Workiva(WK) - 2025 Q1 - Quarterly Report

Part I Item 1. Unaudited Consolidated Financial Statements This section presents Workiva Inc.'s unaudited condensed consolidated financial statements for the three months ended March 31, 2025, and December 31, 2024 (for balance sheet) or March 31, 2024 (for income statement and cash flows), prepared in accordance with U.S. GAAP and SEC interim reporting rules. It includes the balance sheets, statements of operations, comprehensive loss, changes in stockholders' deficit, cash flows, and detailed notes explaining accounting policies, estimates, and specific financial items Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' deficit at specific dates Metric | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total assets | $1,293,634 | $1,368,469 | | Total liabilities | $1,369,369 | $1,410,153 | | Total stockholders' deficit | $(75,735) | $(41,684) | Condensed Consolidated Statements of Operations This section outlines the company's revenues, expenses, and net loss over the reporting periods Metric | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Total revenue | $206,280 | $175,667 | +17.4% | | Subscription and support revenue | $185,512 | $154,979 | +19.7% | | Professional services revenue | $20,768 | $20,688 | +0.4% | Metric | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Net loss | $(21,371) | $(11,687) | +82.9% | Metric | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Basic and diluted EPS | $(0.38) | $(0.21) | Condensed Consolidated Statements of Comprehensive Loss This section details the company's comprehensive loss, including net loss and other comprehensive income/loss items Metric | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | YoY Change | | :--- | :--- | :--- | :--- | | Comprehensive loss | $(17,065) | $(15,577) | +9.6% | Metric | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Foreign currency translation adjustment | $3,937 | $(2,483) | | Unrealized gain (loss) on available-for-sale securities | $369 | $(1,407) | Consolidated Statements of Changes in Stockholders' Deficit This section tracks changes in the company's equity, including net loss, stock-based compensation, and share repurchases Metric | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | | :--- | :--- | :--- | | Balances | $(41,684) | $(75,735) | Metric | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Stock-based compensation expense | $27,888 | $23,007 | Metric | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Repurchases of Class A common stock | $(40,118) | $— | Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Metric | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(7,358) | $24,844 | | Net cash (used in) provided by investing activities | $(9,133) | $17,448 | | Net cash used in financing activities | $(45,012) | $(1,325) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(59,614) | $39,860 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures for the financial statements, covering the company's organization, significant accounting policies, use of estimates, and recent accounting pronouncements. It also includes supplemental information on accrued expenses, cash equivalents, marketable securities, fair value measurements, convertible senior notes, commitments, stock-based compensation, revenue recognition, intangible assets, goodwill, net loss per share, and geographic segment data - Workiva Inc. provides a SaaS platform for finance, accounting, sustainability, risk, and audit teams, focusing on transparency, accountability, and trust by connecting data, unifying processes, and empowering teams in a secure, AI-powered collaborative environment[36] - The company's revenue, expenses, and cash flows from operations are affected by seasonality, with professional services revenue typically higher in Q1 due to Form 10-K filings and sales and marketing expenses higher in Q3 due to the annual user conference[38] Accrued Expenses and Other Current Liabilities (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Customer deposits | $21,628 | $24,500 | | Accrued vacation | $21,551 | $18,698 | | Accrued bonuses | $9,270 | $7,891 | | Accrued commissions | $7,573 | $23,336 | | Accrued payroll | $7,238 | $9,638 | | Operating lease liabilities | $4,940 | $4,896 | | ESPP employee contributions | $4,860 | $7,710 | | Estimated health insurance claims | $2,439 | $3,986 | | Accrued interest | $1,197 | $3,591 | | Accrued other liabilities | $12,799 | $22,262 | | Total | $93,495 | $126,508 | Cash Equivalents and Marketable Securities (Aggregate Fair Value, in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Money market funds | $128,976 | $137,201 | | Commercial paper | $3,051 | $2,059 | | U.S. treasury debt securities | $276,627 | $263,227 | | U.S. government agency debt securities | $74,602 | $81,022 | | Corporate debt securities | $184,377 | $178,852 | | Total | $667,633 | $662,361 | Convertible Senior Notes (Net Carrying Amount, in thousands) | Note Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 2026 Notes | $70,869 | $70,801 | | 2028 Notes | $694,632 | $694,090 | Stock-Based Compensation Expense (in thousands) | Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cost of revenue - Subscription and support | $2,433 | $1,601 | | Cost of revenue - Professional services | $996 | $727 | | Operating expenses - Research and development | $6,050 | $4,641 | | Operating expenses - Sales and marketing | $9,751 | $8,038 | | Operating expenses - General and administrative | $8,658 | $8,000 | | Total | $27,888 | $23,007 | Revenue Disaggregation (in thousands) | Type of Good or Service | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Subscription and support | $185,512 | $154,979 | | XBRL professional services | $17,940 | $17,593 | | Other services | $2,828 | $3,095 | | Total revenues | $206,280 | $175,667 | Intangible Assets, Net Carrying Amount (in thousands) | Asset Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Acquired technology | $12,813 | $14,106 | | Acquired customer related | $11,720 | $11,738 | | Acquired trade names | $283 | $295 | | Patents | $1,215 | $1,250 | | Total | $26,031 | $27,389 | Geographic Revenue (in thousands) | Revenue Type | Region | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | :--- | | Subscription and support | Americas | $149,336 | $128,473 | | | Other | $36,176 | $26,506 | | Professional services | Americas | $18,379 | $18,227 | | | Other | $2,389 | $2,461 | | Total | | $206,280 | $175,667 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Workiva's financial condition and operational results for the three months ended March 31, 2025, compared to the prior year. It covers the company's business overview, key factors influencing performance, critical performance indicators, and a detailed analysis of revenue, costs, operating expenses, and non-operating items, concluding with a discussion on liquidity and capital resources Overview This section provides a high-level introduction to Workiva's business model, platform, and recent financial performance - Workiva's SaaS platform provides solutions for financial reporting, sustainability management, and Governance, Risk, and Compliance (GRC), connecting data and teams for controlled, secure, and audit-ready processes[84] - The company serves over 6,300 organizations globally, with sales and marketing focused on CFO, CSO, and CAE offices, and its SaaS model involves annual/multi-year subscription contracts with solution-based licensing[86][87] Financial Performance (Q1 2025 vs Q1 2024, in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $206.3 | $175.7 | | Net Loss | $(21.4) | $(11.7) | - Workiva's full-time employee headcount increased by 12.2% to 2,873 at March 31, 2025, from 2,561 at March 31, 2024, reflecting continued investment in growth[89] Key Factors Affecting Our Performance This section discusses internal and external factors influencing the company's financial results and strategic direction - Sales of sustainability management solutions, including Workiva Carbon, face material impact from domestic and global policy uncertainties, such as evolving EU CSRD standards, which could slow market adoption and growth[92] - Volatility in the IPO/SPAC markets in the U.S. has adversely affected new sales of SEC and capital markets solutions, with reduced valuation multiples expected to create an uncertain impact on IPOs in fiscal year 2025[93] - Key growth strategies include generating growth from existing customers through multi-solution adoption, pursuing new customers in financial and non-financial reporting, offering new fit-for-purpose solutions, expanding across enterprises, and deepening relationships with global and regional partners[94][95][96][97][98] - The company plans to continue investing in platform development, fit-for-purpose solutions, and sales/marketing/professional services/customer success organizations to drive revenue and support expansion in EMEA and APAC regions[99] - Professional services revenue is seasonal, typically higher in Q1 due to Form 10-K filings, while sales and marketing expenses are historically higher in Q3 due to the annual user conference[100] Key Performance Indicators This section presents key financial and operational metrics used to evaluate the company's performance and growth Financial and Operating Metrics | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total revenue | $206,280 | $175,667 | | Percentage increase in total revenue | 17.4% | 17.0% | | Subscription and support revenue | $185,512 | $154,979 | | Percentage increase in subscription and support revenue | 19.7% | 19.5% | | Subscription and support as a percent of total revenue | 89.9% | 88.2% | | Number of customers | 6,385 | 6,074 | | Gross retention rate | 97.3% | 97.8% | | Net retention rate | 110.1% | 110.6% | | Number of customers with ACV $100k+ | 2,079 | 1,696 | | Number of customers with ACV $300k+ | 439 | 332 | | Number of customers with ACV $500k+ | 191 | 145 | - The gross retention rate slightly decreased to 97.3% as of March 31, 2025, from 97.8% in the prior year, with over half of the revenue attrition attributed to customers whose securities were deregistered due to M&A or financial distress[103] - The net retention rate, including add-ons, slightly decreased to 110.1% as of March 31, 2025, from 110.6% as of March 31, 2024[105] Subscription and Support Revenue by ACV (as a percent of total subscription and support revenue) | ACV Threshold | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | $100k+ | 74.1% | 69.2% | | $300k+ | 38.4% | 34.3% | | $500k+ | 25.9% | 23.1% | Components of Results of Operations This section explains the primary revenue and expense categories contributing to the company's financial outcomes - Revenue is generated from subscription and support services (recognized ratably over contract term) and professional services (document setup, XBRL tagging, consulting, recognized upon completion or as performed)[111][112] - Cost of revenue includes personnel, third-party vendors, hosting fees, IT, and facility costs related to professional services, customer success, and training[113] - Operating expenses comprise sales and marketing (personnel, events, advertising, commissions amortized over three years), research and development (personnel, hosting, IT), and general and administrative (executive, finance, legal, HR personnel, professional fees)[114][115][116] Results of Operations (Comparison of Three Months Ended March 31, 2025 and 2024) This section provides a detailed comparative analysis of the company's financial performance for the specified periods Consolidated Statement of Operations Data (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | $206,280 | $175,667 | | Total cost of revenue | $48,342 | $41,523 | | Gross profit | $157,938 | $134,144 | | Total operating expenses | $182,688 | $152,427 | | Loss from operations | $(24,750) | $(18,283) | | Net loss | $(21,371) | $(11,687) | Consolidated Statement of Operations Data as a Percentage of Revenue | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenue | 100.0% | 100.0% | | Gross profit | 76.6% | 76.4% | | Total operating expenses | 88.6% | 86.7% | | Loss from operations | (12.0)% | (10.3)% | | Net loss | (10.3)% | (6.5)% | Revenue Comparison (in thousands) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $206,280 | $175,667 | 17.4% | | Subscription and support | $185,512 | $154,979 | 19.7% | | Professional services | $20,768 | $20,688 | 0.4% | Cost of Revenue Comparison (in thousands) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total cost of revenue | $48,342 | $41,523 | 16.4% | | Subscription and support cost of revenue | $34,062 | $27,927 | 22.0% | | Professional services cost of revenue | $14,280 | $13,596 | 5.0% | Operating Expenses Comparison (in thousands) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Research and development | $53,780 | $45,495 | 18.2% | | Sales and marketing | $101,671 | $82,633 | 23.0% | | General and administrative | $27,237 | $24,299 | 12.1% | | Total operating expenses | $182,688 | $152,427 | 19.9% | Non-Operating Income (Expenses) (in thousands) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Interest income | $8,747 | $10,455 | (16.3)% | | Interest expense | $(3,195) | $(3,232) | (1.1)% | | Other (expense) income, net | $(233) | $86 | * | - Interest income decreased by $1.7 million due to a lower investment balance and reduced interest rates, while other expense, net increased by $0.3 million primarily due to foreign currency transaction losses[127] Liquidity and Capital Resources This section assesses the company's ability to meet its short-term and long-term financial obligations and fund operations - As of March 31, 2025, principal liquidity sources were cash, cash equivalents, and marketable securities totaling $767.0 million, primarily for working capital. Operations are financed through cash from operations and convertible debt[129] - The company had outstanding convertible debt of $70.9 million for 2026 Notes and $694.6 million for 2028 Notes as of March 31, 2025[130] - Under the 2024 Repurchase Plan, authorized for up to $100.0 million, the company repurchased $40.1 million of Class A common stock as of March 31, 2025[131] Cash Flows Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Operating activities | $(7,358) | $24,844 | | Investing activities | $(9,133) | $17,448 | | Financing activities | $(45,012) | $(1,325) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(59,614) | $39,860 | - Cash used in operating activities was $7.4 million in Q1 2025 (vs. $24.8 million provided in Q1 2024), driven by a net loss of $21.4 million and net cash outflows from changes in operating assets and liabilities, including decreases in accrued expenses and deferred revenue[134][135] - Cash used in investing activities was $9.1 million in Q1 2025 (vs. $17.4 million provided in Q1 2024), primarily due to $103.0 million in marketable securities purchases, partially offset by $94.6 million from maturities[136][137] - Cash used in financing activities was $45.0 million in Q1 2025 (vs. $1.3 million in Q1 2024), mainly due to $40.1 million in Class A common stock repurchases and $12.9 million in taxes for stock-based compensation settlements[138][139] Critical Accounting Policies and Estimates This section highlights the significant accounting policies and judgments that materially impact the company's financial statements - No significant changes were made to the critical accounting policies and estimates during the three months ended March 31, 2025, as previously described in the Annual Report on Form 10-K for the year ended December 31, 2024[142] Item 3. Quantitative and Qualitative Disclosure About Market Risk This section refers to the company's Annual Report on Form 10-K for detailed quantitative and qualitative disclosures about market risk, confirming that there have been no material changes to these exposures since December 31, 2024 - The company's exposures to market risk have not materially changed since December 31, 2024, with further details available in the Annual Report on Form 10-K[143] Item 4. Controls and Procedures Management, including the principal executive and financial officers, concluded that Workiva's disclosure controls and procedures were effective as of March 31, 2025. No material changes in internal control over financial reporting occurred during the quarter - As of March 31, 2025, the company's disclosure controls and procedures were evaluated and deemed effective, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[145] - There were no changes in internal control over financial reporting during the three months ended March 31, 2025, that materially affected or are reasonably likely to materially affect these controls[146] Part II Item 1. Legal Proceedings Workiva is not currently involved in any legal proceedings that management believes would have a material adverse effect on its business, financial condition, operating results, or cash flows, although litigation can still impact the company due to costs and diversion of resources - The company is not a party to any legal proceedings that are expected to have a material adverse effect on its business, financial condition, operating results, or cash flows[149] Item 1A. Risk Factors This section directs readers to the 2024 Annual Report on Form 10-K for a comprehensive discussion of risk factors, noting that no material changes to these factors have occurred during fiscal year 2025 - No material changes to the risk factors discussed in the 2024 Annual Report on Form 10-K have occurred during fiscal year 2025[150] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity for Class A common stock under the $100.0 million plan authorized on July 30, 2024, showing repurchases made during February and March 2025 - On July 30, 2024, the board authorized a share repurchase plan for up to $100.0 million of Class A common stock[152] Share Repurchase Activity (in thousands, except share and per share data) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value that May Yet Be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | | January 1, 2025 to January 31, 2025 | — | $— | $100,000 | | February 1, 2025 to February 28, 2025 | 32,895 | $85.62 | $97,183 | | March 1, 2025 to March 31, 2025 | 428,656 | $87.00 | $59,891 | | Total | 461,551 | | | Item 5. Other Information This section confirms that no directors or officers of Workiva Inc. adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025 - No director or officer adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement" during Q1 2025[153] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the CEO and CFO, and the financial information presented in Inline XBRL format Exhibits Filed | Exhibit Number | Description | | :--- | :--- | | 31.1 | Certification of the Chief Executive Officer | | 31.2 | Certification of the Chief Financial Officer | | 32.1 | Certification of the Chief Executive Officer (18 U.S.C. Section 1350) | | 32.2 | Certification of the Chief Financial Officer (18 U.S.C. Section 1350) | | 101 | Inline XBRL Financial Information | | 104 | Cover Page Interactive Data File | Signatures The Quarterly Report on Form 10-Q was officially signed on May 1, 2025, by Julie Iskow, President and Chief Executive Officer, and Jill Klindt, Executive Vice President, Chief Financial Officer and Treasurer of Workiva Inc - The report was signed by Julie Iskow, President and CEO, and Jill Klindt, EVP, CFO and Treasurer, on May 1, 2025[157]