,809,382

 

TABLE II

WORKIVA INC.

RECONCILIATION OF NON-GAAP GUIDANCE

(in thousands, except share and per share data)

Three months ending

September 30, 2015

Year ending

December 31, 2015

Loss from operations, GAAP range

$

(17,200)

-

$

(17,700)

$

(47,000)

-

$

(49,000)

Add back: Stock-based compensation

3,100

3,100

11,000

11,000

Loss from operations, non-GAAP range

$

(14,100)

-

$

(14,600)

$

(36,000)

-

$

(38,000)

Net loss per share, GAAP range

$

(0.44)

-

$

(0.45)

$

(1.17)

-

$

(1.22)

Add back: Stock-based compensation

0.08

0.08

0.27

0.27

Net loss per share, non-GAAP range

$

(0.36)

-

$

(0.37)

$

(0.90)

-

$

(0.95)

Weighted average common shares outstanding - basic and diluted

40,000,000

40,000,000

40,000,000

40,000,000

 

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SOURCE Workiva Inc.



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