- Increased Q3 2023 Subscription & Support Revenue by 21%
over Q3 2022
- Generated Total Q3 2023 Revenue of $158.2 Million, up 19% over
Q3 2022
- Achieved 38% YOY Growth of Customers with Annual Contract Value
Over $300K
Workiva Inc. (NYSE:WK), the world’s leading cloud platform for
assured, integrated reporting, today announced financial results
for its third quarter ended September 30, 2023.
"Workiva delivered another solid quarter, achieving subscription
revenue growth of 21% and an operating profit that beat the high
end of our guidance," said CEO Julie Iskow. "Our platform offering
continues to stand out from the SaaS crowd given that we solve
problems our customers must address. Companies need transparency.
They need to comply with regulation. And, they need accuracy in
reporting and disclosure. We provide solutions that they need in
good times and in challenging times."
Iskow added, "The value our platform provides was also
quantified by the continued large contract account expansion we saw
during the quarter. We continue to see outpaced growth in our large
contract customers. Compared to third quarter 2022, the number of
annual contracts valued over $100,000 increased 24%. Contracts
valued over $150,000 increased 26% and contracts over $300,000 were
up 38%."
"We were pleased with the strong increase we saw in net revenue
retention, which improved for the fourth consecutive quarter," said
CFO Jill Klindt. "With add-ons, our subscription revenue retention
rate increased to 112% compared to 107% for the third quarter 2022.
The main driver of this improvement is strong account expansion
activity."
"The operating profit we posted in the third quarter is a result
of our continued focus on growth and productivity. This focus has
helped us improve our operating leverage and stay committed to our
goal of delivering improved operating margins and non-GAAP
profitability for both 2023 and 2024," added Klindt.
Third Quarter 2023 Financial
Highlights
- Revenue: Total revenue for the third quarter of 2023
reached $158 million, an increase of 19% from $133 million in the
third quarter of 2022. Subscription and support revenue contributed
$143 million, up 21% versus the third quarter of 2022. Professional
services revenue was $15 million, a slight increase compared to the
same quarter in the prior year.
- Gross Profit: GAAP gross profit for the third quarter of
2023 was $120 million compared with $100 million in the same
quarter of 2022. GAAP gross margin was 75.8% versus 75.6% in the
third quarter of 2022. Non-GAAP gross profit for the third quarter
of 2023 was $122 million, an increase of 20% compared with the
prior year's third quarter, and non-GAAP gross margin was 76.9%
compared to 76.6% in the third quarter of 2022.
- Results from Operations: GAAP loss from operations for
the third quarter of 2023 was $16 million compared with a loss of
$30 million in the prior year's third quarter. Non-GAAP income from
operations was $5 million compared with a loss of $8 million in the
third quarter of 2022.
- GAAP Net Loss: GAAP net loss for the third quarter of
2023 was $56 million compared with a net loss of $30 million for
the prior year's third quarter. GAAP net loss per basic and diluted
share was $1.04 compared with a net loss per basic and diluted
share of $0.56 in the third quarter of 2022.
- Non-GAAP Net Loss: Non-GAAP net loss for the third
quarter of 2023 was $35 million compared with a loss of $8 million
in the prior year's third quarter. Non-GAAP net loss per basic
share and diluted share was $0.65 compared with a net loss per
basic and diluted share of $0.15 in the third quarter of 2022. In
connection with the 2026 note repurchase described below, we
recorded a loss on induced conversion of $45.1 million which was
recorded as interest expense.
- Liquidity: As of September 30, 2023, Workiva had cash,
cash equivalents, and marketable securities totaling $782 million,
compared with $431 million as of December 31, 2022. In August 2023,
we issued $702.0 million aggregate principal amount of 1.250%
convertible senior notes due in 2028. We used $396.9 million of the
net proceeds from the 2028 Notes offering to repurchase $273.8
million principal amount, together with accrued and unpaid interest
thereon, of our 2026 Notes. Workiva had $71 million aggregate
principal amount of 1.125% convertible senior notes due in 2026,
$702 million aggregate principal amount of 1.250% convertible
senior notes due in 2028 and $15 million of finance lease
obligations outstanding as of September 30, 2023.
Key Metrics and Recent Business
Highlights
- Customers: Workiva had 5,945 customers as of September
30, 2023, a net increase of 404 customers from September 30,
2022.
- Revenue Retention Rate: As of September 30, 2023,
Workiva's revenue retention rate (excluding add-on revenue) was
98%, and the revenue retention rate including add-on revenue was
112%. Add-on revenue includes changes in both solutions and pricing
for existing customers.
- Large Contracts: As of September 30, 2023, Workiva had
1,561 customers with an annual contract value (“ACV”) of more than
$100,000, up 24% from 1,257 customers at September 30, 2022.
Workiva had 851 customers with an ACV of more than $150,000, up 26%
from 676 customers in the third quarter of 2022. Workiva had 296
customers with an ACV of more than $300,000, up 38% from 214
customers in the third quarter of 2022.
Financial Outlook
As of October 30, 2023, Workiva is providing guidance as
follows:
Fourth Quarter 2023 Guidance:
- Total revenue is expected to be in the range of $164 million to
$165 million.
- GAAP loss from operations is expected to be in the range of $17
million to $16 million.
- Non-GAAP income from operations is expected to be in the range
of $6 million to $7 million.
- GAAP net loss per basic share is expected to be in the range of
$0.20 to $0.18.
- Non-GAAP net income per basic share is expected to be in the
range of $0.21 to $0.23.
- Net income (loss) per basic share is based on 54 million
weighted-average shares outstanding.
Full Year 2023 Guidance:
- Total revenue is expected to be in the range of $627 million to
$628 million.
- GAAP loss from operations is expected to be in the range of
$102 million to $101 million.
- Non-GAAP income from operations is expected to be in the range
of $3 million to $4 million.
- GAAP net loss per basic share is expected to be in the range of
$2.48 to $2.46.
- Non-GAAP net loss per basic share is expected to be in the
range of $0.54 to $0.52.
- Net income (loss) per basic share is based on 54 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 2023,
in addition to discussing the Company’s outlook for the fourth
quarter and full year 2023. 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 November 7, 2023, 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 cloud platform for assured, integrated reporting to meet
stakeholder demands for action, transparency, and disclosure of
financial and non-financial data. Workiva offers the only unified
SaaS platform that brings customers’ financial reporting,
Environmental, Social, and Governance (ESG), and Governance, Risk,
and Compliance (GRC) together in a controlled, secure, audit-ready
platform. Our platform simplifies the most complex reporting and
disclosure challenges by streamlining processes, connecting data
and teams, and ensuring consistency. Learn more at workiva.com.
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 from net loss. 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 September
30,
Nine months ended September
30,
2023
2022
2023
2022
(unaudited)
Revenue
Subscription and support
$
143,421
$
118,591
$
409,857
$
339,064
Professional services
14,754
14,258
53,529
55,008
Total revenue
158,175
132,849
463,386
394,072
Cost of revenue
Subscription and support (1)
24,864
19,235
74,080
56,683
Professional services (1)
13,491
13,184
42,297
38,846
Total cost of revenue
38,355
32,419
116,377
95,529
Gross profit
119,820
100,430
347,009
298,543
Operating expenses
Research and development (1)
41,747
38,583
130,235
113,644
Sales and marketing (1)
72,576
64,560
215,168
184,879
General and administrative (1)
21,022
27,405
86,660
75,507
Total operating expenses
135,345
130,548
432,063
374,030
Loss from operations
(15,525)
(30,118)
(85,054)
(75,487)
Interest income
7,294
1,440
15,546
2,325
Interest expense
(47,437)
(1,510)
(50,437)
(4,540)
Other (expense) and income, net
(71)
964
(1,450)
1,467
Loss before provision for income taxes
(55,739)
(29,224)
(121,395)
(76,235)
Provision for income taxes
530
467
1,934
810
Net loss
$
(56,269)
$
(29,691)
$
(123,329)
$
(77,045)
Net loss per common share:
Basic and diluted
$
(1.04)
$
(0.56)
$
(2.28)
$
(1.46)
Weighted-average common shares outstanding
- basic and diluted
54,256,941
53,081,564
53,987,791
52,844,532
(1) Includes stock-based compensation expense as follows:
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
(unaudited)
Cost of revenue
Subscription and support
$
1,247
$
855
$
3,732
$
2,557
Professional services
623
533
1,923
1,578
Operating expenses
Research and development
4,155
3,399
13,677
9,272
Sales and marketing
7,108
4,657
20,769
14,388
General and administrative
6,244
10,853
37,928
26,258
WORKIVA INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands)
September 30, 2023
December 31, 2022
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
404,885
$
240,197
Marketable securities
377,533
190,595
Accounts receivable, net
98,861
106,316
Deferred costs
36,953
38,350
Other receivables
7,017
6,674
Prepaid expenses and other
21,902
17,957
Total current assets
947,151
600,089
Property and equipment, net
25,102
27,096
Operating lease right-of-use assets
10,228
13,932
Deferred costs, non-current
28,816
33,682
Goodwill
108,851
109,740
Intangible assets, net
23,585
28,234
Other assets
5,395
6,847
Total assets
$
1,149,128
$
819,620
Liabilities and Stockholders’ (Deficit)
Equity
Current liabilities
Accounts payable
$
4,909
$
6,174
Accrued expenses and other current
liabilities
94,158
83,999
Deferred revenue
338,418
316,263
Finance lease obligations
525
504
Total current liabilities
438,010
406,940
Convertible senior notes, non-current
761,847
340,257
Deferred revenue, non-current
38,216
38,237
Other long-term liabilities
1,539
1,518
Operating lease liabilities,
non-current
9,023
12,102
Finance lease obligations, non-current
14,186
14,583
Total liabilities
1,262,821
813,637
Stockholders’ (deficit) equity
Common stock
54
53
Additional paid-in-capital
541,093
537,732
Accumulated deficit
(648,445)
(525,116)
Accumulated other comprehensive loss
(6,395)
(6,686)
Total stockholders’ (deficit) equity
(113,693)
5,983
Total liabilities and stockholders’
(deficit) equity
$
1,149,128
$
819,620
WORKIVA INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
(unaudited)
Cash flows from operating
activities
Net loss
$
(56,269)
$
(29,691)
$
(123,329)
$
(77,045)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
2,686
2,681
8,353
7,365
Stock-based compensation expense
19,377
20,297
78,029
54,053
Provision for doubtful accounts
8
91
57
82
Realized loss on sale of
available-for-sale securities, net
—
—
708
—
(Accretion) amortization of premiums and
discounts on marketable securities, net
(1,930)
129
(4,530)
1,242
Amortization of issuance costs and debt
discount
472
325
1,122
973
Induced conversion expense
45,144
—
45,144
—
Deferred income tax
(14)
57
(17)
(91)
Changes in assets and liabilities:
Accounts receivable
(15,234)
(7,927)
7,243
(6,190)
Deferred costs
3,116
(1,372)
6,248
(2,662)
Operating lease right-of-use asset
1,244
1,269
3,807
3,877
Other receivables
(1,556)
(527)
(1,842)
38
Prepaid expenses
3,452
3,593
(3,985)
870
Other assets
1,043
(1,140)
1,479
(1,105)
Accounts payable
(386)
3,931
(1,267)
5,995
Deferred revenue
11,120
14,775
22,225
28,573
Operating lease liability
(750)
(1,113)
(3,129)
(3,757)
Accrued expenses and other liabilities
3,468
(523)
10,217
384
Net cash provided by operating
activities
14,991
4,855
46,533
12,602
Cash flows from investing
activities
Purchase of property and equipment
(895)
(1,023)
(1,732)
(2,226)
Purchase of marketable securities
(144,989)
(41,618)
(322,008)
(99,564)
Sale of marketable securities
—
—
65,052
14,981
Maturities of marketable securities
36,906
40,071
76,811
106,857
Acquisitions, net of cash acquired
—
—
—
(99,186)
Purchase of intangible assets
(48)
(62)
(167)
(108)
Net cash used in investing activities
(109,026)
(2,632)
(182,044)
(79,246)
Cash flows from financing
activities
Proceeds from option exercises
1,120
625
3,324
2,595
Taxes paid related to net share
settlements of stock-based compensation awards
(984)
(738)
(9,424)
(10,652)
Proceeds from shares issued in connection
with employee stock purchase plan
6,967
4,038
12,513
9,256
Proceeds from the issuance of convertible
senior notes, net of issuance costs
691,113
—
691,113
—
Payments for repurchase of convertible
senior notes
(396,869)
—
(396,869)
—
Principal payments on finance lease
obligations
(127)
(454)
(376)
(1,342)
Net cash provided by (used in) financing
activities
301,220
3,471
300,281
(143)
Effect of foreign exchange rates on
cash
(1,239)
(2,450)
(82)
(4,102)
Net increase (decrease) in cash and cash
equivalents
205,946
3,244
164,688
(70,889)
Cash and cash equivalents at beginning of
period
198,939
226,253
240,197
300,386
Cash and cash equivalents at end of
period
$
404,885
$
229,497
$
404,885
$
229,497
TABLE I
WORKIVA INC.
RECONCILIATION OF NON-GAAP
INFORMATION
(in thousands, except share
and per share)
Three months ended September
30,
Nine months ended September
30,
2023
2022
2023
2022
Gross profit, subscription and support
$
118,557
$
99,356
$
335,777
$
282,381
Add back: Stock-based compensation
1,247
855
3,732
2,557
Gross profit, subscription and support,
non-GAAP
$
119,804
$
100,211
$
339,509
$
284,938
Gross profit, professional services
$
1,263
$
1,074
$
11,232
$
16,162
Add back: Stock-based compensation
623
533
1,923
1,578
Gross profit, professional services,
non-GAAP
$
1,886
$
1,607
$
13,155
$
17,740
Gross profit
$
119,820
$
100,430
$
347,009
$
298,543
Add back: Stock-based compensation
1,870
1,388
5,655
4,135
Gross profit, non-GAAP
$
121,690
$
101,818
$
352,664
$
302,678
Cost of revenue, subscription and
support
$
24,864
$
19,235
$
74,080
$
56,683
Less: Stock-based compensation
1,247
855
3,732
2,557
Cost of revenue, subscription and support,
non-GAAP
$
23,617
$
18,380
$
70,348
$
54,126
Cost of revenue, professional services
$
13,491
$
13,184
$
42,297
$
38,846
Less: Stock-based compensation
623
533
1,923
1,578
Cost of revenue, professional services,
non-GAAP
$
12,868
$
12,651
$
40,374
$
37,268
Research and development
$
41,747
$
38,583
$
130,235
$
113,644
Less: Stock-based compensation
4,155
3,399
13,677
9,272
Less: Amortization of acquisition-related
intangibles
891
876
2,668
2,240
Research and development, non-GAAP
$
36,701
$
34,308
$
113,890
$
102,132
Sales and marketing
$
72,576
$
64,560
$
215,168
$
184,879
Less: Stock-based compensation
7,108
4,657
20,769
14,388
Less: Amortization of acquisition-related
intangibles
598
587
1,805
1,373
Sales and marketing, non-GAAP
$
64,870
$
59,316
$
192,594
$
169,118
General and administrative
$
21,022
$
27,405
$
86,660
$
75,507
Less: Stock-based compensation
6,244
10,853
37,928
26,258
General and administrative, non-GAAP
$
14,778
$
16,552
$
48,732
$
49,249
Loss from operations
$
(15,525)
$
(30,118)
$
(85,054)
$
(75,487)
Add back: Stock-based compensation
19,377
20,297
78,029
54,053
Add back: Amortization of
acquisition-related intangibles
1,489
1,463
4,473
3,613
Income (loss) from operations,
non-GAAP
$
5,341
$
(8,358)
$
(2,552)
$
(17,821)
Net loss
$
(56,269)
$
(29,691)
$
(123,329)
$
(77,045)
Add back: Stock-based compensation
19,377
20,297
78,029
54,053
Add back: Amortization of
acquisition-related intangibles
1,489
1,463
4,473
3,613
Net loss, non-GAAP
$
(35,403)
$
(7,931)
$
(40,827)
$
(19,379)
Net loss per basic and diluted share:
$
(1.04)
$
(0.56)
$
(2.28)
$
(1.46)
Add back: Stock-based compensation
0.36
0.38
1.44
1.02
Add back: Amortization of
acquisition-related intangibles
0.03
0.03
0.08
0.07
Net loss per basic share, non-GAAP
$
(0.65)
$
(0.15)
$
(0.76)
$
(0.37)
Net loss per diluted share, non-GAAP
$
(0.65)
$
(0.15)
$
(0.76)
$
(0.37)
Weighted-average common shares outstanding
- basic, non-GAAP
54,256,941
53,081,564
53,987,791
52,844,532
Weighted-average common shares outstanding
- diluted, non-GAAP
54,256,941
53,081,564
53,987,791
52,844,532
TABLE II
WORKIVA INC.
RECONCILIATION OF NON-GAAP
GUIDANCE
(in thousands, except share
and per share data)
Three months ending December
31, 2023
Year ending December 31,
2023
Loss from operations, GAAP range
$
(16,946)
-
$
(15,946)
$
(102,000)
-
$
(101,000)
Add back: Stock-based compensation
21,071
21,071
99,100
99,100
Add back: Amortization of
acquisition-related intangibles
1,427
1,427
5,900
5,900
Income from operations, non-GAAP range
$
5,552
-
$
6,552
$
3,000
-
$
4,000
Net loss per share, GAAP range
$
(0.20)
-
$
(0.18)
$
(2.48)
-
$
(2.46)
Add back: Stock-based compensation
0.38
0.38
1.83
1.83
Add back: Amortization of
acquisition-related intangibles
0.03
0.03
0.11
0.11
Net income (loss) per share, non-GAAP
range
$
0.21
-
$
0.23
$
(0.54)
-
$
(0.52)
Weighted-average common shares outstanding
- basic
54,400,000
54,400,000
54,200,000
54,200,000
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231030151326/en/
Investor Contact: Mike Rost Workiva Inc.
investor@workiva.com
Media Contact: Darcie Brossart Workiva Inc.
press@workiva.com
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