8. Revenue Recognition
7.Disaggregation of Revenue
The following table presents our revenues disaggregated by industry (in thousands):
| | | | | |
| Three months ended March 31, 2018 |
Information technology | $ | 7,270 |
Consumer discretionary | 6,893 |
Industrials | 6,747 |
Diversified financials | 6,290 |
Banks | 6,049 |
Healthcare | 5,350 |
Energy | 4,895 |
Other | 16,412 |
Total revenues | $ | 59,906 |
The following table presents our revenues disaggregated by type of good or service (in thousands):
| | | | | |
| Three months ended March 31, 2018 |
Subscription and support | $ | 46,470 |
XBRL professional services | 9,852 |
Other services | 3,584 |
Total revenues | $ | 59,906 |
Deferred Revenue
$42.5 million of revenue recognized during the three months ended March 31, 2018 was included in the deferred revenue balance at the beginning of the period.
Transaction Price Allocated to the Remaining Performance Obligations
As of March 31, 2018, revenue of approximately $131.9 million is expected to be recognized from remaining performance obligations for subscription contracts. We expect to recognize approximately $110.9 million of these remaining performance obligations over the next 12 months, with the balance recognized thereafter.
9. Net Loss Per Share
Basic net loss per share is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by giving effect to all potential shares of common stock, including our outstanding stock options, and stock related to unvested restricted stock awards, and common stock issuable pursuant to the ESPP to the extent dilutive.
The net loss per share is allocated based on the participation rights of the Class A and Class B common shares as if the loss for the year has been distributed. As the liquidation and dividend rights are identical, the net loss is allocated on a proportionate basis.
We consider unvested restricted stock awards granted under the 2014 Equity Incentive Plan to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares. In future periods to the extent we are profitable, we will subtract earnings allocated to these participating securities from net income to determine net income attributable to common stockholders.
A reconciliation of the denominator used in the calculation of basic and diluted loss per share is as follows (in thousands, except share and per share data):
|
| | | | | | | | | | | | | | | |
| Three months ended |
| March 31, 2017 | | March 31, 2016 |
| Class A | | Class B | | Class A | | Class B |
Numerator | | | | | | | |
Net loss | $ | (4,293 | ) | | $ | (1,543 | ) | | $ | (8,496 | ) | | $ | (3,549 | ) |
| | | | | | | |
Denominator | | | | | | | |
Weighted-average common shares outstanding - basic and diluted | 30,239,390 |
| | 10,869,221 |
| | 28,534,236 |
| | 11,917,432 |
|
Basic and diluted net loss per share | $ | (0.14 | ) | | $ | (0.14 | ) | | $ | (0.30 | ) | | $ | (0.30 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three months ended |
| March 31, 2018 | | March 31, 2017 |
| Class A | | Class B | | Class A | | Class B |
Numerator | | | | | | | |
Net loss | $ | (7,330) | | $ | (2,288) | | $ | (4,293) | | $ | (1,543) |
| | | | | | | |
Denominator | | | | | | | |
Weighted-average common shares outstanding - basic and diluted | 32,662,318 | | 10,196,438 | | 30,239,390 | | 10,869,221 |
Basic and diluted net loss per share | $ | (0.22) | | $ | (0.22) | | $ | (0.14) | | $ | (0.14) |
The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share were as follows:
| | | | | | | | | | | |
| As of |
| March 31, 2018 | | March 31, 2017 |
Shares subject to outstanding common stock options | 7,807,606 | | 8,253,195 |
Shares subject to unvested restricted stock awards | — | | 176,665 |
Shares issuable pursuant to the ESPP | 107,764 | | — |
|
| | | | | |
| As of |
| March 31, 2017 | | March 31, 2016 |
Shares subject to outstanding common stock options | 8,253,195 |
| | 7,500,616 |
|
Shares subject to unvested restricted stock awards | 176,665 |
| | 423,360 |
|
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 23, 2017.22, 2018. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2016,2017, in “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and in any subsequent filing we make with the SEC.
Overview
Workiva provides enterprisesWdesk, an intuitive cloud platform that modernizes how customers work with cloud solutions for improving productivity, accountability and insight into business data. Workiva createddata at thousands of organizations. Wdesk a collaborative work management platform for organizations to collect, link, report and analyze their business data. Wdesk’s proprietary word processing, spreadsheet and presentation applications are integrated andis built uponon a data management engine, offering synchronizedcontrolled collaboration, data controlled collaboration,connections, granular permissions and a full audit trail. Wdesk helps mitigate risk, improves productivity and gives users confidence to make decisions with real-time data.in their data-driven decisions. As of March 31, 2017,2018, we provided our solutions to more than 2,8003,100 enterprise customers, including overmore than 70% of FORTUNE 500® companies(1).
(1) Claim not confirmed by FORTUNE or Time Inc. FORTUNE 500 is a registered trademark of Time Inc. and is used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Workiva Inc.
Our scalable, enterprise-grade data engine enables users to collect, aggregate and manage their unstructured and structured data in Wdesk. We offerAlthough our Wdesk solutionsplatform is used for a wide rangehundreds of different use cases across public and private companies, state and local governments and universities, we are currently focusing our sales and marketing resources to expand the use of Wdesk in the following markets:four areas: finance and accounting, audit and internal controls, risk and compliance and operations. Underlying these solutions is our scalable, enterprise-grade data engine enables users to collect, aggregateperformance and manage their unstructured and structured data in Wdesk.management reporting.
We operate our business on a software-as-a-service (SaaS) model. Customers enter into quarterly, annual and multi-year subscription contracts to utilizegain access to Wdesk. Our subscription fee includes the use of our servicesoftware and technical support. Our pricing is based primarily on the number of corporate entities, number of users, level of customer support and length of contract. Our pricing model is scaled to the number of users, so the subscription price per user typically decreases as the number of users increases. We charge customers additional fees primarily for document setup and XBRL tagging services. We generate sales primarily through our direct sales force and, to a lesser extent, our customer success and professional services teams. In addition, in the fourth quarter of 2016, we began to augment our direct-sales channel with partnerships. Over time, we expect ourOur advisory and service partners to include technology companies, consultants, service providersoffer a wider range of domain and accounting firms. We expect our partners to support our sales efforts through referrals and co-selling arrangements, as well as expandfunctional expertise that broadens the usecapabilities of Wdesk, through complementarybringing scale and support to customers and prospects. Our technology offeringspartners enable more data and software integrations.process integrations to help customers connect critical transactional systems directly to Wdesk, which becomes a central repository of trusted data, with powerful linking, auditability and control features.
Our integrated platform, subscription-based model, and exceptional customer support have contributed to a low rate of customer turnover while achieving strong revenue growth. Our subscription and support revenue retention rate was 95.1%95.7% (excluding add-on seats) for the twelve months ended March 31, 2017.2018.
We continue to invest in the development of our solutions, infrastructure and sales and marketing to drive long-term growth. Our full-time employee headcount expanded to 1,313 at March 31, 2018 from 1,180 at March 31, 2017, from 1,160 at March 31, 2016, an increase of 1.7%11.3%.
We have achieved significant revenue growth in recent periods. Our revenue grew to $59.9 million during the three months ended March 31, 2018 from $51.9 million during the three months ended March 31, 2017 from $44.62017. We incurred net losses of $9.6 million during the three months ended March 31,
2016. We incurred net losses of 2018 compared to $5.8 million during the three months ended March 31, 2017 compared to $12.0 million during the three months ended March 31, 2016.2017.
We are an “emerging growth company,” as defined in the JOBS Act. We will cease to be an “emerging growth company” upon the earliest of (i) December 31, 2019, (ii) the last day of the first fiscal year in which our annual gross revenue is $1 billion or more, (iii) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in nonconvertible debt securities or (iv) the date on which we qualify as a “large accelerated filer” with at least $700 million of equity securities held by non-affiliates.
Key Factors Affecting Our Performance
Generate Growth From Existing Customers. Wdesk can exhibit a powerful network effect within an enterprise, meaning that the usefulness of our platform attracts additional users and more data. As more employees in an enterprise use Wdesk, additional opportunities for collaboration and automation drive demand among their colleagues for add-on seats. Expansion within current customers includes adding users for both existing solutions and new use cases.
Pursue New customersCustomers. Our first software solution enabled customers to streamline and automate their SEC regulatory filing process. In 2013, we began expanding into additional markets that were faced with managing large, complex processes with many contributors and disparate sets of business data. We employ a “land-and-expand” sales strategy that focuses on acquiringnow sell to new customers through our direct sales model and building our relationships with existing customers over time. Acquiring new customers is a key component of our continued success in the marketplace, growth opportunityareas of finance and future revenue.accounting, risk and compliance, audit and internal controls and performance and management reporting. We have aggressively invested in and intend to continue to invest inbuild our direct sales force.and marketing organization and leverage our brand equity to attract new customers.
Further penetration of existing customersOffer More Solutions. .We intend to introduce new solutions to continue to meet growing demand for our Wdesk platform. Our account management teams seek to generate additional revenue fromclose and trusted relationships with our customers by adding seatsare a source for new use cases, features and solutions. We have a disciplined process for tracking, developing and releasing new solutions that are designed to existing subscriptionshave immediate, broad applicability; a strong value proposition; and by signinga high return on investment for both Workiva and our customers. Our advance planning team assesses customer needs, conducts industry-based research and defines new subscriptionsmarkets. This vetting process involves our sales, product marketing, customer success, professional services, research and development, finance and senior management teams.
Expand Across Enterprises. Our success in delivering multiple solutions has created demand from customers for additional business solutionsa broader-based, enterprise-wide Wdesk platform. In response, we have been improving our technology and realigning sales and marketing to capitalize on our platform.growing enterprise-wide opportunities. We believe this expansion will add seats and revenue and continue to support our high revenue retention rates. However, we expect that enterprise-wide deals will be larger and more complex, which tend to lengthen the sales cycle.
Add Partners. We continue to add partners. Our consulting and accounting partners offer a significant opportunity existsbroader range of services that leverage the capabilities of Wdesk. Our technology partners enable data connections and process integrations to further streamline critical business functions as we capitalize on growing Wdesk demand for us to sell additional subscriptions to current customers as they become more familiar with our platform and adopt our solutions to address additional business use cases.broader-based, enterprise-wide opportunities.
Investment in growth. We plan to continue to increaseinvest in the development of our headcount and develop softwareWdesk platform to both enhance our current offerings and build new features. As a result, we expect our total operating expenses to increase. In addition, we expect to continue to invest in our sales, marketing, professional services and customer success organizations to drive additional revenue and support the growthneeds of our growing customer base. Investments we make in our sales and marketing and research and development organizations will occur in advance of experiencing any benefits from such investments. As a result, we expect our total operating expenses to continue to increase.
Seasonality. Our revenue from professional services has some degree of seasonality. Many of our customers employ our professional services just before they file their Form 10-K, often in the first calendar quarter. As our non-SEC offerings continue to grow, we expect our professional services revenue to continue to become less seasonal. Our sales and marketing expense also has some degree of seasonality. Sales and marketing expense is generally higher in the third quarter since we hold our annual user conference in September. In addition, we typically paythe timing of the payments of cash bonuses to employees induring the first quarter, resultingand fourth calendar quarters may result in some seasonality in operating cash flow.
Key Performance Indicators
| | | | | | | | | | | |
| Three months ended March 31, | | | | |
| 2018 | | 2017 | | | | |
| | | | | | | |
| (dollars in thousands) | | | | |
Financial metrics | | | | | | | |
Total revenue | $ | 59,906 | | $ | 51,904 | | | | |
Percentage increase in total revenue | 15.4 | % | | 16.5 | % | | | | |
Subscription and support revenue | $ | 46,470 | | $ | 39,540 | | | | |
Percentage increase in subscription and support revenue | 17.5 | % | | 17.7 | % | | | | |
Subscription and support as a percent of total revenue | 77.6 | % | | 76.2 | % | | | | |
|
| | | | | | | |
| Three months ended March 31, |
| 2017 | | 2016 |
| | | |
| (dollars in thousands) |
Financial metrics | | | |
Total revenue | $ | 51,904 |
| | $ | 44,551 |
|
Percentage increase in total revenue | 16.5 | % | | 26.7 | % |
Subscription and support revenue | $ | 39,540 |
| | $ | 33,585 |
|
Percentage increase in subscription and support revenue | 17.7 | % | | 27.9 | % |
Subscription and support as a percent of total revenue | 76.2 | % | | 75.4 | % |
|
| | | |
| As of March 31, |
| 2017 | | 2016 |
Operating metrics | | | |
Number of customers | 2,825 | | 2,557 |
Subscription and support revenue retention rate | 95.1% | | 96.1% |
Subscription and support revenue retention rate including add-ons | 106.6% | | 112.1% |
| | | | | | | | | | | |
| As of March 31, |
| 2018 | | 2017 |
Operating metrics | | | |
Number of customers | 3,119 | | 2,825 |
Subscription and support revenue retention rate | 95.7% | | | 95.1% | |
Subscription and support revenue retention rate including add-ons | 105.3% | | | 106.6% | |
Annual contract value $100k+ | 335 | | 250 |
Annual contract value $150k+ | 151 | | 101 |
Total customers. We believe total number of customers is a key indicator of our financial success and future revenue potential. We define a customer as an entity with an active subscription contract as of the measurement date. Our customer is typically a parent company or, in a few cases, a significant subsidiary that works with us directly. Companies with publicly listed securities account for a substantial majority of our customers.
Subscription and support revenue retention rate. We calculate our subscription and support revenue retention rate by annualizing the subscription and support revenue recorded in the first month of the measurement period for only those customers in place throughout the entire measurement period, thereby excluding any attrition. We divide the result by the annualized subscription and support revenue in the first month of the measurement period for all customers in place at the beginning of the measurement period. The measurement period is based on the trailing twelve months.
Our subscription and support revenue retention rate was 95.1%95.7% at the March 20172018 measurement date, downup from 96.1%95.1% as of March 2016.2017. We believe that our success in maintaining a high rate of revenue retention is attributable primarily to our robust technology platform and strong customer service. Customers being acquired or ceasing to file SEC reports has been the largest contributing factor to our revenue attrition.
Subscription and support revenue retention rate including add-ons. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers. We calculate our subscription and support revenue retention rate including add-ons by annualizing the subscription and support revenue recorded in the last month of the measurement period for only those customers in place throughout the entire measurement period. We divide the result by the annualized subscription and support revenue in the first month of the measurement period for all customers in place at the beginning of the measurement period. The measurement period is based on the trailing twelve months.
Our subscription and support revenue retention rate including add-ons was 106.6%105.3% at the March 20172018 measurement date, down from 112.1%106.6% as of March 2016.2017. As we pursue larger opportunities, we are seeing lengthening and more complex sales cycles.
Revenue retention rates have been calculated based on ASC 605. See Note 1 to our condensed consolidated financial statements for additional information.
. Our annual contract value (“ACV”) for each customer is calculated by annualizing the subscription and support revenue recognized during each quarter.
Components of Results of Operations
Revenue
We generate revenue through the sale of subscriptions to our cloud-based software and the delivery of professional services. We serve a wide range of customers in many industries, and our revenue is not concentrated with any single customer or small group of customers. For the three months ended March 31, 20172018 and 2016,2017, no single customer represented more than 1% of our revenue, and our largest ten customers accounted for less than 6% of our revenue in the aggregate.
We generate sales directly through our sales force or through ourand partners. We also identify some sales opportunities with existing customers through our customer success and professional services teams.
Our customer contracts typically range in length from three to 36 months. Our arrangements do not contain general rights of return. We typically invoice our customers for subscription fees in advance on a quarterly, annual, two-year or three-year basis, with payment due at the start of the subscription term. In 2015, we began to move toward a standard minimum subscription term of one year andWe plan to convert mosta substantial majority of our remaining quarterly contracts to annual terms over the next few years.twelve months. In addition, we continue to offer limited incentives for customers to enter into contract terms of more than one year, typically for terms of two or three years. Unpaid invoice amounts for services starting in future periods are excluded from accounts receivable and deferred revenue. Invoiced amounts are reflected as accounts receivable once we have initiated services with an offset to deferred revenue or revenue depending on whether the revenue recognition criteria have been met.
Subscription and Support Revenue. We recognize the aggregate minimum subscription and support fees ratablyrevenue on a straight-lineratable basis over the subscriptioncontract term providedbeginning on the date that an enforceable contract has been signed by both parties, access to our SaaS solutions has been grantedservice is made available to the customer, the fee for the subscription and support is fixed or determinable, and collection is reasonably assured.customer. Amounts that are invoiced are initially recorded as deferred revenue.
Professional Services Revenue. We believe our professional services facilitate the sale of our subscription service to certain customers. To date, most of our professional services have consisted of document set up, XBRL tagging, and consulting with our customers on business processes and best practices for using Wdesk. Our professional services are not required for customers to utilize our solution. We recognize revenue for our professionaldocument set ups when the service is complete and control has transferred to the customer. Revenues from XBRL tagging and consulting services contracts whenare recognized as the services are performed.
Cost of Revenue
Cost of revenue consists primarily of personnel and related costs directly associated with our professional services, customer success teams and training personnel, including salaries, benefits, bonuses and stock-based compensation; the costs of contracted third-party vendors; the costs of server usagecloud infrastructure services by our customers; information technology costs and facility costs. Costs of server usagecloud infrastructure services are comprised primarily of fees paid to Google Cloud Platform and Amazon Web Services.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of personnel and related costs, including salaries, benefits, bonuses, commissions, travel, and stock-based compensation. Other costs included in this expense are marketing and promotional events, our annual user conference, online marketing, product marketing, information technology costs and facility costs. We capitalize and amortizeSales commissions paid where the amortization period is one year or less are expensed as incurred. All other sales commissions that are directly attributable toconsidered incremental costs of obtaining a contract with a customer and are deferred and amortized on a straight-line basis over the lessera period of twelve months or the non-cancelable term of the customer contract based on the terms of our commission arrangements.
benefit that we have determined to be three years.
Research and Development Expenses
Research and development expenses consist primarily of personnel and related costs, including salaries, benefits, bonuses, and stock-based compensation; costs of server usagecloud infrastructure services by our developers; information technology costs; and facility costs.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel and related costs for our executive, finance and accounting, legal, human resources, and administrative personnel, including salaries, benefits, bonuses, and stock-based compensation; legal, accounting, and other professional service fees; other corporate expenses; information technology costs; and facility costs.
Results of Operations
The following table sets forth selected consolidated statement of operations data for each of the periods indicated:
|
| | | | | | | |
| Three months ended March 31, |
| 2017 | | 2016 |
| | | |
| (in thousands) |
Revenue | | | |
Subscription and support | $ | 39,540 |
| | $ | 33,585 |
|
Professional services | 12,364 |
| | 10,966 |
|
Total revenue | 51,904 |
| | 44,551 |
|
Cost of revenue | | | |
Subscription and support(1) | 7,637 |
| | 6,918 |
|
Professional services(1) | 6,581 |
| | 6,188 |
|
Total cost of revenue | 14,218 |
| | 13,106 |
|
Gross profit | 37,686 |
| | 31,445 |
|
Operating expenses | | | |
Research and development(1) | 15,536 |
| | 14,516 |
|
Sales and marketing(1) | 18,713 |
| | 20,088 |
|
General and administrative(1) | 9,421 |
| | 8,953 |
|
Total operating expenses | 43,670 |
| | 43,557 |
|
Loss from operations | (5,984 | ) | | (12,112 | ) |
Interest expense | (455 | ) | | (490 | ) |
Other income, net | 612 |
| | 576 |
|
Loss before provision for income taxes | (5,827 | ) | | (12,026 | ) |
Provision for income taxes | 9 |
| | 19 |
|
Net loss | $ | (5,836 | ) | | $ | (12,045 | ) |
| | | | | | | | | | | |
| Three months ended March 31, |
| 2018 | | 2017 |
| | | |
| (in thousands) |
Revenue | | | |
Subscription and support | $ | 46,470 | | $ | 39,540 |
Professional services | 13,436 | | 12,364 |
Total revenue | 59,906 | | 51,904 |
Cost of revenue | | | |
Subscription and support(1) | 8,802 | | 7,637 |
Professional services(1) | 7,709 | | 6,581 |
Total cost of revenue | 16,511 | | 14,218 |
Gross profit | 43,395 | | 37,686 |
Operating expenses | | | |
Research and development(1) | 20,127 | | 15,536 |
Sales and marketing(1) | 21,006 | | 18,713 |
General and administrative(1) | 11,768 | | 9,421 |
Total operating expenses | 52,901 | | 43,670 |
Loss from operations | (9,506) | | (5,984) |
Interest expense | (450) | | (455) |
Other income, net | 343 | | 612 |
Loss before provision for income taxes | (9,613) | | (5,827) |
Provision for income taxes | 5 | | 9 |
Net loss | $ | (9,618) | | $ | (5,836) |
(1) Stock-based compensation expense included in these line items was as follows: | | | | | | | | | | | |
| Three months ended March 31, |
| 2018 | | 2017 |
| | | |
| (in thousands) |
Cost of revenue | | | |
Subscription and support | $ | 171 | | $ | 140 |
Professional services | 150 | | 100 |
Operating expenses | | | |
Research and development | 1,021 | | 493 |
Sales and marketing | 1,113 | | 659 |
General and administrative | 3,450 | | 2,747 |
Total stock-based compensation expense | $ | 5,905 | | $ | 4,139 |
|
| | | | | | | |
| Three months ended March 31, |
| 2017 | | 2016 |
| | | |
| (in thousands) |
Cost of revenue | | | |
Subscription and support | $ | 140 |
| | $ | 118 |
|
Professional services | 100 |
| | 122 |
|
Operating expenses | | | |
Research and development | 493 |
| | 584 |
|
Sales and marketing | 659 |
| | 455 |
|
General and administrative | 2,747 |
| | 2,111 |
|
Total stock-based compensation expense | $ | 4,139 |
| | $ | 3,390 |
|
The following table sets forth our consolidated statement of operations data as a percentage of revenue for each of the periods indicated:
| | | | | | | | | | | |
| Three months ended March 31, | | | | |
| 2018 | | 2017 | | | | |
Revenue | | | | | | | |
Subscription and support | 77.6 | % | | 76.2 | % | | | | |
Professional services | 22.4 | | | 23.8 | | | | | |
Total revenue | 100.0 | | | 100.0 | | | | | |
Cost of revenue | | | | | | | |
Subscription and support | 14.7 | | | 14.7 | | | | | |
Professional services | 12.9 | | | 12.7 | | | | | |
Total cost of revenue | 27.6 | | | 27.4 | | | | | |
Gross profit | 72.4 | | | 72.6 | | | | | |
Operating expenses | | | | | | | |
Research and development | 33.6 | | | 29.9 | | | | | |
Sales and marketing | 35.1 | | | 36.1 | | | | | |
General and administrative | 19.6 | | | 18.2 | | | | | |
Total operating expenses | 88.3 | | | 84.2 | | | | | |
Loss from operations | (15.9) | | | (11.6) | | | | | |
Interest expense | (0.8) | | | (0.9) | | | | | |
Other income, net | 0.6 | | | 1.2 | | | | | |
Loss before provision for income taxes | (16.1) | | | (11.3) | | | | | |
Provision (benefit) for income taxes | — | | | — | | | | | |
Net loss | (16.1) | % | | (11.3) | % | | | | |
|
| | | | | |
| Three months ended March 31, |
| 2017 | | 2016 |
Revenue | | | |
Subscription and support | 76.2 | % | | 75.4 | % |
Professional services | 23.8 |
| | 24.6 |
|
Total revenue | 100.0 |
| | 100.0 |
|
Cost of revenue | | | |
Subscription and support | 14.7 |
| | 15.5 |
|
Professional services | 12.7 |
| | 13.9 |
|
Total cost of revenue | 27.4 |
| | 29.4 |
|
Gross profit | 72.6 |
| | 70.6 |
|
Operating expenses | | | |
Research and development | 29.9 |
| | 32.6 |
|
Sales and marketing | 36.1 |
| | 45.1 |
|
General and administrative | 18.2 |
| | 20.1 |
|
Total operating expenses | 84.2 |
| | 97.8 |
|
Loss from operations | (11.6 | ) | | (27.2 | ) |
Interest expense | (0.9 | ) | | (1.1 | ) |
Other income, net | 1.2 |
| | 1.3 |
|
Loss before provision for income taxes | (11.3 | ) | | (27.0 | ) |
Benefit for income taxes | — |
| | — |
|
Net loss | (11.3 | )% | | (27.0 | )% |
Comparison of Three Months Ended March 31, 2018and 2017 and 2016
Revenue
|
| | | | | | | | | |
| Three months ended March 31, | | |
| 2017 | | 2016 | | % Change |
| | | | | |
| (dollars in thousands) |
Revenue | | | | | |
Subscription and support | $ | 39,540 |
| | $ | 33,585 |
| | 17.7% |
Professional services | 12,364 |
| | 10,966 |
| | 12.7% |
Total revenue | $ | 51,904 |
| | $ | 44,551 |
| | 16.5% |
| | | | | | | | | | | | | | | | | |
| Three months ended March 31, | | | | | | | | | |
| 2018 | | 2017 | | % Change | | | | | | | |
| | | | | | | | | | | | |
| (dollars in thousands) | | | | | | | |
Revenue | | | | | | | | | | | | |
Subscription and support | $ | 46,470 | | $ | 39,540 | | 17.5% | | | | | | | | |
Professional services | 13,436 | | 12,364 | | 8.7% | | | | | | | | |
Total revenue | $ | 59,906 | | $ | 51,904 | | 15.4% | | | | | | | | |
Total revenue increased $7.4$8.0 million for the three months ended March 31, 20172018 compared to the same quarter a year ago due primarily to a $6.0$6.9 million increase in subscription and support revenue. Of the total gain in subscription and support revenue, 55.2%55.0% represented revenue from new customers acquired after March 31, 20162017 and 44.8%45.0% represented revenue from existing customers at or prior to March 31, 2016.2017. The total number of our customers expanded 10.5%10.4% from March 31, 20162017 to March 31, 2017.2018. Growth in professional services revenue was attributable primarily to an increase in XBRL tagging services. Professional services revenue increased at a slower rate than subscription and support revenue for the three months ended March 31, 2018 compared to the same quarter a year ago. As our customers become familiar with our platform, they typically become more self sufficient and require fewer professional services. We expect the revenue growth rate from subscription and support to continue to outpace revenue growth from professional services on an annual basis.
ASC 606 caused recognition of professional services revenue to be $1.7 million lower for the first quarter of 2018 than what would have been recognized under the legacy standard. Under ASC 605, revenue from subscription and support and professional services for the first quarter of 2018 would have been $46.2 million and $15.1 million, respectively, which represents increases of 16.9% and 22.4%, respectively, over the same period a year ago. See Note 1 to our condensed consolidated financial statements for a breakdown of revenue for the current period under ASC 605.
Cost of Revenue
|
| | | | | | | | | |
| Three months ended March 31, | | |
| 2017 | | 2016 | | % Change |
| | | | | |
| (dollars in thousands) |
Cost of revenue | | | | | |
Subscription and support | $ | 7,637 |
| | $ | 6,918 |
| | 10.4% |
Professional services | 6,581 |
| | 6,188 |
| | 6.4% |
Total cost of revenue | $ | 14,218 |
| | $ | 13,106 |
| | 8.5% |
| | | | | | | | | | | | | | | | | |
| Three months ended March 31, | | | | | | | | | |
| 2018 | | 2017 | | % Change | | | | | | | |
| | | | | | | | | | | | |
| (dollars in thousands) | | | | | | | |
Cost of revenue | | | | | | | | | | | | |
Subscription and support | $ | 8,802 | | $ | 7,637 | | 15.3% | | | | | | | | |
Professional services | 7,709 | | 6,581 | | 17.1% | | | | | | | | |
Total cost of revenue | $ | 16,511 | | $ | 14,218 | | 16.1% | | | | | | | | |
Cost of revenue increased $1.1$2.3 million during the three months ended March 31, 20172018 versus the same quarter a year ago, attributabledue primarily to an aggregate increase in headcount, employee compensation and benefits of $1.5 million and a $0.4 million rise in the cost of cloud infrastructure services to support our expanding customer base.
Operating Expenses
| | | | | | | | | | | | | | | | | |
| Three months ended March 31, | | | | | | | | | |
| 2018 | | 2017 | | % Change | | | | | | | |
| | | | | | | | | | | | |
| (dollars in thousands) | | | | | | | |
Operating expenses | | | | | | | | | | | | |
Research and development | $ | 20,127 | | $ | 15,536 | | 29.6% | | | | | | | | |
Sales and marketing | 21,006 | | 18,713 | | 12.3% | | | | | | | | |
General and administrative | 11,768 | | 9,421 | | 24.9% | | | | | | | | |
Total operating expenses | $ | 52,901 | | $ | 43,670 | | 21.1% | | | | | | | | |
Research and Development
Research and development expenses increased $4.6 million in the three months ended March 31, 2018 compared to the same quarter a year ago due primarily to $3.8 million in higher compensation and benefits and a $0.4 million expansion of professional services expense related to an increase in technology consultants. We continue to dedicate resources to developing the next generation of Wdesk, which has resulted in higher headcount and additional consultants in research and development.
Sales and Marketing
Sales and marketing expenses increased $2.3 million during the three months ended March 31, 2018 compared to the three months ended March 31, 2017 due primarily to higher compensation, benefits, and travel costs.
General and Administrative
General and administrative expenses increased $2.3 million during the three months ended March 31, 2018 compared to the same quarter a year ago. This increase was due primarily to additional employee compensation, benefits, and travel costs of $0.9$2.6 million. Headcount growth was the primary driver of the personnel-related costs. Expenses related to subscription
Non-Operating Income (Expenses)
| | | | | | | | | | | |
| Three months ended March 31, | | | | | |
| 2018 | | 2017 | | | | | |
| | | | | | | | |
| (dollars in thousands) | | | | | |
Interest expense | $ | (450) | | $ | (455) | | | | | |
Other income, net | 343 | | 612 | | | | | |
Interest Expense and support rose 10.4% inOther Income, Net
Interest expense remained relatively flat during the three months ended March 31, 20172018 compared to the same period a year ago.
Other income, net decreased during the three months ended March 31, 2018 compared to the same period a year ago due primarily to a reduction of government grant income from a training reimbursement program partially offset by an increase in headcount and employee compensation. Professional services expense expanded 6.4% in the three months ended March 31, 2017 versus the same period a year ago due primarily to an increase in employee compensation to handle the growing demand for our services.interest income.
Operating Expenses
|
| | | | | | | | | |
| Three months ended March 31, | | |
| 2017 | | 2016 | | % Change |
| | | | | |
| (dollars in thousands) |
Operating expenses | | | | | |
Research and development | $ | 15,536 |
| | $ | 14,516 |
| | 7.0% |
Sales and marketing | 18,713 |
| | 20,088 |
| | (6.8)% |
General and administrative | 9,421 |
| | 8,953 |
| | 5.2% |
Total operating expenses | $ | 43,670 |
| | $ | 43,557 |
| | 0.3% |
Research and Development
Research and development expenses increased $1.0 million in the three months ended March 31, 2017 compared to the same quarter a year ago due primarily to $0.6 million in higher employee cash-based compensation and benefits.
Sales and Marketing
Sales and marketing expenses decreased $1.4 million during the three months ended March 31, 2017 compared to the three months ended March 31, 2016, due primarily to a $1.0 million reduction in employee cash-based compensation, benefits and travel costs largely due to the simplification of the sales organization.
General and Administrative
General and administrative expenses increased $0.5 million during the three months ended March 31, 2017 compared to the same quarter a year ago, due principally to higher employee cash-based compensation and benefits of $0.6 million and additional employee stock-based compensation of $0.6 million partially offset by a reduction in employee travel expenses of $0.4 million.
Non-Operating Income (Expenses)
|
| | | | | | | |
| Three months ended March 31, |
| 2017 | | 2016 |
| | | |
| (dollars in thousands) |
Interest expense | $ | (455 | ) | | $ | (490 | ) |
Other income, net | 612 |
| | 576 |
|
Interest Expense and Other Income, Net
Both interest expense and other income, net remained relatively flat during the three months ended March 31, 2017 compared to the same period a year ago.
Liquidity and Capital Resources
|
| | | | | | | |
| Three months ended March 31, |
| 2017 | | 2016 |
| | | |
| (in thousands) |
Cash flow provided by (used in) operating activities | $ | 2,580 |
| | $ | (19,078 | ) |
Cash flow (used in) provided by investing activities | (1,242 | ) | | 4,326 |
|
Cash flow used in financing activities | (427 | ) | | (726 | ) |
Net increase (decrease) in cash and cash equivalents, net of impact of exchange rates | $ | 923 |
| | $ | (15,524 | ) |
| | | | | | | | | | | |
| Three months ended March 31, | | | | |
| 2018 | | 2017 | | | | |
| | | | | | | |
| (in thousands) | | | | |
Cash flow provided by operating activities | $ | 1,783 | | $ | 2,580 | | | | |
Cash flow provided by (used in) investing activities | 427 | | (1,242) | | | | |
Cash flow provided by (used in) financing activities | 2,805 | | (427) | | | | |
Net increase in cash and cash equivalents, net of impact of exchange rates | $ | 4,923 | | $ | 923 | | | | |
As of March 31, 2017,2018, our cash, cash equivalents and marketable securities totaled $64.7$81.1 million. To date, we have financed our operations primarily through the proceeds of our initial public offering, private placements of equity, debt that was settled in equity and cash from operating activities. We have generated significant operating losses and negative cash flows from operating activities as reflected in our accumulated deficit and consolidated statements of cash flows. We expect to continue to incur operating losses and may incur negative cash flows from operations in the future. As a result, we may require additional capital resources to continue to grow our business. We believe that current cash and cash equivalents, cash to be receivedflows from existing and new customers, andoperating activities, availability under our existing credit facility and the ability to offer and sell securities pursuant to our shelf registration statement will be sufficient to fund our operations for at least the next twelve months.
In August 2014, we entered into a $15.0 million credit facility with Silicon Valley Bank. Borrowing capacity is equal to the most recent month’s subscription and support revenue multiplied by a percentage that adjusts based on the prior quarter’s customer retention rate. The credit facility can be used to fund working capital and general business requirements. The credit facility is secured by all of our assets and has first priority over our other debt obligations, and requires us to maintain certain financial covenants, including the maintenance of at least $5.0 million of cash on hand or unused borrowing capacity.obligations. The credit facility contains financial and other covenants, including certain restrictive covenants that limit our ability to transfer or dispose of assets, merge with other companies or consummate certain changes of control, acquire other companies, pay dividends, incur additional indebtedness and liens, effectexperience changes in management and enter into new businesses. The credit facility has a variable interest rate equal to the bank’s prime lending rate with interest payable monthly and the principal balance due at maturity. We amended theThe credit facility matures in April 2016 to extend the maturity date to August 2018. No2020, and no amount was outstanding under the credit facility as of March 31, 2017.2018.
We have filed a universal shelf registration statement on Form S-3 with the SEC, which became effective August 10, 2017. Under the shelf registration statement, we may offer and sell, from time to time in the future in one or more public offerings, our Class A common stock, preferred stock, debt securities, warrants, rights and units. The aggregate initial offering price of all securities sold by us under the shelf registration statement will not exceed $250.0 million.
Operating Activities
For the three months ended March 31, 2018, cash provided by operating activities was $1.8 million. The primary factors affecting our operating cash flows during the period were our net loss of $9.6 million, adjusted for non-cash charges of $0.9 million for depreciation and amortization of our property and equipment and intangible assets and $5.9 million of stock-based compensation and a $4.7 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $2.3 million decrease in deferred revenue, a $0.8 million decrease in accrued expenses and other liabilities, and a $1.6 million increase in deferred commissions, partially offset by a $6.5 million decrease in accounts receivable and a $2.7 million increase in accounts payable. Deferred commissions increased primarily due to additional payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. The decrease in deferred revenue was caused by the timing of contract renewals with terms greater than one year. We offer limited incentives for customers to
Operating Activitiesenter into contract terms for more than one year. The decreases in accounts receivable and accrued expenses and other liabilities and increase in accounts payable were primarily attributable to the timing of our billings, cash collections, and cash payments.
For the three months ended March 31, 2017, cash provided by operating activities was $2.6 million. The primary factors affecting our operating cash flows during the period were our net loss of $5.8 million, adjusted for $0.9 million for depreciation and amortization of our property and equipment and intangible assets, $4.1 million of stock-based compensation, and a $4.1 million increase in deferred revenue. Short-term deferred revenue from subscription and support contracts increased $4.5 million from December 31, 2016 to March 31, 2017. Long-term deferred revenue from subscription and support contracts increased by $1.0 million from December 31, 2016 to March 31, 2017. In addition, short-term deferred revenue from professional services decreased by $1.4 million from December 31, 2016 to March 31, 2017. New and existing customer sales along with contract renewals for longer terms accounted for most of the increase in deferred revenue. In addition, a $5.8 million decrease in accrued expenses and other liabilities was partially offset by a $2.7 million decrease in accounts receivable and a $1.0 million increase in accounts payable. The decrease in accounts receivable and increase in accounts payable were primarily attributable to the timing of our billings, cash collections, and cash payments while the decrease in accrued expenses and other liabilities was attributable primarily to the timing of our payment of annual bonuses.
ForInvesting Activities
Cash provided by investing activities of $0.4 million for the three months ended March 31, 2016, cash used in operating activities2018 was $19.1 million. The primary factors affecting our operating cash flows during the period were our net lossdue primarily to proceeds of $12.0 million, adjusted for non-cash charges of $1.0 million for depreciation and amortization of our property and equipment and intangible assets, and $3.4 million of stock-based compensation. The primary drivers of the changes in operating assets and liabilities were a $0.9 million increase in accounts receivable, a $3.2 million decrease in deferred revenue, a $5.9 million decrease in accrued expenses and other liabilities and a $0.7 million decrease in accounts payable. Short-term deferred revenue from subscription and support contracts decreased by $0.3$0.5 million from December 31, 2015 to March 31, 2016. Long-term deferred revenue from subscription and support contracts decreased by $0.4 million from December 31, 2015 to March 31, 2016. In addition, short-term deferred revenue from professional services decreased by $2.3 million from December 31, 2015 to March 31, 2016. The increase in accounts receivable was primarily attributable to the timingmaturities of our billings and cash collections, while the decreases in accounts payable and accrued expenses and other were attributable primarily to the timing of our cash payments, including payment of annual bonuses.
Investing Activitiesmarketable securities.
Cash used in investing activities of $1.2 million for the three months ended March 31, 2017 was due primarily to $4.1 million for the purchase of marketable securities partially offset by proceeds of $3.0 million from maturities of marketable securities.
Financing Activities
Cash provided by investingfinancing activities of $4.3$2.8 million for the three months ended March 31, 20162018 was due primarily to $3.1 million in proceeds of $4.8from option exercises and $1.4 million in proceeds from the sale of marketable securities, which wasshares issued in connection with our employee stock purchase plan partially offset by $0.4$1.3 million in taxes paid related to the net share settlements of stock-based compensation awards and $0.3 million in payments on capital expenditures. Our capital expenditures were associated primarily with computer equipmentlease and furniture and fixtures in support of expanding our infrastructure and work force.
Financing Activitiesfinancing obligations.
Cash used in financing activities of $0.4 million for the three months ended March 31, 2017 was due primarily to $0.9 million in taxes paid related to the net share settlements of stock-based compensation awards and $0.3 million in payments on capital lease and financing obligations, partially offset by $0.8 million in proceeds from option exercises.
Cash used in financing activities of $0.7 million for the three months ended March 31, 2016 was due primarily to $0.8 million in taxes paid related to the net share settlements of stock-based compensation
awards and $0.4 million in repayments on long-term debt and payments on capital lease and financing obligations, partially offset by $0.3 million in proceeds from option exercises.
Contractual Obligations and Commitments
There were no material changes in our contractual obligations and commitments from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 20162017 filed with the SEC on February 23, 2017.22, 2018 except those related to operating lease obligations.
The following table represents our contractual obligations as of March 31, 2018 for operating lease obligations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Payments due by period |
| | Total | | Less than 1 year | | 1-3 years | | 3-5 years | | More than 5 years |
| | (in thousands) |
Operating lease obligations relating to office facilities | | $ | 29,220 | | $ | 3,020 | | $ | 6,766 | | $ | 6,147 | | $ | 13,287 |
Off-Balance Sheet Arrangements
During all periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As a result, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, income taxes and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
DuringExcept for the three months ended March 31, 2017,accounting policies for revenue recognition, deferred revenue, customer deposits and deferred commissions that were updated as a result of adopting ASU 2014-09, there werehave been no significant changes to our critical accounting policies and estimates as described in the financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 20162017 filed with the SEC on February 23, 2017.22, 2018, that have had a material impact on our condensed consolidated financial statements and related notes.
Revenue Recognition
We generate revenue through the sale of subscriptions to our cloud-based software and the delivery of professional services. Revenues are recognized when control of these services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.
We determine revenue recognition through the following steps:
- Identification of the contract, or contracts, with a customer
- Identification of the performance obligations in the contract
- Determination of the transaction price
- Allocation of the transaction price to the performance obligations in the contract
- Recognition of revenue when, or as, we satisfy a performance obligation
Revenue is reported net of sales and other taxes collected from customers to be remitted to government authorities.
Subscription and Support Revenue
We recognize subscription and support revenue on a ratable basis over the contract term beginning on the date that our service is made available to the customer. Our subscription contracts are generally three to 36 months in duration, are billed in advance and are non-cancelable. We consider the access to Wdesk and related support services in a customer contract to be a series of distinct services which comprise a single performance obligation because they are substantially the same and have the same pattern of transfer.
Professional Services Revenue and Customer Options
Professional services revenues primarily consist of fees for document set up, XBRL tagging, and consulting with our customers on business processes and best practices for using Wdesk. We have determined that an agreement to purchase these professional services constitutes an option to purchase services in accordance with ASC 606 rather than an agreement that creates enforceable rights and obligations because of the customer's contractual right to cancel services that have not yet been used. In the limited case of agreements where we determined that the option provides the customer with a material right, we allocate a portion of the transaction price to the material right. Professional service agreements that do not contain a material right are accounted for when the customer exercises its option to purchase additional services.
Revenue is recognized for document set ups when the service is complete and control has transferred to the customer. Revenues from XBRL tagging and consulting services are recognized as the services are performed.
Contracts with Multiple Performance Obligations
Some of our contracts with customers contain multiple performance obligations in the event that we determine a material right exists. For these contracts, we account for the individual performance obligations separately when they are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services is separately identifiable from other promises in the contract. If these criteria are not met, the promised services are accounted for as a combined performance obligation. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. We determine the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions and entity-specific factors, including the size of our arrangements, length of term, customer demographics and the numbers and types of users within our arrangements.
Deferred Revenue
We typically invoice our customers for subscription and support fees in advance on a quarterly, annual, two- or three-year basis, with payment due at the start of the subscription term. Unpaid invoice amounts for non-cancelable services starting in future periods are included in accounts receivable and deferred revenue. The portion of deferred revenue that we anticipate will be recognized after the succeeding twelve-month period is recorded as non-current deferred revenue, and the remaining portion is recorded as current deferred revenue.
Customer Deposits
As an agreement to purchase professional services constitutes a customer option, fees received in advance of these services being performed are considered customer deposits and are included in accrued expenses and other current liabilities on the condensed consolidated balance sheet. Unpaid invoice amounts for these professional services starting in future periods are excluded from accounts receivable and accrued expenses and other current liabilities.
Deferred Commissions
Sales commissions earned by our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions paid where the amortization period is one year or less are expensed as incurred. All other sales commissions are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be three years. We determined the period of benefit by taking into consideration our standard contract terms and conditions, rate of technological change and other factors. Amortization expense is included in sales and marketing expenses in the accompanying condensed consolidated statements of operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, see “Item 7A., Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2016.2017. Our exposures to market risk have not changed materially since December 31, 2016.2017.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our principal executive officer and principal financial officer, our management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Our disclosure controls and procedures are intended to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on management’s evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are designed to, and are effective to, provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the quarter covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1. Legal Proceedings
From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that in the opinion of our management, if determined adversely to us, would have a material adverse effect on our business, financial condition, operating results or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 20162017 Annual Report on Form 10-K, which could materially affect our business, financial condition or future results. There have been no material changes during fiscal 20172018 to the risk factors that were included in the Form 10-K.
Item 2. Unregistered Sales of Securities and Use of Proceeds
Sales of Unregistered Securities
Not applicable.
Use of Proceeds from Public Offerings of Common Stock
There has been no material change in the planned use of proceeds from our initial public offering as described in our final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on December 12, 2014.
Issuer Purchases of Equity Securities
The following table provides information about purchases of shares of our Class A Common Stock during the three months ended March 31, 20172018 related to shares withheld upon vesting of restricted stock awards and units for tax withholding obligations:
|
| | | | | | | | | | | | | |
Date | | Total Number of Shares Purchased (1) | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Program | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program |
January 2017 | | — |
| | — |
| | — |
| | — |
|
February 2017 | | 72,871 |
| | $ | 12.85 |
| | — |
| | — |
|
March 2017 | | — |
| | — |
| | — |
| | — |
|
Total | | 72,871 |
| | $ | 12.85 |
| | — |
| | — |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Date | | Total Number of Shares Purchased(1) | | Average Price Paid Per Share | | Total Number of Shares Purchased as Part of Publicly Announced Program | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program |
January 2018 | | 9,357 | | $ | 21.87 | | — | | — |
February 2018 | | 51,581 | | 22.05 | | — | | — |
March 2018 | | — | | — | | — | | — |
Total | | 60,938 | | $ | 22.02 | | — | | — |
(1) Total number of shares delivered to us by employees to satisfy the mandatory tax withholding requirement upon vesting of stock-based compensation awards.
Item 6. Exhibits
See the Exhibit Index immediatelyThe following the signature page of this Quarterly Report on Form 10-Q.exhibits are being filed herewith:
| | | | | | | | |
Exhibit Number | | Description |
| | |
10.1 | | |
| | |
10.2 | | |
| | |
12.1 | | |
| | |
31.1 | | |
| | |
31.2 | | |
| | |
32.1 | | |
| | |
32.2 | | |
| | |
101.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| | |
101.SCH | | XBRL Taxonomy Extension Schema Document. |
| | |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document. |
| | |
101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. |
| | |
101.LAB | | XBRL Taxonomy Extension Label Linkbase Document. |
| | |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. |
| | |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 4th2nd day of May, 2017.2018.
| | | | | |
WORKIVA INC. |
| |
WORKIVA INC. |
By: | |
By: | /s/ Matthew M. Rizai, Ph.D. |
Name: | Matthew M. Rizai, Ph.D. |
Title: | Chairman and Chief Executive Officer |
| |
By: | /s/ J. Stuart Miller |
Name: | J. Stuart Miller |
Title: | Executive Vice President and Chief Financial Officer |
| |
By: | /s/ Jill Klindt |
Name: | Jill Klindt |
Title: | Senior Vice President, Treasurer and Chief Financial Officer |
| |
By: | /s/ Jill Klindt |
Name: | Jill Klindt |
Title: | Senior Vice President and Chief Accounting Officer |
| |
EXHIBIT INDEX
|
| | |
Exhibit
Number
| | Description |
| | |
31.1 | | Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
31.2 | | Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | |
32.1 | | Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
32.2 | | Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | |
101.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| | |
101.SCH | | XBRL Taxonomy Extension Schema Document. |
| | |
101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document. |
| | |
101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. |
| | |
101.LAB | | XBRL Taxonomy Extension Label Linkbase Document. |
| | |
101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. |
| | |