Workiva(WK) - 2025 Q2 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements This section presents Workiva Inc.'s unaudited consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive loss, changes in stockholders' deficit, and cash flows, along with detailed notes explaining significant accounting policies, financial instrument details, and other relevant disclosures Consolidated Balance Sheets Presents Workiva Inc.'s financial position, detailing assets, liabilities, and stockholders' deficit as of specific dates Consolidated Balance Sheet Highlights (in thousands): | Metric | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :-------------------------------- | :------------ | :---------------- | :-------------------- | | Total Assets | $1,345,742 | $1,368,469 | $(22,727) | | Total Liabilities | $1,412,270 | $1,410,153 | $2,117 | | Total Stockholders' Deficit | $(66,528) | $(41,684) | $(24,844) | | Cash and cash equivalents | $284,253 | $301,835 | $(17,582) | | Marketable securities | $529,456 | $514,585 | $14,871 | | Accounts receivable, net | $121,564 | $148,433 | $(26,869) | | Convertible senior notes, current | $70,937 | $— | $70,937 | | Convertible senior notes, non-current | $695,175 | $764,891 | $(69,716) | - Total assets decreased by $22.7 million, primarily due to a decrease in cash and cash equivalents and accounts receivable, partially offset by an increase in marketable securities[15] - Total liabilities increased by $2.1 million, driven by the reclassification of $70.9 million of 2026 convertible senior notes to current liabilities, partially offset by a decrease in non-current convertible senior notes[17] - Total stockholders' deficit increased by $24.8 million, primarily due to accumulated deficit and share repurchases[17] Consolidated Statements of Operations Details Workiva Inc.'s revenues, expenses, and net loss for the specified reporting periods Consolidated Statements of Operations Highlights (in thousands, except per share amounts): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------- | :------------------------------ | :------------------------------ | :------------- | | Total Revenue | $215,187 | $177,503 | 21.2% | $421,467 | $353,170 | 19.3% | | Subscription and support revenue | $198,223 | $160,735 | 23.3% | $383,735 | $315,714 | 21.5% | | Professional services revenue | $16,964 | $16,768 | 1.2% | $37,732 | $37,456 | 0.7% | | Gross Profit | $165,644 | $136,331 | 21.5% | $323,582 | $270,475 | 19.6% | | Loss from operations | $(22,146) | $(23,149) | (4.3%) | $(46,896) | $(41,432) | 13.2% | | Net loss | $(19,400) | $(17,548) | 10.6% | $(40,771) | $(29,235) | 39.5% | | Basic and diluted net loss per share | $(0.35) | $(0.32) | 9.4% | $(0.73) | $(0.53) | 37.7% | - Total revenue increased by 21.2% for the three months and 19.3% for the six months ended June 30, 2025, primarily driven by strong growth in subscription and support revenue[19] - Net loss increased by 10.6% for the three months and 39.5% for the six months ended June 30, 2025, compared to the prior year, leading to higher basic and diluted net loss per share[19] Consolidated Statements of Comprehensive Loss Reports Workiva Inc.'s net loss and other comprehensive income (loss) components for the periods presented Consolidated Statements of Comprehensive Loss Highlights (in thousands): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net loss | $(19,400) | $(17,548) | $(40,771) | $(29,235) | | Other comprehensive income (loss) | $8,908 | $(1,095) | $13,214 | $(4,985) | | Comprehensive loss | $(10,492) | $(18,643) | $(27,557) | $(34,220) | - The company reported a significant increase in other comprehensive income for both the three and six months ended June 30, 2025, primarily due to foreign currency translation adjustments, which helped reduce the comprehensive loss compared to the net loss[23] Consolidated Statements of Changes in Stockholders' Deficit Outlines the changes in Workiva Inc.'s equity components, including net loss, stock-based compensation, and share repurchases Changes in Stockholders' Deficit (Six Months Ended June 30, 2025, in thousands): | Item | Amount | | :------------------------------------------ | :------- | | Balances at December 31, 2024 | $(41,684) | | Stock-based compensation expense | $56,355 | | Issuance of common stock (options & ESPP) | $2,434 | | Tax withholding related to net share settlements | $(13,491) | | Repurchases of Class A common stock | $(50,120) | | Net loss | $(40,771) | | Other comprehensive income | $13,214 | | Balances at June 30, 2025 | $(66,528) | - The total stockholders' deficit increased from $(41.7) million at December 31, 2024, to $(66.5) million at June 30, 2025, primarily due to net loss and repurchases of Class A common stock, partially offset by stock-based compensation expense and other comprehensive income[26][29] Consolidated Statements of Cash Flows Summarizes Workiva Inc.'s cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (in thousands): | Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by (used in) operating activities | $50,311 | $(14) | $42,953 | $24,830 | | Net cash used in investing activities | $(4,283) | $(26,315) | $(13,416) | $(8,867) | | Net cash used in financing activities | $(8,907) | $(1,482) | $(53,919) | $(2,807) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $42,229 | $(28,169) | $(17,385) | $11,691 | | Cash, cash equivalents, and restricted cash at end of period | $284,965 | $268,412 | $284,965 | $268,412 | - Operating cash flow significantly improved, moving from a slight outflow of $(14) thousand in Q2 2024 to an inflow of $50.3 million in Q2 2025, and increasing from $24.8 million to $43.0 million for the six-month period[32] - Cash used in investing activities decreased for the three-month period but increased for the six-month period, with significant purchases of marketable securities and the prior year's acquisition of Sustain.Life impacting the figures[32] - Cash used in financing activities increased substantially, primarily due to repurchases of Class A common stock under the 2024 Repurchase Plan[32] Notes to Consolidated Financial Statements Provides detailed explanations and disclosures supporting the consolidated financial statements 1. Organization and Significant Accounting Policies Describes Workiva Inc.'s business, significant accounting principles, and recent accounting pronouncements - Workiva Inc. provides a platform for transparency, accountability, and trust, serving finance, accounting, sustainability, risk, and audit teams globally with its AI-powered collaborative SaaS platform[36] - The company's financial results are subject to 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] - The One Big Beautiful Bill Act of 2025, enacted on July 4, 2025, includes significant changes to federal corporate tax provisions, and the company is currently assessing its potential impact on future tax assets and liabilities[42][43] - New accounting pronouncements, ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation), are effective for annual periods beginning after December 15, 2024, and December 15, 2026, respectively, and ASU 2024-04 (Convertible Debt) is effective after December 15, 2025. The company is assessing their effects[44][45][46] 2. Supplemental Consolidated Balance Sheet Information Offers additional detail on specific balance sheet accounts, such as accrued expenses and other current liabilities Accrued Expenses and Other Current Liabilities (in thousands): | Item | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Customer deposits | $23,520 | $24,500 | | Accrued vacation | $22,218 | $18,698 | | Accrued bonuses | $18,279 | $7,891 | | Accrued commissions | $9,876 | $23,336 | | ESPP employee contributions | $8,450 | $7,710 | | Accrued payroll | $8,114 | $9,638 | | Operating lease liabilities | $4,932 | $4,896 | | Accrued interest | $3,591 | $3,591 | | Estimated health insurance claims | $2,603 | $3,986 | | Accrued other liabilities | $17,005 | $22,262 | | Total | $118,588 | $126,508 | - Total accrued expenses and other current liabilities decreased from $126.5 million at December 31, 2024, to $118.6 million at June 30, 2025, primarily due to decreases in accrued commissions and other accrued liabilities, partially offset by increases in accrued bonuses and vacation[47] 3. Cash Equivalents and Marketable Securities Details the composition and fair value of Workiva Inc.'s cash equivalents and investment portfolio Cash Equivalents and Marketable Securities (as of June 30, 2025, in thousands): | Type | Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate Fair Value | | :------------------------------ | :------------- | :--------------- | :---------------- | :------------------- | | Money market funds | $165,852 | $— | $— | $165,852 | | Commercial paper | $6,508 | $— | $— | $6,508 | | U.S. treasury debt securities | $276,869 | $481 | $(108) | $277,242 | | U.S. government agency debt securities | $75,315 | $51 | $(43) | $75,323 | | Corporate debt securities | $180,021 | $386 | $(51) | $180,356 | | Total | $704,565 | $918 | $(202) | $705,281 | Included in: | Category | Amount | | :------------------------ | :------- | | Cash and cash equivalents | $175,825 | | Marketable securities | $529,456 | - The total fair value of cash equivalents and marketable securities increased to $705.3 million as of June 30, 2025, from $662.4 million at December 31, 2024, with a net unrealized gain of $716 thousand[48][49] - The majority of marketable securities mature within one to two years, with $327.1 million due within one year and $202.4 million due in one to two years[50] 4. Fair Value Measurements Explains the valuation methodologies and hierarchy used for Workiva Inc.'s financial instruments - The company classifies its financial instruments using a three-level fair value hierarchy, maximizing observable inputs[51][52] - Cash equivalents (money market funds) are classified as Level 1, while marketable securities (commercial paper, U.S. treasury, U.S. government agency, and corporate debt securities) are classified as Level 2, based on quoted prices for comparable instruments in active markets[53][54][55] - The fair value of convertible senior notes is classified as Level 2, determined by quoted prices in an over-the-counter market[56] 5. Convertible Senior Notes Provides information on Workiva Inc.'s outstanding convertible debt, including carrying amounts and interest expense - Workiva has two series of convertible senior notes: 1.125% notes due August 15, 2026 (2026 Notes) and 1.250% notes due August 15, 2028 (2028 Notes)[57][58][59] - As of June 30, 2025, the 2026 Notes are classified as current liabilities due to their Free Convertibility Date being less than one year away, while the 2028 Notes remain non-current[63] Convertible Senior Notes Carrying Amount (in thousands): | Note Series | June 30, 2025 | December 31, 2024 | | :---------- | :------------ | :---------------- | | 2026 Notes | $70,937 | $70,801 | | 2028 Notes | $695,175 | $694,090 | Interest Expense (in thousands): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Contractual interest expense | $2,394 | $2,394 | $4,788 | $4,788 | | Amortization of issuance costs | $610 | $609 | $1,220 | $1,217 | | Total | $3,004 | $3,003 | $6,008 | $6,005 | 6. Commitments and Contingencies Discloses Workiva Inc.'s contractual obligations and potential liabilities from legal matters - The company is involved in legal proceedings in the ordinary course of business but does not believe any currently pending matters will have a material adverse effect on its financial condition or operations[66] 7. Stock-Based Compensation Details Workiva Inc.'s stock-based compensation plans and associated expenses - Stock-based compensation is granted to attract and retain employees, directors, and consultants, primarily through restricted stock units, performance restricted stock units, stock options, and an Employee Stock Purchase Plan (ESPP)[67] Stock-Based Compensation Expense (in thousands): | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Cost of revenue | $3,617 | $2,706 | $7,046 | $5,034 | | Research and development | $6,556 | $5,152 | $12,606 | $9,793 | | Sales and marketing | $9,890 | $8,490 | $19,641 | $16,528 | | General and administrative | $8,404 | $9,054 | $17,062 | $17,054 | | Total | $28,467 | $25,402 | $56,355 | $48,409 | - Total stock-based compensation expense increased by 12.1% for the three months and 16.4% for the six months ended June 30, 2025, compared to the prior year, with significant increases in R&D and Sales & Marketing[68] - As of June 30, 2025, 3,180,310 unvested restricted stock units and performance restricted stock units were outstanding, with a weighted average grant date fair value of $91.04[71] 8. Revenue Recognition Explains Workiva Inc.'s policies for recognizing revenue from subscription and professional services Disaggregation of Revenue (in thousands): | Type of Service | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Subscription and support | $198,223 | $160,735 | $383,735 | $315,714 | | XBRL professional services | $14,502 | $14,027 | $32,442 | $31,620 | | Other services | $2,462 | $2,741 | $5,290 | $5,836 | | Total | $215,187 | $177,503 | $421,467 | $353,170 | - Subscription and support revenue continues to be the primary driver of total revenue, showing strong growth of 23.3% and 21.5% for the three and six months ended June 30, 2025, respectively[75] - The company expects to recognize approximately $1.2 billion in revenue from remaining performance obligations for subscription contracts, with $668.3 million expected within the next 12 months[77] 9. Intangible Assets and Goodwill Presents the carrying amounts and amortization of Workiva Inc.'s intangible assets and goodwill Net Intangible Assets (in thousands): | Component | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Acquired technology | $11,635 | $14,106 | | Acquired customer related | $12,120 | $11,738 | | Acquired trade names | $258 | $295 | | Patents | $1,202 | $1,250 | | Total | $25,215 | $27,389 | - Total net intangible assets decreased to $25.2 million as of June 30, 2025, from $27.4 million at December 31, 2024, primarily due to amortization[78] - Amortization expense for intangible assets was $2.0 million for the three months and $3.9 million for the six months ended June 30, 2025, an increase from the prior year[79] - Goodwill increased to $206.0 million as of June 30, 2025, from $196.8 million at December 31, 2024, primarily due to foreign currency translation adjustments[80] 10. Net Loss Per Share Calculates Workiva Inc.'s basic and diluted net loss per common share for the reporting periods Net Loss Per Common Share (Basic and Diluted): | Period | Net Loss Per Share | | :------------------------------- | :----------------- | | Three months ended June 30, 2025 | $(0.35) | | Three months ended June 30, 2024 | $(0.32) | | Six months ended June 30, 2025 | $(0.73) | | Six months ended June 30, 2024 | $(0.53) | - The basic and diluted net loss per share increased for both the three-month and six-month periods ended June 30, 2025, reflecting the higher net loss incurred[81][82] - Anti-dilutive securities, including stock options, unvested restricted stock units, ESPP shares, and convertible senior notes, were excluded from the diluted EPS calculation due to the net loss position[82] 11. Geographic Information Provides a breakdown of Workiva Inc.'s revenue and long-lived assets by geographical region - Workiva operates as one operating and reportable segment, with revenue disaggregated by geographical region[83] Revenue by Geographical Region (in thousands): | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Americas (Subscription & Support) | $156,916 | $132,228 | $306,252 | $260,701 | | Other (Subscription & Support) | $41,307 | $28,507 | $77,483 | $55,013 | | Americas (Professional Services) | $14,946 | $15,076 | $33,325 | $33,303 | | Other (Professional Services) | $2,018 | $1,692 | $4,407 | $4,153 | | Total | $215,187 | $177,503 | $421,467 | $353,170 | - The Americas region continues to be the largest revenue contributor, with the U.S. accounting for approximately 92-93% of total Americas revenue[85] Long-Lived Assets by Geographical Region (in thousands): | Region | June 30, 2025 | December 31, 2024 | | :------- | :------------ | :---------------- | | Americas | $27,889 | $29,148 | | Other | $4,960 | $4,463 | | Total | $32,849 | $33,611 | 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 results of operations for the three and six months ended June 30, 2025, compared to the prior year. It covers the company's business overview, key performance drivers, and a detailed analysis of revenue, costs, operating expenses, and liquidity Overview Presents Workiva Inc.'s business model, market position, and key financial highlights for the reporting period - Workiva's SaaS platform provides solutions for financial reporting, sustainability management, and governance, risk, and compliance (GRC) to over 6,400 organizations, including more than 80% of FORTUNE® 1,000 companies[88][90] - The company's revenue grew to $215.2 million and $421.5 million for the three and six months ended June 30, 2025, respectively, but it incurred net losses of $19.4 million and $40.8 million for the same periods[94][95] - Growth drivers include multi-solution adoption, partner program development, international expansion, and fit-for-purpose solutions, which may lead to increased upfront sales and marketing costs[96] - Sales of sustainability management solutions are impacted by domestic and global policy uncertainties, such as the EU's CSRD 'stop-the-clock' directive, delaying compliance obligations[97] - Volatility in the IPO/SPAC markets has adversely affected new sales of SEC and capital markets solutions, with reduced valuation multiples expected to continue impacting IPOs in fiscal year 2025[98] Key Factors Affecting Our Performance Identifies the strategic initiatives and external factors influencing Workiva Inc.'s operational and financial results - Workiva aims to generate growth from existing customers through a network effect, encouraging additional users and solutions adoption within enterprises due to its solution-based licensing model[99] - The company plans to pursue new customers by expanding its sales and marketing organization, targeting professionals in financial and non-financial reporting, sustainability management, and GRC[100] - Workiva intends to offer more solutions by developing new features and applications based on customer needs and industry research, with a disciplined vetting process involving various internal teams[101] - Expansion across enterprises is a key strategy, leading to larger, more complex deals and potentially longer sales cycles, but expected to add new users and increase revenue[102] - The company continues to add and deepen relationships with global and regional partners (consulting firms, system integrators, technology partners) to extend its reach, accelerate platform adoption, and enhance professional service delivery[103] - Workiva plans to invest in platform development, fit-for-purpose solutions, and its application marketplace, as well as in sales, marketing, professional services, and customer success, particularly in EMEA and APAC regions[104] Key Performance Indicators Highlights Workiva Inc.'s crucial financial and operational metrics used to assess business performance and growth Key Financial Metrics (in thousands): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total revenue | $215,187 | $177,503 | $421,467 | $353,170 | | Percentage increase in total revenue | 21.2% | 14.5% | 19.3% | 15.7% | | Subscription and support revenue | $198,223 | $160,735 | $383,735 | $315,714 | | Percentage increase in subscription and support revenue | 23.3% | 17.5% | 21.5% | 18.5% | | Subscription and support as a percent of total revenue | 92.1% | 90.6% | 91.0% | 89.4% | Key Operating Metrics: | Metric | As of June 30, 2025 | As of June 30, 2024 | | :--------------------------------------- | :------------------ | :------------------ | | Number of customers | 6,467 | 6,147 | | Gross retention rate | 97.5% | 97.6% | | Net retention rate | 113.7% | 109.2% | | Number of customers with ACV $100k+ | 2,241 | 1,768 | | Number of customers with ACV $300k+ | 488 | 356 | | Number of customers with ACV $500k+ | 208 | 154 | - The number of customers increased to 6,467 as of June 30, 2025, from 6,147 in the prior year, including customers acquired through the Sustain.Life acquisition[107] - The net retention rate improved to 113.7% as of June 30, 2025, from 109.2% in the prior year, indicating successful up-selling, cross-selling, and pricing changes[111] - The percentage of subscription and support revenue from customers with annual contract values (ACV) of $100k+, $300k+, and $500k+ all increased, demonstrating progress in expanding customer adoption of the platform[113] Components of Results of Operations Explains the primary drivers and composition of Workiva Inc.'s revenue, cost of revenue, and operating expenses - Revenue is generated from subscription to cloud-based software (recognized ratably) and professional services (recognized upon completion or as performed), with no significant customer concentration[114][117][118] - Cost of revenue includes personnel, third-party vendor costs, hosting fees, and IT costs related to professional services and customer support[119] - Sales and marketing expenses cover personnel, commissions (deferred and amortized over three years for longer contracts), marketing events, and IT costs[120] - Research and development expenses primarily consist of personnel costs, hosting fees for developers, and IT costs[121] - General and administrative expenses include personnel costs for executive, finance, legal, HR, and administrative functions, along with professional service fees and other corporate expenses[122] Results of Operations Analyzes Workiva Inc.'s financial performance, detailing changes in revenue, costs, and operating expenses Revenue Analyzes Workiva Inc.'s revenue streams, distinguishing between subscription and professional services growth Revenue Performance (in thousands): | Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :------------------------ | :------------------------------- | :------------------------------- | :------- | :------------------------------ | :------------------------------ | :------- | | Subscription and support | $198,223 | $160,735 | 23.3% | $383,735 | $315,714 | 21.5% | | Professional services | $16,964 | $16,768 | 1.2% | $37,732 | $37,456 | 0.7% | | Total revenue | $215,187 | $177,503 | 21.2% | $421,467 | $353,170 | 19.3% | - Total revenue increased by $37.7 million (21.2%) for the three months and $68.3 million (19.3%) for the six months ended June 30, 2025, primarily driven by strong demand and solution expansion in subscription and support[126][127] - Professional services revenue growth was minimal (1.2% for three months, 0.7% for six months) as the company continues to transition consulting services to partners[126][127] Cost of Revenue Examines the costs directly associated with Workiva Inc.'s revenue generation, including subscription and professional services Cost of Revenue Performance (in thousands): | Cost Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :------------------------ | :------------------------------- | :------------------------------- | :------- | :------------------------------ | :------------------------------ | :------- | | Subscription and support | $35,277 | $27,945 | 26.2% | $69,339 | $55,872 | 24.1% | | Professional services | $14,266 | $13,227 | 7.9% | $28,546 | $26,823 | 6.4% | | Total cost of revenue | $49,543 | $41,172 | 20.3% | $97,885 | $82,695 | 18.4% | - Total cost of revenue increased by $8.4 million (20.3%) for the three months and $15.2 million (18.4%) for the six months ended June 30, 2025[128][129] - The increase in subscription and support cost of revenue was primarily due to higher cash-based compensation, stock-based compensation, licensed platform content costs, and intangibles amortization related to Sustain.Life[128][129] Operating Expenses Details Workiva Inc.'s research and development, sales and marketing, and general and administrative expenditures Operating Expenses Performance (in thousands): | Expense Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :------------------------ | :------------------------------- | :------------------------------- | :------- | :------------------------------ | :------------------------------ | :------- | | Research and development | $54,843 | $48,408 | 13.3% | $108,623 | $93,903 | 15.7% | | Sales and marketing | $104,025 | $84,697 | 22.8% | $205,696 | $167,330 | 22.9% | | General and administrative | $28,922 | $26,375 | 9.7% | $56,159 | $50,674 | 10.8% | | Total operating expenses | $187,790 | $159,480 | 17.8% | $370,478 | $311,907 | 18.8% | - Research and development expenses increased by $6.4 million (13.3%) for the three months and $14.7 million (15.7%) for the six months, driven by higher compensation and professional service fees due to increased headcount and platform investment[132][133] - Sales and marketing expenses rose by $19.3 million (22.8%) for the three months and $38.4 million (22.9%) for the six months, primarily due to increased compensation, marketing and advertising, and professional service fees to support go-to-market activities[134][135] - General and administrative expenses increased by $2.5 million (9.7%) for the three months and $5.5 million (10.8%) for the six months, mainly due to higher cash-based compensation and internal event costs[136][137] Non-Operating Income (Expenses) Reports Workiva Inc.'s interest income, interest expense, and other non-core financial gains or losses Non-Operating Income (Expenses) (in thousands): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :------------------------ | :------------------------------- | :------------------------------- | :------- | :------------------------------ | :------------------------------ | :------- | | Interest income | $8,344 | $10,336 | (19.3%) | $17,091 | $20,791 | (17.8%) | | Interest expense | $(3,194) | $(3,237) | (1.3%) | $(6,389) | $(6,469) | (1.2%) | | Other (expense) income, net | $(736) | $(45) | * | $(969) | $41 | * | - Interest income decreased by $2.0 million (19.3%) for the three months and $3.7 million (17.8%) for the six months, primarily due to a decrease in investment balance and lower interest rates[139][140] - Other expense, net, significantly increased due to losses on foreign currency transactions[139][140] Liquidity and Capital Resources Assesses Workiva Inc.'s ability to meet short-term and long-term financial obligations and fund operations Overview of Sources and Uses of Cash Summarizes Workiva Inc.'s primary sources of funds and how cash is utilized across its operations - As of June 30, 2025, Workiva's principal sources of liquidity were cash, cash equivalents, and marketable securities totaling $813.7 million[142] - Operations have been financed primarily through cash generated from operations and convertible debt issuances, despite incurring significant operating losses[142] - Management believes current liquidity and operating cash flows will be sufficient to fund operations for at least the next twelve months[142] Convertible Debt Details Workiva Inc.'s outstanding convertible senior notes, including their terms and impact on liquidity - In August 2023, Workiva issued $702.0 million of 1.250% 2028 Notes, using $396.9 million of the proceeds to repurchase $273.8 million of 2026 Notes[143] - As of June 30, 2025, outstanding debt included $70.9 million for 2026 Notes (maturing August 2026) and $695.2 million for 2028 Notes (maturing August 2028)[143] Share Repurchase Plan Describes Workiva Inc.'s program for repurchasing its Class A common stock and related activity - On July 30, 2024, the board authorized a $100.0 million share repurchase plan for Class A common stock[144] - As of June 30, 2025, $50.1 million of Class A common stock had been repurchased under the 2024 Repurchase Plan[144] Cash Flows Analyzes Workiva Inc.'s cash generation and usage across operating, investing, and financing activities Cash Flow Summary (in thousands): | Activity | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Operating activities | $50,311 | $(14) | $42,953 | $24,830 | | Investing activities | $(4,283) | $(26,315) | $(13,416) | $(8,867) | | Financing activities | $(8,907) | $(1,482) | $(53,919) | $(2,807) | | Net increase (decrease) in cash | $42,229 | $(28,169) | $(17,385) | $11,691 | - Operating cash flow significantly improved, with $50.3 million provided in Q2 2025 compared to a nominal outflow in Q2 2024, driven by changes in operating assets and liabilities, including increased deferred revenue and accrued expenses[147] - Cash used in investing activities decreased for the three-month period due to lower purchases of marketable securities and the absence of a large acquisition like Sustain.Life in the prior year[151][152] - Cash used in financing activities increased substantially due to $10.0 million in Class A common stock repurchases for the three months and $50.1 million for the six months ended June 30, 2025[155][157] Contractual Obligations and Commitments Outlines Workiva Inc.'s future payment obligations and other binding agreements - There were no material changes to contractual obligations and commitments from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[159] Critical Accounting Policies and Estimates Identifies Workiva Inc.'s accounting policies requiring significant judgment and estimation - The preparation of financial statements requires estimates and assumptions, but no significant changes to critical accounting policies and estimates occurred during the six months ended June 30, 2025[160][161] Item 3. Quantitative and Qualitative Disclosure About Market Risk This section refers to the Annual Report on Form 10-K for detailed quantitative and qualitative disclosures about market risk, stating that there have been no material changes since December 31, 2024 - The company's exposures to market risk have not materially changed since December 31, 2024, as detailed in the Annual Report on Form 10-K[162] Item 4. Controls and Procedures This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance for timely and accurate reporting[163][164] - No changes in internal control over financial reporting occurred during the period that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[165] - Management acknowledges that controls and procedures, regardless of design, can only provide reasonable assurance and are subject to resource constraints and judgment[166] Part II. Other Information Item 1. Legal Proceedings This section addresses the company's involvement in legal proceedings, stating that no current litigation is expected to have a material adverse effect on its business - Workiva is not currently a party to any legal proceedings that management believes would have a material adverse effect on its business, financial condition, operating results, or cash flows[168] Item 1A. Risk Factors This section directs readers to the Annual Report on Form 10-K for a comprehensive discussion of risk factors, noting no material changes in fiscal year 2025 - There have been no material changes during fiscal year 2025 to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K[169] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section provides details on the company's share repurchase activity for Class A common stock under its authorized plan - The board of directors authorized a share repurchase plan for up to $100.0 million of Class A common stock on July 30, 2024[171] Share Repurchase Activity (Three Months Ended June 30, 2025, 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 | | :------------------------------ | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | | April 1, 2025 to April 30, 2025 | 131,810 | $75.86 | $49,892 | | May 1, 2025 to May 31, 2025 | — | $— | $49,892 | | June 1, 2025 to June 30, 2025 | — | $— | $49,892 | | Total | 131,810 | | | - During April 2025, 131,810 shares of Class A common stock were repurchased at an average price of $75.86 per share, leaving approximately $49.9 million remaining under the repurchase plan[171] Item 5. Other Information This section provides updates on director and officer trading arrangements and the planned departure of the Chief Financial Officer Director and Officer Trading Arrangements Reports on trading plans adopted or modified by Workiva Inc.'s directors and officers - On May 8, 2025, The Robert H. Herz Irrevocable Trust adopted a Rule 10b5-1 trading arrangement for the sale of up to 5,000 shares of Class A common stock, effective from August 7, 2025, until February 16, 2026[172][173] - No other director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[173] Departure of Chief Financial Officer Announces the planned transition and departure of Workiva Inc.'s Chief Financial Officer - Jill E. Klindt, Executive Vice President, CFO, and Treasurer, will be stepping down in 2025 after a transition period, remaining in an advisory capacity through mid-December 2025[174][175] - Her departure is considered a termination without Cause, and the company has initiated a search for a successor[175][177] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, certifications, and financial information in Inline XBRL format - Exhibits include the Certificate of Incorporation, Form of Restricted Stock Unit Agreement, CEO and CFO certifications (pursuant to Sarbanes-Oxley Act Sections 302 and 906), and financial information formatted in Inline XBRL[178] Signatures Contains the official certifications and signatures of Workiva Inc.'s authorized officers for the report - The report is duly signed by Julie Iskow, President and Chief Executive Officer, and Jill Klindt, Executive Vice President, Chief Financial Officer and Treasurer, on July 31, 2025[180][181]