Workiva(US:WK)2023-02-20 16:00Part I Item 1. Business Workiva provides a cloud platform for integrated financial, ESG, and GRC reporting, with 86% of 2022 revenue from subscriptions, serving over 4,700 global organizations Overview Workiva's mission is to power transparent reporting for a better world, offering a unified SaaS platform for financial, ESG, and GRC reporting16 The Workiva platform connects and transforms data from hundreds of ERP, HCM, and CRM systems, enabling greater control, consistency, accuracy, and productivity in reporting17 | Metric | 2022 | 2021 | 2020 | CAGR (2020-2022) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $537.9 million | $443.3 million | $351.6 million | 24% | | Net Loss | $90.9 million | $37.7 million | $48.4 million | - | | Subscription & Support Revenue % | 86% | - | - | - | 2022 Company Highlights and Milestones Julie Iskow was promoted to President and COO in February 202221 Acquired Denmark-based ParsePort in April 2022, strengthening transparent reporting capabilities and expanding the customer base21 Launched ESG Explorer and ESG Hub in the first half of 2022 to assist customers with ESG reporting21 Received a AAA rating in the 2022 MSCI ESG Ratings assessment, signifying industry-leader status21 Added 5 new innovation patents in 2022, bringing the total to 6821 Macro Trends Six macro trends are driving demand: shift to the cloud, digital transformation, remote and hybrid work, influx of disparate data sources, increased regulatory environment, and increased stakeholder demands for ESG data22 Regulators are increasingly demanding structured, machine-readable data (e.g., XBRL) in company disclosures27 Increased stakeholder capitalism emphasizes transparency and accountability to all stakeholders, driving demand for ESG reporting solutions28 Growth Vectors Investment focus on four major growth opportunities: The Workiva Platform, Fit-for-Purpose Solutions, Global Expansion, and Partner Ecosystem29 Global expansion is a key opportunity, with EMEA and APAC contributing 11% of consolidated revenue in 2022, expected to increase33 ESG represents a generational growth opportunity, with accelerated investments to meet growing demand for non-financial KPIs and integrated reporting34 GRC is a broad market segment where Workiva is a leader, enabling identification, tracking, and management of risk for legal, ethical, and regulatory compliance34 Workiva Platform The Workiva platform is a single instance, multi-tenant software deployed in the cloud, built on Amazon Web Services and Google Cloud Platform36 Key features include data connection from various ERP, HCM, CRM systems, drag-and-drop data transformation, automated updates via data-linking, detailed audit trails, and granular permission controls36373839 The platform is designed for enterprise-grade scalability, availability, and security, with continuous improvements released several times a week414243 The Workiva Marketplace offers over 215 templates and 70+ no-code data connectors to streamline processes and solve new business problems44 Fit-for-Purpose Solutions Workiva markets and sells over 30 fit-for-purpose solutions categorized into Financial Reporting, ESG, GRC, and Industry Verticals45 Financial Reporting solutions include Global Statutory Reporting, SEC/SEDAR Reporting, Capital Markets, Annual & Interim Reporting, ESEF, and Management Reporting464748495051 ESG Reporting solution enables high-quality disclosures, supports various frameworks (GRI, SASB, TCFD, UNSDGs), and helps operationalize ESG initiatives52535455 GRC solutions cover Controls Management (SOX), Internal Audit Management, Enterprise Risk Management (ERM), and Policy and Procedure Management56575859 Industry Verticals include Financial Services (Dodd-Frank, Basel III, EBA, FCA compliance), Public Sector (CAFR, budgeting, FedRAMP), and Energy & Utility Sector (FERC XBRL mandate)60616263 Research and Development R&D focuses on innovating new solutions, furthering platform openness and extensibility, and enhancing user experience64 Over the last decade, Workiva has invested more than $780 million in R&D64 Customers As of December 31, 2022, Workiva had more than 5,600 customers, including 88% of the top 100 public and private companies65 | Metric | As of Dec 31, 2022 | As of Dec 31, 2021 | | :--- | :--- | :--- | | Subscription and support revenue retention rate | 97.8% | 97.0% | | Subscription and support revenue retention rate including add-ons | 108.5% | 110.0% | Workiva hosts Customer Advisory Boards (CABs) for Financial Reporting, ESG, and GRC to gather feedback and insights66 Competition Primary competitors include manual processes, diversified enterprise software providers, niche software providers, professional services firms, GRC software providers, and business intelligence/performance management software providers6768 Principal competitive factors are product features, reliability, performance, breadth, extensibility, integration, price, total cost of ownership, industry standards, sales/marketing, and brand68 Sales and Marketing Sales are primarily conducted through a direct sales organization, augmented by a growing ecosystem of over 200 advisory, technology, and service partners6973 Marketing efforts focus on brand promotion, demand generation, and assessing product market needs, utilizing various programs and events7475 Customer Success and Professional Services Customer success offers 24/7 live support and best practices, while professional services include document setup, XBRL mapping/tagging, and business process consulting7778 Intellectual Property Workiva relies on patent, trademark, copyright, and trade secret laws, along with contractual protections, to safeguard its intellectual property80 As of December 31, 2022, Workiva had 68 issued patents and 16 patent applications pending81 The enterprise software industry is characterized by numerous patents and frequent intellectual property litigation84 Litigation Workiva is not currently a party to any legal proceedings expected to have a material adverse effect on its business, operating results, financial condition, or cash flows86 Litigation can adversely impact the company due to defense and settlement costs and diversion of management resources86 Government Regulations Workiva believes its businesses and operations are in substantial compliance with all applicable government laws and regulations87 New or amended laws/regulations could reduce demand, increase expenses, impose operational limitations, or increase compliance/litigation costs87 Corporate ESG Commitments Workiva is committed to ESG through authentic and purposeful action, supporting people and customers, protecting the environment, and conducting good business practices89 ESG strategy includes board oversight, materiality approach, stakeholder engagement, an ESG Task Force, and