Workiva Inc. reports 17.5% revenue growth in 2018 and 0.78 pp EBITDA Margin growth from -19.6% to -18.8%
02/20/2019 • About Workiva Inc. (
$WK) • By InTwits
Workiva Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Workiva Inc. is a fast growth stock: 2018 revenue growth was 17.5%, 5 year revenue CAGR was 23.5% at 2018 ROIC -784%
- The company operates at negative EBITDA Margin: -18.8%
- Workiva Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 9.3% while average EBITDA Margin was -22.6% for the sames years. In 2018 SBC/Revenue was even higher: 12.6%
- Workiva Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: $1m in 2018, $1m in 2017, $2m in 2016, $2m in 2015, $9m in 2014
- In the last 5 years the company invested considerably less than D&A: $15m vs. $19m. In 2018 this situation was still the same: CAPEX was 1 while D&A was 4
- The company has unprofitable business model: ROIC is -784.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.4x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 17.5%. Revenue growth showed acceleration in 18Q4 - it increased 18.2% YoY. Revenue decline was accelerating on average at -4.2 pp per annum in the last 5 years. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 10.3 pp from 18.8% to 8.5% in FY2018. EBITDA Margin stuck to a growing trend at 3.1 pp per annum in the last 5 years.
Gross Margin increased on 2.0 pp from 71.0% to 73.0% in 2018. SG&A as a % of Revenue showed almost no change in 2018. Stock Based Compensation (SBC) as a % of Revenue increased on 3.3 pp from 9.4% to 12.6% in 2018. SBC as a % of Revenue followed a growing trend at 1.4 pp per annum in 2014-2018.
Net Income margin increased slightly on 0.88 pp from -21.4% to -20.5% in 2018. Net Income margin grew at 4.1 pp per annum in 2014-2018.
Investments (CAPEX, working capital and M&A)
In 2018 the company had CAPEX/Revenue of 0.46%. Workiva Inc.'s CAPEX/Revenue decreased slightly on 0.81 pp from 1.3% in 2015 to 0.46% in 2018. It's average level of CAPEX/Revenue for the last three years was 0.70%. CAPEX as a % of Revenue followed a declining trend in 2014-2018.
Accounts receivable as a % of Revenue surged on 12.8 pp from 13.9% to 26.6% in 2018. Accounts payable as a % of Revenue increased on 3.2 pp from 5.1% to 8.3% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.4x and Debt / EBITDA is . Debt decreased on 5.9% while cash jumped on 28.6%.
Workiva Inc. has no short term refinancing risk: cash is higher than short term debt (6,348.9%).
Average interest expence charged on company's debt was 9.9% in 2018.
Management team
Workiva Inc.'s CEO Martin J Vanderploeg "Marty" is a founder and has spent 1 year with the company. CEO total compensation was
$12,865,296 in 2018 which included
$1,015,244 salary. The company's CFO J Stuart Miller has spent 4 years with the company.
At the end of financial year the company had 7.0% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 1,319 employees. The number of employees showed almost no change in 2018. Average revenue per employee in 2018 was
$185,249 and it jumped on 17.5%.
Financial and operational results
FY ended 12/31/2018
Workiva Inc. ($WK) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 112.7 | 145.3 | 178.6 | 207.9 | 244.3 | 17.5% |
| Gross Profit | 78.8 | 105.1 | 127.0 | 147.6 | 178.5 | 20.9% |
| SG&A | 73.3 | 98.3 | 113.2 | 123.8 | 146.7 | 18.5% |
| EBITDA | -34.7 | -39.3 | -39.8 | -40.8 | -46.0 | |
| EBIT | -38.6 | -43.7 | -43.6 | -44.3 | -49.8 | |
| Interest expence | | 2.0 | 1.9 | 1.8 | 1.8 | -1.0% |
| Tax | 0.0 | -0.0 | 0.0 | 0.1 | 0.2 | 304.9% |
| Net Income | -41.2 | -43.4 | -44.0 | -44.4 | -50.1 | |
| Stock Based Compensation | 7.4 | 11.0 | 14.2 | 19.5 | 30.8 | 58.4% |
Balance Sheet
|
|---|
| Cash | 101.1 | 58.8 | 51.3 | 60.3 | 77.6 | 28.6% |
| Accounts Receivable | 11.1 | 15.6 | 22.5 | 28.8 | 65.1 | 126.1% |
| Accounts Payable | 3.0 | 5.1 | 0.8 | 3.1 | 5.5 | 78.5% |
| Short Term Debt | 2.0 | 1.8 | 1.3 | 1.2 | 1.2 | 4.6% |
| Long Term Debt | 22.8 | 21.2 | 19.8 | 18.4 | 17.2 | -6.6% |
Cash flow
|
|---|
| Capex | 8.6 | 1.8 | 1.9 | 1.2 | 1.1 | -5.6% |
Ratios
|
|---|
| Revenue growth | 32.3% | 28.9% | 23.0% | 16.4% | 17.5% | |
| EBITDA growth | 29.1% | 13.1% | 1.2% | 2.5% | 12.9% | |
|
|---|
| Gross Margin | 69.9% | 72.3% | 71.1% | 71.0% | 73.0% | 2.0% |
| EBITDA Margin | -30.8% | -27.0% | -22.3% | -19.6% | -18.8% | 0.8% |
| EBIT Margin | -34.3% | -30.1% | -24.4% | -21.3% | -20.4% | 0.9% |
| SG&A, % of revenue | 65.0% | 67.7% | 63.3% | 59.5% | 60.0% | 0.5% |
| SBC, % of revenue | 6.6% | 7.6% | 8.0% | 9.4% | 12.6% | 3.3% |
| Net Income Margin | -36.5% | -29.9% | -24.6% | -21.4% | -20.5% | 0.9% |
| CAPEX, % of revenue | 7.6% | 1.3% | 1.1% | 0.6% | 0.5% | -0.1% |
|
|---|
| ROIC | -83.9% | -67.0% | -127.6% | -404.2% | -784.5% | -380.3% |
| ROE | | -106.5% | | | | |
| Interest expence / Average debt | | 8.5% | 8.5% | 9.1% | 9.9% | 0.8% |
People
|
|---|
| Insider ownership | 7.0% | 7.0% | 7.0% | 7.0% | 7.0% | 0.0% |
| Employees | | 1,122 | 1,172 | 1,318 | 1,319 | 0.1% |
| Revenue/Employee, th. $ | | 129 | 152 | 158 | 185 | 17.5% |
Workiva Inc. ($WK) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 60 | 59 | 61 | 64 | | 15.4% | 19.7% | 16.9% | 18.2% |
| EBITDA | -9 | -21 | -10 | -7 | | | | | |
| Net Income | -10 | -22 | -11 | -8 | | | | | |
Balance Sheet
|
|---|
| Cash | 65 | 57 | 72 | 78 | | 25.0% | -4.2% | 14.5% | 28.6% |
| Short Term Debt | 1 | 1 | 1 | 1 | | -9.2% | -8.2% | -0.3% | 4.6% |
| Long Term Debt | 18 | 18 | 18 | 17 | | -7.1% | -6.3% | -6.3% | -6.6% |
Ratios
|
|---|
| Gross Margin | 72.4% | 72.4% | 74.3% | 73.0% | | -0.2% | 1.4% | 4.3% | 2.5% |
| EBITDA Margin | -14.4% | -35.4% | -15.7% | -10.7% | | -4.6% | -17.2% | 9.1% | 14.5% |
| Net Income Margin | -16.1% | -36.8% | -18.0% | -12.0% | | -4.8% | -16.2% | 9.0% | 14.3% |
Peers in Application Software
Below we provide Workiva Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Workiva Inc. ($WK) | | 28.9% | 23.0% | 16.4% | 17.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Workiva Inc. ($WK) | 69.9% | 72.3% | 71.1% | 71.0% | 73.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.2% |
|---|
| Workiva Inc. ($WK) | -30.8% | -27.0% | -22.3% | -19.6% | -18.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| Workiva Inc. ($WK) | 7.6% | 1.3% | 1.1% | 0.6% | 0.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.3% |
|---|
| Workiva Inc. ($WK) | -83.9% | -67.0% | -127.6% | -404.2% | -784.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
