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Workiva Inc. Announces First Quarter 2023 Financial Results

  • Increased Q1 2023 Subscription & Support Revenue by 21% over Q1 2022
  • Generated Total Q1 2023 Revenue of $150.2 Million, up 16% over Q1 2022
  • Achieved 24% YOY Growth of Customers with Annual Contract Value Over $150K

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.

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

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

 

 

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