Business Wire | Nov 4, 2020 04:15PM EST

Workiva Announces Third Quarter 2020 Financial Results

Nov. 04, 2020

AMES, Iowa--(BUSINESS WIRE)--Nov. 04, 2020--Workiva Inc. (NYSE:WK), the company that simplifies complex work, today announced financial results for its third quarter ended September 30, 2020.

"We are pleased with our financial results, which beat guidance for revenue and operating income," said Marty Vanderploeg, Chief Executive Officer. "We executed on our initiatives, resulting in record bookings in the third quarter."

"Both transaction volume and average deal size exceeded our expectations in the third quarter," said Stuart Miller, Chief Financial Officer. "As a result, we are raising guidance for the fourth quarter."

"The global trends of online collaboration and remote work continue to benefit Workiva," said Vanderploeg. "In the third quarter, we saw broad demand across key solutions, particularly in global statutory reporting, management reporting and capital markets."

"We continued to make great progress upgrading customers to our next-generation platform during the third quarter," said Vanderploeg. "Customers accounting for over 90% of our Annual Contract Value have upgraded. The Workiva platform continues to be a key enabler of our growth strategy."

Third Quarter 2020 Financial Highlights

* Revenue: Total revenue for the third quarter of 2020 reached $88.1 million, an increase of 18.8% from $74.2 million in the third quarter of 2019. Subscription and support revenue contributed $75.9 million, up 20.4% versus the third quarter of 2019. Professional services revenue was $12.2 million, an increase of 9.8% compared to the same quarter in the prior year.

* Gross Profit: GAAP gross profit for the third quarter of 2020 was $66.2 million compared with $52.4 million in the same quarter of 2019. GAAP gross margin was 75.2% versus 70.7% in the third quarter of 2019. Non-GAAP gross profit for the third quarter of 2020 was $66.9 million, an increase of 25.6% compared with the prior year's third quarter, and non-GAAP gross margin was 75.9% compared to 71.8% in the third quarter of 2019.

* Results from Operations: GAAP loss from operations for the third quarter of 2020 was $7.0 million compared with a loss of $15.5 million in the prior year's third quarter. Non-GAAP income from operations was $3.6 million, compared with non-GAAP loss from operations of $6.3 million in the third quarter of 2019.

* GAAP Net Loss: GAAP net loss for the third quarter of 2020 was $10.5 million compared with a net loss of $16.1 million for the prior year's third quarter. GAAP net loss per basic and diluted share was $0.22 compared with a net loss per basic and diluted share of $0.34 in the third quarter of 2019.

* Non-GAAP Net Income/Loss: Non-GAAP net income for the third quarter of 2020 was $2.3 million compared with a net loss of $5.7 million in the prior year's third quarter. Non-GAAP net income per basic and diluted share was $0.05 and $0.04, respectively, compared with a net loss per basic and diluted share of $0.12, in the third quarter of 2019.

* Liquidity: As of September 30, 2020, Workiva had cash, cash equivalents and marketable securities totaling $523.9 million, compared with $488.0 million as of December 31, 2019. Workiva had $345.0 million aggregate principal amount of 1.125% convertible senior notes due in 2026 and $16.2 million of other financing obligations outstanding as of September 30, 2020.

Key Metrics and Recent Business Highlights

* Customers: Workiva had 3,583 customers as of September 30, 2020, a net increase of 129 customers from September 30, 2019.

* Revenue Retention Rate: As of September 30, 2020, Workiva's revenue retention rate (excluding add-on revenue) was 94.9%, and the revenue retention rate including add-on revenue was 110.0%. Add-on revenue includes changes in both solutions and pricing for existing customers.

* Large Contracts: As of September 30, 2020, Workiva had 785 customers with an annual contract value (ACV) of more than $100,000, up 28% from 611 customers at September 30, 2019. Workiva had 383 customers with an ACV of more than $150,000, up 47% from 261 customers in the third quarter of 2019.

Financial Outlook

As of November 4, 2020, Workiva is providing guidance as follows:

Fourth Quarter 2020 Guidance

* Total revenue is expected to be in the range of $90.2 million to $90.7 million. * GAAP loss from operations is expected to be in the range of $10.0 million to $9.5 million. * Non-GAAP income from operations is expected to be in the range of $0.5 million to $1.0 million. * GAAP net loss per basic and diluted share is expected to be in the range of $0.26 to $0.25. * Non-GAAP net income per basic share is expected to be in the range of $0.00 to $0.01. * Net income (loss) per basic share is based on 49.1 million weighted-average shares outstanding.

Full Year 2020 Guidance:

* Total revenue is expected to be in the range of $348.0 million to $348.5 million. * GAAP loss from operations is expected to be in the range of $42.9 million to $42.4 million. * Non-GAAP income from operations is expected to be in the range of $3.0 million to $3.5 million. * GAAP net loss per basic and diluted share is expected to be in the range of $1.11 to $1.10. * Non-GAAP net income per basic share is expected to be in the range of $0.02 to $0.03. * Net income (loss) per basic share is based on 48.5 million weighted-average shares outstanding.

"On a preliminary basis, we expect total revenue to exceed $401 million in 2021. We expect the growth rate of revenue from subscription and support to exceed the growth rate of revenue from professional services. In addition, we expect non-GAAP operating loss as a percentage of revenue to be a low single digit in 2021," said Miller.

Workiva has factored into its guidance the expected impacts of COVID-19 on its business and results of operations based on currently available information. Significant variation from these assumptions could cause the company to change its guidance, and it undertakes no obligation to update its assumptions, expectations or guidance. These statements are forward-looking, and actual results may differ materially, as further discussed below under the heading "Safe Harbor Statement."

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, in addition to discussing the Company's outlook for the fourth quarter and full year 2020. To access this call, dial 833-968-1977 (U.S. domestic) or 647-689-6649 (international). The conference ID is 4214167. 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 11, 2020, at 800-585-8367 (U.S. domestic) or 416-621-4642 (international). The replay pass code is 4214167. 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) simplifies complex work for thousands of organizations worldwide. Customers trust Workiva's open, intelligent and intuitive platform to connect data, documents and teams. The results: more efficiency, greater transparency and less risk. Learn more at workiva.com.

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

Non-GAAP Financial Measures

The non-GAAP adjustments referenced herein relate to the exclusion of stock-based compensation and non-cash interest expense. 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. As it relates to Non-GAAP loss from operations for 2021, described above, the Company has not provided guidance for GAAP measures or a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP measure, because it is unable to predict with reasonable certainty the GAAP loss from operations and its components without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on the GAAP reported results for 2021.

Workiva believes that the use of non-GAAP gross profit and gross margin, non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss per share is helpful to its investors. These measures, which are referred to as non-GAAP financial measures, are not prepared in accordance with generally accepted accounting principles in the United States, or GAAP. Non-GAAP gross profit is calculated by excluding stock-based compensation expense attributable to cost of revenues from gross profit. Non-GAAP gross margin is the ratio calculated by dividing non-GAAP gross profit by revenues. Non-GAAP loss from operations is calculated by excluding stock-based compensation expense from loss from operations. Non-GAAP net loss is calculated by excluding stock-based compensation expense, net of tax, and non-cash interest expense related to our convertible senior notes 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. 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 Nine months ended September 30, September 30,

2020 2019 2020 2019

(unaudited)

Revenue

Subscription and $ 75,850 $ 63,022 $ 214,907 $ 179,617 support

Professional services 12,249 11,157 42,853 38,009

Total revenue 88,099 74,179 257,760 217,626

Cost of revenue

Subscription and 12,013 10,924 36,264 30,935 support ^(1)

Professional services 9,873 10,827 30,262 31,029 ^(1)

Total cost of revenue 21,886 21,751 66,526 61,964

Gross profit 66,213 52,428 191,234 155,662

Operating expenses

Research and 23,956 22,899 70,458 66,705 development ^(1)

Sales and marketing ^ 35,487 32,990 106,874 86,568 (1)

General and 13,722 12,017 46,802 33,626 administrative ^(1)

Total operating 73,165 67,906 224,134 186,899 expenses

Loss from operations (6,952 ) (15,478 ) (32,900 ) (31,237 )

Interest income 471 1,460 2,832 2,593

Interest expense (3,572 ) (1,959 ) (10,689 ) (2,832 )

Other (expense) and (387 ) 24 263 (259 )income, net

Loss before provision (10,440 ) (15,953 ) (40,494 ) (31,735 )for income taxes

Provision for income 67 98 351 101 taxes

Net loss $ (10,507 ) $ (16,051 ) $ (40,845 ) $ (31,836 )

Net loss per common share:

Basic and diluted $ (0.22 ) $ (0.34 ) $ (0.85 ) $ (0.69 )

Weighted-averagecommon shares 48,840,131 46,731,663 48,188,183 46,048,037 outstanding - basicand diluted

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

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

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019

(unaudited)

Cost of revenue

Subscription and support

$

426

$

386

$

1,293

$

1,142

Professional services

272

456

1,062

1,296

Operating expenses

Research and development

2,167

2,265

5,790

6,016

Sales and marketing

2,687

2,203

8,367

6,199

General and administrative

5,049

3,913

18,919

11,276

Three months ended Nine months ended September 30, September 30,

2020 2019 2020 2019

(unaudited)

Cost of revenue

Subscription and support $ 426 $ 386 $ 1,293 $ 1,142

Professional services 272 456 1,062 1,296

Operating expenses

Research and development 2,167 2,265 5,790 6,016

Sales and marketing 2,687 2,203 8,367 6,199

General and administrative 5,049 3,913 18,919 11,276

WORKIVA INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30, 2020

December 31, 2019

(unaudited)

Assets

Current assets

Cash and cash equivalents

$

426,132

$

381,742

Marketable securities

97,750

106,214

Accounts receivable, net

55,571

60,228

Deferred commissions

17,919

14,108

Other receivables

2,417

2,432

Prepaid expenses and other

9,587

6,508

Total current assets

609,376

571,232

Property and equipment, net

38,231

39,745

Operating lease right-of-use assets

16,631

15,352

Deferred commissions, non-current

17,572

14,977

Intangible assets, net

1,633

1,651

Other assets

4,059

3,439

Total assets

$

687,502

$

646,396

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$

3,651

$

7,057

Accrued expenses and other current liabilities

63,444

49,930

Deferred revenue

182,700

173,617

Current portion of financing obligations

1,429

1,328

Total current liabilities

251,224

231,932

Convertible senior notes, net

287,242

280,601

Deferred revenue, non-current

34,756

32,569

Other long-term liabilities

1,748

1,498

Operating lease liabilities, non-current

18,229

18,564

Financing obligations, non-current

14,805

15,889

Total liabilities

608,004

581,053

Stockholders' equity

Common stock

48

47

Additional paid-in-capital

474,969

420,170

Accumulated deficit

(396,006

)

(355,161

)

Accumulated other comprehensive income

487

287

Total stockholders' equity

79,498

65,343

Total liabilities and stockholders' equity

$

687,502

$

646,396

WORKIVA INC.



CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30, December 31, 2020 2019

(unaudited)

Assets

Current assets

Cash and cash equivalents $ 426,132 $ 381,742

Marketable securities 97,750 106,214

Accounts receivable, net 55,571 60,228

Deferred commissions 17,919 14,108

Other receivables 2,417 2,432

Prepaid expenses and other 9,587 6,508

Total current assets 609,376 571,232

Property and equipment, net 38,231 39,745

Operating lease right-of-use assets 16,631 15,352

Deferred commissions, non-current 17,572 14,977

Intangible assets, net 1,633 1,651

Other assets 4,059 3,439

Total assets $ 687,502 $ 646,396

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable $ 3,651 $ 7,057

Accrued expenses and other current 63,444 49,930 liabilities

Deferred revenue 182,700 173,617

Current portion of financing obligations 1,429 1,328

Total current liabilities 251,224 231,932

Convertible senior notes, net 287,242 280,601

Deferred revenue, non-current 34,756 32,569

Other long-term liabilities 1,748 1,498

Operating lease liabilities, non-current 18,229 18,564

Financing obligations, non-current 14,805 15,889

Total liabilities 608,004 581,053

Stockholders' equity

Common stock 48 47

Additional paid-in-capital 474,969 420,170

Accumulated deficit (396,006 ) (355,161 )

Accumulated other comprehensive income 487 287

Total stockholders' equity 79,498 65,343

Total liabilities and stockholders' equity $ 687,502 $ 646,396

WORKIVA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three months ended September 30,

Nine months ended September 30,

2020

2019

2020

2019

(unaudited)

Cash flows from operating activities

Net loss

$

(10,507

)

$

(16,051

)

$

(40,845

)

$

(31,836

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

1,160

1,058

3,433

2,932

Stock-based compensation expense

10,601

9,223

35,431

25,929

Recovery of doubtful accounts

(550

)

(104

)

(191

)

(58

)

Amortization (accretion) of premiums and discounts on marketable securities, net

106

15

319

(89

)

Amortization of debt discount and issuance costs

2,231

1,083

6,641

1,083

Deferred income tax

63

(21

)

(68

)

(67

)

Changes in assets and liabilities:

Accounts receivable

(13,307

)

3,579

4,805

21,530

Deferred commissions

(4,818

)

(2,106

)

(6,381

)

(7,968

)

Operating lease right-of-use asset

1,019

581

2,992

1,805

Other receivables

224

(417

)

29

(470

)

Prepaid expenses

(211

)

(191

)

(3,056

)

(3,737

)

Other assets

83

(943

)

(600

)

(2,349

)

Accounts payable

(181

)

516

(3,255

)

160

Deferred revenue

16,182

3,830

11,314

14,112

Operating lease liability

(1,115

)

(758

)

(3,438

)

(2,226

)

Accrued expenses and other liabilities

6,819

5,403

12,531

9,828

Net cash provided by operating activities

7,799

4,697

19,661

28,579

Cash flows from investing activities

Purchase of property and equipment

(379

)

(663

)

(1,763

)

(2,860

)

Purchase of marketable securities

(7,980

)

(54,749

)

(45,269

)

(95,466

)

Sale of marketable securities

-

498

11,423

498

Maturities of marketable securities

16,300

1,500

42,337

20,390

Purchase of intangible assets

(102

)

(51

)

(253

)

(712

)

Other

-

(1,000

)

-

(1,000

)

Net cash provided by (used in) investing activities

7,839

(54,465

)

6,475

(79,150

)

Cash flows from financing activities

Proceeds from option exercises

4,795

5,940

14,253

22,493

Taxes paid related to net share settlements of stock-based compensation awards

-

-

(2,111

)

(390

)

Proceeds from shares issued in connection with employee stock purchase plan

3,567

2,773

7,227

4,922

Proceeds from the issuance of convertible senior notes, net of issuance costs

-

335,899

-

335,899

Principal payments on capital lease and financing obligations

(335

)

(306

)

(983

)

(901

)

Net cash provided by financing activities

8,027

344,306

18,386

362,023

Effect of foreign exchange rates on cash

346

(127

)

(132

)

88

Net increase in cash and cash equivalents

24,011

294,411

44,390

311,540

Cash and cash equivalents at beginning of period

402,121

94,713

381,742

77,584

Cash and cash equivalents at end of period

$

426,132

$

389,124

$

426,132

$

389,124

WORKIVA INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three months ended Nine months ended September 30, September 30,

2020 2019 2020 2019

(unaudited)

Cash flows from operating activities

Net loss $ (10,507 ) $ (16,051 ) $ (40,845 ) $ (31,836 )

Adjustments to reconcilenet loss to net cash provided by operatingactivities:

Depreciation and 1,160 1,058 3,433 2,932 amortization

Stock-based compensation 10,601 9,223 35,431 25,929 expense

Recovery of doubtful (550 ) (104 ) (191 ) (58 )accounts

Amortization (accretion)of premiums and discounts 106 15 319 (89 )on marketable securities,net

Amortization of debtdiscount and issuance 2,231 1,083 6,641 1,083 costs

Deferred income tax 63 (21 ) (68 ) (67 )

Changes in assets and liabilities:

Accounts receivable (13,307 ) 3,579 4,805 21,530

Deferred commissions (4,818 ) (2,106 ) (6,381 ) (7,968 )

Operating lease 1,019 581 2,992 1,805 right-of-use asset

Other receivables 224 (417 ) 29 (470 )

Prepaid expenses (211 ) (191 ) (3,056 ) (3,737 )

Other assets 83 (943 ) (600 ) (2,349 )

Accounts payable (181 ) 516 (3,255 ) 160

Deferred revenue 16,182 3,830 11,314 14,112

Operating lease liability (1,115 ) (758 ) (3,438 ) (2,226 )

Accrued expenses and 6,819 5,403 12,531 9,828 other liabilities

Net cash provided by 7,799 4,697 19,661 28,579 operating activities

Cash flows from investing activities

Purchase of property and (379 ) (663 ) (1,763 ) (2,860 )equipment

Purchase of marketable (7,980 ) (54,749 ) (45,269 ) (95,466 )securities

Sale of marketable - 498 11,423 498 securities

Maturities of marketable 16,300 1,500 42,337 20,390 securities

Purchase of intangible (102 ) (51 ) (253 ) (712 )assets

Other - (1,000 ) - (1,000 )

Net cash provided by(used in) investing 7,839 (54,465 ) 6,475 (79,150 )activities



Cash flows from financing activities

Proceeds from option 4,795 5,940 14,253 22,493 exercises

Taxes paid related to netshare settlements of - - (2,111 ) (390 )stock-based compensationawards

Proceeds from sharesissued in connection with 3,567 2,773 7,227 4,922 employee stock purchaseplan

Proceeds from theissuance of convertible - 335,899 - 335,899 senior notes, net ofissuance costs

Principal payments oncapital lease and (335 ) (306 ) (983 ) (901 )financing obligations

Net cash provided by 8,027 344,306 18,386 362,023 financing activities

Effect of foreign 346 (127 ) (132 ) 88 exchange rates on cash

Net increase in cash and 24,011 294,411 44,390 311,540 cash equivalents

Cash and cash equivalents 402,121 94,713 381,742 77,584 at beginning of period

Cash and cash equivalents $ 426,132 $ 389,124 $ 426,132 $ 389,124 at end of period

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,

2020

2019

2020

2019

Gross profit, subscription and support

$

63,837

$

52,098

$

178,643

$

148,682

Add back: Stock-based compensation

426

386

1,293

1,142

Gross profit, subscription and support, non-GAAP

$

64,263

$

52,484

$

179,936

$

149,824

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

84.7

%

83.3

%

83.7

%

83.4

%

Gross profit, professional services

$

2,376

$

330

$

12,591

$

6,980

Add back: Stock-based compensation

272

456

1,062

1,296

Gross profit, professional services, non-GAAP

$

2,648

$

786

$

13,653

$

8,276

As a percentage of professional services revenue, non-GAAP

21.6

%

7.0

%

31.9

%

21.8

%

Gross profit

$

66,213

$

52,428

$

191,234

$

155,662

Add back: Stock-based compensation

698

842

2,355

2,438

Gross profit, non-GAAP

$

66,911

$

53,270

$

193,589

$

158,100

As percentage of revenue, non-GAAP

75.9

%

71.8

%

75.1

%

72.6

%

Cost of revenue, subscription and support

$

12,013

$

10,924

$

36,264

$

30,935

Less: Stock-based compensation

426

386

1,293

1,142

Cost of revenue, subscription and support, non-GAAP

$

11,587

$

10,538

$

34,971

$

29,793

As percentage of revenue, non-GAAP

13.2

%

14.2

%

13.6

%

13.7

%

Cost of revenue, professional services

$

9,873

$

10,827

$

30,262

$

31,029

Less: Stock-based compensation

272

456

1,062

1,296

Cost of revenue, professional services, non-GAAP

$

9,601

$

10,371

$

29,200

$

29,733

As percentage of revenue, non-GAAP

10.9

%

14.0

%

11.3

%

13.7

%

Research and development

$

23,956

$

22,899

$

70,458

$

66,705

Less: Stock-based compensation

2,167

2,265

5,790

6,016

Research and development, non-GAAP

$

21,789

$

20,634

$

64,668

$

60,689

As percentage of revenue, non-GAAP

24.7

%

27.8

%

25.1

%

27.9

%

Sales and marketing

$

35,487

$

32,990

$

106,874

$

86,568

Less: Stock-based compensation

2,687

2,203

8,367

6,199

Sales and marketing, non-GAAP

$

32,800

$

30,787

$

98,507

$

80,369

As percentage of revenue, non-GAAP

37.2

%

41.5

%

38.2

%

36.9

%

General and administrative

$

13,722

$

12,017

$

46,802

$

33,626

Less: Stock-based compensation

5,049

3,913

18,919

11,276

General and administrative, non-GAAP

$

8,673

$

8,104

$

27,883

$

22,350

As percentage of revenue, non-GAAP

9.8

%

10.9

%

10.8

%

10.3

%

Loss from operations

$

(6,952

)

$

(15,478

)

$

(32,900

)

$

(31,237

)

Add back: Stock-based compensation

10,601

9,223

35,431

25,929

Income (loss) from operations, non-GAAP

$

3,649

$

(6,255

)

$

2,531

$

(5,308

)

As percentage of revenue, non-GAAP

4.1

%

(8.4

)%

1.0

%

(2.4

)%

Net loss

$

(10,507

)

$

(16,051

)

$

(40,845

)

$

(31,836

)

Add back: Stock-based compensation

10,601

9,223

35,431

25,929

Add back: Non-cash interest expense related to convertible senior notes

2,231

1,083

6,641

1,083

Net income (loss), non-GAAP

$

2,325

$

(5,745

)

$

1,227

$

(4,824

)

As percentage of revenue, non-GAAP

2.6

%

(7.7

)%

0.5

%

(2.2

)%

Net loss per basic and diluted share:

$

(0.22

)

$

(0.34

)

$

(0.85

)

$

(0.69

)

Add back: Stock-based compensation

0.22

0.20

0.74

0.57

Add back: Non-cash interest expense related to convertible senior notes

0.05

0.02

0.14

0.02

Net income (loss) per basic share, non-GAAP

$

0.05

$

(0.12

)

$

0.03

$

(0.10

)

Net income (loss) per diluted share, non-GAAP

$

0.04

$

(0.12

)

$

0.02

$

(0.10

)

Weighted-average common shares outstanding - basic, non-GAAP

48,840,131

46,731,663

48,188,183

46,048,037

Weighted-average common shares outstanding - diluted, non-GAAP

53,209,214

46,731,663

52,417,046

46,048,037

TABLE I

WORKIVA INC.

RECONCILIATION OF NON-GAAP INFORMATION

(in thousands, except share and per share)

Three months ended Nine months ended September 30, September 30,

2020 2019 2020 2019

Gross profit,subscription and $ 63,837 $ 52,098 $ 178,643 $ 148,682 support

Add back: Stock-based 426 386 1,293 1,142 compensation

Gross profit,subscription and $ 64,263 $ 52,484 $ 179,936 $ 149,824 support, non-GAAP

As a percentage ofsubscription and 84.7 % 83.3 % 83.7 % 83.4 %support revenue,non-GAAP



Gross profit, $ 2,376 $ 330 $ 12,591 $ 6,980 professional services

Add back: Stock-based 272 456 1,062 1,296 compensation

Gross profit,professional $ 2,648 $ 786 $ 13,653 $ 8,276 services, non-GAAP

As a percentage ofprofessional services 21.6 % 7.0 % 31.9 % 21.8 %revenue, non-GAAP



Gross profit $ 66,213 $ 52,428 $ 191,234 $ 155,662

Add back: Stock-based 698 842 2,355 2,438 compensation

Gross profit, $ 66,911 $ 53,270 $ 193,589 $ 158,100 non-GAAP

As percentage of 75.9 % 71.8 % 75.1 % 72.6 %revenue, non-GAAP



Cost of revenue,subscription and $ 12,013 $ 10,924 $ 36,264 $ 30,935 support

Less: Stock-based 426 386 1,293 1,142 compensation

Cost of revenue,subscription and $ 11,587 $ 10,538 $ 34,971 $ 29,793 support, non-GAAP

As percentage of 13.2 % 14.2 % 13.6 % 13.7 %revenue, non-GAAP



Cost of revenue, $ 9,873 $ 10,827 $ 30,262 $ 31,029 professional services

Less: Stock-based 272 456 1,062 1,296 compensation

Cost of revenue,professional $ 9,601 $ 10,371 $ 29,200 $ 29,733 services, non-GAAP

As percentage of 10.9 % 14.0 % 11.3 % 13.7 %revenue, non-GAAP



Research and $ 23,956 $ 22,899 $ 70,458 $ 66,705 development

Less: Stock-based 2,167 2,265 5,790 6,016 compensation

Research and $ 21,789 $ 20,634 $ 64,668 $ 60,689 development, non-GAAP

As percentage of 24.7 % 27.8 % 25.1 % 27.9 %revenue, non-GAAP



Sales and marketing $ 35,487 $ 32,990 $ 106,874 $ 86,568

Less: Stock-based 2,687 2,203 8,367 6,199 compensation

Sales and marketing, $ 32,800 $ 30,787 $ 98,507 $ 80,369 non-GAAP

As percentage of 37.2 % 41.5 % 38.2 % 36.9 %revenue, non-GAAP



General and $ 13,722 $ 12,017 $ 46,802 $ 33,626 administrative

Less: Stock-based 5,049 3,913 18,919 11,276 compensation

General andadministrative, $ 8,673 $ 8,104 $ 27,883 $ 22,350 non-GAAP

As percentage of 9.8 % 10.9 % 10.8 % 10.3 %revenue, non-GAAP



Loss from operations $ (6,952 ) $ (15,478 ) $ (32,900 ) $ (31,237 )

Add back: Stock-based 10,601 9,223 35,431 25,929 compensation

Income (loss) from $ 3,649 $ (6,255 ) $ 2,531 $ (5,308 )operations, non-GAAP

As percentage of 4.1 % (8.4 ) 1.0 % (2.4 )revenue, non-GAAP % %



Net loss $ (10,507 ) $ (16,051 ) $ (40,845 ) $ (31,836 )

Add back: Stock-based 10,601 9,223 35,431 25,929 compensation

Add back: Non-cashinterest expenserelated to 2,231 1,083 6,641 1,083 convertible seniornotes

Net income (loss), $ 2,325 $ (5,745 ) $ 1,227 $ (4,824 )non-GAAP

As percentage of 2.6 % (7.7 ) 0.5 % (2.2 )revenue, non-GAAP % %



Net loss per basic $ (0.22 ) $ (0.34 ) $ (0.85 ) $ (0.69 )and diluted share:

Add back: Stock-based 0.22 0.20 0.74 0.57 compensation

Add back: Non-cashinterest expenserelated to 0.05 0.02 0.14 0.02 convertible seniornotes

Net income (loss) per $ 0.05 $ (0.12 ) $ 0.03 $ (0.10 )basic share, non-GAAP

Net income (loss) perdiluted share, $ 0.04 $ (0.12 ) $ 0.02 $ (0.10 )non-GAAP



Weighted-averagecommon shares 48,840,131 46,731,663 48,188,183 46,048,037 outstanding - basic,non-GAAP

Weighted-averagecommon shares 53,209,214 46,731,663 52,417,046 46,048,037 outstanding -diluted, non-GAAP

TABLE II

WORKIVA INC.

RECONCILIATION OF NON-GAAP GUIDANCE

(in thousands, except share and per share data)

Three months ending December 31, 2020

Year ending December 31, 2020

Loss from operations, GAAP range

$

(10,000

)

-

$

(9,500

)

$

(42,900

)

-

$

(42,400

)

Add back: Stock-based compensation

10,500

10,500

45,900

45,900

Income from operations, non-GAAP range

$

500

-

$

1,000

$

3,000

-

$

3,500

Net loss per share, GAAP range

$

(0.26

)

-

$

(0.25

)

$

(1.11

)

-

$

(1.10

)

Add back: Stock-based compensation

0.21

0.21

0.95

0.95

Add back: Non-cash interest expense related to convertible senior notes

0.05

0.05

0.18

0.18

Net income per share, basic, non-GAAP range

$

0.00

-

$

0.01

$

0.02

-

$

0.03

Weighted-average common shares outstanding - basic

49,100,000

49,100,000

48,500,000

48,500,000

View source version on businesswire.com: https://www.businesswire.com/news/home/20201104005040/en/

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

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