Workiva Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed February 20, 2024. This is an annual report, not a standalone Q4 report. Workiva provides cloud software for financial reporting, ESG, and governance, risk, and compliance (GRC). Revenue is primarily subscription and support fees.
Financial performance
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Revenue | $630.0 million | $537.9 million | Up 17.1% |
| Subscription and support revenue | $558.6 million | $464.9 million | Up 20.2%; 88.7% of FY2023 revenue |
| Professional services revenue | $71.4 million | $72.9 million | Down 2.1% |
| Gross profit / margin | $475.8 million / 75.6% | $408.0 million / 75.9% | Margin down 0.3 percentage points |
| Operating loss / margin | $94.5 million / 14.9% | $88.8 million / 16.5% | Loss increased; margin improved |
| Net loss / diluted loss per share | $127.5 million / $2.36 | $90.9 million / $1.72 | Loss widened |
| Cash provided by operations | $70.9 million | $11.3 million | Improved; includes a $45.1 million noncash induced-conversion adjustment |
Operating expenses rose 14.8% to $570.3 million, led by sales and marketing at $287.0 million. Stock-based compensation increased to $98.8 million from $70.7 million. Interest expense rose to $53.6 million, largely reflecting the $45.1 million loss on the induced repurchase of 2026 notes. Interest income increased to $25.9 million.
Liquidity, debt, and balance sheet
- Cash, cash equivalents, and marketable securities totaled $813.7 million at year-end, versus $430.8 million in 2022. Current assets were $1.009 billion and current liabilities were $484.5 million.
- Cash used in investing was $357.3 million, primarily reflecting purchases of marketable securities; financing provided $301.3 million, principally from the new notes issuance net of repurchases.
- In August 2023, Workiva issued $702.0 million of 1.250% convertible senior notes due 2028 and used $396.9 million of net proceeds to repurchase $273.8 million principal of its 1.125% notes due 2026. Year-end note principal totaled approximately $773.2 million; net carrying value was $762.5 million.
- Total stockholders’ deficit was $89.4 million, compared with positive equity of $6.0 million a year earlier. Management said existing liquidity and operating cash flows should fund operations for at least 12 months from issuance of the statements.
Material changes and operating indicators
- Customer count increased 6.5% to 6,034. Subscription and support revenue retention was 97.9%, while retention including add-ons was 110.3%.
- Customers with annual contract value of at least $100,000 rose to 1,631 from 1,345. International revenue was approximately 15% of consolidated revenue.
- Professional services revenue declined as Workiva continued shifting consulting and other services to partners and due to timing of XBRL services.
- CEO Julie Iskow succeeded Marty Vanderploeg in April 2023; he became non-executive chair. The filing also describes executive transitions and related compensation, including $18.1 million of stock-based compensation under former-executive transition agreements.
Outlook, risks, and unusual items
The filing provides no formal numerical revenue or earnings guidance. Management expects subscription and support revenue growth to continue outpacing professional services growth and plans to invest in the platform, sales, marketing, and international expansion. Management said a weaker IPO/SPAC market adversely affected SEC and capital-markets sales and expected that market weakness to continue to negatively affect IPO/SPAC activity in 2024.
- Workiva has recorded annual net losses since operations began; FY2023 net loss widened, and management expects continued investment and possible future operating losses.
- More than 40% of revenue is associated with customers using the platform for SEC filings, creating exposure to regulatory changes and SEC-market demand. The company also cited competition, economic conditions, longer enterprise sales cycles, and customer renewal or expansion uncertainty.
- Other disclosed risks include cybersecurity and service availability, privacy regulation, AI governance, international operations and foreign exchange, labor costs, and dependence on third-party cloud infrastructure and partners. Workiva reported no cybersecurity incident that had materially affected or was reasonably likely to materially affect the company to date.
- Convertible notes create potential cash-settlement, refinancing, and dilution exposure. No conversion conditions were met at December 31, 2023. The dual-class structure gives Class B shares ten votes per share; certain current and former executives collectively held approximately 43% of voting power at year-end.
- The company reported no pending legal proceeding management believed would have a material adverse effect. The auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded internal controls were effective.
Important facts for investors to verify
- Whether recurring subscription growth and add-on expansion can offset slower professional services and continued weakness in IPO-related demand.
- How operating costs, stock-based compensation, and the widening net loss affect progress toward profitability and cash generation.
- The terms, conversion exposure, and eventual cash or equity settlement implications of the 2026 and 2028 convertible notes.
- Whether reported cash from operations remains sustainable, considering deferred-revenue timing and the noncash induced-conversion adjustment.
- Whether retention, customer growth, and international expansion remain strong amid competition and evolving reporting regulations.