WK Workiva Inc

Q1 Subscription and Support Revenue of $56.1 Million, up 20.8% from Q1 2018

Q1 Total Revenue of $70.0 Million, up 16.8% from Q1 2018

Workiva (NYSE:WK), the leading cloud provider of connected data, reporting and compliance solutions, today announced financial results for its first quarter ended March 31, 2019.

"We once again posted strong results for the first quarter of 2019,” said Marty Vanderploeg, Chief Executive Officer of Workiva. "We exceeded quarterly guidance for revenue and operating results, and we are raising our full year 2019 revenue guidance."

"While we are pleased with our progress on operating margin, accelerating growth in subscription revenue remains our number one priority from a financial perspective," said Stuart Miller, Chief Financial Officer of Workiva. "We plan to increase hiring in areas where we see the most opportunities for revenue growth."

"Over the next few quarters, we plan to focus our investments on building more data integrations, expanding in Europe and increasing Wdesk use for integrated risk and global statutory reporting," said Vanderploeg. "As we expand our global footprint, it is essential that Wdesk is tightly integrated with our customers' systems of record and other core enterprise applications."

"Improvement in operating cash flow remains our second highest financial priority," said Miller. "Even with our targeted new investments, we expect operating cash flow to improve significantly in 2019 as compared to 2018."

First Quarter 2019 Financial Highlights

• Revenue: Total revenue for the first quarter of 2019 reached $70.0 million, an increase of 16.8% from $59.9 million in the first quarter of 2018. Subscription and support revenue contributed $56.1 million, up 20.8% versus the first quarter of 2018. Professional services revenue was $13.8 million, an increase of 3.0% compared to the same quarter in the prior year.
• Gross Profit: GAAP gross profit for the first quarter of 2019 was $50.4 million compared with $43.4 million in the same quarter of 2018. GAAP gross margin was 72.1% versus 72.4% in the first quarter of 2018. Non-GAAP gross profit for the first quarter of 2019 was $51.2 million, an increase of 17.1% compared with the prior year's first quarter, and non-GAAP gross margin was 73.2% compared to 73.0% in the first quarter of 2018.
• Loss from Operations: GAAP loss from operations for the first quarter of 2019 was $7.3 million compared with a loss of $9.5 million in the prior year's first quarter. Non-GAAP income from operations was $0.9 million, compared with non-GAAP loss from operations of $3.6 million in the first quarter of 2018.
• Net Loss: GAAP net loss for the first quarter of 2019 was $7.5 million compared with a net loss of $9.6 million for the prior year's first quarter. GAAP net loss per basic and diluted share was $0.17 compared with a net loss per basic and diluted share of $0.22 in the first quarter of 2018.
• Non-GAAP net income for the first quarter of 2019 was $0.7 million compared with a net loss of $3.7 million in the prior year's first quarter. Non-GAAP net income per basic and diluted share was $0.02 and $0.01, respectively, compared with a net loss per basic and diluted share of $0.09 in the first quarter of 2018.
• Balance Sheet: As of March 31, 2019, Workiva had cash, cash equivalents and marketable securities totaling $114.4 million, compared with $98.3 million as of December 31, 2018. Financing obligations totaled $18.1 million as of March 31, 2019.

Key Metrics and Non-financial Highlights

• Customers: Workiva had 3,366 customers as of March 31, 2019, a net increase of 247 customers from March 31, 2018.
• Revenue Retention Rate: As of March 31, 2019, Workiva's revenue retention rate (excluding add-on revenue) was 95.7%, and the revenue retention rate including add-on revenue was 110.7%. Add-on revenue includes changes for existing customers in new solutions, new seats and pricing.
• Large Contracts: As of March 31, 2019, Workiva had 493 customers with an annual contract value (ACV) of more than $100,000, up 47.2% from 335 customers at March 31, 2018. Workiva had 207 customers with an ACV of more than $150,000, up 37.1% from 151 customers in the first quarter of 2018.
• New Offices in Frankfurt and Paris: Workiva opened new offices in Germany and France to attract and support customers in those countries.

Financial OutlookAs of May 1, 2019, Workiva is providing guidance for its second quarter 2019 and full year 2019 as follows:

Second Quarter 2019 Guidance:

• Total revenue is expected to be in the range of $68.6 million to $69.1 million.
• GAAP loss from operations is expected to be in the range of $13.1 million to $13.6 million.
• Non-GAAP loss from operations is expected to be in the range of $4.2 million to $4.7 million.
• GAAP net loss per basic and diluted share is expected to be in the range of $0.29 to $0.30.
• Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.10 to $0.11.
• Net loss per basic and diluted share is based on 46.1 million weighted-average shares outstanding.

Full Year 2019 Guidance:

• Total revenue is expected to be in the range of $284.0 million to $286.0 million.
• GAAP loss from operations is expected to be in the range of $50.0 million to $52.0 million.
• Non-GAAP loss from operations is expected to be in the range of $15.0 million to $17.0 million.
• GAAP net loss per basic and diluted share is expected to be in the range of $1.09 to $1.13.
• Non-GAAP net loss per basic and diluted share is expected to be in the range of $0.34 to $0.38.
• Net loss per basic and diluted share is based on 46.3 million weighted-average shares outstanding.

Quarterly Conference CallWorkiva will host a conference call today at 5:00 p.m. ET to review the Company’s financial results for the first quarter 2019, in addition to discussing the Company’s outlook for the second quarter and full year 2019. To access this call, dial 833-287-0800 (domestic) or 647-689-4434 (international). The conference ID is 8385167. 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 8, 2019 at 800-585-8367 (domestic) or 416-621-4642 (international). The replay pass code is 8385167. 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 WorkivaWorkiva, the leading cloud provider of connected data, reporting and compliance solutions, is used by thousands of enterprises across 180 countries, including more than 75 percent of Fortune 500® companies, and by government agencies. Our customers have linked over five billion data elements to trust their data, reduce risk and save time. For more information about Workiva (NYSE:WK), please visit workiva.com.

Read the Workiva blog: www.workiva.com/blogFollow Workiva on LinkedIn: www.linkedin.com/company/workivaLike Workiva on Facebook: www.facebook.com/workivaFollow Workiva on Twitter: www.twitter.com/workiva

Claim not confirmed by FORTUNE or Fortune Media IP Limited. FORTUNE® and FORTUNE 500® are registered trademarks of Fortune Media IP Limited and are used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not endorse products or services of, Workiva Inc.

Non-GAAP Financial MeasuresThe 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 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 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 StatementCertain 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, 2019     2018 (unaudited) Revenue     Subscription and support $ 56,123 $ 46,470 Professional services 13,840 13,436 Total revenue 69,963 59,906 Cost of revenue Subscription and support (1) 9,809 8,802 Professional services (1) 9,727 7,709 Total cost of revenue 19,536 16,511 Gross profit 50,427 43,395 Operating expenses Research and development (1) 22,011 20,127 Sales and marketing (1) 25,365 21,006 General and administrative (1) 10,383 11,768 Total operating expenses 57,759 52,901 Loss from operations (7,332) (9,506) Interest expense (440) (450) Other income, net 320 343 Loss before provision for income taxes (7,452) (9,613) Provision for income taxes 11 5 Net loss $ (7,463) $ (9,618) Net loss per common share: Basic and diluted $ (0.17) $ (0.22) Weighted-average common shares outstanding - basic and diluted 45,229,279 42,858,756  

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

  Three months ended March 31, 2019     2018 (unaudited) Cost of revenue Subscription and support $ 357 $ 171 Professional services 409 150 Operating expenses Research and development 1,900 1,021 Sales and marketing 1,964 1,113 General and administrative 3,563 3,450   WORKIVA INC.CONSOLIDATED BALANCE SHEETS(in thousands)             March 31, 2019   December 31, 2018 (unaudited) Assets Current assets Cash and cash equivalents $ 78,736 $ 77,584 Marketable securities 35,668 20,764 Accounts receivable, net 50,560 65,107 Deferred commissions 9,500 8,178 Other receivables 1,395 1,181 Prepaid expenses and other 7,656 4,417 Total current assets 183,515 177,231 Property and equipment, net 41,049 41,468 Operating lease right-of-use assets 17,057 — Deferred commissions, non-current 11,296 10,569 Intangible assets, net 1,322 1,266 Other assets 2,042 577 Total assets $ 256,281 $ 231,111 Liabilities and Stockholders’ Equity (Deficit) Current liabilities Accounts payable $ 3,182 $ 5,461 Accrued expenses and other current liabilities 33,416 36,353 Deferred revenue 149,943 148,545 Current portion of financing obligations 1,253 1,222 Total current liabilities 187,794 191,581 Deferred revenue, non-current 25,933 25,171 Other long-term liabilities 969 6,891 Operating lease liabilities, non-current 20,846 — Financing obligations, non-current 16,883 17,208 Total liabilities 252,425 240,851 Stockholders’ equity (deficit) Common stock 45 44 Additional paid-in-capital 318,151 297,145 Accumulated deficit (314,490) (307,027) Accumulated other comprehensive income 150 98 Total stockholders’ equity (deficit) 3,856 (9,740) Total liabilities and stockholders’ equity (deficit) $ 256,281 $ 231,111   WORKIVA INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)       Three months ended March 31, 2019     2018 (unaudited) Cash flows from operating activities Net loss $ (7,463) $ (9,618) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 903 872 Stock-based compensation expense 8,193 5,905 (Recovery of) provision for doubtful accounts (187) 44 (Accretion) amortization of premiums and discounts on marketable securities, net (81) 18 Deferred income tax (18) — Changes in assets and liabilities: Accounts receivable 14,818 6,542 Deferred commissions (2,029) (1,649) Operating lease right-of-use asset 668 — Other receivables (214) 27 Prepaid expenses (3,236) 231 Other assets (1,464) (58) Accounts payable (1,562) 2,677 Deferred revenue 1,987 (2,345) Operating lease liability (655) — Accrued expenses and other liabilities (4,541) (863) Net cash provided by operating activities 5,119 1,783 Cash flows from investing activities Purchase of property and equipment (1,743) (9) Purchase of marketable securities (22,155) — Maturities of marketable securities 7,390 500 Purchase of intangible assets (84) (64) Net cash (used in) provided by investing activities (16,592) 427 Cash flows from financing activities Proceeds from option exercises 11,055 3,075 Taxes paid related to net share settlements of stock-based compensation awards (390) (1,342) Proceeds from shares issued in connection with employee stock purchase plan 2,149 1,370 Principal payments on capital lease and financing obligations (294) (298) Net cash provided by financing activities 12,520 2,805 Effect of foreign exchange rates on cash 105 (92) Net increase in cash and cash equivalents 1,152 4,923 Cash and cash equivalents at beginning of period 77,584 60,333 Cash and cash equivalents at end of period $ 78,736 $ 65,256   TABLE IWORKIVA INC.RECONCILIATION OF NON-GAAP INFORMATION(in thousands, except share and per share)       Three months ended March 31, 2019       2018 Gross profit, subscription and support $ 46,314 $ 37,668 Add back: Stock-based compensation 357 171 Gross profit, subscription and support, non-GAAP $ 46,671 $ 37,839 As a percentage of subscription and support revenue, non-GAAP 83.2% 81.4%   Gross profit, professional services $ 4,113 $ 5,727 Add back: Stock-based compensation 409 150 Gross profit, professional services, non-GAAP $ 4,522 $ 5,877 As a percentage of professional services revenue, non-GAAP 32.7% 43.7%   Gross profit $ 50,427 $ 43,395 Add back: Stock-based compensation 766 321 Gross profit, non-GAAP $ 51,193 $ 43,716 As percentage of revenue, non-GAAP 73.2% 73.0%   Research and development $ 22,011 $ 20,127 Less: Stock-based compensation 1,900 1,021 Research and development, non-GAAP $ 20,111 $ 19,106 As percentage of revenue, non-GAAP 28.7% 31.9%   Sales and marketing $ 25,365 $ 21,006 Less: Stock-based compensation 1,964 1,113 Sales and marketing, non-GAAP $ 23,401 $ 19,893 As percentage of revenue, non-GAAP 33.4% 33.2%   General and administrative $ 10,383 $ 11,768 Less: Stock-based compensation 3,563 3,450 General and administrative, non-GAAP $ 6,820 $ 8,318 As percentage of revenue, non-GAAP 9.7% 13.9%   Loss from operations $ (7,332) $ (9,506) Add back: Stock-based compensation 8,193 5,905 Income (loss) from operations, non-GAAP $ 861 $ (3,601) As percentage of revenue, non-GAAP 1.2% (6.0)%   Net loss $ (7,463) $ (9,618) Add back: Stock-based compensation 8,193 5,905 Net income (loss), non-GAAP $ 730 $ (3,713) As percentage of revenue, non-GAAP 1.0% (6.2)%   Net loss per basic and diluted share: $ (0.17) $ (0.22) Add back: Stock-based compensation 0.19 0.13 Net income (loss) per basic share, non-GAAP $ 0.02 $ (0.09) Net income (loss) per diluted share, non-GAAP $ 0.01 $ (0.09)   Weighted-average common shares outstanding - basic, non-GAAP 45,229,279 42,858,756 Weighted-average common shares outstanding - diluted, non-GAAP 50,550,143 42,858,756   TABLE IIWORKIVA INC.RECONCILIATION OF NON-GAAP GUIDANCE(in thousands, except share and per share data)            

Three months endingJune 30, 2019

Year endingDecember 31, 2019

        Loss from operations, GAAP range $ (13,100) - $ (13,600) $ (50,000) - $ (52,000) Add back: Stock-based compensation   8,900   8,900   35,000   35,000 Loss from operations, non-GAAP range $ (4,200) - $ (4,700) $ (15,000) - $ (17,000)   Net loss per share, GAAP range $ (0.29) - $ (0.30) $ (1.09) - $ (1.13) Add back: Stock-based compensation   0.19   0.19   0.75   0.75 Net loss per share, non-GAAP range $ (0.10) - $ (0.11) $ (0.34) - $ (0.38)   Weighted-average common shares outstanding - basic and diluted 46,100,000 46,100,000 46,300,000 46,300,000

View source version on businesswire.com: https://www.businesswire.com/news/home/20190501005902/en/

Investor Contact:Adam RogersWorkiva Inc.investor@workiva.com(515) 663-4493

Media Contact:Kevin McCarthyWorkiva Inc.press@workiva.com(515) 663-4471