Workiva Inc. — FY 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed February 21, 2023. Workiva sells cloud-based reporting, ESG, governance, risk and compliance software and related services. Subscription and support accounted for 86.4% of revenue. Figures below are in U.S. dollars.
Financial performance and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $537.9 million | $443.3 million |
| Subscription and support revenue | $464.9 million | $379.3 million |
| Professional services revenue | $72.9 million | $63.9 million |
| Gross profit / gross margin | $408.0 million / 75.9% | $339.5 million / 76.5% |
| Operating loss / operating margin | $(88.8) million / (16.5)% | $(29.4) million / (6.7)% |
| Net loss / net margin | $(90.9) million / (16.9)% | $(37.7) million / (8.7)% |
| Cash from operating activities | $11.3 million | $49.8 million |
Revenue grew 21.3%; subscription and support revenue grew 22.6%. Operating expenses rose 34.7% to $496.8 million, outpacing revenue growth. Stock-based compensation was $70.7 million, versus $48.6 million in 2021. Capital expenditures were $3.5 million; operating cash flow less capital expenditures was approximately $7.9 million.
At year-end, cash, cash equivalents and marketable securities totaled $430.8 million. Current assets were $600.1 million and current liabilities $406.9 million. The company reported $345.0 million principal amount of 1.125% convertible senior notes due 2026, carried at $340.3 million; their disclosed fair value was $425.0 million. The notes were classified as non-current at year-end, compared with current in 2021, because no holder conversion condition was met in 2022. Total liabilities were $813.6 million and stockholders’ equity $6.0 million.
Changes, business developments and outlook
- Customer count increased 31.3% to 5,664, including 922 ParsePort customers. Subscription and support revenue retention was 97.8%; retention including add-ons was 108.5%, down from 110.0% in 2021.
- Workiva acquired ParsePort on April 1, 2022 for approximately $99.2 million net of cash acquired. The acquisition added $78.2 million of goodwill and $24.0 million of intangible assets; ParsePort’s 2022 revenue and net loss included in results were described as insignificant.
- Management reported more measured customer buying and longer sales cycles during 2022, and said foreign-exchange movements—particularly a stronger U.S. dollar against the euro and pound—had reduced reported growth. Lower IPO/SPAC activity hurt new sales of SEC and capital-markets solutions; management expected those pressures to continue into fiscal 2023.
- No numerical revenue or earnings guidance is provided in the supplied filing text. The company plans continued investment in product development, sales and marketing, partners, and international expansion. Its 2023 executive short-term incentive plan may use revenue growth, operating cash flow, or operating loss excluding stock compensation as performance metrics.
Risks, contingencies and unusual items
- Workiva says a majority of revenue is associated with customers using its platform for SEC filings, despite non-SEC solutions representing 66% of new solution and new customer bookings in 2022.
- Key risks include competition, slower technology spending, elongated sales cycles, customer renewals and expansion, reliance on cloud providers, cybersecurity and privacy incidents, international and currency exposure, and the ability to manage growth and reach profitability.
- The company has reported annual net losses since operations began. Its full valuation allowance against net U.S. deferred tax assets reflects cumulative losses; use of tax-loss carryforwards may also be limited.
- Contractual obligations totaled $445.3 million, including $40.0 million of other contractual commitments, primarily cloud services. Management reported no pending legal proceeding expected to have a material adverse effect.
- Adoption of convertible-debt accounting guidance in 2022 reduced additional paid-in capital by $58.6 million, reduced accumulated deficit by $18.3 million, and increased the notes’ carrying amount by $40.3 million. The auditor issued unqualified opinions on the financial statements and internal control; revenue recognition and ParsePort valuation were identified as critical audit matters.
Important facts for investors to verify
- Whether subscription growth and customer expansion can offset slower buying behavior, weaker IPO/SPAC activity, and foreign-exchange headwinds.
- How operating expenses, stock-based compensation and cash generation develop relative to revenue growth, given the wider operating loss and reduced operating cash flow.
- ParsePort’s contribution to growth and the assumptions supporting its acquired intangible-asset and goodwill values.
- The conversion, settlement and potential cash requirements of the 2026 notes, alongside the company’s liquidity and contractual commitments.
- Whether retention metrics remain comparable over time: the filing excludes ParsePort from the 2022 retention calculations because prior-year comparable data was unavailable.