Workiva Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed February 22, 2022. Although the request references 2021 Q4, this filing reports annual results and does not provide a complete standalone Q4 income statement or cash-flow statement.
Business context
Workiva sells cloud-based software for regulatory, financial, ESG, risk and other reporting workflows. It reported 4,315 customers at year-end, with subscription and support fees providing most revenue. The company highlighted platform enhancements and acquisitions in 2021, including OneCloud, AuditNet and Mark V Systems (Arelle).
Financial performance
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $443.3 million | $351.6 million | +26.1% |
| Subscription and support revenue | $379.3 million | $295.9 million | +28.2% |
| Professional services revenue | $63.9 million | $55.7 million | +14.8% |
| Gross profit / gross margin | $339.5 million / 76.5% | $261.4 million / 74.3% | Margin +2.2 points |
| Operating loss / operating margin | $29.4 million / -6.7% | $37.8 million / -10.9% | Loss narrowed |
| Net loss / net margin | $37.7 million / -8.7% | $48.4 million / -14.0% | Loss narrowed |
| Operating cash flow | $49.8 million | $33.2 million | +$16.6 million |
Revenue growth reflected demand and improved pricing across use cases and a 15.9% increase in customer count. Gross margin improved as revenue grew faster than cost of revenue. Operating expenses rose 23.3%, led by sales and marketing, research and development, and general and administrative costs. Stock-based compensation was $48.6 million, up from $45.8 million.
Liquidity, debt and cash flow
- Cash, cash equivalents and marketable securities totaled $530.4 million at year-end, versus $530.0 million in 2020. Cash and cash equivalents alone were $300.4 million.
- Current assets were $657.1 million and current liabilities $646.5 million, including $298.7 million of convertible notes classified as current; working capital was approximately $10.6 million.
- The company issued $345.0 million principal of 1.125% unsecured convertible notes due 2026. A conversion condition was met, making the notes convertible through March 31, 2022; no conversion requests had been received through the filing date. The notes’ disclosed fair value was $614.7 million.
- Cash used in investing was $68.6 million, including $37.5 million for acquisitions, net of cash acquired. Financing activities used $3.4 million. Cash and cash equivalents declined $22.4 million during the year.
- Management said available liquidity and operating cash flows were expected to fund operations for at least 12 months from issuance of the audited statements, while noting expected continued operating losses and possible future negative operating cash flows.
Changes, outlook and material risks
- Subscription and support revenue retention was 97.0%, up from 95.0%; including add-ons it was 110.0%, versus 109.5%. Customers with annual contract value of at least $100,000 increased to 1,121 from 847.
- Management planned continued investment in the platform, product development, sales, marketing and customer success, with emphasis on ESG, international expansion, ESEF, capital markets and partner channels. No specific FY2022 revenue or earnings guidance is provided in the supplied filing text.
- Management said COVID-19 had not adversely affected the business to date, but future disruption remained possible. The filing also flags competition, customer renewal and expansion, growth execution, hiring and labor costs, data security and privacy, cloud-provider reliability, international and currency exposure, and acquisition integration as risks.
- Convertible-note conversion could require cash settlement and affect liquidity; current classification materially reduced reported working capital. Contractual obligations totaled $455.4 million, including future note payments, leases and other commitments.
- Revenue recognition was identified as a critical audit matter. Ernst & Young issued unqualified opinions on the financial statements and internal control over financial reporting; management also concluded controls were effective.
Most important facts for investors to verify
- Standalone Q4 2021 results and trends, which are not clearly presented as a full quarterly statement in this annual filing.
- Convertible-note conversion, settlement method and any subsequent impact on cash, dilution and working capital.
- Whether retention, customer expansion and subscription growth continue, including the potential pricing transition for capital-markets customers noted by management.
- Progress toward profitability and the sustainability of operating cash flow, considering significant stock-based compensation and deferred contract-cost investment.
- Acquisition integration outcomes and the performance of newer ESG, risk and international offerings.