Workiva Announces Second Quarter 2016 Financial Results

August 3, 2016

Q2 Revenue of $43.0 million, Up 27% from Q2 of 2015

AMES, Iowa, Aug. 3, 2016 /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, 2016 and increased its full-year 2016 guidance.

"We posted strong results in the second quarter, highlighted by 27% revenue growth over the same quarter last year," said Matt Rizai, Chairman and Chief Executive Officer of Workiva. "We outperformed our guidance for quarterly revenue, operating loss and loss per share."

"We continue to sign new Wdesk customers as well as add seats at existing customers for a growing number of use cases that should position us well for the second half of 2016," said Rizai.

"We are making good progress on our path to positive operating cash flow," said Rizai. "We expect annual cash usage from operations to improve for the full year 2016, as compared to full year 2015. We also expect annual cash usage from operations to improve further in 2017."

Second Quarter 2016 Financial Highlights

 

  • Revenue: Total revenue for the quarter ended June 30, 2016 was $43.0 million, an increase of 26.6% from $34.0 million in the second quarter of 2015. Subscription and support revenue was $35.0 million, an increase of 24.5% versus results in the second quarter of 2015. Professional services revenue was $8.0 million, an increase of 36.7% compared to the same quarter in the prior year.
  • Gross Profit: GAAP gross profit for the quarter ended June 30, 2016 was $30.4 million compared with $24.2 million in the same quarter of the prior year. GAAP gross margin was 70.8% in the second quarter of 2016 versus 71.3% in the second quarter of 2015. Non-GAAP gross profit for the quarter ended June 30, 2016 was $30.7 million, an increase of 25.7% compared with the prior year's second quarter, and non-GAAP gross margin was 71.3% compared to 71.8% in the second quarter of 2015.
  • Loss from Operations: GAAP loss from operations for the quarter ended June 30, 2016 was $11.3 million compared with a loss of $10.6 million in the prior year's second quarter. Non-GAAP loss from operations for the quarter ended June 30, 2016 was $7.8 million, compared with non-GAAP loss from operations of $8.0 million in the second quarter of 2015. Non-GAAP loss from operations as a percentage of revenue improved 530 basis points for the quarter ended June 30, 2016 compared to the second quarter of 2015.
  • Net Loss: GAAP net loss for the quarter ended June 30, 2016 was $11.5 million compared with a net loss of $11.0 million for the prior year's second quarter. GAAP net loss per basic and diluted share for the quarter ended June 30, 2016 was $0.28, based on 40.6 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.28, based on 39.6 million weighted-average shares outstanding in the second quarter of 2015.
  • Non-GAAP net loss for the quarter ended June 30, 2016 was $8.0 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, 2016 was $0.20, based on 40.6 million weighted-average shares outstanding, compared with a net loss per basic and diluted share of $0.21, based on 39.6 million weighted-average shares outstanding in the second quarter of 2015.

Operating Metrics

 

  • Customers: Workiva had 2,622 customers as of June 30, 2016, a net increase of 232 customers from June 30, 2015.
  • Revenue Retention Rate: As of June 30, 2016, Workiva's revenue retention rate (excluding add-on revenue) was 95.1%, and the revenue retention rate including add-on revenue was 110.2%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Financial Outlook
As of August 3, 2016, Workiva is providing guidance for its third quarter 2016 and raising guidance for the full year 2016 as follows:

Third Quarter 2016 Guidance:

 

  • Total revenue is expected to be in the range of $44.5 million to $45.0 million.
  • Non-GAAP loss from operations is expected to be in the range of $13.4 million to $13.9 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 $0.34 to $0.35.
  • GAAP net loss per basic and diluted share is expected to be in the range of $0.43 to $0.44.
  • Net loss per basic and diluted share is based on 40.8 million weighted-average shares outstanding.

Full Year 2016 Guidance:

 

  • Total revenue is expected to be in the range of $180.5 million to $181.5 million.
  • Non-GAAP loss from operations is expected to be in the range of $38.5 million to $39.5 million.
  • GAAP loss from operations is expected to be in the range of $52.9 million to $53.9 million.
  • Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.96 to $0.99.
  • GAAP net loss per basic and diluted share is expected to be in the range of $1.31 to $1.34.
  • Net loss per basic and diluted share is based on 40.8 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 2016, in addition to discussing the Company's outlook for the third quarter and full year 2016. To access this call, dial 877-201-0168 (domestic) or 647-788-4901 (international). The conference ID is 40734346. 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 10, 2016 at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 40734346. 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 1,200 people with offices in 16 cities. The company is headquartered in Ames, Iowa. For more information, visit workiva.com.

Claim not confirmed by FORTUNE or Time Inc. FORTUNE 500 is a registered trademark of Time Inc. and is used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Workiva Inc.

Non-GAAP Financial Measures
The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation. A reconciliation of GAAP to non-GAAP historical financial measures has been provided in Table I at the end of this press release. A reconciliation of GAAP to non-GAAP guidance has been provided in Table II at the end of this press release.

Workiva believes that the use of non-GAAP gross profit and gross margin, non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss per share is helpful to its investors. These measures, which are referred to as non-GAAP financial measures, are not prepared in accordance with generally accepted accounting principles in the United States, or GAAP. Non-GAAP gross profit is calculated by excluding stock-based compensation expense attributable to cost of revenues from gross profit. Non-GAAP gross margin is the ratio calculated by dividing non-GAAP gross profit by revenues. Non-GAAP loss from operations is calculated by excluding stock-based compensation expense from loss from operations. Non-GAAP net loss is calculated by excluding stock-based compensation expense, net of tax, from net loss. Non-GAAP net loss per share is calculated by dividing non-GAAP net loss by the weighted- average shares outstanding as presented in the calculation of GAAP net loss per share. Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company's non-cash expenses, Workiva believes that providing non-GAAP financial measures that exclude stock-based compensation expense allows for more meaningful comparisons between its operating results from period to period. Workiva's management uses these non-GAAP financial measures as tools for financial and operational decision making and for evaluating Workiva's own operating results over different periods of time.

Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in Workiva's industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on Workiva's reported financial results. Further, stock-based compensation expense has been and will continue to be for the foreseeable future a significant recurring expense in Workiva's business and an important part of the compensation provided to its employees. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. Investors should review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included below, and not rely on any single financial measure to evaluate Workiva's business.

Safe Harbor Statement
Certain statements in this press release are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company's future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In particular, statements about the Company's expectations, beliefs, plans, objectives, assumptions, future events or future performance contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "estimate," "predict," "potential," "outlook," "guidance" or the negative of those terms or other comparable terminology.

Please see the Company's documents filed or to be filed with the Securities and Exchange Commission, including the Company's annual reports filed on Form 10-K and quarterly reports on Form 10-Q, and any amendments thereto for a discussion of certain important risk factors that relate to forward-looking statements contained in this report. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company's control. These and other important factors may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Any forward-looking statements are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


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 June 30,


Six months ended June 30,


2016


2015


2016


2015

Revenue








Subscription and support

$

34,969



$

28,085



$

68,554



$

54,354


Professional services

8,042



5,883



19,008



14,768


Total revenue

43,011



33,968



87,562



69,122


Cost of revenue








Subscription and support (1)

7,039



5,564



13,957



11,449


Professional services (1)

5,538



4,189



11,726



7,966


Total cost of revenue

12,577



9,753



25,683



19,415


Gross profit

30,434



24,215



61,879



49,707


Operating expenses








Research and development (1)

14,047



12,196



28,563



24,204


Sales and marketing (1)

19,828



16,329



39,916



30,034


General and administrative (1)

7,882



6,291



16,835



13,025


Total operating expenses

41,757



34,816



85,314



67,263


Loss from operations

(11,323)



(10,601)



(23,435)



(17,556)


Interest expense

(468)



(513)



(958)



(1,023)


Other income and (expense), net

278



191



854



125


Loss before provision for income taxes

(11,513)



(10,923)



(23,539)



(18,454)


Provision for income taxes

12



106



31



22


Net loss

$

(11,525)



$

(11,029)



$

(23,570)



$

(18,476)


Net loss per common share:








Basic and diluted

$

(0.28)



$

(0.28)



$

(0.58)



$

(0.47)


Weighted average common shares outstanding - basic and diluted

40,593,908



39,627,842



40,522,790



39,610,905



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

 



















Three months ended June 30,


Six months ended June 30,


2016


2015


2016


2015

Cost of revenue








Subscription and support

$

125



$

87



$

243



$

183


Professional services

93



89



215



161


Operating expenses








Research and development

609



369



1,193



703


Sales and marketing

449



432



904



782


General and administrative

2,226



1,643



4,337



2,965


 

WORKIVA INC.


UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands)










June 30, 2016


December 31, 2015


(unaudited)



Assets




Current assets




Cash and cash equivalents

$

39,885



$

58,750


Marketable securities

11,044



17,420


Accounts receivable, net

18,260



15,647


Deferred commissions

1,500



1,368


Other receivables

897



818


Prepaid expenses and other current assets

5,387



3,875


Total current assets

76,973



97,878


Property and equipment, net

43,619



44,410


Intangible assets, net

978



896


Other assets

1,126



711


Total assets

$

122,696



$

143,895


Liabilities and Stockholders' Equity

Current liabilities




Accounts payable

$

4,965



$

5,138


Accrued expenses and other current liabilities

14,697



20,394


Deferred revenue

57,291



55,741


Deferred government grant obligation

1,003



985


Current portion of capital lease and financing obligations

1,625



1,808


Current portion of long-term debt

20



18


Total current liabilities

79,601



84,084


Deferred revenue

8,340



7,597


Deferred government grant obligation

1,497



1,996


Other long-term liabilities

4,026



3,343


Capital lease and financing obligations

20,358



21,083


Long-term debt

53



73


Total liabilities

113,875



118,176


Stockholders' equity




Common stock

41



41


Additional paid-in-capital

209,022



202,371


Accumulated deficit

(200,504)



(176,934)


Accumulated other comprehensive income

262



241


Total stockholders' equity

8,821



25,719


Total liabilities and stockholders' equity

$

122,696



$

143,895


 

WORKIVA INC.


UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


















Three months ended June 30,


Six months ended June 30,


2016


2015


2016


2015

Cash flows from operating activities








Net loss

$

(11,525)



$

(11,029)



$

(23,570)



$

(18,476)


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








Depreciation and amortization

975



1,127



1,972



2,296


Stock-based compensation expense

3,502



2,620



6,892



4,794


Provision for doubtful accounts

48



52



170



126


Realized gain on sale of available-for-sale securities

(4)





(6)




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

36





75




Recognition of deferred government grant obligation

(230)



(206)



(663)



(272)


Deferred income tax

(12)





(12)




Changes in assets and liabilities:








Accounts receivable

(1,844)



(584)



(2,725)



(1,495)


Deferred commissions

(117)



(32)



(129)



113


Other receivables

142



(424)



(82)



(612)


Prepaid expenses and other

(1,327)



(65)



(1,513)



79


Other assets

(323)



38



(386)



94


Accounts payable

797



1,262



101



1,419


Deferred revenue

5,399



2,514



2,184



1,842


Accrued expenses and other liabilities

447



2,046



(5,422)



(1,846)


Change in restricted cash



73





101


Net cash used in operating activities

(4,036)



(2,608)



(23,114)



(11,837)


Cash flows from investing activities








Purchase of property and equipment

(597)



(159)



(1,009)



(1,030)


Purchase of marketable securities

(802)





(802)




Sale of marketable securities

2,404





7,197




Purchase of intangible assets

(59)



(195)



(114)



(278)


Net cash provided by (used in) investing activities

946



(354)



5,272



(1,308)


Cash flows from financing activities








Payment of equity issuance costs



(273)





(1,346)


Proceeds from option exercises

236



353



520



433


Taxes paid related to net share settlements of stock-based compensation awards





(761)




Changes in restricted cash







300


Repayment of other long-term debt

(18)



(42)



(18)



(67)


Principal payments on capital lease and financing obligations

(476)



(483)



(908)



(1,161)


Distributions to members



(35)





(35)


Proceeds from government grants





183



313


Payments of issuance costs on line of credit

(33)





(33)




Net cash used in financing activities

(291)



(480)



(1,017)



(1,563)


Effect of foreign exchange rates on cash

40



(19)



(6)



9


Net decrease in cash and cash equivalents

(3,341)



(3,461)



(18,865)



(14,699)


Cash and cash equivalents at beginning of period

43,226



89,893



58,750



101,131


Cash and cash equivalents at end of period

$

39,885



$

86,432



$

39,885



$

86,432


 

TABLE I

WORKIVA INC.

RECONCILIATION OF NON-GAAP INFORMATION

(in thousands, except share and per share


















Three months ended June 30,


Six months ended June 30,


2016


2015


2016


2015

Gross profit, subscription and support

$

27,930



$

22,521



$

54,597



$

42,905


Add back: Stock-based compensation

125



87



243



183


Gross profit, subscription and support, non-GAAP

$

28,055



$

22,608



$

54,840



$

43,088


As a percentage of subscription and support revenue, non-GAAP

80.2

%


80.5

%


80.0

%


79.3

%









Gross profit, professional services

$

2,504



$

1,694



$

7,282



$

6,802


Add back: Stock-based compensation

93



89



215



161


Gross profit, professional services, non-GAAP

$

2,597



$

1,783



$

7,497



$

6,963


As a percentage of professional services revenue, non-GAAP

32.3

%


30.3

%


39.4

%


47.1

%









Gross profit, as reported

$

30,434



$

24,215



$

61,879



$

49,707


Add back: Stock-based compensation

218



176



458



344


Gross profit, non-GAAP

$

30,652



$

24,391



$

62,337



$

50,051


As percentage of revenue, non-GAAP

71.3

%


71.8

%


71.2

%


72.4

%









Research and development, as reported

$

14,047



$

12,196



$

28,563



$

24,204


Less: Stock-based compensation

609



369



1,193



703


Research and development, non-GAAP

$

13,438



$

11,827



$

27,370



$

23,501


As percentage of revenue, non-GAAP

31.2

%


34.8

%


31.3

%


34.0

%









Sales and marketing, as reported

$

19,828



$

16,329



$

39,916



$

30,034


Less: Stock-based compensation

449



432



904



782


Sales and marketing, non-GAAP

$

19,379



$

15,897



$

39,012



$

29,252


As percentage of revenue, non-GAAP

45.1

%


46.8

%


44.6

%


42.3

%









General and administrative, as reported

$

7,882



$

6,291



$

16,835



$

13,025


Less: Stock-based compensation

2,226



1,643



4,337



2,965


General and administrative, non-GAAP

$

5,656



$

4,648



$

12,498



$

10,060


As percentage of revenue, non-GAAP

13.2

%


13.7

%


14.3

%


14.6

%









Loss from operations

$

(11,323)



$

(10,601)



$

(23,435)



$

(17,556)


Add back: Stock-based compensation

3,502



2,620



6,892



4,794


Loss from operations, non-GAAP

$

(7,821)



$

(7,981)



$

(16,543)



$

(12,762)


As percentage of revenue, non-GAAP

(18.2)%



(23.5)%



(18.9)%



(18.5)%










Net loss

$

(11,525)



$

(11,029)



$

(23,570)



$

(18,476)


Add back: Stock-based compensation

3,502



2,620



6,892



4,794


Net loss, non-GAAP

$

(8,023)



$

(8,409)



$

(16,678)



$

(13,682)


As percentage of revenue, non-GAAP

(18.7)%



(24.8)%



(19.0)%



(19.8)%










Net loss per basic and diluted share:

$

(0.28)



$

(0.28)



$

(0.58)



$

(0.47)


Add back: Stock-based compensation

0.08



0.07



0.17



0.12


Net loss per basic and diluted share, non-GAAP

$

(0.20)



$

(0.21)



$

(0.41)



$

(0.35)


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

40,593,908



39,627,842



40,522,790



39,610,905


 

TABLE II

WORKIVA INC.

RECONCILIATION OF NON-GAAP GUIDANCE

(in thousands, except share and per share data)


















Three months ending September 30, 2016


Year ending December 31, 2016









Loss from operations, GAAP range

$

(17,200)


-

$

(17,700)



$

(52,900)


-

$

(53,900)


Add back: Stock-based compensation

3,800



3,800



14,400



14,400


Loss from operations, non-GAAP range

$

(13,400)


-

$

(13,900)



$

(38,500)


-

$

(39,500)










Net loss per share, GAAP range

$

(0.43)


-

$

(0.44)



$

(1.31)


-

$

(1.34)


Add back: Stock-based compensation

0.09



0.09



0.35



0.35


Net loss per share, non-GAAP range

$

(0.34)


-

$

(0.35)



$

(0.96)


-

$

(0.99)










Weighted average common shares outstanding - basic and diluted

40,800,000



40,800,000



40,800,000



40,800,000


 

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SOURCE Workiva Inc.

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