NEW YORK--(BUSINESS WIRE)--Workiva Inc. (NYSE:WK), the world's leading cloud platform for assured integrated reporting, today announced financial results for its first quarter ended March 31, 2023.
"The Workiva team delivered a solid quarter and continued to execute at a high level, resulting in subscription revenue growth of 21%," said Julie Iskow, President & Chief Executive Officer. "Accelerating subscription growth drove revenue above the high end of our first quarter guidance and contributed to our beat at the high end of our operating results guidance by $3.7 million."
"Our focus on multi-solution deals and account expansions led to the increase in the number of larger subscription contracts. In the first quarter, contracts valued at over $100K, $150K, and $300K per year were up 21%, 24%, and 33%, respectively from the first quarter of 2022," said Jill Klindt, Chief Financial Officer. "Additionally, our subscription and support revenue retention rate remained best-in-class at 98% for the first quarter of 2023."
"We continued to see healthy market demand for our platform and best-of-breed solutions, even in an uncertain macro environment," said Iskow. "We believe this is a result of the rapidly evolving market trend of increased stakeholder scrutiny of both financial data and non-financial data, which has made our product offerings more relevant than ever."
First Quarter 2023 Financial Highlights
- Revenue: Total revenue for the first quarter of 2023 reached $150.2 million, an increase of 16% from $129.7 million in the first quarter of 2022. Subscription and support revenue contributed $129.7 million, up 21% versus the first quarter of 2022. Professional services revenue was $20.5 million, a decrease of 9% compared to the same quarter in the prior year.
- Gross Profit: GAAP gross profit for the first quarter of 2023 was $111.7 million compared with $98.8 million in the same quarter of 2022. GAAP gross margin was 74.3% versus 76.2% in the first quarter of 2022. Non-GAAP gross profit for the first quarter of 2023 was $113.4 million, an increase of 13.3% compared with the prior year's first quarter, and non-GAAP gross margin was 75.5% compared to 77.1% in the first quarter of 2022.
- Loss from Operations: GAAP loss from operations for the first quarter of 2023 was $46.8 million compared with a loss of $17.2 million in the prior year's first quarter. Non-GAAP loss from operations was $7.3 million compared with a loss of $1.2 million in the first quarter of 2022.
- GAAP Net Loss: GAAP net loss for the first quarter of 2023 was $46.2 million compared with a net loss of $18.5 million for the prior year's first quarter. GAAP net loss per basic and diluted share was $0.86 compared with a net loss per basic and diluted share of $0.35 in the first quarter of 2022.
- Non-GAAP Net Loss: Non-GAAP net loss for the first quarter of 2023 was $6.6 million compared with a loss of $2.5 million in the prior year's first quarter. Non-GAAP net loss per basic and diluted share was $0.12 compared with a net loss per basic and diluted share of $0.05 in the first quarter of 2022.
- Liquidity: As of March 31, 2023, Workiva had cash, cash equivalents, and marketable securities totaling $439.8 million, compared with $430.8 million as of December 31, 2022. Workiva had $345.0 million aggregate principal amount of 1.125% convertible senior notes due in 2026 and $15.0 million of finance lease obligations outstanding as of March 31, 2023.
Key Metrics and Recent Business Highlights
- Customers: Workiva had 5,754 customers as of March 31, 2023, including 919 ParsePort ESEF customers, a net increase of 1,346 customers from March 31, 2022.
- Revenue Retention Rate: As of March 31, 2023, Workiva's revenue retention rate (excluding add-on revenue) was 98%, and the revenue retention rate including add-on revenue was 109%. Add-on revenue includes changes in both solutions and pricing for existing customers.
- Large Contracts: As of March 31, 2023, Workiva had 1,363 customers with an annual contract value ("ACV") of more than $100,000, up 21% from 1,124 customers at March 31, 2022. Workiva had 746 customers with an ACV of more than $150,000, up 24% from 603 customers in the first quarter of 2022. Workiva had 247 customers with an ACV of more than $300,000, up 33% from 186 customers in the first quarter of 2022.
Financial Outlook
As of May 2, 2023, Workiva is providing guidance as follows:
Second Quarter 2023 Guidance:
- Total revenue is expected to be in the range of $153.0 million to $154.0 million.
- GAAP loss from operations is expected to be in the range of $27.0 million to $26.0 million.
- Non-GAAP loss from operations is expected to be in the range of $5.0 million to $4.0 million.
- GAAP net loss per basic share is expected to be in the range of $0.50 to $0.48.
- Non-GAAP net loss per basic share is expected to be in the range of $0.09 to $0.07.
- Net loss per basic share is based on 53.8 million weighted-average shares outstanding.
Full Year 2023 Guidance:
- Total revenue is expected to be in the range of $626.0 million to $628.0 million.
- GAAP loss from operations is expected to be in the range of $113.0 million to $111.0 million.
- Non-GAAP loss from operations is expected to be in the range of $7.0 million to $5.0 million.
- GAAP net loss per basic share is expected to be in the range of $2.09 to $2.05.
- Non-GAAP net loss per basic share is expected to be in the range of $0.13 to $0.09.
- Net loss per basic share is based on 54.0 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 first quarter 2023, in addition to discussing the Company's outlook for the second 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 May 9, 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.
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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 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 March 31, | ||||||||
2023 | 2022 | |||||||
(unaudited) | ||||||||
Revenue | ||||||||
Subscription and support | $ | 129,664 | $ | 107,120 | ||||
Professional services | 20,525 | 22,554 | ||||||
Total revenue | 150,189 | 129,674 | ||||||
Cost of revenue | ||||||||
Subscription and support (1) | 24,133 | 18,533 | ||||||
Professional services (1) | 14,385 | 12,340 | ||||||
Total cost of revenue | 38,518 | 30,873 | ||||||
Gross profit | 111,671 | 98,801 | ||||||
Operating expenses | ||||||||
Research and development (1) | 45,791 | 35,884 | ||||||
Sales and marketing (1) | 70,710 | 56,100 | ||||||
General and administrative (1) | 42,011 | 23,994 | ||||||
Total operating expenses | 158,512 | 115,978 | ||||||
Loss from operations | (46,841 | ) | (17,177 | ) | ||||
Interest income | 3,717 | 280 | ||||||
Interest expense | (1,501 | ) | (1,518 | ) | ||||
Other expense, net | (940 | ) | (165 | ) | ||||
Loss before provision (benefit) for income taxes | (45,565 | ) | (18,580 | ) | ||||
Provision (benefit) for income taxes | 585 | (87 | ) | |||||
Net loss | $ | (46,150 | ) | $ | (18,493 | ) | ||
Net loss per common share: | ||||||||
Basic and diluted | $ | (0.86 | ) | $ | (0.35 | ) | ||
Weighted-average common shares outstanding - basic and diluted | 53,690,242 | 52,596,228 | ||||||
(1) Includes stock-based compensation expense as follows: | ||||||||
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
(unaudited) | ||||||||
Cost of revenue | ||||||||
Subscription and support | $ | 1,072 | $ | 790 | ||||
Professional services | 633 | 452 | ||||||
Operating expenses | ||||||||
Research and development | 4,697 | 2,725 | ||||||
Sales and marketing | 6,958 | 4,085 | ||||||
General and administrative | 24,682 | 7,257 | ||||||
WORKIVA INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
March 31, 2023 | December 31, 2022 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 195,485 | $ | 240,197 | ||||
Marketable securities | 244,338 | 190,595 | ||||||
Accounts receivable, net | 77,151 | 106,316 | ||||||
Deferred costs | 39,668 | 38,350 | ||||||
Other receivables | 5,086 | 6,674 | ||||||
Prepaid expenses and other | 23,713 | 17,957 | ||||||
Total current assets | 585,441 | 600,089 | ||||||
Property and equipment, net | 26,049 | 27,096 | ||||||
Operating lease right-of-use assets | 12,714 | 13,932 | ||||||
Deferred costs, non-current | 30,819 | 33,682 | ||||||
Goodwill | 110,997 | 109,740 | ||||||
Intangible assets, net | 27,111 | 28,234 | ||||||
Other assets | 6,943 | 6,847 | ||||||
Total assets | $ | 800,074 | $ | 819,620 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 6,394 | $ | 6,174 | ||||
Accrued expenses and other current liabilities | 79,342 | 83,999 | ||||||
Deferred revenue | 309,781 | 316,263 | ||||||
Finance lease obligations | 511 | 504 | ||||||
Total current liabilities | 396,028 | 406,940 | ||||||
Convertible senior notes, non-current | 340,582 | 340,257 | ||||||
Deferred revenue, non-current | 35,601 | 38,237 | ||||||
Other long-term liabilities | 1,533 | 1,518 | ||||||
Operating lease liabilities, non-current | 10,948 | 12,102 | ||||||
Finance lease obligations, non-current | 14,452 | 14,583 | ||||||
Total liabilities | 799,144 | 813,637 | ||||||
Stockholders' equity | ||||||||
Common stock | 53 | 53 | ||||||
Additional paid-in-capital | 575,549 | 537,732 | ||||||
Accumulated deficit | (571,266 | ) | (525,116 | ) | ||||
Accumulated other comprehensive loss | (3,406 | ) | (6,686 | ) | ||||
Total stockholders' equity | 930 | 5,983 | ||||||
Total liabilities and stockholders' equity | $ | 800,074 | $ | 819,620 | ||||
WORKIVA INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
(unaudited) | ||||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (46,150 | ) | $ | (18,493 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 2,800 | 1,959 | ||||||
Stock-based compensation expense | 38,042 | 15,309 | ||||||
Provision for (recovery of) doubtful accounts | 106 | (29 | ) | |||||
Realized loss on sale of available-for-sale securities, net | 561 | - | ||||||
(Accretion) amortization of premiums and discounts on marketable securities, net | (1,028 | ) | 660 | |||||
Amortization of issuance costs and debt discount | 325 | 324 | ||||||
Deferred income tax | (10 | ) | (211 | ) | ||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 29,363 | 6,581 | ||||||
Deferred costs | 1,770 | 1,444 | ||||||
Operating lease right-of-use asset | 1,295 | 1,301 | ||||||
Other receivables | 95 |
| 180 | |||||
Prepaid expenses | (5,732 | ) | (1,132 | ) | ||||
Other assets | (74 | ) | 23 | |||||
Accounts payable | 207 | 4,364 | ||||||
Deferred revenue | (9,955 | ) | 606 | |||||
Operating lease liability | (1,172 | ) | (1,342 | ) | ||||
Accrued expenses and other liabilities | (4,880 | ) | (12,481 | ) | ||||
Net cash provided by (used in) operating activities | 5,563 | (937 | ) | |||||
Cash flows from investing activities | ||||||||
Purchase of property and equipment | (198 | ) | (532 | ) | ||||
Purchase of marketable securities | (125,815 | ) | (34,148 | ) | ||||
Sale of marketable securities | 43,713 | 14,981 | ||||||
Maturities of marketable securities | 31,905 | 26,250 | ||||||
Purchase of intangible assets | (79 | ) | (40 | ) | ||||
Net cash (used in) provided by investing activities | (50,474 | ) | 6,511 | |||||
Cash flows from financing activities | ||||||||
Proceeds from option exercises | 1,457 | 825 | ||||||
Taxes paid related to net share settlements of stock-based compensation awards | (7,228 | ) | (8,570 | ) | ||||
Proceeds from shares issued in connection with employee stock purchase plan | 5,546 | 5,218 | ||||||
Principal payments on finance lease obligations | (124 | ) | (442 | ) | ||||
Net cash used in financing activities | (349 | ) | (2,969 | ) | ||||
Effect of foreign exchange rates on cash | 548 | 85 | ||||||
Net (decrease) increase in cash and cash equivalents | (44,712 | ) | 2,690 | |||||
Cash and cash equivalents at beginning of period | 240,197 | 300,386 | ||||||
Cash and cash equivalents at end of period | $ | 195,485 | $ | 303,076 | ||||
TABLE I | ||||||||
WORKIVA INC. | ||||||||
RECONCILIATION OF NON-GAAP INFORMATION | ||||||||
(in thousands, except share and per share) | ||||||||
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Gross profit, subscription and support | $ | 105,531 | $ | 88,587 | ||||
Add back: Stock-based compensation | 1,072 | 790 | ||||||
Gross profit, subscription and support, non-GAAP | $ | 106,603 | $ | 89,377 | ||||
Gross profit, professional services | $ | 6,140 | $ | 10,214 | ||||
Add back: Stock-based compensation | 633 | 452 | ||||||
Gross profit, professional services, non-GAAP | $ | 6,773 | $ | 10,666 | ||||
Gross profit | $ | 111,671 | $ | 98,801 | ||||
Add back: Stock-based compensation | 1,705 | 1,242 | ||||||
Gross profit, non-GAAP | $ | 113,376 | $ | 100,043 | ||||
Cost of revenue, subscription and support | $ | 24,133 | $ | 18,533 | ||||
Less: Stock-based compensation | 1,072 | 790 | ||||||
Cost of revenue, subscription and support, non-GAAP | $ | 23,061 | $ | 17,743 | ||||
Cost of revenue, professional services | $ | 14,385 | $ | 12,340 | ||||
Less: Stock-based compensation | 633 | 452 | ||||||
Cost of revenue, professional services, non-GAAP | $ | 13,752 | $ | 11,888 | ||||
Research and development | $ | 45,791 | $ | 35,884 | ||||
Less: Stock-based compensation | 4,697 | 2,725 | ||||||
Less: Amortization of acquisition-related intangibles | 886 | 495 | ||||||
Research and development, non-GAAP | $ | 40,208 | $ | 32,664 | ||||
Sales and marketing | $ | 70,710 | $ | 56,100 | ||||
Less: Stock-based compensation | 6,958 | 4,085 | ||||||
Less: Amortization of acquisition-related intangibles | 601 | 200 | ||||||
Sales and marketing, non-GAAP | $ | 63,151 | $ | 51,815 | ||||
General and administrative | $ | 42,011 | $ | 23,994 | ||||
Less: Stock-based compensation | 24,682 | 7,257 | ||||||
General and administrative, non-GAAP | $ | 17,329 | $ | 16,737 | ||||
Loss from operations | $ | (46,841 | ) | $ | (17,177 | ) | ||
Add back: Stock-based compensation | 38,042 | 15,309 | ||||||
Add back: Amortization of acquisition-related intangibles | 1,487 | 695 | ||||||
Loss from operations, non-GAAP | $ | (7,312 | ) | $ | (1,173 | ) | ||
Net loss | $ | (46,150 | ) | $ | (18,493 | ) | ||
Add back: Stock-based compensation | 38,042 | 15,309 | ||||||
Add back: Amortization of acquisition-related intangibles | 1,487 | 695 | ||||||
Net loss, non-GAAP | $ | (6,621 | ) | $ | (2,489 | ) | ||
Net loss per basic and diluted share: | $ | (0.86 | ) | $ | (0.35 | ) | ||
Add back: Stock-based compensation | 0.71 | 0.29 | ||||||
Add back: Amortization of acquisition-related intangibles | 0.03 | 0.01 | ||||||
Net loss per basic share, non-GAAP | $ | (0.12 | ) | $ | (0.05 | ) | ||
Net loss per diluted share, non-GAAP | $ | (0.12 | ) | $ | (0.05 | ) | ||
Weighted-average common shares outstanding - basic, non-GAAP | 53,690,242 | 52,596,228 | ||||||
Weighted-average common shares outstanding - diluted, non-GAAP | 53,690,242 | 52,596,228 | ||||||
TABLE II | ||||||||||||||||
WORKIVA INC. | ||||||||||||||||
RECONCILIATION OF NON-GAAP GUIDANCE | ||||||||||||||||
(in thousands, except share and per share data) | ||||||||||||||||
Three months ending June 30, 2023 | Year ending December 31, 2023 | |||||||||||||||
Loss from operations, GAAP range | $ | (27,000 | ) | - | $ | (26,000 | ) | $ | (113,000 | ) | - | $ | (111,000 | ) | ||
Add back: Stock-based compensation | 20,500 | 20,500 | 100,200 | 100,200 | ||||||||||||
Add back: Amortization of acquisition-related intangibles | 1,500 | 1,500 | 5,800 | 5,800 | ||||||||||||
Net loss from operations, non-GAAP range | $ | (5,000 | ) | - | $ | (4,000 | ) | $ | (7,000 | ) | - | $ | (5,000 | ) | ||
Net loss per share, GAAP range | $ | (0.50 | ) | - | $ | (0.48 | ) | $ | (2.09 | ) | - | $ | (2.05 | ) | ||
Add back: Stock-based compensation | 0.38 | 0.38 | 1.85 | 1.85 | ||||||||||||
Add back: Amortization of acquisition-related intangibles | 0.03 | 0.03 | 0.11 | 0.11 | ||||||||||||
Net loss per share, non-GAAP range | $ | (0.09 | ) | - | $ | (0.07 | ) | $ | (0.13 | ) | - | $ | (0.09 | ) | ||
Weighted-average common shares outstanding - basic | 53,800,000 | 53,800,000 | 54,000,000 | 54,000,000 | ||||||||||||
Contacts
Investor Contact:
Mike Rost
Workiva Inc.
investor@workiva.com
Media Contact:
Darcie Brossart
Workiva Inc.
press@workiva.com
