Increased Q2 2022 Subscription & Support Revenue by 24.3% over Q2 2021
Generated Total Q2 2022 Revenue of $131.5 Million, up 24.6% over Q2 2021
Achieved 28.4% YOY Growth of Customers with Annual Contract Value Over $150K

Workiva Inc. (NYSE:WK), the company powering transparent reporting for a better world, today announced financial results for its second quarter ended June 30, 2022.

"Our second quarter subscription & support and total revenue exceeded market expectations and we once again beat the high end of our guidance in revenue and operating results," said Marty Vanderploeg, Chief Executive Officer. "We added 123 net new logos for the Workiva platform, saw a 28% YOY increase in the number of customers with contract values over $150k, and achieved our highest revenue retention rate of 97.9%."

"We believe that the demand for regulatory software is consistent and durable. For the back half of 2022, we are maintaining our investment in our platform, purpose-built solutions, and talent in order to accelerate our growth and capture more of our large and relatively unaddressed TAM. However, we intend to balance this investment with a more prudent approach to our second half outlook," Vanderploeg added.

"We have increased our focus on operating leverage and have slowed the hiring plans for parts of our core business for the remainder of 2022. The balance between growth and operating leverage should lead to future margin improvement and we believe it will return Workiva to a quarterly operating profit on a Non-GAAP basis in the latter half of 2023," said Jill Klindt, Chief Financial Officer. "It is still early days in Workiva's growth story as we continue to capture more of the large and expanding business reporting market. We remain committed to strong, durable growth as we build Workiva into a billion dollar revenue company."

Second Quarter 2022 Financial Highlights

Revenue: Total revenue for the second quarter of 2022 reached $131.5 million, an increase of 24.6% from $105.6 million in the second quarter of 2021. Subscription and support revenue contributed $113.4 million, up 24.3% versus the second quarter of 2021. Professional services revenue was $18.2 million, an increase of 26.5% compared to the same quarter in the prior year.
Gross Profit: GAAP gross profit for the second quarter of 2022 was $99.3 million compared with $81.0 million in the same quarter of 2021. GAAP gross margin was 75.5% versus 76.7% in the second quarter of 2021. Non-GAAP gross profit for the second quarter of 2022 was $100.8 million, an increase of 22.9% compared with the prior year's second quarter, and non-GAAP gross margin was 76.6% compared to 77.7% in the second quarter of 2021.
Results from Operations: GAAP loss from operations for the second quarter of 2022 was $28.2 million compared with a loss of $5.7 million in the prior year's second quarter. Non-GAAP loss from operations was $8.3 million, compared with non-GAAP income from operations of $5.3 million in the second quarter of 2021.
GAAP Net Loss: GAAP net loss for the second quarter of 2022 was $28.9 million compared with a net loss of $9.5 million for the prior year's second quarter. GAAP net loss per basic and diluted share was $0.55 compared with a net loss per basic and diluted share of $0.19 in the second quarter of 2021.
Non-GAAP Net Loss/Income: Non-GAAP net loss for the second quarter of 2022 was $9.0 million compared with net income of $3.8 million in the prior year's second quarter. Non-GAAP net loss per basic and diluted share was $0.17, compared with net income per basic and diluted share of $0.07 in the second quarter of 2021.
Liquidity: As of June 30, 2022, Workiva had cash, cash equivalents, and marketable securities totaling $429.0 million, compared with $530.4 million as of December 31, 2021. Workiva had $345.0 million aggregate principal amount of 1.125% convertible senior notes due in 2026 and $15.8 million of finance lease obligations outstanding as of June 30, 2022.

Key Metrics and Recent Business Highlights

Customers: Workiva had 5,381 customers as of June 30, 2022, including approximately 850 ParsePort ESEF customers, a net increase of 1,432 customers from June 30, 2021.
Revenue Retention Rate: As of June 30, 2022, Workiva's revenue retention rate (excluding add-on revenue) was 97.9%, and the revenue retention rate including add-on revenue was 108.0%. Add-on revenue includes changes in both solutions and pricing for existing customers.
Large Contracts: As of June 30, 2022, Workiva had 1,186 customers with an annual contract value ("ACV") of more than $100,000, up 25% from 952 customers at June 30, 2021. Workiva had 642 customers with an ACV of more than $150,000, up 28% from 500 customers in the second quarter of 2021. Workiva had 194 customers with an ACV of more than $300,000, up 22% from 159 customers in the second quarter of 2021.
On April 1, 2022, Workiva acquired all of the issued and outstanding equity interests in Denmark-based ParsePort ApS ("ParsePort"), a leading solution provider for the European Single Electronic Format ("ESEF") financial reporting mandate, which complements Workiva's cloud platform.

Financial Outlook

As of August 9, 2022, Workiva is providing updated guidance as follows:

Third Quarter 2022 Guidance:

Total revenue is expected to be in the range of $132.0 million to $133.0 million.
GAAP loss from operations is expected to be in the range of $33.5 million to $32.5 million.
Non-GAAP loss from operations is expected to be in the range of $13.0 million to $12.0 million.
GAAP net loss per basic share is expected to be in the range of $0.66 to $0.64.
Non-GAAP net loss per basic share is expected to be in the range of $0.27 to $0.25.
Net loss per basic share is based on 53.1 million weighted-average shares outstanding.

Full Year 2022 Guidance:

Total revenue is expected to be in the range of $534.0 million to $536.0 million.
GAAP loss from operations is expected to be in the range of $103.5 million to $101.5 million.
Non-GAAP loss from operations is expected to be in the range of $27.0 million to $25.0 million.
GAAP net loss per basic share is expected to be in the range of $2.02 to $1.98.
Non-GAAP net loss per basic share is expected to be in the range of $0.57 to $0.53.
Net loss per basic share is based on 53.0 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 second quarter 2022, in addition to discussing the Company's outlook for the third quarter and full year 2022. 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 August 16, 2022, 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 regulatory, financial, and ESG reporting solutions to meet stakeholder demands for action, transparency, and disclosure of financial and non-financial data. Our cloud-based 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

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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. 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 June 30,						Six months ended June 30,
	2022			2021			2022			2021
	(unaudited)
Revenue
Subscription and support	$	113,353		$	91,205		$	220,473		$	176,141
Professional services		18,196			14,382			40,750			33,668
Total revenue		131,549			105,587			261,223			209,809
Cost of revenue
Subscription and support ⁽¹⁾		18,915			14,098			37,448			27,300
Professional services ⁽¹⁾		13,322			10,493			25,662			20,967
Total cost of revenue		32,237			24,591			63,110			48,267
Gross profit		99,312			80,996			198,113			161,542
Operating expenses
Research and development ⁽¹⁾		39,177			27,830			75,061			54,464
Sales and marketing ⁽¹⁾		64,219			41,525			120,319			82,560
General and administrative ⁽¹⁾		24,108			17,384			48,102			34,405
Total operating expenses		127,504			86,739			243,482			171,429
Loss from operations		(28,192	)		(5,743	)		(45,369	)		(9,887	)
Interest income		605			255			885			615
Interest expense		(1,512	)		(3,502	)		(3,030	)		(6,987	)
Other income (expense), net		668			(156	)		503			(540	)
Loss before provision for income taxes		(28,431	)		(9,146	)		(47,011	)		(16,799	)
Provision for income taxes		430			368			343			39
Net loss	$	(28,861	)	$	(9,514	)	$	(47,354	)	$	(16,838	)
Net loss per common share:
Basic and diluted	$	(0.55	)	$	(0.19	)	$	(0.90	)	$	(0.33	)
Weighted-average common shares outstanding - basic and diluted		52,850,470			51,065,867			52,724,051			50,657,264

(1) Includes stock-based compensation expense as follows:
	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022			2021
	(unaudited)
Cost of revenue
Subscription and support	$	912		$	597		$	1,702		$	1,093
Professional services		593			409			1,045			776
Operating expenses
Research and development		3,148			2,417			5,873			4,848
Sales and marketing		5,646			2,837			9,731			6,386
General and administrative		8,148			4,792			15,405			9,572

WORKIVA INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)
	June 30, 2022			December 31, 2021
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	226,253		$	300,386
Marketable securities		202,712			230,060
Accounts receivable, net		75,607			76,848
Deferred costs		29,992			31,152
Other receivables		2,949			3,538
Prepaid expenses and other		17,776			15,108
Total current assets		555,289			657,092
Property and equipment, net		27,331			28,821
Operating lease right-of-use assets		15,049			17,760
Deferred costs, non-current		34,826			33,091
Goodwill		109,040			34,556
Intangible assets, net		30,162			10,434
Other assets		5,061			5,005
Total assets	$	776,758		$	786,759
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	5,797		$	4,114
Accrued expenses and other current liabilities		85,863			84,126
Deferred revenue		272,731			258,023
Convertible senior notes, current		—			298,661
Finance lease obligations		936			1,575
Total current liabilities		365,327			646,499
Convertible senior notes, non-current		339,608			—
Deferred revenue, non-current		34,063			34,181
Other long-term liabilities		1,380			1,605
Operating lease liabilities, non-current		13,688			16,408
Finance lease obligations, non-current		14,838			15,087
Total liabilities		768,904			713,780
Stockholders' equity
Common stock		52			51
Additional paid-in-capital		498,115			525,646
Accumulated deficit		(481,523	)		(452,430	)
Accumulated other comprehensive (loss) income		(8,790	)		(288	)
Total stockholders' equity		7,854			72,979
Total liabilities and stockholders' equity	$	776,758		$	786,759

WORKIVA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022			2021
	(unaudited)
Cash flows from operating activities
Net loss	$	(28,861	)	$	(9,514	)	$	(47,354	)	$	(16,838	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,725			1,097			4,684			2,151
Stock-based compensation expense		18,447			11,052			33,756			22,675
Provision for (recovery of) doubtful accounts		20			17			(9	)		(101	)
Amortization of premiums and discounts on marketable securities, net		453			763			1,113			1,388
Amortization of issuance costs and debt discount		324			2,284			648			4,550
Deferred income tax		63			362			(148	)		16
Changes in assets and liabilities:
Accounts receivable		(4,844	)		(12,106	)		1,737			3,159
Deferred costs		(2,734	)		(9,018	)		(1,290	)		(10,077	)
Operating lease right-of-use asset		1,307			977			2,608			1,921
Other receivables		385			585			565			424
Prepaid expenses		(1,591	)		722			(2,723	)		(3,025	)
Other assets		12			(110	)		35			(683	)
Accounts payable		(2,300	)		(1,172	)		2,064			736
Deferred revenue		13,192			11,900			13,798			12,079
Operating lease liability		(1,302	)		(1,202	)		(2,644	)		(2,278	)
Accrued expenses and other liabilities		13,388			16,123			907			8,166
Net cash provided by operating activities		8,684			12,760			7,747			24,263
Cash flows from investing activities
Purchase of property and equipment		(671	)		(811	)		(1,203	)		(1,660	)
Purchase of marketable securities		(23,798	)		(51,217	)		(57,946	)		(94,872	)
Sale of marketable securities		—			250			14,981			250
Maturities of marketable securities		40,536			30,206			66,786			70,792
Acquisitions, net of cash acquired		(99,186	)		—			(99,186	)		—
Purchase of intangible assets		(6	)		(52	)		(46	)		(123	)
Other investments		—			(750	)		—			(750	)
Net cash used in investing activities		(83,125	)		(22,374	)		(76,614	)		(26,363	)
Cash flows from financing activities
Proceeds from option exercises		1,145			1,480			1,970			5,618
Taxes paid related to net share settlements of stock-based compensation awards		(1,344	)		(731	)		(9,914	)		(7,877	)
Proceeds from shares issued in connection with employee stock purchase plan		—			—			5,218			4,237
Principal payments on finance lease obligations		(446	)		(424	)		(888	)		(841	)
Net cash (used in) provided by financing activities		(645	)		325			(3,614	)		1,137
Effect of foreign exchange rates on cash		(1,737	)		310			(1,652	)		326
Net decrease in cash and cash equivalents		(76,823	)		(8,979	)		(74,133	)		(637	)
Cash and cash equivalents at beginning of period		303,076			331,173			300,386			322,831
Cash and cash equivalents at end of period	$	226,253		$	322,194		$	226,253		$	322,194

TABLE I
WORKIVA INC.
RECONCILIATION OF NON-GAAP INFORMATION
(in thousands, except share and per share)
	Three months ended June 30,						Six months ended June 30,
	2022			2021			2022			2021
Gross profit, subscription and support	$	94,438		$	77,107		$	183,025		$	148,841
Add back: Stock-based compensation		912			597			1,702			1,093
Gross profit, subscription and support, non-GAAP	$	95,350		$	77,704		$	184,727		$	149,934
As a percentage of subscription and support revenue, non-GAAP		84.1	%		85.2	%		83.8	%		85.1	%

Gross profit, professional services	$	4,874		$	3,889		$	15,088		$	12,701
Add back: Stock-based compensation		593			409			1,045			776
Gross profit, professional services, non-GAAP	$	5,467		$	4,298		$	16,133		$	13,477
As a percentage of professional services revenue, non-GAAP		30.0	%		29.9	%		39.6	%		40.0	%

Gross profit	$	99,312		$	80,996		$	198,113		$	161,542
Add back: Stock-based compensation		1,505			1,006			2,747			1,869
Gross profit, non-GAAP	$	100,817		$	82,002		$	200,860		$	163,411
As percentage of revenue, non-GAAP		76.6	%		77.7	%		76.9	%		77.9	%

Cost of revenue, subscription and support	$	18,915		$	14,098		$	37,448		$	27,300
Less: Stock-based compensation		912			597			1,702			1,093
Cost of revenue, subscription and support, non-GAAP	$	18,003		$	13,501		$	35,746		$	26,207
As percentage of revenue, non-GAAP		13.7	%		12.8	%		13.7	%		12.5	%

Cost of revenue, professional services	$	13,322		$	10,493		$	25,662		$	20,967
Less: Stock-based compensation		593			409			1,045			776
Cost of revenue, professional services, non-GAAP	$	12,729		$	10,084		$	24,617		$	20,191
As percentage of revenue, non-GAAP		9.7	%		9.6	%		9.4	%		9.6	%

Research and development	$	39,177		$	27,830		$	75,061		$	54,464
Less: Stock-based compensation		3,148			2,417			5,873			4,848
Less: Amortization of acquisition-related intangibles		869			—			1,364			—
Research and development, non-GAAP	$	35,160		$	25,413		$	67,824		$	49,616
As percentage of revenue, non-GAAP		26.7	%		24.1	%		26.0	%		23.6	%

Sales and marketing	$	64,219		$	41,525		$	120,319		$	82,560
Less: Stock-based compensation		5,646			2,837			9,731			6,386
Less: Amortization of acquisition-related intangibles		586			—			786			—
Sales and marketing, non-GAAP	$	57,987		$	38,688		$	109,802		$	76,174
As percentage of revenue, non-GAAP		44.1	%		36.6	%		42.0	%		36.3	%

General and administrative	$	24,108		$	17,384		$	48,102		$	34,405
Less: Stock-based compensation		8,148			4,792			15,405			9,572
General and administrative, non-GAAP	$	15,960		$	12,592		$	32,697		$	24,833
As percentage of revenue, non-GAAP		12.1	%		11.9	%		12.5	%		11.8	%

Loss from operations	$	(28,192	)	$	(5,743	)	$	(45,369	)	$	(9,887	)
Add back: Stock-based compensation		18,447			11,052			33,756			22,675
Add back: Amortization of acquisition-related intangibles		1,455			—			2,150			—
(Loss) income from operations, non-GAAP	$	(8,290	)	$	5,309		$	(9,463	)	$	12,788
As percentage of revenue, non-GAAP		(6.3	)%		5.0	%		(3.6	)%		6.1	%

Net loss	$	(28,861	)	$	(9,514	)	$	(47,354	)	$	(16,838	)
Add back: Stock-based compensation		18,447			11,052			33,756			22,675
Add back: Amortization of acquisition-related intangibles		1,455			—			2,150			—
Add back: Non-cash interest expense related to convertible senior notes		—			2,284			—			4,550
Net (loss) income, non-GAAP	$	(8,959	)	$	3,822		$	(11,448	)	$	10,387
As percentage of revenue, non-GAAP		(6.8	)%		3.6	%		(4.4	)%		5.0	%

Net loss per basic and diluted share:	$	(0.55	)	$	(0.19	)	$	(0.90	)	$	(0.33	)
Add back: Stock-based compensation		0.35			0.22			0.64			0.45
Add back: Amortization of acquisition-related intangibles		0.03			—			0.04			—
Add back: Non-cash interest expense related to convertible senior notes		—			0.04			—			0.09
Net (loss) income per basic share, non-GAAP	$	(0.17	)	$	0.07		$	(0.22	)	$	0.21
Net (loss) income per diluted share, non-GAAP	$	(0.17	)	$	0.07		$	(0.22	)	$	0.19

Weighted-average common shares outstanding - basic, non-GAAP		52,850,470			51,065,867			52,724,051			50,657,264
Weighted-average common shares outstanding - diluted, non-GAAP		52,850,470			55,064,895			52,724,051			55,081,027

TABLE II
WORKIVA INC.
RECONCILIATION OF NON-GAAP GUIDANCE
(in thousands, except share and per share data)
	Three months ending September 30, 2022							Year ending December 31, 2022

Loss from operations, GAAP range	$	(33,500	)	-	$	(32,500	)	$	(103,500	)	-	$	(101,500	)
Add back: Stock-based compensation		19,045				19,045			71,431				71,431
Add back: Amortization of acquisition-related intangibles		1,455				1,455			5,069				5,069
Net loss from operations, non-GAAP range	$	(13,000	)	-	$	(12,000	)	$	(27,000	)	-	$	(25,000	)

Net loss per share, GAAP range	$	(0.66	)	-	$	(0.64	)	$	(2.02	)	-	$	(1.98	)
Add back: Stock-based compensation		0.36				0.36			1.35				1.35
Add back: Amortization of acquisition-related intangibles		0.03				0.03			0.10				0.10
Net loss per share, non-GAAP range	$	(0.27	)	-	$	(0.25	)	$	(0.57	)	-	$	(0.53	)

Weighted-average common shares outstanding - basic		53,100,000				53,100,000			53,000,000				53,000,000

View source version on businesswire.com: https://www.businesswire.com/news/home/20220809005395/en/

Workiva Inc. Announces Second Quarter 2022 Financial Results