Increased Q3 2023 Subscription & Support Revenue by 21% over Q3 2022

Generated Total Q3 2023 Revenue of $158.2 Million, up 19% over Q3 2022

Achieved 38% YOY Growth of Customers with Annual Contract Value Over $300K

Workiva Inc. (NYSE:WK), the world's leading cloud platform for assured, integrated reporting, today announced financial results for its third quarter ended September 30, 2023.

"Workiva delivered another solid quarter, achieving subscription revenue growth of 21% and an operating profit that beat the high end of our guidance," said CEO Julie Iskow. "Our platform offering continues to stand out from the SaaS crowd given that we solve problems our customers must address. Companies need transparency. They need to comply with regulation. And, they need accuracy in reporting and disclosure. We provide solutions that they need in good times and in challenging times."

Iskow added, "The value our platform provides was also quantified by the continued large contract account expansion we saw during the quarter. We continue to see outpaced growth in our large contract customers. Compared to third quarter 2022, the number of annual contracts valued over $100,000 increased 24%. Contracts valued over $150,000 increased 26% and contracts over $300,000 were up 38%."

"We were pleased with the strong increase we saw in net revenue retention, which improved for the fourth consecutive quarter," said CFO Jill Klindt. "With add-ons, our subscription revenue retention rate increased to 112% compared to 107% for the third quarter 2022. The main driver of this improvement is strong account expansion activity."

"The operating profit we posted in the third quarter is a result of our continued focus on growth and productivity. This focus has helped us improve our operating leverage and stay committed to our goal of delivering improved operating margins and non-GAAP profitability for both 2023 and 2024," added Klindt.

Third Quarter 2023 Financial Highlights

Revenue: Total revenue for the third quarter of 2023 reached $158 million, an increase of 19% from $133 million in the third quarter of 2022. Subscription and support revenue contributed $143 million, up 21% versus the third quarter of 2022. Professional services revenue was $15 million, a slight increase compared to the same quarter in the prior year.

Gross Profit: GAAP gross profit for the third quarter of 2023 was $120 million compared with $100 million in the same quarter of 2022. GAAP gross margin was 75.8% versus 75.6% in the third quarter of 2022. Non-GAAP gross profit for the third quarter of 2023 was $122 million, an increase of 20% compared with the prior year's third quarter, and non-GAAP gross margin was 76.9% compared to 76.6% in the third quarter of 2022.

Results from Operations: GAAP loss from operations for the third quarter of 2023 was $16 million compared with a loss of $30 million in the prior year's third quarter. Non-GAAP income from operations was $5 million compared with a loss of $8 million in the third quarter of 2022.

GAAP Net Loss: GAAP net loss for the third quarter of 2023 was $56 million compared with a net loss of $30 million for the prior year's third quarter. GAAP net loss per basic and diluted share was $1.04 compared with a net loss per basic and diluted share of $0.56 in the third quarter of 2022.

Non-GAAP Net Loss: Non-GAAP net loss for the third quarter of 2023 was $35 million compared with a loss of $8 million in the prior year's third quarter. Non-GAAP net loss per basic share and diluted share was $0.65 compared with a net loss per basic and diluted share of $0.15 in the third quarter of 2022. In connection with the 2026 note repurchase described below, we recorded a loss on induced conversion of $45.1 million which was recorded as interest expense.

Liquidity: As of September 30, 2023, Workiva had cash, cash equivalents, and marketable securities totaling $782 million, compared with $431 million as of December 31, 2022. In August 2023, we issued $702.0 million aggregate principal amount of 1.250% convertible senior notes due in 2028. We used $396.9 million of the net proceeds from the 2028 Notes offering to repurchase $273.8 million principal amount, together with accrued and unpaid interest thereon, of our 2026 Notes. Workiva had $71 million aggregate principal amount of 1.125% convertible senior notes due in 2026, $702 million aggregate principal amount of 1.250% convertible senior notes due in 2028 and $15 million of finance lease obligations outstanding as of September 30, 2023.

Key Metrics and Recent Business Highlights

Customers: Workiva had 5,945 customers as of September 30, 2023, a net increase of 404 customers from September 30, 2022.

Revenue Retention Rate: As of September 30, 2023, Workiva's revenue retention rate (excluding add-on revenue) was 98%, and the revenue retention rate including add-on revenue was 112%. Add-on revenue includes changes in both solutions and pricing for existing customers.

Large Contracts: As of September 30, 2023, Workiva had 1,561 customers with an annual contract value ("ACV") of more than $100,000, up 24% from 1,257 customers at September 30, 2022. Workiva had 851 customers with an ACV of more than $150,000, up 26% from 676 customers in the third quarter of 2022. Workiva had 296 customers with an ACV of more than $300,000, up 38% from 214 customers in the third quarter of 2022.

Financial Outlook

As of October 30, 2023, Workiva is providing guidance as follows:

Fourth Quarter 2023 Guidance:

Total revenue is expected to be in the range of $164 million to $165 million.
GAAP loss from operations is expected to be in the range of $17 million to $16 million.
Non-GAAP income from operations is expected to be in the range of $6 million to $7 million.
GAAP net loss per basic share is expected to be in the range of $0.20 to $0.18.
Non-GAAP net income per basic share is expected to be in the range of $0.21 to $0.23.
Net income (loss) per basic share is based on 54 million weighted-average shares outstanding.

Full Year 2023 Guidance:

Total revenue is expected to be in the range of $627 million to $628 million.
GAAP loss from operations is expected to be in the range of $102 million to $101 million.
Non-GAAP income from operations is expected to be in the range of $3 million to $4 million.
GAAP net loss per basic share is expected to be in the range of $2.48 to $2.46.
Non-GAAP net loss per basic share is expected to be in the range of $0.54 to $0.52.
Net income (loss) per basic share is based on 54 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 2023, in addition to discussing the Company's outlook for the fourth 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 November 7, 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.

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 September 30,				Nine months ended September 30,
		2023		2022		2023		2022
	(unaudited)
Revenue
Subscription and support	$	143,421	$	118,591	$	409,857	$	339,064
Professional services		14,754		14,258		53,529		55,008
Total revenue		158,175		132,849		463,386		394,072
Cost of revenue
Subscription and support ⁽¹⁾		24,864		19,235		74,080		56,683
Professional services ⁽¹⁾		13,491		13,184		42,297		38,846
Total cost of revenue		38,355		32,419		116,377		95,529
Gross profit		119,820		100,430		347,009		298,543
Operating expenses
Research and development ⁽¹⁾		41,747		38,583		130,235		113,644
Sales and marketing ⁽¹⁾		72,576		64,560		215,168		184,879
General and administrative ⁽¹⁾		21,022		27,405		86,660		75,507
Total operating expenses		135,345		130,548		432,063		374,030
Loss from operations		(15,525)		(30,118)		(85,054)		(75,487)
Interest income		7,294		1,440		15,546		2,325
Interest expense		(47,437)		(1,510)		(50,437)		(4,540)
Other (expense) and income, net		(71)		964		(1,450)		1,467
Loss before provision for income taxes		(55,739)		(29,224)		(121,395)		(76,235)
Provision for income taxes		530		467		1,934		810
Net loss	$	(56,269)	$	(29,691)	$	(123,329)	$	(77,045)
Net loss per common share:
Basic and diluted	$	(1.04)	$	(0.56)	$	(2.28)	$	(1.46)
Weighted-average common shares outstanding - basic and diluted		54,256,941		53,081,564		53,987,791		52,844,532

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

	Three months ended September 30,				Nine months ended September 30,
		2023		2022		2023		2022
	(unaudited)
Cost of revenue
Subscription and support	$	1,247	$	855	$	3,732	$	2,557
Professional services		623		533		1,923		1,578
Operating expenses
Research and development		4,155		3,399		13,677		9,272
Sales and marketing		7,108		4,657		20,769		14,388
General and administrative		6,244		10,853		37,928		26,258

WORKIVA INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)

	September 30, 2023		December 31, 2022
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	404,885	$	240,197
Marketable securities		377,533		190,595
Accounts receivable, net		98,861		106,316
Deferred costs		36,953		38,350
Other receivables		7,017		6,674
Prepaid expenses and other		21,902		17,957
Total current assets		947,151		600,089
Property and equipment, net		25,102		27,096
Operating lease right-of-use assets		10,228		13,932
Deferred costs, non-current		28,816		33,682
Goodwill		108,851		109,740
Intangible assets, net		23,585		28,234
Other assets		5,395		6,847
Total assets	$	1,149,128	$	819,620
Liabilities and Stockholders' (Deficit) Equity
Current liabilities
Accounts payable	$	4,909	$	6,174
Accrued expenses and other current liabilities		94,158		83,999
Deferred revenue		338,418		316,263
Finance lease obligations		525		504
Total current liabilities		438,010		406,940
Convertible senior notes, non-current		761,847		340,257
Deferred revenue, non-current		38,216		38,237
Other long-term liabilities		1,539		1,518
Operating lease liabilities, non-current		9,023		12,102
Finance lease obligations, non-current		14,186		14,583
Total liabilities		1,262,821		813,637
Stockholders' (deficit) equity
Common stock		54		53
Additional paid-in-capital		541,093		537,732
Accumulated deficit		(648,445)		(525,116)
Accumulated other comprehensive loss		(6,395)		(6,686)
Total stockholders' (deficit) equity		(113,693)		5,983
Total liabilities and stockholders' (deficit) equity	$	1,149,128	$	819,620

WORKIVA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Three months ended September 30,				Nine months ended September 30,
		2023		2022		2023		2022
	(unaudited)
Cash flows from operating activities
Net loss	$	(56,269)	$	(29,691)	$	(123,329)	$	(77,045)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		2,686		2,681		8,353		7,365
Stock-based compensation expense		19,377		20,297		78,029		54,053
Provision for doubtful accounts		8		91		57		82
Realized loss on sale of available-for-sale securities, net		—		—		708		—
(Accretion) amortization of premiums and discounts on marketable securities, net		(1,930)		129		(4,530)		1,242
Amortization of issuance costs and debt discount		472		325		1,122		973
Induced conversion expense		45,144		—		45,144		—
Deferred income tax		(14)		57		(17)		(91)
Changes in assets and liabilities:
Accounts receivable		(15,234)		(7,927)		7,243		(6,190)
Deferred costs		3,116		(1,372)		6,248		(2,662)
Operating lease right-of-use asset		1,244		1,269		3,807		3,877
Other receivables		(1,556)		(527)		(1,842)		38
Prepaid expenses		3,452		3,593		(3,985)		870
Other assets		1,043		(1,140)		1,479		(1,105)
Accounts payable		(386)		3,931		(1,267)		5,995
Deferred revenue		11,120		14,775		22,225		28,573
Operating lease liability		(750)		(1,113)		(3,129)		(3,757)
Accrued expenses and other liabilities		3,468		(523)		10,217		384
Net cash provided by operating activities		14,991		4,855		46,533		12,602
Cash flows from investing activities
Purchase of property and equipment		(895)		(1,023)		(1,732)		(2,226)
Purchase of marketable securities		(144,989)		(41,618)		(322,008)		(99,564)
Sale of marketable securities		—		—		65,052		14,981
Maturities of marketable securities		36,906		40,071		76,811		106,857
Acquisitions, net of cash acquired		—		—		—		(99,186)
Purchase of intangible assets		(48)		(62)		(167)		(108)
Net cash used in investing activities		(109,026)		(2,632)		(182,044)		(79,246)

Cash flows from financing activities
Proceeds from option exercises		1,120		625		3,324		2,595
Taxes paid related to net share settlements of stock-based compensation awards		(984)		(738)		(9,424)		(10,652)
Proceeds from shares issued in connection with employee stock purchase plan		6,967		4,038		12,513		9,256
Proceeds from the issuance of convertible senior notes, net of issuance costs		691,113		—		691,113		—
Payments for repurchase of convertible senior notes		(396,869)		—		(396,869)		—
Principal payments on finance lease obligations		(127)		(454)		(376)		(1,342)
Net cash provided by (used in) financing activities		301,220		3,471		300,281		(143)
Effect of foreign exchange rates on cash		(1,239)		(2,450)		(82)		(4,102)
Net increase (decrease) in cash and cash equivalents		205,946		3,244		164,688		(70,889)
Cash and cash equivalents at beginning of period		198,939		226,253		240,197		300,386
Cash and cash equivalents at end of period	$	404,885	$	229,497	$	404,885	$	229,497

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,
		2023		2022		2023		2022
Gross profit, subscription and support	$	118,557	$	99,356	$	335,777	$	282,381
Add back: Stock-based compensation		1,247		855		3,732		2,557
Gross profit, subscription and support, non-GAAP	$	119,804	$	100,211	$	339,509	$	284,938

Gross profit, professional services	$	1,263	$	1,074	$	11,232	$	16,162
Add back: Stock-based compensation		623		533		1,923		1,578
Gross profit, professional services, non-GAAP	$	1,886	$	1,607	$	13,155	$	17,740

Gross profit	$	119,820	$	100,430	$	347,009	$	298,543
Add back: Stock-based compensation		1,870		1,388		5,655		4,135
Gross profit, non-GAAP	$	121,690	$	101,818	$	352,664	$	302,678

Cost of revenue, subscription and support	$	24,864	$	19,235	$	74,080	$	56,683
Less: Stock-based compensation		1,247		855		3,732		2,557
Cost of revenue, subscription and support, non-GAAP	$	23,617	$	18,380	$	70,348	$	54,126

Cost of revenue, professional services	$	13,491	$	13,184	$	42,297	$	38,846
Less: Stock-based compensation		623		533		1,923		1,578
Cost of revenue, professional services, non-GAAP	$	12,868	$	12,651	$	40,374	$	37,268

Research and development	$	41,747	$	38,583	$	130,235	$	113,644
Less: Stock-based compensation		4,155		3,399		13,677		9,272
Less: Amortization of acquisition-related intangibles		891		876		2,668		2,240
Research and development, non-GAAP	$	36,701	$	34,308	$	113,890	$	102,132

Sales and marketing	$	72,576	$	64,560	$	215,168	$	184,879
Less: Stock-based compensation		7,108		4,657		20,769		14,388
Less: Amortization of acquisition-related intangibles		598		587		1,805		1,373
Sales and marketing, non-GAAP	$	64,870	$	59,316	$	192,594	$	169,118

General and administrative	$	21,022	$	27,405	$	86,660	$	75,507
Less: Stock-based compensation		6,244		10,853		37,928		26,258
General and administrative, non-GAAP	$	14,778	$	16,552	$	48,732	$	49,249

Loss from operations	$	(15,525)	$	(30,118)	$	(85,054)	$	(75,487)
Add back: Stock-based compensation		19,377		20,297		78,029		54,053
Add back: Amortization of acquisition-related intangibles		1,489		1,463		4,473		3,613
Income (loss) from operations, non-GAAP	$	5,341	$	(8,358)	$	(2,552)	$	(17,821)

Net loss	$	(56,269)	$	(29,691)	$	(123,329)	$	(77,045)
Add back: Stock-based compensation		19,377		20,297		78,029		54,053
Add back: Amortization of acquisition-related intangibles		1,489		1,463		4,473		3,613
Net loss, non-GAAP	$	(35,403)	$	(7,931)	$	(40,827)	$	(19,379)

Net loss per basic and diluted share:	$	(1.04)	$	(0.56)	$	(2.28)	$	(1.46)
Add back: Stock-based compensation		0.36		0.38		1.44		1.02
Add back: Amortization of acquisition-related intangibles		0.03		0.03		0.08		0.07
Net loss per basic share, non-GAAP	$	(0.65)	$	(0.15)	$	(0.76)	$	(0.37)
Net loss per diluted share, non-GAAP	$	(0.65)	$	(0.15)	$	(0.76)	$	(0.37)

Weighted-average common shares outstanding - basic, non-GAAP		54,256,941		53,081,564		53,987,791		52,844,532
Weighted-average common shares outstanding - diluted, non-GAAP		54,256,941		53,081,564		53,987,791		52,844,532

TABLE II
WORKIVA INC.
RECONCILIATION OF NON-GAAP GUIDANCE
(in thousands, except share and per share data)

	Three months ending December 31, 2023					Year ending December 31, 2023

Loss from operations, GAAP range	$	(16,946)	-	$	(15,946)	$	(102,000)	-	$	(101,000)
Add back: Stock-based compensation		21,071			21,071		99,100			99,100
Add back: Amortization of acquisition-related intangibles		1,427			1,427		5,900			5,900
Income from operations, non-GAAP range	$	5,552	-	$	6,552	$	3,000	-	$	4,000

Net loss per share, GAAP range	$	(0.20)	-	$	(0.18)	$	(2.48)	-	$	(2.46)
Add back: Stock-based compensation		0.38			0.38		1.83			1.83
Add back: Amortization of acquisition-related intangibles		0.03			0.03		0.11			0.11
Net income (loss) per share, non-GAAP range	$	0.21	-	$	0.23	$	(0.54)	-	$	(0.52)

Weighted-average common shares outstanding - basic		54,400,000			54,400,000		54,200,000			54,200,000

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