Workiva Inc. Announces Second Quarter 2022 Financial Results

·16 min read
  • Increased Q2 2022 Subscription & Support Revenue by 24.3% over Q2 2021

  • Generated Total Q2 2022 Revenue of $131.5 Million, up 24.6% over Q2 2021

  • Achieved 28.4% YOY Growth of Customers with Annual Contract Value Over $150K

AMES, Iowa, August 09, 2022--(BUSINESS WIRE)--Workiva Inc. (NYSE:WK), the company powering transparent reporting for a better world, today announced financial results for its second quarter ended June 30, 2022.

"Our second quarter subscription & support and total revenue exceeded market expectations and we once again beat the high end of our guidance in revenue and operating results," said Marty Vanderploeg, Chief Executive Officer. "We added 123 net new logos for the Workiva platform, saw a 28% YOY increase in the number of customers with contract values over $150k, and achieved our highest revenue retention rate of 97.9%."

"We believe that the demand for regulatory software is consistent and durable. For the back half of 2022, we are maintaining our investment in our platform, purpose-built solutions, and talent in order to accelerate our growth and capture more of our large and relatively unaddressed TAM. However, we intend to balance this investment with a more prudent approach to our second half outlook," Vanderploeg added.

"We have increased our focus on operating leverage and have slowed the hiring plans for parts of our core business for the remainder of 2022. The balance between growth and operating leverage should lead to future margin improvement and we believe it will return Workiva to a quarterly operating profit on a Non-GAAP basis in the latter half of 2023," said Jill Klindt, Chief Financial Officer. "It is still early days in Workiva's growth story as we continue to capture more of the large and expanding business reporting market. We remain committed to strong, durable growth as we build Workiva into a billion dollar revenue company."

Second Quarter 2022 Financial Highlights

  • Revenue: Total revenue for the second quarter of 2022 reached $131.5 million, an increase of 24.6% from $105.6 million in the second quarter of 2021. Subscription and support revenue contributed $113.4 million, up 24.3% versus the second quarter of 2021. Professional services revenue was $18.2 million, an increase of 26.5% compared to the same quarter in the prior year.

  • Gross Profit: GAAP gross profit for the second quarter of 2022 was $99.3 million compared with $81.0 million in the same quarter of 2021. GAAP gross margin was 75.5% versus 76.7% in the second quarter of 2021. Non-GAAP gross profit for the second quarter of 2022 was $100.8 million, an increase of 22.9% compared with the prior year's second quarter, and non-GAAP gross margin was 76.6% compared to 77.7% in the second quarter of 2021.

  • Results from Operations: GAAP loss from operations for the second quarter of 2022 was $28.2 million compared with a loss of $5.7 million in the prior year's second quarter. Non-GAAP loss from operations was $8.3 million, compared with non-GAAP income from operations of $5.3 million in the second quarter of 2021.

  • GAAP Net Loss: GAAP net loss for the second quarter of 2022 was $28.9 million compared with a net loss of $9.5 million for the prior year's second quarter. GAAP net loss per basic and diluted share was $0.55 compared with a net loss per basic and diluted share of $0.19 in the second quarter of 2021.

  • Non-GAAP Net Loss/Income: Non-GAAP net loss for the second quarter of 2022 was $9.0 million compared with net income of $3.8 million in the prior year's second quarter. Non-GAAP net loss per basic and diluted share was $0.17, compared with net income per basic and diluted share of $0.07 in the second quarter of 2021.

  • Liquidity: As of June 30, 2022, Workiva had cash, cash equivalents, and marketable securities totaling $429.0 million, compared with $530.4 million as of December 31, 2021. Workiva had $345.0 million aggregate principal amount of 1.125% convertible senior notes due in 2026 and $15.8 million of finance lease obligations outstanding as of June 30, 2022.

Key Metrics and Recent Business Highlights

  • Customers: Workiva had 5,381 customers as of June 30, 2022, including approximately 850 ParsePort ESEF customers, a net increase of 1,432 customers from June 30, 2021.

  • Revenue Retention Rate: As of June 30, 2022, Workiva's revenue retention rate (excluding add-on revenue) was 97.9%, and the revenue retention rate including add-on revenue was 108.0%. Add-on revenue includes changes in both solutions and pricing for existing customers.

  • Large Contracts: As of June 30, 2022, Workiva had 1,186 customers with an annual contract value ("ACV") of more than $100,000, up 25% from 952 customers at June 30, 2021. Workiva had 642 customers with an ACV of more than $150,000, up 28% from 500 customers in the second quarter of 2021. Workiva had 194 customers with an ACV of more than $300,000, up 22% from 159 customers in the second quarter of 2021.

  • On April 1, 2022, Workiva acquired all of the issued and outstanding equity interests in Denmark-based ParsePort ApS ("ParsePort"), a leading solution provider for the European Single Electronic Format ("ESEF") financial reporting mandate, which complements Workiva's cloud platform.

Financial Outlook

As of August 9, 2022, Workiva is providing updated guidance as follows:

Third Quarter 2022 Guidance:

  • Total revenue is expected to be in the range of $132.0 million to $133.0 million.

  • GAAP loss from operations is expected to be in the range of $33.5 million to $32.5 million.

  • Non-GAAP loss from operations is expected to be in the range of $13.0 million to $12.0 million.

  • GAAP net loss per basic share is expected to be in the range of $0.66 to $0.64.

  • Non-GAAP net loss per basic share is expected to be in the range of $0.27 to $0.25.

  • Net loss per basic share is based on 53.1 million weighted-average shares outstanding.

Full Year 2022 Guidance:

  • Total revenue is expected to be in the range of $534.0 million to $536.0 million.

  • GAAP loss from operations is expected to be in the range of $103.5 million to $101.5 million.

  • Non-GAAP loss from operations is expected to be in the range of $27.0 million to $25.0 million.

  • GAAP net loss per basic share is expected to be in the range of $2.02 to $1.98.

  • Non-GAAP net loss per basic share is expected to be in the range of $0.57 to $0.53.

  • Net loss per basic share is based on 53.0 million weighted-average shares outstanding.

Quarterly Conference Call

Workiva will host a conference call today at 5:00 p.m. ET to review the Company’s financial results for the second quarter 2022, in addition to discussing the Company’s outlook for the third quarter and full year 2022. To access this call, dial 888-330-2469 (U.S. domestic) or 240-789-2740 (international). The conference ID is 8736384. 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 16, 2022, at 800-770-2030 (U.S. domestic) or 647-362-9199 (international). The replay pass code is 8736384. 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 Inc. (NYSE:WK) is on a mission to power transparent reporting for a better world. We build and deliver the world’s leading regulatory, financial, and ESG reporting solutions to meet stakeholder demands for action, transparency, and disclosure of financial and non-financial data. Our cloud-based platform simplifies the most complex reporting and disclosure challenges by streamlining processes, connecting data and teams, and ensuring consistency. Learn more at workiva.com.

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Non-GAAP Financial Measures

The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation and amortization of acquisition-related intangible assets. 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 income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (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 income (loss) from operations is calculated by excluding stock-based compensation expense and amortization expense for acquisition-related intangible assets from loss from operations. Non-GAAP net income (loss) is calculated by excluding stock-based compensation expense, net of tax, and amortization expense for acquisition-related intangible assets. Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (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. For business combinations, we generally allocate a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition and thus we do not believe it is reflective of ongoing operations. 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.

WORKIVA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

Three months ended June 30,

Six months ended June 30,

2022

2021

2022

2021

(unaudited)

Revenue

Subscription and support

$

113,353

$

91,205

$

220,473

$

176,141

Professional services

18,196

14,382

40,750

33,668

Total revenue

131,549

105,587

261,223

209,809

Cost of revenue

Subscription and support (1)

18,915

14,098

37,448

27,300

Professional services (1)

13,322

10,493

25,662

20,967

Total cost of revenue

32,237

24,591

63,110

48,267

Gross profit

99,312

80,996

198,113

161,542

Operating expenses

Research and development (1)

39,177

27,830

75,061

54,464

Sales and marketing (1)

64,219

41,525

120,319

82,560

General and administrative (1)

24,108

17,384

48,102

34,405

Total operating expenses

127,504

86,739

243,482

171,429

Loss from operations

(28,192

)

(5,743

)

(45,369

)

(9,887

)

Interest income

605

255

885

615

Interest expense

(1,512

)

(3,502

)

(3,030

)

(6,987

)

Other income (expense), net

668

(156

)

503

(540

)

Loss before provision for income taxes

(28,431

)

(9,146

)

(47,011

)

(16,799

)

Provision for income taxes

430

368

343

39

Net loss

$

(28,861

)

$

(9,514

)

$

(47,354

)

$

(16,838

)

Net loss per common share:

Basic and diluted

$

(0.55

)

$

(0.19

)

$

(0.90

)

$

(0.33

)

Weighted-average common shares outstanding - basic and diluted

52,850,470

51,065,867

52,724,051

50,657,264

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

Three months ended June 30,

Six months ended June 30,

2022

2021

2022

2021

(unaudited)

Cost of revenue

Subscription and support

$

912

$

597

$

1,702

$

1,093

Professional services

593

409

1,045

776

Operating expenses

Research and development

3,148

2,417

5,873

4,848

Sales and marketing

5,646

2,837

9,731

6,386

General and administrative

8,148

4,792

15,405

9,572

WORKIVA INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

June 30, 2022

December 31, 2021

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

226,253

$

300,386

Marketable securities

202,712

230,060

Accounts receivable, net

75,607

76,848

Deferred costs

29,992

31,152

Other receivables

2,949

3,538

Prepaid expenses and other

17,776

15,108

Total current assets

555,289

657,092

Property and equipment, net

27,331

28,821

Operating lease right-of-use assets

15,049

17,760

Deferred costs, non-current

34,826

33,091

Goodwill

109,040

34,556

Intangible assets, net

30,162

10,434

Other assets

5,061

5,005

Total assets

$

776,758

$

786,759

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

$

5,797

$

4,114

Accrued expenses and other current liabilities

85,863

84,126

Deferred revenue

272,731

258,023

Convertible senior notes, current

298,661

Finance lease obligations

936

1,575

Total current liabilities

365,327

646,499

Convertible senior notes, non-current

339,608

Deferred revenue, non-current

34,063

34,181

Other long-term liabilities

1,380

1,605

Operating lease liabilities, non-current

13,688

16,408

Finance lease obligations, non-current

14,838

15,087

Total liabilities

768,904

713,780

Stockholders’ equity

Common stock

52

51

Additional paid-in-capital

498,115

525,646

Accumulated deficit

(481,523

)

(452,430

)

Accumulated other comprehensive (loss) income

(8,790

)

(288

)

Total stockholders’ equity

7,854

72,979

Total liabilities and stockholders’ equity

$

776,758

$

786,759

WORKIVA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three months ended June 30,

Six months ended June 30,

2022

2021

2022

2021

(unaudited)

Cash flows from operating activities

Net loss

$

(28,861

)

$

(9,514

)

$

(47,354

)

$

(16,838

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

2,725

1,097

4,684

2,151

Stock-based compensation expense

18,447

11,052

33,756

22,675

Provision for (recovery of) doubtful accounts

20

17

(9

)

(101

)

Amortization of premiums and discounts on marketable securities, net

453

763

1,113

1,388

Amortization of issuance costs and debt discount

324

2,284

648

4,550

Deferred income tax

63

362

(148

)

16

Changes in assets and liabilities:

Accounts receivable

(4,844

)

(12,106

)

1,737

3,159

Deferred costs

(2,734

)

(9,018

)

(1,290

)

(10,077

)

Operating lease right-of-use asset

1,307

977

2,608

1,921

Other receivables

385

585

565

424

Prepaid expenses

(1,591

)

722

(2,723

)

(3,025

)

Other assets

12

(110

)

35

(683

)

Accounts payable

(2,300

)

(1,172

)

2,064

736

Deferred revenue

13,192

11,900

13,798

12,079

Operating lease liability

(1,302

)

(1,202

)

(2,644

)

(2,278

)

Accrued expenses and other liabilities

13,388

16,123

907

8,166

Net cash provided by operating activities

8,684

12,760

7,747

24,263

Cash flows from investing activities

Purchase of property and equipment

(671

)

(811

)

(1,203

)

(1,660

)

Purchase of marketable securities

(23,798

)

(51,217

)

(57,946

)

(94,872

)

Sale of marketable securities

250

14,981

250

Maturities of marketable securities

40,536

30,206

66,786

70,792

Acquisitions, net of cash acquired

(99,186

)

(99,186

)

Purchase of intangible assets

(6

)

(52

)

(46

)

(123

)

Other investments

(750

)

(750

)

Net cash used in investing activities

(83,125

)

(22,374

)

(76,614

)

(26,363

)

Cash flows from financing activities

Proceeds from option exercises

1,145