Workiva Announces Third Quarter 2015 Financial Results

Total Quarterly Revenue of $36 million, up 30% from Q3 of 2014

Nov 05, 2015, 16:17 ET from Workiva Inc.

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

"We had a strong third quarter with 30% 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 our customers' organizations for Sarbanes-Oxley (SOX) and SEC compliance, risk processes and management reporting."

"The efficiency of the Wdesk platform allows us to leverage new products into adjacent markets," said Rizai. "For example, advancements in our data platform for the SOX market are attracting users in the much larger Governance, Risk and Compliance (GRC) market."

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

Third Quarter 2015 Financial Highlights

  • Revenue: Total revenue for the quarter ended September 30, 2015 was $36.3 million, an increase of 29.9% from $27.9 million in the third quarter of 2014. Subscription and support revenue was $29.8 million, an increase of 25.9% versus results in the third quarter of 2014. Professional services revenue was $6.4 million, an increase of 52.2% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the quarter ended September 30, 2015 was $26.5 million compared with $19.4 million in the same quarter of the prior year. GAAP gross margin was 73.0% in the third quarter of 2015 versus 69.4% in the third quarter of 2014. Non-GAAP gross profit for the quarter ended September 30, 2015 was $26.7 million, an increase of 36.7% compared with the prior year's third quarter, and non-GAAP gross margin was 73.5% compared to 69.9% in the third quarter of 2014.
  • Loss from Operations: GAAP loss from operations for the quarter ended September 30, 2015 was $14.3 million compared with a loss of $12.6 million in the prior year's third quarter. Non-GAAP loss from operations for the quarter ended September 30, 2015 was $11.2 million, compared with non-GAAP loss from operations of $11.2 million in the third quarter of 2014.
  • Net Loss: GAAP net loss for the quarter ended September 30, 2015 was $14.6 million compared with a net loss of $13.4 million for the prior year's third quarter. GAAP net loss per basic and diluted share for the quarter ended September 30, 2015 was $0.37, based on 40.0 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.42, based on 31.9 million weighted-average shares outstanding in the third quarter of 2014.
  • Non-GAAP net loss for the quarter ended September 30, 2015 was $11.5 million compared with a net loss of $12.0 million in the prior year's third quarter. Non-GAAP net loss per basic and diluted share for the quarter ended September 30, 2015 was $0.29, based on 40.0 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.38, based on 31.9 million weighted-average shares outstanding in the third quarter of 2014.
  • Balance Sheet: As of September 30, 2015, Workiva had cash, cash equivalents and marketable securities totaling $81.8 million, compared with $86.4 million as of June 30, 2015. Debt, including capital lease and financing obligations, totaled $23.6 million as of September 30, 2015.
  • Cash Flow: Net cash used in operating activities was $4.7 million for the three months ended September 30, 2015, compared to net cash used in operating activities of $4.6 million for the three months ended September 30, 2014.

Operating Metrics

  • Customers: Workiva had 2,468 customers as of September 30, 2015, a net increase of 292 customers from September 30, 2014.
  • Revenue Retention Rate: As of September 30, 2015, Workiva's revenue retention rate (excluding add-on revenue) was 96.4%, and the revenue retention rate including add-on revenue was 107.7%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook

As of November 5, 2015, Workiva is providing guidance for its fourth quarter 2015 and raising guidance for the full year 2015, as follows:

Fourth Quarter 2015 Guidance:

  • Total revenue is expected to be in the range of $37.6 million to $38.1 million.
  • Non-GAAP loss from operations is expected to be in the range of $10.8 million to $11.3 million.
  • GAAP loss from operations is expected to be in the range of $14.0 million to $14.5 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.24 to $0.25.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.32 to $0.33.
  • 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 $143.0 million to $143.5 million, compared with the prior outlook for revenue of $141.5 million to $143.0 million.
  • Non-GAAP loss from operations is expected to be in the range of $34.8 million to $35.3 million, compared with the prior outlook for non-GAAP loss from operations of $36.0 million to $38.0 million.
  • GAAP loss from operations is expected to be in the range of $45.9 million to $46.4 million, compared with the prior outlook for GAAP loss from operations of $47.0 million to $49.0 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.87 to $0.88, compared with the prior outlook for non-GAAP net loss per basic and diluted share of $0.90 to $0.95.
  • GAAP net loss per basic and diluted share is expected to be in the range of $1.15 to $1.16, compared with the prior outlook for GAAP net loss per basic and diluted share of $1.17 to $1.22.
  • 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 third quarter of 2015, in addition to discussing the Company's outlook for the fourth quarter and full year 2015. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 50167406. 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 12, 2015 at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 50167406. 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 September 30,

Nine months ended September 30,

2015

2014

2015

2014

Revenue

Subscription and support

$

29,832

$

23,690

$

84,186

$

66,306

Professional services

6,436

4,229

21,204

16,259

Total revenue

36,268

27,919

105,390

82,565

Cost of revenue

Subscription and support (1)

5,319

5,387

16,768

15,085

Professional services (1)

4,457

3,152

12,423

8,832

Total cost of revenue

9,776

8,539

29,191

23,917

Gross profit

26,492

19,380

76,199

58,648

Operating expenses

Research and development (1)

12,766

11,175

36,970

32,234

Sales and marketing (1)

20,903

16,248

50,937

39,435

General and administrative (1)

7,153

4,572

20,178

13,986

Total operating expenses

40,822

31,995

108,085

85,655

Loss from operations

(14,330)

(12,615)

(31,886)

(27,007)

Interest expense

(494)

(700)

(1,517)

(1,281)

Other income and (expense), net

163

(67)

288

(209)

Loss before income tax benefit

(14,661)

(13,382)

(33,115)

(28,497)

Income tax benefit

(31)

(9)

Net loss

$

(14,630)

$

(13,382)

$

(33,106)

$

(28,497)

Net loss per common share:

Basic and diluted

$

(0.37)

$

(0.42)

$

(0.83)

$

(0.90)

Weighted average common shares outstanding - basic and diluted

39,980,308

31,889,795

39,735,393

31,836,479

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

 

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

Cost of revenue

Subscription and support

$

92

$

88

$

275

$

403

Professional services

90

47

251

264

Operating expenses

Research and development

586

341

1,289

1,443

Sales and marketing

461

288

1,243

889

General and administrative

1,853

649

4,818

2,540

 

 

WORKIVA INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands)

September 30, 2015

December 31, 2014

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

69,094

$

101,131

Marketable securities

12,659

Accounts receivable, net

12,133

11,120

Deferred commissions

953

852

Other receivables

951

295

Prepaid expenses and other current assets

3,282

3,143

Total current assets

99,072

116,541

Restricted cash

401

Property and equipment, net

45,754

46,265

Intangible assets, net

868

549

Other assets

626

795

Total assets

$

146,320

$

164,551

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

4,730

$

3,011

Accrued expenses and other current liabilities

17,228

16,765

Deferred revenue

51,047

42,605

Deferred government grant obligation

2,637

2,324

Current portion of capital lease and financing obligations

1,985

1,941

Current portion of long-term debt

18

84

Total current liabilities

77,645

66,730

Deferred revenue

8,584

13,671

Deferred government grant obligation

3,151

3,424

Other long-term liabilities

3,208

2,069

Capital lease and financing obligations

21,505

22,747

Long-term debt

73

91

Total liabilities

114,166

108,732

Stockholders' equity

Common stock

41

39

Additional paid-in-capital

198,499

189,168

Accumulated deficit

(166,641)

(133,535)

Accumulated other comprehensive income

255

147

Total stockholders' equity

32,154

55,819

Total liabilities and stockholders' equity

$

146,320

$

164,551

 

 

WORKIVA INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

Cash flows from operating activities

Net loss

$

(14,630)

$

(13,382)

$

(33,106)

$

(28,497)

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

Depreciation and amortization

1,058

1,132

3,354

2,752

Stock-based compensation expense

3,082

1,413

7,876

5,539

Provision for doubtful accounts

222

104

348

128

Accretion of discount on convertible notes

133

133

Paid-in-kind interest on convertible note

58

58

Change in fair value of derivative liability

48

48

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

(7)

(7)

136

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

32

32

Recognition of deferred government grant obligation

(236)

(39)

(508)

(51)

Changes in assets and liabilities:

Accounts receivable

47

(1,794)

(1,448)

2,584

Deferred commissions

(217)

(201)

(104)

(411)

Other receivables

(44)

108

(656)

240

Prepaid expenses and other

(218)

231

(139)

(942)

Other assets

72

(201)

166

(165)

Accounts payable

857

1,727

2,276

371

Deferred revenue

1,686

3,211

3,528

15,517

Accrued expenses and other liabilities

3,578

2,826

1,732

3,608

Change in restricted cash

101

54

Net cash (used in) provided by operating activities

(4,718)

(4,626)

(16,555)

1,102

Cash flows from investing activities

Purchase of property and equipment

(629)

(2,768)

(1,659)

(8,044)

Purchase of marketable securities

(15,692)

(15,692)

Sale of marketable securities

3,012

3,012

4,864

Purchase of intangible assets

(66)

(121)

(344)

(237)

Net cash used in investing activities

(13,375)

(2,889)

(14,683)

(3,417)

Cash flows from financing activities

Payment of equity issuance costs

(57)

(1,346)

(57)

Proceeds from issuance of convertible notes

5,000

5,000

Proceeds from option exercises

1,062

158

1,495

363

Changes in restricted cash

300

(300)

Repayment of other long-term debt

(17)

(96)

(84)

(198)

Principal payments on capital lease and financing obligations

(522)

(316)

(1,683)

(781)

Distributions to members

(17)

(35)

(51)

Proceeds from borrowings on line of credit

3,000

3,020

Proceeds from government for training reimbursement

56

194

Payments of issuance costs on line of credit

(99)

(99)

Repayment of line of credit

(2,038)

Government grant awards

235

548

2,000

Net cash provided by (used in) financing activities

758

7,629

(805)

7,053

Effect of foreign exchange rates on cash

(3)

26

6

22

Net (decrease) increase in cash and cash equivalents

(17,338)

140

(32,037)

4,760

Cash and cash equivalents at beginning of period

86,432

20,135

101,131

15,515

Cash and cash equivalents at end of period

$

69,094

$

20,275

$

69,094

$

20,275

 

 

TABLE I WORKIVA INC. RECONCILIATION OF NON-GAAP INFORMATION (in thousands, except share and per share data)

Three months ended September 30,

Nine months ended September 30,

2015

2014

2015

2014

Gross profit, subscription and support

$

24,513

$

18,303

$

67,418

$

51,221

Add back: Stock-based compensation

92

88

275

403

Gross profit, subscription and support, non-GAAP

$

24,605

$

18,391

$

67,693

$

51,624

As a percentage of subscription and support revenue

82.5

%

77.6

%

80.4

%

77.9

%

Gross profit, professional services

$

1,979

$

1,077

$

8,781

$

7,427

Add back: Stock-based compensation

90

47

251

264

Gross profit, professional services, non-GAAP

$

2,069

$

1,124

$

9,032

$

7,691

As a percentage of professional services revenue

32.1

%

26.6

%

42.6

%

47.3

%

Gross profit, as reported

$

26,492

$

19,380

$

76,199

$

58,648

Add back: Stock-based compensation

182

135

526

667

Gross profit, non-GAAP

$

26,674

$

19,515

$

76,725

$

59,315

As percentage of revenue, non-GAAP

73.5

%

69.9

%

72.8

%

71.8

%

Research and development, as reported

$

12,766

$

11,175

$

36,970

$

32,234

Less: Stock-based compensation

586

341

1,289

1,443

Research and development, non-GAAP

$

12,180

$

10,834

$

35,681

$

30,791

As percentage of revenue, non-GAAP

33.6

%

38.8

%

33.9

%

37.3

%

Sales and marketing, as reported

$

20,903

$

16,248

$

50,937

$

39,435

Less: Stock-based compensation

461

288

1,243

889

Sales and marketing, non-GAAP

$

20,442

$

15,960

$

49,694

$

38,546

As percentage of revenue, non-GAAP

56.4

%

57.2

%

47.2

%

46.7

%

General and administrative, as reported

$

7,153

$

4,572

$

20,178

$

13,986

Less: Stock-based compensation

1,853

649

4,818

2,540

General and administrative, non-GAAP

$

5,300

$

3,923

$

15,360

$

11,446

As percentage of revenue, non-GAAP

14.6

%

14.1

%

14.6

%

13.9

%

Loss from operations

$

(14,330)

$

(12,615)

$

(31,886)

$

(27,007)

Add back: Stock-based compensation

3,082

1,413

7,876

5,539

Operating loss, non-GAAP

$

(11,248)

$

(11,202)

$

(24,010)

$

(21,468)

As percentage of revenue, non-GAAP

(31.0)%

(40.1)%

(22.8)%

(26.0)%

Net loss

$

(14,630)

$

(13,382)

$

(33,106)

$

(28,497)

Add back: Stock-based compensation

3,082

1,413

7,876

5,539

Net loss, non-GAAP

$

(11,548)

$

(11,969)

$

(25,230)

$

(22,958)

As percentage of revenue, non-GAAP

(31.8)%

(42.9)%

(23.9)%

(27.8)%

Net loss per share, non-GAAP:

Basic and diluted, non-GAAP

$

(0.29)

$

(0.38)

$

(0.63)

$

(0.72)

Weighted average common shares outstanding - basic and diluted

39,980,308

31,889,795

39,735,393

31,836,479

 

 

TABLE II WORKIVA INC. RECONCILIATION OF NON-GAAP GUIDANCE (in thousands, except share and per share data)

Three months ending December 31, 2015

Year ending December 31, 2015

Loss from operations, GAAP range

$

(14,000)

-

$

(14,500)

$

(45,900)

-

$

(46,400)

Add back: Stock-based compensation

3,200

3,200

11,100

11,100

Loss from operations, non-GAAP range

$

(10,800)

-

$

(11,300)

$

(34,800)

-

$

(35,300)

Net loss per share, GAAP range

$

(0.32)

-

$

(0.33)

$

(1.15)

-

$

(1.16)

Add back: Stock-based compensation

0.08

0.08

0.28

0.28

Net loss per share, non-GAAP range

$

(0.24)

-

$

(0.25)

$

(0.87)

-

$

(0.88)

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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