Workiva Announces Second Quarter 2015 Financial Results

August 5, 2015

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

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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