Workiva(WK) - 2025 Q4 - Annual Report

Revenue Growth - Total revenue increased to $884.6 million in 2025, up 19.7% from $738.7 million in 2024[231] - Subscription and support revenue reached $812.6 million, reflecting a year-over-year increase of 21.7%[245] - Total revenue for 2025 reached $884.6 million, a 19.7% increase from $738.7 million in 2024, primarily driven by a $145.0 million increase in subscription and support revenue[264] - Subscription and support revenue accounted for 91.9% of total revenue in 2025, up from 90.4% in 2024, indicating a strong demand and continued expansion of solutions across the customer base[263] Customer Metrics - The number of customers grew to 6,624 in 2025, compared to 6,305 in 2024, indicating a strong customer acquisition trend[245] - The total number of customers increased by 5.1% from December 31, 2024, to December 31, 2025, reflecting continued growth in the customer base[264] - Subscription and support revenue from customers with annual contract value of $100k+ accounted for 76.8% of total subscription and support revenue in 2025[251] Retention Rates - The gross retention rate was 97.2% as of December 31, 2025, slightly down from 97.4% in 2024[247] - The net retention rate improved to 112.8% in 2025, up from 111.9% in 2024, showcasing effective upselling strategies[249] Expenses and Costs - Total cost of revenue increased to $190.4 million in 2025, a 10.7% rise from $172.1 million in 2024, with subscription and support costs rising by 15.1%[265] - Research and development expenses grew by 11.4% to $214.8 million in 2025, driven by higher cash-based compensation and benefits[266][267] - Sales and marketing expenses increased by 17.7% to $408.9 million in 2025, largely due to higher cash-based compensation and benefits as well as increased marketing investments[266][268] - General and administrative expenses rose by 9.6% to $112.9 million in 2025, primarily due to higher compensation and internal event costs[266][269] Financial Performance - The net loss for 2025 was $26.2 million, an improvement from a net loss of $55.0 million in 2024[262] - Interest income decreased by $5.2 million to $34.2 million in 2025, attributed to lower interest rates[270] - Cash flow from operating activities for the year ended December 31, 2025 was $140.1 million, up from $87.7 million in 2024, driven by a net loss of $26.2 million adjusted for non-cash charges of $130.6 million[276][278] Cash and Liquidity - As of December 31, 2025, the company's liquidity sources included cash, cash equivalents, and marketable securities totaling $891.6 million, sufficient to fund operations for at least the next twelve months[272] - The company’s cash and cash equivalents are primarily held for working capital purposes, totaling $891.6 million as of December 31, 2025, with limited exposure to interest rate changes due to short-term maturities[303] Investment and Financing Activities - Cash used in investing activities for 2025 was $34.9 million, primarily due to $425.5 million in purchases of marketable securities, partially offset by $390.5 million from maturities of marketable securities[280] - Cash used in financing activities for 2025 was $74.9 million, mainly from $71.6 million in stock repurchases under the 2024 Repurchase Plan[282] - In August 2023, the company issued $702.0 million of 1.250% convertible senior notes due 2028, with net proceeds of $691.1 million, of which $396.9 million was used to repurchase $273.8 million of 2026 Notes[273] Stock and Shareholder Activities - During Q4 2025, the company repurchased approximately 131,000 shares for $11.5 million under the 2024 Repurchase Plan, with $28 million remaining for future repurchases[275] - Stock-based compensation expense totaled $122.9 million in 2025, up from $102.2 million in 2024, indicating increased investment in employee incentives[262] Market Risks - Regulatory uncertainties, particularly in sustainability management solutions, may impact future growth trajectories[234] - The investment portfolio is primarily composed of U.S. corporate and U.S. treasury debt securities, which are subject to market risk due to interest rate changes[304] - An immediate increase of 100 basis points in interest rates would have resulted in a $4.1 million market value reduction in the investment portfolio as of December 31, 2025[305] - The fair value of fixed rate debt instruments fluctuates with changes in interest rates and the market price of the company's common stock[306]