EX-99.1 2 q12018exhibit991.htm EXHIBIT 99.1 Exhibit



workivalogodigitalandweba15.jpg

FOR IMMEDIATE RELEASE

Workiva Announces First Quarter 2018 Financial Results
Q1 Total Revenue of $59.9 million, Up 15.4% from Q1 2017
Q1 Subscription and Support Revenue of $46.5 million, Up 17.5% from Q1 2017
AMES, Iowa - May 2, 2018 -- Workiva Inc. (NYSE: WK), a leader in data collaboration, reporting and compliance solutions, today announced financial results for its first quarter ended March 31, 2018.

“We posted strong results in the first quarter of 2018, highlighted by an increase of 15.4% in total revenue over the same quarter last year, with subscription and support revenue up 17.5% and professional services revenue up 8.7%,” said Matt Rizai, Chairman and Chief Executive Officer of Workiva. “We outperformed our guidance for quarterly revenue, operating loss and loss per share.”
First Quarter 2018 Financial Highlights
•
Revenue: Total revenue for the first quarter of 2018 reached $59.9 million, an increase of 15.4% from $51.9 million in the first quarter of 2017. Subscription and support revenue contributed $46.5 million, up 17.5% versus the first quarter of 2017. Professional services revenue was $13.4 million, an increase of 8.7% compared to the same quarter in the prior year. Adoption of ASC 606 caused recognition of professional services revenue to be $1.7 million less for the first quarter of 2018 than what would have been recognized under the legacy standard.
•
Gross Profit: GAAP gross profit for the first quarter of 2018 was $43.4 million compared with $37.7 million in the same quarter of 2017. GAAP gross margin was 72.4% versus 72.6% in the first quarter of 2017. Non-GAAP gross profit for the first quarter of 2018 was $43.7 million, an increase of 15.3% compared with the prior year's first quarter, and non-GAAP gross margin was 73.0% compared to 73.1% in the first quarter of 2017.
•
Loss from Operations: GAAP loss from operations for the first quarter of 2018 was $9.5 million compared with a loss of $6.0 million in the prior year's first quarter. Non-GAAP loss from operations was $3.6 million, compared with non-GAAP loss from operations of $1.8 million in the first quarter of 2017. Adoption of ASC 606 caused loss from operations to be $0.2 million less for the first quarter of 2018 than what would have been recognized under the legacy standard.
•
Net Loss: GAAP net loss for the first quarter of 2018 was $9.6 million compared with a net loss of $5.8 million for the prior year's first quarter. GAAP net loss per basic and diluted share was $0.22 compared with a net loss per basic and diluted share of $0.14 in the first quarter of 2017.
•
Non-GAAP net loss for the first quarter of 2018 was $3.7 million compared with a net loss of $1.7 million in the prior year's first quarter. Non-GAAP net loss per basic and diluted share was $0.09 compared with a net loss per basic and diluted share of $0.04 in the first quarter of 2017.
Key Metrics
•
Customers: Workiva had 3,119 customers as of March 31, 2018, a net increase of 294 customers from March 31, 2017.
•
Revenue Retention Rate: As of March 31, 2018, Workiva's revenue retention rate (excluding add-on revenue) was 95.7%, and the revenue retention rate including add-on revenue was 105.3%. Add-on revenue

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includes the change in both seats purchased and seat pricing for existing customers. Revenue retention rates are calculated using the legacy accounting standard ASC 605. Revenue retention rates will be calculated using ASC 606 when comparable data becomes available.
•
Large Contracts: As of March 31, 2018, Workiva had 335 customers with an annual contract value (ACV) of more than $100,000, up 34.0% from 250 customers at March 31, 2017. Workiva had 151 customers with an ACV of more than $150,000, up 49.5% from 101 customers in the first quarter of last year.

Financial Outlook
As of May 2, 2018, Workiva is providing guidance for its second quarter 2018 and full year 2018 as follows:
Second Quarter 2018 Guidance:
•
Total revenue is expected to be in the range of $55.7 million to $56.2 million.
•
GAAP loss from operations is expected to be in the range of $16.9 million to $17.4 million.
•
Non-GAAP loss from operations is expected to be in the range of $10.0 million to $10.5 million.
•
GAAP net loss per basic and diluted share is expected to be in the range of $0.40 to $0.41.
•
Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.24 to $0.25.
•
Net loss per basic and diluted share is based on 43.3 million weighted-average shares outstanding.
Full Year 2018 Guidance:
•
Total revenue is expected to be in the range of $235.5 million to $237.0 million.
•
GAAP loss from operations is expected to be in the range of $56.3 million to $57.8 million.
•
Non-GAAP loss from operations is expected to be in the range of $30.0 million to $31.5 million.
•
GAAP net loss per basic and diluted share is expected to be in the range of $1.32 to $1.35.
•
Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.72 to $0.75.
•
Net loss per basic and diluted share is based on 43.5 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 and full year 2018, in addition to discussing the Company’s outlook for the second quarter and full year 2018. To access this call, dial 866-393-4306 (domestic) or 734-385-2616 (international). The conference ID is 4168126. 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, 2018 at 855-859-2056 (domestic) or 404-537-3406 (international). The replay pass code is 4168126. 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 delivers Wdesk, a leading enterprise cloud platform for data collaboration, reporting and compliance that is used by thousands of organizations worldwide, including over 70 percent of the Fortune 500®. Companies of all sizes, state and local governments and educational institutions use Wdesk to help mitigate risk, improve productivity and gain confidence in their data-driven decisions. For more information about Workiva (NYSE:WK), please visit workiva.com.


Read the Workiva blog: www.workiva.com/blog
Follow Workiva on LinkedIn: www.linkedin.com/company/workiva
Like Workiva on Facebook: www.facebook.com/workiva
Follow Workiva on Twitter: www.twitter.com/workiva

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.

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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-

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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
 

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WORKIVA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)

 
Three months ended March 31,
 
2018
 
2017
 
(unaudited)
Revenue
 
 
 
Subscription and support
$
46,470

 
$
39,540

Professional services
13,436

 
12,364

Total revenue
59,906

 
51,904

Cost of revenue
 
 
 
Subscription and support (1)
8,802

 
7,637

Professional services (1)
7,709

 
6,581

Total cost of revenue
16,511

 
14,218

Gross profit
43,395

 
37,686

Operating expenses
 
 
 
Research and development (1)
20,127

 
15,536

Sales and marketing (1)
21,006

 
18,713

General and administrative (1)
11,768

 
9,421

Total operating expenses
52,901

 
43,670

Loss from operations
(9,506
)
 
(5,984
)
Interest expense
(450
)
 
(455
)
Other income, net
343

 
612

Loss before provision for income taxes
(9,613
)
 
(5,827
)
Provision for income taxes
5

 
9

Net loss
$
(9,618
)
 
$
(5,836
)
Net loss per common share:
 
 
 
Basic and diluted
$
(0.22
)
 
$
(0.14
)
Weighted-average common shares outstanding - basic and diluted
42,858,756

 
41,108,611


(1) Includes stock-based compensation expense as follows:
 
Three months ended March 31,
 
2018
 
2017
 
(unaudited)
Cost of revenue
 
 
 
Subscription and support
$
171

 
$
140

Professional services
150

 
100

Operating expenses
 
 
 
Research and development
1,021

 
493

Sales and marketing
1,113

 
659

General and administrative
3,450

 
2,747



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WORKIVA INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)
 
March 31, 2018
 
December 31, 2017
 
(unaudited)
 
 
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
65,256

 
$
60,333

Marketable securities
15,801

 
16,364

Accounts receivable, net
39,202

 
28,800

Deferred commissions
3,845

 
2,376

Other receivables
949

 
975

Prepaid expenses
6,216

 
6,444

Total current assets
131,269

 
115,292

Property and equipment, net
39,801

 
40,444

Deferred commissions, non-current
5,489

 
—

Intangible assets, net
1,158

 
1,118

Other assets
920

 
861

Total assets
$
178,637

 
$
157,715

Liabilities and Stockholders’ Deficit
Current liabilities
 
 
 
Accounts payable
$
5,913

 
$
3,060

Accrued expenses and other current liabilities
26,383

 
20,212

Deferred revenue
110,943

 
104,684

Deferred government grant obligation
129

 
217

Current portion of capital lease and financing obligations
1,161

 
1,168

Total current liabilities
144,529

 
129,341

Deferred revenue, non-current
20,968

 
22,709

Deferred government grant obligation
258

 
278

Other long-term liabilities
3,966

 
3,896

Capital lease and financing obligations
18,134

 
18,425

Total liabilities
187,855

 
174,649

Stockholders’ deficit
 
 
 
Common stock
43

 
42

Additional paid-in-capital
257,297

 
248,289

Accumulated deficit
(266,574
)
 
(265,337
)
Accumulated other comprehensive income
16

 
72

Total stockholders’ deficit
(9,218
)
 
(16,934
)
Total liabilities and stockholders’ deficit
$
178,637

 
$
157,715



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WORKIVA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 
Three months ended March 31,
 
2018
 
2017
 
(unaudited)
Cash flows from operating activities
 
 
 
Net loss
$
(9,618
)
 
$
(5,836
)
Adjustments to reconcile net loss to net cash provided by operating activities
 
 
 
Depreciation and amortization
872

 
891

Stock-based compensation expense
5,905

 
4,139

Provision for doubtful accounts
44

 
286

Amortization of premiums and discounts on marketable securities, net
18

 
31

Recognition of deferred government grant obligation
(108
)
 
(538
)
Changes in assets and liabilities:
 
 
 
Accounts receivable
6,542

 
2,686

Deferred commissions
(1,649
)
 
(2
)
Other receivables
27

 
840

Prepaid expenses
231

 
804

Other assets
(58
)
 
(23
)
Accounts payable
2,677

 
1,017

Deferred revenue
(2,345
)
 
4,096

Accrued expenses and other liabilities
(755
)
 
(5,811
)
Net cash provided by operating activities
1,783

 
2,580

Cash flows from investing activities
 
 
 
Purchase of property and equipment
(9
)
 
(121
)
Purchase of marketable securities
—

 
(4,091
)
Maturities of marketable securities
500

 
3,001

Purchase of intangible assets
(64
)
 
(31
)
Net cash provided by (used in) investing activities
427

 
(1,242
)
Cash flows from financing activities
 
 
 
Proceeds from option exercises
3,075

 
806

Taxes paid related to net share settlements of stock-based compensation awards
(1,342
)
 
(936
)
Proceeds from shares issued in connection with employee stock purchase plan
1,370

 
—

Principal payments on capital lease and financing obligations
(298
)
 
(297
)
Net cash provided by (used in) financing activities
2,805

 
(427
)
Effect of foreign exchange rates on cash
(92
)
 
12

Net increase in cash and cash equivalents
4,923

 
923

Cash and cash equivalents at beginning of period
60,333

 
51,281

Cash and cash equivalents at end of period
$
65,256

 
$
52,204


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TABLE I
WORKIVA INC.
RECONCILIATION OF NON-GAAP INFORMATION
(in thousands, except share and per share)


Three months ended March 31,

2018

2017
Gross profit, subscription and support
$
37,668


$
31,903

Add back: Stock-based compensation
171


140

Gross profit, subscription and support, non-GAAP
$
37,839


$
32,043

As a percentage of subscription and support revenue, non-GAAP
81.4
 %

81.0
 %
 



Gross profit, professional services
$
5,727


$
5,783

Add back: Stock-based compensation
150


100

Gross profit, professional services, non-GAAP
$
5,877


$
5,883

As a percentage of professional services revenue, non-GAAP
43.7
 %

47.6
 %
 



Gross profit, as reported
$
43,395


$
37,686

Add back: Stock-based compensation
321


240

Gross profit, non-GAAP
$
43,716


$
37,926

As percentage of revenue, non-GAAP
73.0
 %

73.1
 %
 



Research and development, as reported
$
20,127


$
15,536

Less: Stock-based compensation
1,021


493

Research and development, non-GAAP
$
19,106


$
15,043

As percentage of revenue, non-GAAP
31.9
 %

29.0
 %
 
 
 
 
Sales and marketing, as reported
$
21,006


$
18,713

Less: Stock-based compensation
1,113


659

Sales and marketing, non-GAAP
$
19,893


$
18,054

As percentage of revenue, non-GAAP
33.2
 %

34.8
 %
 
 
 
 
General and administrative, as reported
$
11,768


$
9,421

Less: Stock-based compensation
3,450


2,747

General and administrative, non-GAAP
$
8,318


$
6,674

As percentage of revenue, non-GAAP
13.9
 %

12.9
 %
 
 
 
 
Loss from operations
$
(9,506
)

$
(5,984
)
Add back: Stock-based compensation
5,905


4,139

Loss from operations, non-GAAP
$
(3,601
)

$
(1,845
)
As percentage of revenue, non-GAAP
(6.0
)%

(3.6
)%
 
 
 
 
Net loss
$
(9,618
)

$
(5,836
)
Add back: Stock-based compensation
5,905


4,139

Net loss, non-GAAP
$
(3,713
)

$
(1,697
)
As percentage of revenue, non-GAAP
(6.2
)%

(3.3
)%
 
 
 
 
Net loss per basic and diluted share:
$
(0.22
)
 
$
(0.14
)
Add back: Stock-based compensation
0.13


0.10

Net loss per basic and diluted share, non-GAAP
$
(0.09
)
 
$
(0.04
)
Weighted-average common shares outstanding - basic and diluted, non-GAAP
42,858,756

 
41,108,611


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TABLE II
WORKIVA INC.
RECONCILIATION OF NON-GAAP GUIDANCE
(in thousands, except share and per share data)

 
Three months ending June 30, 2018
 
Year ending December 31, 2018
 
 
 
 
 
 
 
 
Loss from operations, GAAP range
$
(16,900
)
-
$
(17,400
)
 
$
(56,300
)
-
$
(57,800
)
Add back: Stock-based compensation
6,900

 
6,900

 
26,300

 
26,300

Loss from operations, non-GAAP range
$
(10,000
)
-
$
(10,500
)
 
$
(30,000
)
-
$
(31,500
)
 
 
 
 
 
 
 
 
Net loss per share, GAAP range
$
(0.40
)
-
$
(0.41
)
 
$
(1.32
)
-
$
(1.35
)
Add back: Stock-based compensation
0.16

 
0.16

 
0.60

 
0.60

Net loss per share, non-GAAP range
$
(0.24
)
-
$
(0.25
)
 
$
(0.72
)
-
$
(0.75
)
 
 
 
 
 
 
 
 
Weighted-average common shares outstanding - basic and diluted
43,300,000

 
43,300,000

 
43,500,000

 
43,500,000



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