Increased Q3 2022 Subscription & Support Revenue by 19.9% over Q3 2021
Generated Total Q3 2022 Revenue of $132.8 Million, up 17.9% over Q3 2021
Achieved 25.0% 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 third quarter ended September 30, 2022.

"We are pleased with our third quarter 2022 results, delivering revenue growth near the high end of our quarterly guidance," said Marty Vanderploeg, chief executive officer. "The strategic investments we've made in our platform and solutions over the past year are paying off. For the quarter, we showed continued bookings growth in multiple solution areas led by ESG."

"Third quarter Subscription & Support revenue grew 19.9%," said Jill Klindt, chief financial officer. "Total revenue grew 17.9% even after a 1.9% negative impact from foreign currency. For the full year, we're targeting a total revenue growth rate of 20%."

"Our continued focus on driving multi-solution adoption has propelled Workiva's growth," added Vanderploeg. "As organizations face increased macro uncertainty and cost challenges, we still believe they will continue to invest in the Workiva platform to drive efficiency, enhance productivity, and deliver on their financial, regulatory, and ESG requirements."

Third Quarter 2022 Financial Highlights

Revenue: Total revenue for the third quarter of 2022 reached $132.8 million, an increase of 17.9% from $112.7 million in the third quarter of 2021. Subscription and support revenue contributed $118.6 million, up 19.9% versus the third quarter of 2021. Professional services revenue was $14.3 million, an increase of 3.5% compared to the same quarter in the prior year.
Gross Profit: GAAP gross profit for the third quarter of 2022 was $100.4 million compared with $86.3 million in the same quarter of 2021. GAAP gross margin was 75.6% versus 76.6% in the third quarter of 2021. Non-GAAP gross profit for the third quarter of 2022 was $101.8 million, an increase of 16.5% compared with the prior year's third quarter, and non-GAAP gross margin was 76.6% compared to 77.6% in the third quarter of 2021.
Results from Operations: GAAP loss from operations for the third quarter of 2022 was $30.1 million compared with a loss of $8.0 million in the prior year's third quarter. Non-GAAP loss from operations was $8.4 million, compared with non-GAAP income from operations of $5.0 million in the third quarter of 2021.
GAAP Net Loss: GAAP net loss for the third quarter of 2022 was $29.7 million compared with a net loss of $6.6 million for the prior year's third quarter. GAAP net loss per basic and diluted share was $0.56 compared with a net loss per basic and diluted share of $0.13 in the third quarter of 2021.
Non-GAAP Net Loss/Income: Non-GAAP net loss for the third quarter of 2022 was $7.9 million compared with net income of $8.7 million in the prior year's third quarter. Non-GAAP net loss per basic and diluted share was $0.15, compared with net income per basic share and diluted share of $0.17 and $0.15, respectively, in the third quarter of 2021.
Liquidity: As of September 30, 2022, Workiva had cash, cash equivalents, and marketable securities totaling $433.0 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 $15.3 million of finance lease obligations outstanding as of September 30, 2022.

Key Metrics and Recent Business Highlights

Customers: Workiva had 5,541 customers as of September 30, 2022, including approximately 895 ParsePort ESEF customers, a net increase of 1,395 customers from September 30, 2021.
Revenue Retention Rate: As of September 30, 2022, Workiva's revenue retention rate (excluding add-on revenue) was 98.1%, and the revenue retention rate including add-on revenue was 107.0%. Add-on revenue includes changes in both solutions and pricing for existing customers.
Large Contracts: As of September 30, 2022, Workiva had 1,257 customers with an annual contract value ("ACV") of more than $100,000, up 21% from 1,043 customers at September 30, 2021. Workiva had 676 customers with an ACV of more than $150,000, up 25% from 541 customers in the third quarter of 2021. Workiva had 214 customers with an ACV of more than $300,000, up 21% from 177 customers in the third quarter of 2021.

Financial Outlook

As of November 2, 2022, Workiva is providing updated guidance as follows:

Fourth Quarter 2022 Guidance:

Total revenue is expected to be in the range of $138.9 million to $139.9 million.
GAAP loss from operations is expected to be in the range of $24.9 million to $23.9 million.
Non-GAAP loss from operations is expected to be in the range of $5.7 million to $4.7 million.
GAAP net loss per basic share is expected to be in the range of $0.47 to $0.45.
Non-GAAP net loss per basic share is expected to be in the range of $0.10 to $0.08.
Net loss per basic share is based on 53.3 million weighted-average shares outstanding.

Full Year 2022 Guidance:

Total revenue is expected to be in the range of $533.0 million to $534.0 million.
GAAP loss from operations is expected to be in the range of $100.4 million to $99.4 million.
Non-GAAP loss from operations is expected to be in the range of $23.5 million to $22.5 million.
GAAP net loss per basic share is expected to be in the range of $1.92 to $1.90.
Non-GAAP net loss per basic share is expected to be in the range of $0.47 to $0.45.
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 third quarter 2022, in addition to discussing the Company's outlook for the fourth 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 November 9, 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

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, amortization expense for acquisition-related intangible assets, and non-cash interest expense related to our convertible senior notes 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. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be accounted for as separate liability and equity components in a manner that reflects our non-convertible debt borrowing rate. This results in the debt component being treated as though it was issued at a discount, with the debt discount being accreted as additional non-cash interest expense over the term of the notes using the effective interest method. As a result, we believe that excluding this non-cash interest expense attributable to the debt discount in calculating our non-GAAP measures is useful because this interest expense does not represent a cash outflow and is not indicative of our ongoing operational performance. 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 September 30,						Nine months ended September 30,
		2022			2021			2022			2021
	(unaudited)
Revenue
Subscription and support	$	118,591		$	98,912		$	339,064		$	275,053
Professional services		14,258			13,781			55,008			47,449
Total revenue		132,849			112,693			394,072			322,502
Cost of revenue
Subscription and support ⁽¹⁾		19,235			15,606			56,683			42,906
Professional services ⁽¹⁾		13,184			10,799			38,846			31,766
Total cost of revenue		32,419			26,405			95,529			74,672
Gross profit		100,430			86,288			298,543			247,830
Operating expenses
Research and development ⁽¹⁾		38,583			29,841			113,644			84,305
Sales and marketing ⁽¹⁾		64,560			46,026			184,879			128,586
General and administrative ⁽¹⁾		27,405			18,390			75,507			52,795
Total operating expenses		130,548			94,257			374,030			265,686
Loss from operations		(30,118	)		(7,969	)		(75,487	)		(17,856	)
Interest income		1,440			219			2,325			834
Interest expense		(1,510	)		(3,508	)		(4,540	)		(10,495	)
Other income, net		964			3,805			1,467			3,265
Loss before provision (benefit) for income taxes		(29,224	)		(7,453	)		(76,235	)		(24,252	)
Provision (benefit) for income taxes		467			(885	)		810			(846	)
Net loss	$	(29,691	)	$	(6,568	)	$	(77,045	)	$	(23,406	)
Net loss per common share:
Basic and diluted	$	(0.56	)	$	(0.13	)	$	(1.46	)	$	(0.46	)
Weighted-average common shares outstanding - basic and diluted		53,081,564			51,441,688			52,844,532			50,921,612

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

	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
	(unaudited)
Cost of revenue
Subscription and support	$	855	$	731	$	2,557	$	1,824
Professional services		533		407		1,578		1,183
Operating expenses
Research and development		3,399		2,347		9,272		7,195
Sales and marketing		4,657		4,095		14,388		10,481
General and administrative		10,853		5,107		26,258		14,679


WORKIVA INC. CONSOLIDATED BALANCE SHEETS (in thousands)
	September 30, 2022			December 31, 2021
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	229,497		$	300,386
Marketable securities		203,511			230,060
Accounts receivable, net		82,278			76,848
Deferred costs		35,043			31,152
Other receivables		3,449			3,538
Prepaid expenses and other		14,098			15,108
Total current assets		567,876			657,092
Property and equipment, net		27,133			28,821
Operating lease right-of-use assets		14,414			17,760
Deferred costs, non-current		30,258			33,091
Goodwill		103,091			34,556
Intangible assets, net		27,828			10,434
Other assets		6,037			5,005
Total assets	$	776,637		$	786,759
Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Accounts payable	$	9,674		$	4,114
Accrued expenses and other current liabilities		84,890			84,126
Deferred revenue		280,594			258,023
Convertible senior notes, current		—			298,661
Finance lease obligations		609			1,575
Total current liabilities		375,767			646,499
Convertible senior notes, non-current		339,932			—
Deferred revenue, non-current		37,498			34,181
Other long-term liabilities		1,353			1,605
Operating lease liabilities, non-current		12,866			16,408
Finance lease obligations, non-current		14,711			15,087
Total liabilities		782,127			713,780
Stockholders' (deficit) equity
Common stock		53			51
Additional paid-in-capital		522,336			525,646
Accumulated deficit		(511,214	)		(452,430	)
Accumulated other comprehensive loss		(16,665	)		(288	)
Total stockholders' (deficit) equity		(5,490	)		72,979
Total liabilities and stockholders' (deficit) equity	$	776,637		$	786,759


WORKIVA INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
	Three months ended September 30,						Nine months ended September 30,
		2022			2021			2022			2021
	(unaudited)
Cash flows from operating activities
Net loss	$	(29,691	)	$	(6,568	)	$	(77,045	)	$	(23,406	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,681			1,429			7,365			3,580
Stock-based compensation expense		20,297			12,687			54,053			35,362
Provision for (recovery of) doubtful accounts		91			(61	)		82			(162	)
Amortization of premiums and discounts on marketable securities, net		129			811			1,242			2,199
Gain on settlement of equity securities		—			(3,698	)		—			(3,698	)
Amortization of issuance costs and debt discount		325			2,301			973			6,851
Deferred income tax		57			(930	)		(91	)		(914	)
Changes in assets and liabilities:
Accounts receivable		(7,927	)		2,074			(6,190	)		5,233
Deferred costs		(1,372	)		(2,027	)		(2,662	)		(12,104	)
Operating lease right-of-use asset		1,269			985			3,877			2,906
Other receivables		(527	)		(628	)		38			(204	)
Prepaid expenses		3,593			(1,024	)		870			(4,049	)
Other assets		(1,140	)		(514	)		(1,105	)		(1,197	)
Accounts payable		3,931			478			5,995			1,214
Deferred revenue		14,775			9,949			28,573			22,028
Operating lease liability		(1,113	)		(1,112	)		(3,757	)		(3,390	)
Accrued expenses and other liabilities		(523	)		2,161			384			10,327
Net cash provided by operating activities		4,855			16,313			12,602			40,576
Cash flows from investing activities
Purchase of property and equipment		(1,023	)		(771	)		(2,226	)		(2,431	)
Purchase of marketable securities		(41,618	)		(48,213	)		(99,564	)		(143,085	)
Sale of marketable securities		—			—			14,981			250
Maturities of marketable securities		40,071			45,579			106,857			116,371
Acquisitions, net of cash acquired		—			(35,067	)		(99,186	)		(35,067	)
Purchase of intangible assets		(62	)		(64	)		(108	)		(187	)
Other investments		—			—			—			(750	)
Net cash used in investing activities		(2,632	)		(38,536	)		(79,246	)		(64,899	)

Cash flows from financing activities
Proceeds from option exercises		625			3,174			2,595			8,792
Taxes paid related to net share settlements of stock-based compensation awards		(738	)		(15,809	)		(10,652	)		(23,686	)
Proceeds from shares issued in connection with employee stock purchase plan		4,038			4,624			9,256			8,861
Principal payments on finance lease obligations		(454	)		(430	)		(1,342	)		(1,271	)
Net cash provided by (used in) financing activities		3,471			(8,441	)		(143	)		(7,304	)
Effect of foreign exchange rates on cash		(2,450	)		(405	)		(4,102	)		(79	)
Net increase (decrease) in cash and cash equivalents		3,244			(31,069	)		(70,889	)		(31,706	)
Cash and cash equivalents at beginning of period		226,253			322,194			300,386			322,831
Cash and cash equivalents at end of period	$	229,497		$	291,125		$	229,497		$	291,125


TABLE I WORKIVA INC. RECONCILIATION OF NON-GAAP INFORMATION (in thousands, except share and per share)
	Three months ended September 30,						Nine months ended September 30,
		2022			2021			2022			2021
Gross profit, subscription and support	$	99,356		$	83,306		$	282,381		$	232,147
Add back: Stock-based compensation		855			731			2,557			1,824
Gross profit, subscription and support, non-GAAP	$	100,211		$	84,037		$	284,938		$	233,971
As a percentage of subscription and support revenue, non-GAAP		84.5	%		85.0	%		84.0	%		85.1	%

Gross profit, professional services	$	1,074		$	2,982		$	16,162		$	15,683
Add back: Stock-based compensation		533			407			1,578			1,183
Gross profit, professional services, non-GAAP	$	1,607		$	3,389		$	17,740		$	16,866
As a percentage of professional services revenue, non-GAAP		11.3	%		24.6	%		32.2	%		35.5	%

Gross profit	$	100,430		$	86,288		$	298,543		$	247,830
Add back: Stock-based compensation		1,388			1,138			4,135			3,007
Gross profit, non-GAAP	$	101,818		$	87,426		$	302,678		$	250,837
As percentage of revenue, non-GAAP		76.6	%		77.6	%		76.8	%		77.8	%

Cost of revenue, subscription and support	$	19,235		$	15,606		$	56,683		$	42,906
Less: Stock-based compensation		855			731			2,557			1,824
Cost of revenue, subscription and support, non-GAAP	$	18,380		$	14,875		$	54,126		$	41,082
As percentage of revenue, non-GAAP		13.8	%		13.2	%		13.7	%		12.7	%

Cost of revenue, professional services	$	13,184		$	10,799		$	38,846		$	31,766
Less: Stock-based compensation		533			407			1,578			1,183
Cost of revenue, professional services, non-GAAP	$	12,651		$	10,392		$	37,268		$	30,583
As percentage of revenue, non-GAAP		9.5	%		9.2	%		9.5	%		9.5	%

Research and development	$	38,583		$	29,841		$	113,644		$	84,305
Less: Stock-based compensation		3,399			2,347			9,272			7,195
Less: Amortization of acquisition-related intangibles		876			275			2,240			275
Research and development, non-GAAP	$	34,308		$	27,219		$	102,132		$	76,835
As percentage of revenue, non-GAAP		25.8	%		24.2	%		25.9	%		23.8	%

Sales and marketing	$	64,560		$	46,026		$	184,879		$	128,586
Less: Stock-based compensation		4,657			4,095			14,388			10,481
Less: Amortization of acquisition-related intangibles		587			13			1,373			13
Sales and marketing, non-GAAP	$	59,316		$	41,918		$	169,118		$	118,092
As percentage of revenue, non-GAAP		44.6	%		37.2	%		42.9	%		36.6	%

General and administrative	$	27,405		$	18,390		$	75,507		$	52,795
Less: Stock-based compensation		10,853			5,107			26,258			14,679
General and administrative, non-GAAP	$	16,552		$	13,283		$	49,249		$	38,116
As percentage of revenue, non-GAAP		12.5	%		11.8	%		12.5	%		11.8	%

Loss from operations	$	(30,118	)	$	(7,969	)	$	(75,487	)	$	(17,856	)
Add back: Stock-based compensation		20,297			12,687			54,053			35,362
Add back: Amortization of acquisition-related intangibles		1,463			288			3,613			288
(Loss) income from operations, non-GAAP	$	(8,358	)	$	5,006		$	(17,821	)	$	17,794
As percentage of revenue, non-GAAP		(6.3	) %		4.4	%		(4.5	) %		5.5	%

Net loss	$	(29,691	)	$	(6,568	)	$	(77,045	)	$	(23,406	)
Add back: Stock-based compensation		20,297			12,687			54,053			35,362
Add back: Amortization of acquisition-related intangibles		1,463			288			3,613			288
Add back: Non-cash interest expense related to convertible senior notes		—			2,301			—			6,851
Net (loss) income, non-GAAP	$	(7,931	)	$	8,708		$	(19,379	)	$	19,095
As percentage of revenue, non-GAAP		(6.0	) %		7.7	%		(4.9	) %		5.9	%

Net loss per basic and diluted share:	$	(0.56	)	$	(0.13	)	$	(1.46	)	$	(0.46	)
Add back: Stock-based compensation		0.38			0.25			1.02			0.69
Add back: Amortization of acquisition-related intangibles		0.03			0.01			0.07			0.01
Add back: Non-cash interest expense related to convertible senior notes		—			0.04			—			0.13
Net (loss) income per basic share, non-GAAP	$	(0.15	)	$	0.17		$	(0.37	)	$	0.37
Net (loss) income per diluted share, non-GAAP	$	(0.15	)	$	0.15		$	(0.37	)	$	0.34

Weighted-average common shares outstanding - basic, non-GAAP		53,081,564			51,441,688			52,844,532			50,921,612
Weighted-average common shares outstanding - diluted, non-GAAP		53,081,564			56,563,730			52,844,532			55,687,528


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

Loss from operations, GAAP range	$	(24,869	)	-	$	(23,869	)	$	(100,356	)	-	$	(99,356	)
Add back: Stock-based compensation		17,788				17,788			71,841				71,841
Add back: Amortization of acquisition-related intangibles		1,402				1,402			5,015				5,015
Net loss from operations, non-GAAP range	$	(5,679	)	-	$	(4,679	)	$	(23,500	)	-	$	(22,500	)

Net loss per share, GAAP range	$	(0.47	)	-	$	(0.45	)	$	(1.92	)	-	$	(1.90	)
Add back: Stock-based compensation		0.33				0.33			1.36				1.36
Add back: Amortization of acquisition-related intangibles		0.03				0.03			0.09				0.09
Net loss per share, non-GAAP range	$	(0.10	)	-	$	(0.08	)	$	(0.47	)	-	$	(0.45	)

Weighted-average common shares outstanding - basic		53,300,000				53,300,000			53,000,000				53,000,000

View source version on businesswire.com: https://www.businesswire.com/news/home/20221102005408/en/

Workiva Inc. Announces Third Quarter 2022 Financial Results