UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 10-Q

___________________________________

(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from               to
Commission File Number 001-36773

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WORKIVA INC.

(Exact name of registrant as specified in its charter)

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Delaware (State or other jurisdiction of incorporation or organization)									47-2509828 (I.R.S. Employer Identification Number)
2900 University Blvd Ames, IA 50010 (888) 275-3125
(Address of principal executive offices and zip code)
(888) 275-3125
(Registrant's telephone number, including area code)
___________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class			Trading Symbol			Name of each exchange on which registered
Class A common stock, par value $.001			WK			New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    ý			Accelerated filer o
Non-accelerated filer    o			Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ý

As of October 29, 2021, there were approximately 45,151,293 shares of the registrant's Class A common stock and 5,710,181 shares of the registrant's Class B common stock outstanding.

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WORKIVA INC.

TABLE OF CONTENTS

									Page
						Part I. Financial Information
Item 1.						Unaudited Consolidated Financial Statements:			1
						Condensed Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020			1
						Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020			3
						Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020			4
						Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended September 30, 2021 and 2020			5
						Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2021 and 2020			7
						Notes to Condensed Consolidated Financial Statements			9
Item 2.						Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3.						Quantitative and Qualitative Disclosure About Market Risk			38
Item 4.						Controls and Procedures			38
						Part II. Other Information
Item 1.						Legal Proceedings			40
Item 1A.						Risk Factors			40
Item 2.						Unregistered Sales of Equity Securities and Use of Proceeds			42
Item 6.						Exhibits			43
						Signatures			S-1

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical facts, including statements regarding our future results of operations and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, 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, as well as in any documents incorporated by reference that describe risks and factors that could cause results to differ materially from those projected in these forward-looking statements.

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements or events and circumstances reflected in the forward-looking statements will occur. We are under no duty to update any of these forward-looking statements after completion of this Quarterly Report on Form 10-Q to conform these statements to actual results or revised expectations.

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Part I. Financial Information

Item 1.     Financial Statements

    

WORKIVA INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
			As of September 30, 2021						As of December 31, 2020
			(unaudited)
ASSETS
Current assets
Cash and cash equivalents			$	291,125					$	322,831
Marketable securities			231,224						207,207
Accounts receivable, net of allowance for doubtful accounts of $555 and $717 at September 30, 2021 and December 31, 2020, respectively			64,099						68,922
Deferred commissions			28,021						21,923
Other receivables			3,354						3,155
Prepaid expenses and other			13,092						9,047
Total current assets			630,915						633,085
Property and equipment, net			28,490						29,365
Operating lease right-of-use assets			14,536						15,844
Deferred commissions, non-current			29,234						23,421
Goodwill			34,279						—
Intangible assets, net			8,193						1,583
Other assets			4,568						3,708
Total assets			$	750,215					$	707,006

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WORKIVA INC. CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(in thousands, except share and per share amounts)
			As of September 30, 2021						As of December 31, 2020
			(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	4,018					$	2,843
Accrued expenses and other current liabilities			78,799						68,256
Deferred revenue			235,754						208,990
Convertible senior notes, current			296,341						—
Finance lease obligations			1,776						1,705
Total current liabilities			616,688						281,794
Convertible senior notes, net			—						289,490
Deferred revenue, non-current			31,463						35,894
Other long-term liabilities			1,335						1,680
Operating lease liabilities, non-current			15,231						17,209
Finance lease obligations, non-current			15,320						16,662
Total liabilities			680,037						642,729
Stockholders’ equity
Class A common stock, $0.001 par value per share, 1,000,000,000 shares authorized, 45,094,257 and 40,719,189 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively			45						41
Class B common stock, $0.001 par value per share, 500,000,000 shares authorized, 5,710,181 and 8,069,610 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively			6						8
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding			—						—
Additional paid-in-capital			508,025						478,698
Accumulated deficit			(438,106)						(414,700)
Accumulated other comprehensive income			208						230
Total stockholders’ equity			70,178						64,277
Total liabilities and stockholders’ equity			$	750,215					$	707,006

See accompanying notes.

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WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share amounts) (unaudited)
			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Revenue
Subscription and support			$	98,912					$	75,850					$	275,053					$	214,907
Professional services			13,781						12,249						47,449						42,853
Total revenue			112,693						88,099						322,502						257,760
Cost of revenue
Subscription and support			15,606						12,013						42,906						36,264
Professional services			10,799						9,873						31,766						30,262
Total cost of revenue			26,405						21,886						74,672						66,526
Gross profit			86,288						66,213						247,830						191,234
Operating expenses
Research and development			29,841						23,956						84,305						70,458
Sales and marketing			46,026						35,487						128,586						106,874
General and administrative			18,390						13,642						52,795						46,564
Total operating expenses			94,257						73,085						265,686						223,896
Loss from operations			(7,969)						(6,872)						(17,856)						(32,662)
Interest income			219						471						834						2,832
Interest expense			(3,508)						(3,500)						(10,495)						(10,467)
Other income (expense), net			3,805						(387)						3,265						263
Loss before (benefit) provision for income taxes			(7,453)						(10,288)						(24,252)						(40,034)
(Benefit) provision for income taxes			(885)						67						(846)						351
Net loss			$	(6,568)					$	(10,355)					$	(23,406)					$	(40,385)
Net loss per common share:
Basic and diluted			$	(0.13)					$	(0.21)					$	(0.46)					$	(0.84)
Weighted-average common shares outstanding - basic and diluted			51,441,688						48,840,131						50,921,612						48,188,183

See accompanying notes.

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WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (in thousands) (unaudited)
			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Net loss			$	(6,568)					$	(10,355)					$	(23,406)					$	(40,385)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment, net of tax			22						30						226						(51)
Unrealized (loss) gain on available-for-sale securities, net of tax			(18)						(211)						(248)						251
Other comprehensive income (loss), net of tax			4						(181)						(22)						200
Comprehensive loss			$	(6,564)					$	(10,536)					$	(23,428)					$	(40,185)

See accompanying notes.

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WORKIVA INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands) (unaudited)
			Common Stock (Class A and B)
			Shares						Amount						Additional Paid-in-Capital						Accumulated Other Comprehensive Income						Accumulated Deficit						Total Stockholders' Equity
Balances at December 31, 2020			48,789						$	49					$	478,698					$	230					$	(414,700)					$	64,277
Stock-based compensation expense			—						—						11,623						—						—						11,623
Issuance of common stock upon exercise of stock options			312						1						4,137						—						—						4,138
Issuance of common stock under employee stock purchase plan			93						—						4,237						—						—						4,237
Issuance of restricted stock units			803						—						—						—						—						—
Tax withholding related to net share settlements of stock-based compensation awards			(70)						—						(7,146)						—						—						(7,146)
Net loss			—						—						—						—						(7,324)						(7,324)
Other comprehensive loss			—						—						—						(49)						—						(49)
Balances at March 31, 2021			49,927						$	50					$	491,549					$	181					$	(422,024)					$	69,756
Stock-based compensation expense			—						—						11,052						—						—						11,052
Issuance of common stock upon exercise of stock options			117						—						1,480						—						—						1,480
Issuance of restricted stock units			318						—						—						—						—						—
Tax withholding related to net share settlements of stock-based compensation awards			(8)						—						(731)						—						—						(731)
Net loss			—						—						—						—						(9,514)						(9,514)
Other comprehensive income			—						—						—						23						—						23
Balances at June 30, 2021			50,354						$	50					$	503,350					$	204					$	(431,538)					$	72,066
Stock-based compensation expense			—						—						12,687						—						—						12,687
Issuance of common stock upon exercise of stock options			200						1						3,173						—						—						3,174
Issuance of common stock under employee stock purchase plan			56						—						4,624						—						—						4,624
Issuance of restricted stock units			305						—						—						—						—						—
Tax withholding related to net share settlements of stock-based compensation awards			(111)						—						(15,809)						—						—						(15,809)
Net loss			—						—						—						—						(6,568)						(6,568)
Other comprehensive income			—						—						—						4						—						4
Balances at September 30, 2021			50,804						$	51					$	508,025					$	208					$	(438,106)					$	70,178

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WORKIVA INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued)
(in thousands) (unaudited)
			Common Stock (Class A and B)
			Shares						Amount						Additional Paid-in-Capital						Accumulated Other Comprehensive Income						Accumulated Deficit						Total Stockholders' Equity
Balances at December 31, 2019			46,639						$	47					$	420,170					$	287					$	(366,302)					$	54,202
Stock-based compensation expense			—						—						9,936						—						—						9,936
Issuance of common stock upon exercise of stock options			225												2,794						—						—						2,794
Issuance of common stock under employee stock purchase plan			94						—						3,660						—						—						3,660
Issuance of restricted stock units			117						—						—						—						—						—
Tax withholding related to net share settlements of stock-based compensation awards			(30)						—						(1,379)						—						—						(1,379)
Net loss			—						—						—						—						(10,418)						(10,418)
Other comprehensive loss			—						—						—						(9)						—						(9)
Balances at March 31, 2020			47,045						$	47					$	435,181					$	278					$	(376,720)					$	58,786
Stock-based compensation expense			—						—						14,894						—						—						14,894
Issuance of common stock upon exercise of stock options			443						—						6,664						—						—						6,664
Issuance of restricted stock units			153						—						—						—						—						—
Tax withholding related to net share settlements of stock-based compensation awards			(21)						—						(732)						—						—						(732)
Net loss			—						—						—						—						(19,612)						(19,612)
Other comprehensive income			—						—						—						390						—						390
Balances at June 30, 2020			47,620						$	47					$	456,007					$	668					$	(396,332)					$	60,390
Stock-based compensation expense			—						—						10,601						—						—						10,601
Issuance of common stock upon exercise of stock options			371						1						4,794						—						—						4,795
Issuance of common stock under employee stock purchase plan			93						—						3,567						—						—						3,567
Issuance of restricted stock units			47						—						—						—						—						—
Net loss			—						—						—						—						(10,355)						(10,355)
Other comprehensive income			—						—						—						(181)						—						(181)
Balances at September 30, 2020			48,131						$	48					$	474,969					$	487					$	(406,687)					$	68,817

See accompanying notes.

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WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) (unaudited)
			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Cash flows from operating activities
Net loss			$	(6,568)					$	(10,355)					$	(23,406)					$	(40,385)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			1,429						1,080						3,580						3,195
Stock-based compensation expense			12,687						10,601						35,362						35,431
Recovery of doubtful accounts			(61)						(550)						(162)						(191)
Amortization of premiums and discounts on marketable securities, net			811						106						2,199						319
Gain on settlement of equity securities			(3,698)						—						(3,698)						—
Amortization of debt discount and issuance costs			2,301						2,231						6,851						6,641
Deferred income tax			(930)						63						(914)						(68)
Changes in assets and liabilities:
Accounts receivable			2,074						(13,307)						5,233						4,805
Deferred commissions			(2,027)						(4,818)						(12,104)						(6,381)
Operating lease right-of-use asset			985						1,019						2,906						2,992
Other receivables			(628)						224						(204)						29
Prepaid expenses and other			(1,024)						(211)						(4,049)						(3,056)
Other assets			(514)						83						(1,197)						(600)
Accounts payable			478						(181)						1,214						(3,255)
Deferred revenue			9,949						16,182						22,028						11,314
Operating lease liability			(1,112)						(1,115)						(3,390)						(3,438)
Accrued expenses and other liabilities			2,161						6,822						10,327						12,538
Net cash provided by operating activities			16,313						7,874						40,576						19,890
Cash flows from investing activities
Purchase of property and equipment			(771)						(379)						(2,431)						(1,763)
Purchase of marketable securities			(48,213)						(7,980)						(143,085)						(45,269)
Sale of marketable securities			—						—						250						11,423
Maturities of marketable securities			45,579						16,300						116,371						42,337
Business combinations, net of cash acquired			(35,067)						—						(35,067)						—
Purchase of intangible assets			(64)						(102)						(187)						(253)
Other investments			—						—						(750)						—
Net cash (used in) provided by investing activities			(38,536)						7,839						(64,899)						6,475

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WORKIVA INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands) (unaudited)
			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Cash flows from financing activities
Proceeds from option exercises			3,174						4,795						8,792						14,253
Taxes paid related to net share settlements of stock-based compensation awards			(15,809)						—						(23,686)						(2,111)
Proceeds from shares issued in connection with employee stock purchase plan			4,624						3,567						8,861						7,227
Principal payments on finance lease obligations			(430)						(410)						(1,271)						(1,212)
Net cash (used in) provided by financing activities			(8,441)						7,952						(7,304)						18,157
Effect of foreign exchange rates on cash			(405)						346						(79)						(132)
Net (decrease) increase in cash and cash equivalents			(31,069)						24,011						(31,706)						44,390
Cash and cash equivalents at beginning of period			322,194						402,121						322,831						381,742
Cash and cash equivalents at end of period			$	291,125					$	426,132					$	291,125					$	426,132
Supplemental cash flow disclosure
Cash paid for interest			$	2,177					$	2,240					$	4,607					$	4,787
Cash paid for income taxes, net of refunds			$	36					$	84					$	(30)					$	469
Supplemental disclosure of noncash investing and financing activities
Allowance for tenant improvements			$	—					$	—					$	—					$	149

See accompanying notes.

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WORKIVA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Significant Accounting Policies

Organization

Workiva Inc., a Delaware corporation, and its wholly-owned subsidiaries (the “Company” or “we” or “us”) simplifies complex work for thousands of organizations worldwide. We are a leading provider of cloud-based compliance and regulatory reporting solutions that are designed to solve business challenges at the intersection of data, process and people. Our operational headquarters are located in Ames, Iowa, with additional offices located in the United States, Europe, the Asia-Pacific region and Canada.

Basis of Presentation and Principles of Consolidation

The financial information presented in the accompanying unaudited condensed consolidated financial statements has been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet data as of December 31, 2020 was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of our financial position and results of operations. The operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results expected for the full year ending December 31, 2021.

Seasonality has affected our revenue, expenses and cash flows from operations. Revenue from professional services has been higher in the first quarter as many of our customers file their Form 10-K in the first calendar quarter. Our sales and marketing expense also has some degree of seasonality. Sales and marketing expense has historically been higher in the third quarter due to our annual user conference in September. Our transition to a virtual event in September 2020 and September 2021 has mostly mitigated this trend. In addition, the timing of the payments of cash bonuses to employees during the first and fourth calendar quarters may result in some seasonality in operating cash flow. The condensed consolidated financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this report and the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on February 17, 2021.

The unaudited condensed consolidated financial statements include the accounts of Workiva Inc. and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

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Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and various other assumptions believed to be reasonable. These estimates include, but are not limited to, the allowance for doubtful accounts, the determination of the relative selling prices of our services, the measurement of material rights, health insurance claims incurred but not yet reported, valuation of available-for-sale marketable securities, useful lives of deferred contract costs, intangible assets and property and equipment, goodwill, income taxes, discount rates used in the valuation of right-of-use assets and lease liabilities, the fair value of the liability and equity components of the convertible senior notes, and certain assumptions used in the valuation of equity awards. While these estimates are based on our best knowledge of current events and actions that may affect us in the future, actual results may differ materially from these estimates.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which was issued to simplify the accounting for income taxes by removing certain exceptions for recognizing deferred taxes, performing intraperiod allocation, and calculating income taxes in interim periods. Further, ASU 2019-12 adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax basis goodwill and allocating taxes to members of a consolidated group. The standard became effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The standard provides different transition methods for the various provisions. Effective January 1, 2021, we adopted this standard. The adoption of this new standard did not have a material impact on our consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain convertible instruments, amends guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share (“EPS”) calculations as a result of these changes. The standard will be effective for us beginning January 1, 2022 and can be applied on either a fully retrospective or modified retrospective basis. Early adoption is permitted for fiscal years beginning after December 15, 2020. We intend to adopt this standard using the modified retrospective method on January 1, 2022 and are currently evaluating its impact on our consolidated financial statements.

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2. Supplemental Consolidated Balance Sheet Information

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

			As of September 30, 2021						As of December 31, 2020
Accrued vacation			$	11,876					$	10,294
Accrued commissions			6,975						12,678
Accrued bonuses			16,579						6,573
Accrued payroll			3,013						2,631
Estimated health insurance claims			1,605						1,224
Accrued interest			485						1,455
ESPP employee contributions			2,941						4,269
Customer deposits			24,592						18,283
Operating lease liabilities			4,233						4,541
Accrued other liabilities			6,500						6,308
			$	78,799					$	68,256

3. Cash Equivalents and Marketable Securities

At September 30, 2021, cash equivalents and marketable securities consisted of the following (in thousands):

			Amortized Cost						Unrealized Gains						Unrealized Losses						Aggregate Fair Value
Money market funds			$	253,079					$	—					$	—					$	253,079
Commercial paper			12,487						—						—						12,487
U.S. treasury debt securities			52,755						4						(28)						52,731
Corporate debt securities			160,945						64						(41)						160,968
Foreign government debt securities			5,037						1						—						5,038
			$	484,303					$	69					$	(69)					$	484,303
Included in cash and cash equivalents			$	253,079					$	—					$	—					$	253,079
Included in marketable securities			$	231,224					$	69					$	(69)					$	231,224

At December 31, 2020, cash equivalents and marketable securities consisted of the following (in thousands):

			Amortized Cost						Unrealized Gains						Unrealized Losses						Aggregate Fair Value
Money market funds			$	265,578					$	—					$	—					$	265,578
Commercial paper			21,489						—						—						21,489
U.S. treasury debt securities			51,731						80						(2)						51,809
Corporate debt securities			147,715						214						(47)						147,882
Foreign government debt securities			1,025						2						—						1,027
			$	487,538					$	296					$	(49)					$	487,785
Included in cash and cash equivalents			$	280,578					$	—					$	—					$	280,578
Included in marketable securities			$	206,960					$	296					$	(49)					$	207,207

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The contractual maturities of the investments classified as marketable securities are as follows (in thousands):

			As of September 30, 2021
Due within one year			$	134,115
Due in one to two years			95,098
Due in three to five years			2,011
			$	231,224

The following table presents gross unrealized losses and fair values for those cash equivalents and marketable securities that were in an unrealized loss position as of September 30, 2021, aggregated by investment category and the length of time that individual securities have been in a continuous loss position (in thousands):

			As of September 30, 2021
			Less than 12 months												12 months or greater
			Fair Value						Unrealized Loss						Fair Value						Unrealized Loss
U.S. treasury debt securities			$	34,768					$	(28)					$	—					$	—
Corporate debt securities			73,864						(41)						—						—
Total			$	108,632					$	(69)					$	—					$	—

We do not believe the unrealized losses represent credit losses based on our evaluation of available evidence as of September 30, 2021, which includes an assessment of whether it is more likely than not we will be required to sell the investment before recovery of the investment's amortized cost basis.

4. Fair Value Measurements

We determine the fair values of our financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:

Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

Level 3 - Inputs are unobservable inputs based on our assumptions.

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Financial Assets

Cash equivalents primarily consist of AAA-rated money market funds with overnight liquidity and no stated maturities. We classified cash equivalents as Level 1 due to the short-term nature of these instruments and measured the fair value based on quoted prices in active markets for identical assets.

When available, our marketable securities are valued using quoted prices for identical instruments in active markets. If we are unable to value our marketable securities using quoted prices for identical instruments in active markets, we value our investments using broker reports that utilize quoted market prices for comparable instruments. We validate, on a sample basis, the derived prices provided by the brokers by comparing their assessment of the fair values of our investments against the fair values of the portfolio balances of another third-party professional pricing service. As of September 30, 2021, all of our marketable securities were valued using quoted prices for comparable instruments in active markets and are classified as Level 2.

Based on our valuation of our money market funds and marketable securities, we concluded that they are classified in either Level 1 or Level 2, and we have no financial assets measured using Level 3 inputs. The following table presents information about our assets that are measured at fair value on a recurring basis using the above input categories (in thousands):

						Fair Value Measurements as of September 30, 2021																		Fair Value Measurements as of December 31, 2020
Description						Total						Level 1						Level 2						Total						Level 1						Level 2
Money market funds						$	253,079					$	253,079					$	—					$	265,578					$	265,578					$	—
Commercial paper						12,487						—						12,487						21,489						—						21,489
U.S. treasury debt securities						52,731						—						52,731						51,809						—						51,809
Corporate debt securities						160,968						—						160,968						147,882						—						147,882
Foreign government debt securities						5,038						—						5,038						1,027						—						1,027
						$	484,303					$	253,079					$	231,224					$	487,785					$	265,578					$	222,207
Included in cash and cash equivalents						$	253,079																	$	280,578
Included in marketable securities						$	231,224																	$	207,207

We completed an acquisition during the three months ended September 30, 2021. The values of the net assets acquired and the resulting goodwill were recorded at fair value using Level 3 inputs. The majority of the related current assets acquired and liabilities assumed were recorded at their carrying values as of the date of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair values of goodwill and definite-lived intangible assets acquired in the acquisition was externally estimated primarily based on the income approach. The income approach estimates fair value based on the present value of the cash flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash flows and discount rates used in the present value calculations.

Convertible Senior Notes

As of September 30, 2021, the fair value of our convertible senior notes was $641.8 million. The fair value was determined based on the quoted price of the convertible senior notes in an over-the-counter market on the last trading day of the reporting period and has been classified as Level 2 in the fair value hierarchy. See Note 5 to the condensed consolidated financial statements for more information.

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5. Convertible Senior Notes

In August 2019, we issued $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, including the exercise in full by the initial purchasers of their option to purchase an additional $45.0 million principal amount (the “Notes”). The Notes were issued pursuant to an indenture and are senior, unsecured obligations of the Company. The Notes bear interest at a fixed rate of 1.125% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2020. Proceeds from the issuance of the Notes totaled $335.9 million, net of initial purchaser discounts and issuance costs.

The initial conversion rate is 12.4756 shares of our common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $80.16 per share, subject to adjustment upon the occurrence of specified events.

Holders of the Notes may convert all or a portion of their Notes prior to the close of business on May 15, 2026, in multiples of $1,000 principal amount, only under the following circumstances:

•during any calendar quarter commencing after the calendar quarter ending on September 30, 2019 (and only during such calendar quarter), if the last reported sale price of our Class A common stock, par value $0.001 per share (which we refer to in this offering memorandum as our “Class A common stock”), for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•during the five consecutive business day period immediately following any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined below) per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Class A common stock and the conversion rate on each such trading day;

•if we call any or all of the Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or

•upon the occurrence of certain specified corporate events as set forth in the indenture.

On or after May 16, 2026, holders of the Notes may convert their Notes at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of our Class A common stock, at our election, in the manner and subject to the terms and conditions provided in the indenture. It is our current intent to settle conversions through a combination settlement of cash and shares of our Class A common stock with a specified dollar amount per $1,000 principal amount of Notes of $1,000.

The Company may redeem for cash all or any portion of the Notes, at its option, on or after August 21, 2023, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to, but excluding, the redemption date.

During the third quarter of 2021 one of the conversion conditions was met and the Notes are now convertible at the option of the holders through December 31, 2021. Specifically, the last reported sale

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price of our Class A common stock exceeded 130% of the conversion price of the Notes for more than 20 trading days during the 30 consecutive trading days ended September 30, 2021. As a result, the Notes were classified as current liabilities on the condensed consolidated balance sheet as of September 30, 2021. As of September 30, 2021, and through the date of this filing, we have not received any conversion requests for the Notes.

Interest expense representing the amortization of the debt discount and issuance costs as well as contractual interest expense is amortized to interest expense at an effective interest rate of 4.3% over the term of the Notes. As of September 30, 2021 the if-converted value of the Notes exceeded the principal amount by $261.7 million.

As of September 30, 2021, the remaining life of the Notes is approximately 4.8 years.

The net carrying amount of the liability and equity components of the Notes was as follows (in thousands):

			September 30, 2021						December 31, 2020
Liability component:
Principal			$	345,000					$	345,000
Unamortized discount			(43,255)						(49,346)
Unamortized issuance costs			(5,404)						(6,164)
Net carrying amount			$	296,341					$	289,490
Equity component, net of purchase discounts and issuance costs			$	58,560					$	58,560

Interest expense related to the Notes is as follows (in thousands):

			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Contractual interest expense			$	970					$	970					$	2,911					$	2,910
Amortization of debt discount			2,045						1,983						6,091						5,903
Amortization of issuance costs			256						248						760						738
Total interest expense			$	3,271					$	3,201					$	9,762					$	9,551

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6. Commitments and Contingencies

Litigation

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 evaluate the development of legal matters on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of any currently pending legal proceedings to which we are a party will not have a material adverse effect on our business, operating results, financial condition 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.

Leases

In July 2021, we signed an operating lease agreement to lease office space in London which commenced on October 1, 2021. The agreement has a term of three years with an optional two-year extension and a base rent of approximately $1.6 million per year.

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7. Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation expense was recorded in the following cost and expense categories consistent with the respective employee or service provider’s related cash compensation (in thousands):

			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Cost of revenue
Subscription and support			$	731					$	426					$	1,824					$	1,293
Professional services			407						272						1,183						1,062
Operating expenses
Research and development			2,347						2,167						7,195						5,790
Sales and marketing			4,095						2,687						10,481						8,367
General and administrative			5,107						5,049						14,679						18,919
Total			$	12,687					$	10,601					$	35,362					$	35,431

Stock Options

The following table summarizes the option activity under the Plans for the nine months ended September 30, 2021:

			Options						Weighted- Average Exercise Price						Weighted- Average Remaining Contractual Term (Years)
Outstanding at December 31, 2020			2,903,167						$	14.48					4.7
Granted			—						—
Forfeited			(6,380)						19.25
Exercised			(629,755)						13.96
Outstanding at September 30, 2021			2,267,032						$	14.61					4.1
Exercisable at September 30, 2021			2,259,753						$	14.59					4.1

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Restricted Stock Units

The following table summarizes the restricted stock unit activity under the Plan for the nine months ended September 30, 2021:

			Number of Shares						Weighted- Average Grant Date Fair Value
Unvested at December 31, 2020			2,904,616						$	35.72
Granted			872,135						108.00
Forfeited			(182,761)						63.62
Vested(1)			(1,557,830)						30.63
Unvested at September 30, 2021			2,036,160						$	68.96

(1) During the nine months ended September 30, 2021, in accordance with our Nonqualified Deferred Compensation Plan, recipients of 402,832 shares had elected to defer settlement of the vested restricted stock units and 270,567 shares were released from deferral. This resulted in total deferred units of 695,869 as of September 30, 2021.    

Employee Stock Purchase Plan

During the nine months ended September 30, 2021, 148,864 shares of common stock were purchased under the ESPP at a weighted-average price of $59.52 per share, resulting in cash proceeds of $8.9 million.

Compensation expense associated with ESPP purchase rights is recognized on a straight-line basis over the vesting period. At September 30, 2021, there was approximately $1.0 million of total unrecognized compensation expense related to the ESPP, which is expected to be recognized over a weighted-average period of 0.3 years.

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8. Revenue Recognition

Disaggregation of Revenue

The following table presents our revenues disaggregated by industry (in thousands).

			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Information technology			$	16,097					$	11,983					$	44,953					$	34,264
Diversified financials			13,538						10,665						38,094						31,232
Consumer discretionary			12,148						9,748						34,019						28,497
Healthcare			11,860						8,772						34,003						25,517
Industrials			11,826						9,365						33,739						27,768
Banks			9,940						8,959						30,247						25,914
Insurance			7,547						5,828						22,106						17,173
Energy			6,818						5,812						20,178						17,793
Utilities			6,040						3,538						16,795						10,707
Real estate			4,608						3,769						13,727						11,810
Materials			4,570						3,824						13,040						10,735
Other			7,701						5,836						21,601						16,350
Total revenues			$	112,693					$	88,099					$	322,502					$	257,760

The following table presents our revenues disaggregated by type of good or service (in thousands):

			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Subscription and support			$	98,912					$	75,850					$	275,053					$	214,907
XBRL professional services			9,003						7,798						33,558						29,543
Other services			4,778						4,451						13,891						13,310
Total revenues			$	112,693					$	88,099					$	322,502					$	257,760

Deferred Revenue

We recognized $91.3 million and $68.2 million of revenue during the three months ended September 30, 2021 and 2020, respectively, that was included in the deferred revenue balances at the beginning of the respective periods. We recognized $198.7 million and $148.3 million of revenue during the nine months ended September 30, 2021 and 2020, respectively, that was included in the deferred revenue balances at the beginning of the respective periods.

Transaction Price Allocated to the Remaining Performance Obligations

As of September 30, 2021, we expect revenue of approximately $518.5 million to be recognized from remaining performance obligations for subscription contracts. We expect to recognize approximately $305.2 million of these remaining performance obligations over the next 12 months with the balance substantially recognized in the 24 months thereafter.

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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 convertible senior notes, outstanding stock options, stock related to unvested restricted stock units, and common stock issuable pursuant to the ESPP to the extent dilutive. Basic and diluted net loss per share was the same for each period presented, as the inclusion of all potential common shares outstanding would have been anti-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.

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
			September 30, 2021												September 30, 2020
			Class A						Class B						Class A						Class B
Numerator
Net loss			$	(5,731)					$	(837)					$	(8,566)					$	(1,789)
Denominator
Weighted-average common shares outstanding - basic and diluted			44,886,268						6,555,420						40,400,270						8,439,861
Basic and diluted net loss per share			$	(0.13)					$	(0.13)					$	(0.21)					$	(0.21)

			Nine months ended
			September 30, 2021												September 30, 2020
			Class A						Class B						Class A						Class B
Numerator
Net loss			$	(19,993)					$	(3,413)					$	(33,239)					$	(7,146)
Denominator
Weighted-average common shares outstanding - basic and diluted			43,496,619						7,424,993						39,661,228						8,526,955
Basic and diluted net loss per share			$	(0.46)					$	(0.46)					$	(0.84)					$	(0.84)

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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
			September 30, 2021						September 30, 2020
Shares subject to outstanding common stock options			2,267,032						3,265,977
Shares subject to unvested restricted stock units			2,036,160						2,974,719
Shares issuable pursuant to the ESPP			55,561						95,084

In addition, as of September 30, 2021 and 2020, approximately 4.3 million shares of our Class A common stock underlying the conversion option in the Notes were excluded from the weighted-average shares used to calculate the diluted net loss per common share as they are considered anti-dilutive. We use the treasury stock method for calculating any potential dilutive effect of the conversion option on diluted net income per share, if applicable.

10. Business Combination

On July 30, 2021, we acquired all of the equity interest in OneCloud, Inc. (“OneCloud”), an integration platform as a service (“iPaaS”) company, in order to extend our integration and data preparation capabilities, for $35.1 million, net of cash acquired of $1.5 million.

We previously held an investment in OneCloud which was accounted for as an investment in equity securities. Prior to performing purchase accounting we remeasured the previous ownership interest to fair value, increasing the value to $4.7 million, which resulted in a gain of $3.7 million recorded in other income (expense), net in the condensed consolidated statement of operations.

The purchase price has been preliminarily allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill. The goodwill recognized was primarily attributable to the assembled workforce and strategic benefits that are expected to be achieved and is not deductible for income tax purposes.

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The following table presents a preliminary allocation of the purchase price to the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Cash consideration			$	36,564
Previously held equity interest			4,698
Total consideration			$	41,262
Cash			$	1,497
Intangible assets			7,000
Goodwill			34,279
Other assets			548
Deferred revenue			(900)
Deferred tax liability			(988)
Other liabilities			(174)
Fair value of assets and liabilities			$	41,262

We incurred costs related to the acquisition of approximately $0.4 million during the nine months ended September 30, 2021. All acquisition related costs were expensed as incurred and have been recorded in general and administrative expenses in our condensed consolidated statements of operations.

The amount of revenues and net loss from the acquisition included in our condensed consolidated statements of operations for the three and nine months ended September 30, 2021 were insignificant.

11. Goodwill and Intangible Assets

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. Goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment test as of October 1. As of September 30, 2021, no impairment charges have been recorded.

The changes in the carrying amount of goodwill were as follows (in thousands):

December 31, 2020			$	—
Acquisition			34,279
September 30, 2021			$	34,279

Intangible assets consist of patents and intangible assets acquired in a business combination, primarily technology, customer relationships and a trade name. Patents are recorded at cost to obtain and amortized over the useful lives. Intangible assets acquired in a business combination are recorded at fair value on the date of acquisition and amortized over their estimated useful lives.

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The following table presents the components of net intangible assets (in thousands):

			As of September 30, 2021																								As of December 31, 2020
			Weighted Average Useful Life (Years)						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Acquired technology			4						$	6,600					$	(275)					$	6,325					$	—					$	—					$	—
Acquired customer relationships			10						300						(5)						295						—						—						—
Acquired trade name			2						100						(8)						92						—						—						—
Patents			10						2,708						(1,227)						1,481						2,538						(955)						1,583
Total									$	9,708					$	(1,515)					$	8,193					$	2,538					$	(955)					$	1,583

Amortization expense related to intangible assets was $0.4 million and $0.1 million for the three months ended September 30, 2021 and 2020, respectively, and $0.6 million and $0.3 million for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, expected remaining amortization expense of intangible assets by fiscal year is as follows (in thousands):

Three months ended December 31, 2021			$	541
2022			2,021
2023			1,910
2024			1,867
2025			1,154
2026			160
Thereafter			540
Total expected amortization expense			$	8,193

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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 17, 2021. 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, 2020, 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 simplifies complex work for thousands of organizations worldwide. We are a leading provider of cloud-based compliance and regulatory reporting solutions that are designed to solve business challenges at the intersection of data, process and people.

Workiva changes the way enterprises manage and report business data. Our open, intelligent and intuitive platform is based on single instance, multi-tenant software applications deployed in the cloud. Our platform connects data, documents and teams, which results in improved efficiency, greater transparency and reduced risk of errors. We offer customers controlled collaboration, data linking, data integrations, granular permissions, process management and a full audit trail on our proprietary platform. As of September 30, 2021, 4,146 organizations subscribed to our platform for at least one solution.

Customers use our platform to create, review and publish data-linked documents and reports with greater control, consistency, accuracy and productivity. Customers collaborate in the same document simultaneously, which improves efficiency and version control. Our platform is flexible and scalable, so customers can easily adapt it to define, automate and change their business processes in real time.

Our platform lets our customers connect data from Enterprise Resource Planning (“ERP”), Human Capital Management (“HCM”) and Customer Relationship Management (“CRM”) systems, as well as other third-party cloud and on-premise applications.

While our customers use our platform for dozens of different use cases, our sales and marketing resources are organized into four solution groups: Regulatory Reporting, Operational & Financial Reporting, Financial Services and Governance, Risk & Compliance.

We operate our business on a Software-as-a-Service (“SaaS”) model. Customers enter into annual and multi-year subscription contracts to gain access to our platform. Our subscription fee includes the use of our software and technical support. Prior to the third quarter of 2018, our subscription pricing was based primarily on the number of corporate entities, number of users, level of customer support and length of contract. Thereafter, we began converting existing customer orders to, and signing new orders primarily based on, a solution-based licensing model. Under this model, operating metrics related to a customer’s expected use of each solution determine the price. At September 30, 2021, over 80% of our subscription revenue was priced on a solution-based licensing model. 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, we augment our direct sales channel with partnerships. Our advisory and service partners offer a wider range of domain and functional expertise that broadens the capabilities of our platform, bringing scale and support to customers and prospects. Our technology partners enable more data and process integrations to help customers connect critical transactional systems directly to our platform.

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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 2,014 at September 30, 2021 from 1,670 at September 30, 2020, an increase of 20.6%.

We have achieved significant revenue growth in recent periods. Our revenue grew to $112.7 million and $322.5 million during the three and nine months ended September 30, 2021, respectively from $88.1 million and $257.8 million during the three and nine months ended September 30, 2020, respectively. We incurred a net loss of $6.6 million and $23.4 million, during the three and nine months ended September 30, 2021, respectively compared to $10.4 million and $40.4 million during the three and nine months ended September 30, 2020, respectively.

Recent Business Developments

On July 30, 2021, we acquired all of the equity interest in OneCloud, Inc., an integration platform as a service (“iPaaS”) company, in order to extend our integration and data preparation capabilities. See Note 10 to the condensed consolidated financial statements for more information.

Impact of COVID-19

A pandemic of respiratory disease (abbreviated “COVID-19”) began to spread globally, including to the United States, in early 2020. The World Health Organization declared COVID-19 to be a public health emergency of international concern. Recently, and despite increasing rates of vaccination, infection and hospitalization rates have been increasing throughout the United States, Europe and elsewhere, largely due to the emergence of new variant strains of the COVID-19 virus which are believed to be more contagious than the original virus. The COVID-19 outbreak has resulted in travel restrictions, prohibitions of non-essential activities, disruption and shutdown of certain businesses and greater uncertainty in global financial markets. The extent of the impact of COVID-19 on our future operational and financial performance remains uncertain and will depend on certain developments, including the duration and spread of COVID-19 and variants of concern, related public health measures, the manufacture, distribution, efficacy and public acceptance of treatments and vaccines, and their impact on the macroeconomy, our current and prospective customers, employees and vendors.

We cannot fully predict the extent to which the ongoing COVID-19 outbreak will impact our business or operating results, which is highly dependent on inherently uncertain future developments, including the severity and duration of the COVID-19 outbreak and the actions taken by governments and businesses in relation to COVID-19 containment. During the first quarter of 2020, we adopted several measures in response to the COVID-19 outbreak, including advising employees to work from home, restricting non-critical business travel by our employees, and changing in-person marketing events to a digital format. During the second quarter of 2021, we continued to slowly reopen select offices under limited occupancy requirements and strict health precautions in accordance with local authority guidelines. Our top priority has been, and remains, the health and safety of our employees. Travel was primarily restricted to business critical travel only. The full impact of the COVID-19 outbreak continues to be inherently uncertain at the time of this report. In 2021, as the administration of vaccines has increased, we have reopened our offices to partial capacity, allowing our employees to voluntarily return, and we continue to evaluate our strategy to return to in-person marketing events and future annual user conferences. We will continue to monitor Center for Disease Control (“CDC”) guidelines and local restrictions across the world, the administration of vaccines, and the number of new cases, as we continue to re-open certain of our offices and allow employees to travel. We expect to see an increase in travel, office and entertainment costs as a result of this progress. We continue to meet the needs of our customers, keeping our platform fully operational and delivering the services contracted by our customers. The effect, if any, of these and any additional operational changes we may implement is uncertain, but changes we have implemented to date have not materially impaired, and are not expected to

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materially impair, our ability to maintain operations, including financial reporting systems, internal control over financial reporting and disclosure controls and procedures.

As a result of the work and travel restrictions relating to the ongoing COVID-19 outbreak, substantially all of our sales and operating activities are still being conducted remotely even though we have slowly begun reopening our offices and permitting certain business travel. This global work-from-home operating environment may adversely impact the productivity of certain employees, and these conditions may persist and harm our business, including our financial condition and results of operations. Additionally, we believe a number of customers and prospects may have delayed purchasing decisions as result of the COVID-19 outbreak. Furthermore, in response to the COVID-19 outbreak existing and potential customers may ultimately choose to reduce technology spending or attempt to renegotiate contracts and obtain concessions, which could materially and negatively impact our financial condition and results of operations. Because our platform is offered as a subscription-based service, the effects of the outbreak may not be fully reflected in our operating results until future periods. The long-term impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration, spread, and severity of the virus and its variants, as well as the efficacy of vaccines and vaccine distribution, and the timing and trajectory of the economic recovery. As additional COVID-19 variants emerge, and the development, distribution and public acceptance of treatments and vaccines progress and public health recommendations change, we continue to evaluate and refine our return to work and distributed workforce strategies.

Key Factors Affecting Our Performance

Generate Growth From Existing Customers. The Workiva platform can exhibit a powerful network effect within an enterprise, meaning that the usefulness of our platform attracts additional users. Since solution-based licensing offers our customers an unlimited number of seats for each solution purchased, we expect customers to add more seats over time. As more employees in an enterprise use our platform, additional opportunities for collaboration and automation drive demand among their colleagues for additional solutions.

Pursue New Customers. We sell to organizations that manage large, complex processes with many contributors and disparate sets of business data. We market our platform to professionals in the areas of: finance and accounting, regulatory reporting, management and performance reporting, integrated risk management, and global statutory reporting. We intend to continue to build our sales and marketing organization and leverage our brand equity to attract new customers.

Offer More Solutions. We intend to introduce new solutions to continue to meet growing demand for our platform. Our close and trusted relationships with our customers are 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 have immediate, broad applicability; a strong value proposition; and a high return on investment for both Workiva and our customers. Our advance planning team assesses customer needs, conducts industry-based research and defines new markets. 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 a broader-based, enterprise-wide Workiva platform. In response, we have been improving our technology and realigning sales and marketing to capitalize on our 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 across both new and existing customers will be larger and more complex, which tend to lengthen the sales cycle.

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Add Partners. We continue to expand and deepen our relationships with global and regional partners, including consulting firms, system integrators, large and mid-sized independent software vendors, and implementation partners. Our advisory and service partners offer a wider range of domain and functional expertise that broadens our platform’s capabilities and promotes Workiva as part of the digital transformation projects they drive for their customers. Our technology partners enable powerful data and process integrations to help customers connect critical transactional systems directly to our platform, with powerful linking, auditability and control features. We believe that our partner ecosystem extends our global reach, accelerates the usage and adoption of our platform, and enables more efficient delivery of professional services.

Investment in growth. We plan to continue to invest in the development of our platform to enhance our current offerings and build new features. 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 needs of our growing customer base and to take advantage of opportunities that we have identified in Europe, Middle East, and Africa (“EMEA”), as well as use cases for integrated risk, global statutory reporting, and the U.S. government.

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. Sales and marketing expense has historically been higher in the third quarter due to our annual user conference in September. Our transition to a virtual event in 2020 and continuing in September 2021 has mostly mitigated this trend. In addition, the timing of the payments of cash bonuses to employees during the first and fourth calendar quarters may result in some seasonality in operating cash flow.

Key Performance Indicators

			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
			(dollars in thousands)
Financial metrics
Total revenue			$	112,693					$	88,099					$	322,502					$	257,760
Percentage increase in total revenue			27.9		%				18.8		%				25.1		%				18.4		%
Subscription and support revenue			$	98,912					$	75,850					$	275,053					$	214,907
Percentage increase in subscription and support revenue			30.4		%				20.4		%				28.0		%				19.6		%
Subscription and support as a percent of total revenue			87.8		%				86.1		%				85.3		%				83.4		%

			As of September 30,
			2021						2020
Operating metrics
Number of customers			4,146						3,583
Subscription and support revenue retention rate			96.5%						94.9%
Subscription and support revenue retention rate including add-ons			111.1%						110.0%
Number of customers with annual contract value $100k+			1,043						785
Number of customers with annual contract value $150k+			541						383

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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 based on all customers that were active at the end of the same calendar quarter of the prior year (“base customers”). We begin by annualizing the subscription and support revenue recorded in the same calendar quarter of the prior year for those base customers who are still active at the end of the current quarter. We divide the result by the annualized subscription and support revenue in the same quarter of the prior year for all base customers.

Our subscription and support revenue retention rate was 96.5% as of September 30, 2021, up from 94.9% as of September 30, 2020. 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 whose securities were deregistered due to merger or acquisition or financial distress accounted for just over half of our revenue attrition in the latest quarter.

Subscription and support revenue retention rate including add-ons. Add-on revenue includes the change in both solutions and 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 current quarter for our base customers that were active at the end of the current quarter. We divide the result by the annualized subscription and support revenue in the same quarter of the prior year for all base customers.

Our subscription and support revenue retention rate including add-ons was 111.1% as of the quarter ended September 30, 2021, up from 110.0% as of September 30, 2020.

Annual contract value. Our annual contract value (“ACV”) for each customer is calculated by annualizing the subscription and support revenue recognized during each quarter. We believe the increase in the number of larger contracts shows our progress in expanding our customers’ adoption of our platform.

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 nine months ended September 30, 2021 and 2020, no single customer represented more than 1% of our revenue, and our largest 10 customers accounted for less than 6% of our revenue in the aggregate.

Our recent revenue growth has been based in part on the strength of the initial public offering (“IPO”)/special-purpose acquisition company (“SPAC”) market, which can fluctuate. A significant decline in the IPO/SPAC market could impact sales of our capital markets and SEC solutions and potentially other solutions and our corresponding revenue growth rate.

We generate sales directly through our sales force and 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 twelve to 36 months. We typically invoice our customers for subscription fees annually in advance. For contracts with a two or three year term,

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customers sometimes elect to pay the entire multi-year subscription term in advance. Our arrangements do not contain general rights of return.

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. 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 to help our customers with business processes and best practices for using our platform. Our professional services are not required for customers to utilize our solution. We recognize revenue 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.

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 usage by our customers; information technology costs; and facility costs. Costs of server usage are comprised primarily of fees paid to Amazon Web Services and Google Cloud Platform.

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 pay sales commissions for initial contracts and expansions of existing customer contracts. When the relevant amortization period is one year or less, we expense sales commissions as incurred. All other sales commissions are considered incremental costs of obtaining a contract with a customer and are deferred and amortized on a straight-line basis over a period of 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 usage 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.

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Results of Operations

The following table sets forth selected consolidated statement of operations data for each of the periods indicated:

			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
			(in thousands)
Revenue
Subscription and support			$	98,912					$	75,850					$	275,053					$	214,907
Professional services			13,781						12,249						47,449						42,853
Total revenue			112,693						88,099						322,502						257,760
Cost of revenue
Subscription and support(1)			15,606						12,013						42,906						36,264
Professional services(1)			10,799						9,873						31,766						30,262
Total cost of revenue			26,405						21,886						74,672						66,526
Gross profit			86,288						66,213						247,830						191,234
Operating expenses
Research and development(1)			29,841						23,956						84,305						70,458
Sales and marketing(1)			46,026						35,487						128,586						106,874
General and administrative(1)			18,390						13,642						52,795						46,564
Total operating expenses			94,257						73,085						265,686						223,896
Loss from operations			(7,969)						(6,872)						(17,856)						(32,662)
Interest income			219						471						834						2,832
Interest expense			(3,508)						(3,500)						(10,495)						(10,467)
Other income (expense), net			3,805						(387)						3,265						263
Loss before provision for income taxes			(7,453)						(10,288)						(24,252)						(40,034)
(Benefit) provision for income taxes			(885)						67						(846)						351
Net loss			$	(6,568)					$	(10,355)					$	(23,406)					$	(40,385)

(1)     Stock-based compensation expense included in these line items was as follows:

			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
			(in thousands)
Cost of revenue
Subscription and support			$	731					$	426					$	1,824					$	1,293
Professional services			407						272						1,183						1,062
Operating expenses
Research and development			2,347						2,167						7,195						5,790
Sales and marketing			4,095						2,687						10,481						8,367
General and administrative			5,107						5,049						14,679						18,919
Total stock-based compensation expense			$	12,687					$	10,601					$	35,362					$	35,431

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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 September 30,												Nine months ended September 30,
			2021						2020						2021						2020
Revenue
Subscription and support			87.8		%				86.1		%				85.3		%				83.4		%
Professional services			12.2						13.9						14.7						16.6
Total revenue			100.0						100.0						100.0						100.0
Cost of revenue
Subscription and support			13.8						13.6						13.3						14.1
Professional services			9.6						11.2						9.8						11.7
Total cost of revenue			23.4						24.8						23.1						25.8
Gross profit			76.6						75.2						76.9						74.2
Operating expenses
Research and development			26.5						27.2						26.1						27.3
Sales and marketing			40.8						40.3						39.9						41.5
General and administrative			16.3						15.5						16.4						18.1
Total operating expenses			83.6						83.0						82.4						86.9
Loss from operations			(7.0)						(7.8)						(5.5)						(12.7)
Interest income			0.2						0.5						0.3						1.1
Interest expense			(3.1)						(4.0)						(3.3)						(4.1)
Other income (expense), net			3.4						(0.4)						1.0						0.1
Loss before provision for income taxes			(6.5)						(11.7)						(7.5)						(15.6)
(Benefit) provision for income taxes			(0.8)						0.1						(0.3)						0.1
Net loss			(5.7)		%				(11.8)		%				(7.2)		%				(15.7)		%

Comparison of Three and Nine Months Ended September 30, 2021 and 2020

Revenue

			Three months ended September 30,																					Nine months ended September 30,
			2021						2020						% Change									2021						2020						% Change
			(dollars in thousands)
Revenue
Subscription and support			$	98,912					$	75,850					30.4%									$	275,053					$	214,907					28.0%
Professional services			13,781						12,249						12.5%									47,449						42,853						10.7%
Total revenue			$	112,693					$	88,099					27.9%									$	322,502					$	257,760					25.1%

Total revenue increased $24.6 million for the three months ended September 30, 2021 compared to the same quarter a year ago due primarily to a $23.1 million increase in subscription and support revenue. Growth in subscription and support revenue in the third quarter was attributable mainly to strong demand and better pricing for a broad range of use cases. The total number of our customers increased 15.7% from September 30, 2020 to September 30, 2021. Professional services revenue increased $1.5 million for the three months ended September 30, 2021 compared to the same quarter a year ago due primarily to growth in revenue from XBRL professional services.

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Total revenue increased $64.7 million for the nine months ended September 30, 2021 compared to the same period a year ago due primarily to a $60.1 million increase in subscription and support revenue. Additionally, professional services revenue increased $4.6 million due to growth in revenue from XBRL professional services.

Cost of Revenue

			Three months ended September 30,																					Nine months ended September 30,
			2021						2020						% Change									2021						2020						% Change
			(dollars in thousands)
Cost of revenue
Subscription and support			$	15,606					$	12,013					29.9%									$	42,906					$	36,264					18.3%
Professional services			10,799						9,873						9.4%									31,766						30,262						5.0%
Total cost of revenue			$	26,405					$	21,886					20.6%									$	74,672					$	66,526					12.2%

Cost of revenue increased $4.5 million in the three months ended September 30, 2021 compared to the same quarter a year ago. Subscription and support cost of revenue increased $3.6 million due primarily to $3.0 million in higher cash-based compensation and benefits due mostly to increased headcount. This increase resulted primarily from our continued investment in and support of our platform and solutions. Professional services cost of revenue increased $0.9 million due primarily to increased headcount.

Cost of revenue increased $8.1 million during the nine months ended September 30, 2021 compared to the same period a year ago. Subscription and support cost of revenue increased $6.6 million due primarily to an increase in cash-based compensation and benefits of $5.3 million as well as a $1.0 million increase in software and cloud infrastructure services. This increase in cloud infrastructure services was the result of our continued investment in and support of our platform and solutions. Professional services cost of revenue increased $1.5 million due primarily to increased headcount.

Operating Expenses

			Three months ended September 30,																					Nine months ended September 30,
			2021						2020						% Change									2021						2020						% Change
			(dollars in thousands)
Operating expenses
Research and development			$	29,841					$	23,956					24.6%									$	84,305					$	70,458					19.7%
Sales and marketing			46,026						35,487						29.7%									128,586						106,874						20.3%
General and administrative			18,390						13,642						34.8%									52,795						46,564						13.4%
Total operating expenses			$	94,257					$	73,085					29.0%									$	265,686					$	223,896					18.7%

Research and Development

Research and development expenses increased $5.9 million in the three months ended September 30, 2021 compared to the same quarter a year ago due primarily to $4.6 million in higher cash-based compensation and benefits and a $0.5 million increase in professional service fees. The increases in compensation and professional service fees were the result of our continued investment in and support of our platform and solutions.

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Research and development expenses increased $13.8 million in the nine months ended September 30, 2021 compared to the same period a year ago due primarily to higher cash-based compensation and benefits of $10.9 million, a $1.4 million increase in stock-based compensation and a $1.4 million increase in professional service fees. The increases in compensation and professional service fees were the result of our continued investment in and support of our platform and solutions.

Sales and Marketing

Sales and marketing expenses increased $10.5 million during the three months ended September 30, 2021 compared to the three months ended September 30, 2020 due primarily to $8.1 million in higher cash-based compensation and benefits, a $1.4 million increase in stock-based compensation, a $0.4 million increase in marketing and advertising as well as a $0.4 million increase in software expense. Headcount in sales and marketing increased 22.0% in the quarter ended September 30, 2021 compared to the same quarter a year ago. In the third quarter of 2021, we recognized an additional $1.0 million in stock-based compensation pursuant to severance obligations. The increases in marketing and advertising costs and software expense supports our continued investment in and support of our platform and solutions. We expect to continue to invest in sales and marketing to help drive revenue growth.

Sales and marketing expenses increased $21.7 million during the nine months ended September 30, 2021 compared to the same period a year ago due primarily to $18.6 million higher cash-based compensation and benefits, an additional $2.1 million in stock-based compensation, $1.3 million in marketing and advertising fees and $1.9 million in software expense. These increases were partially offset by $1.9 million in savings gained from reduced travel by our sales and marketing employees due to the COVID-19 pandemic. The increase in compensation was due to an increase in employee headcount. During 2021, we recognized an additional $1.7 million in stock-based compensation pursuant to severance obligations. The increase in marketing and advertising costs as well as the remaining increase in software expense supports our continued investment in and support of our platform and solutions.

General and Administrative

General and administrative expenses increased $4.7 million during the three months ended September 30, 2021 compared to the three months ended September 30, 2020 due primarily to $2.3 million in higher cash-based compensation and benefits, an additional $0.5 million in stock-based compensation, a $0.9 million increase in professional service fees and a $0.4 million increase in software expense. Headcount in general and administrative increased 18.5% compared to the same quarter a year ago. The increase in professional service fees was the result of our continued investment in and support of our platform and solutions.

General and administrative expenses increased $6.2 million during the nine months ended September 30, 2021 compared to the same period a year ago. This increase was due primarily to $7.8 million in higher cash-based compensation and benefits, a $1.2 million increase in software and cloud infrastructure services, a $1.2 million increase in professional service fees and a $0.9 million increase in rent expense. These increases were partially offset by a $3.7 million decrease in stock-based compensation. In addition, in the second quarter of 2020, we also recorded one-time fees of $0.6 million related to the cancellation of certain events. In the second quarter of 2020, we recorded an additional $1.2 million and $4.9 million of cash-based and equity-based compensation, respectively, pursuant to certain separation agreements with former executives. The offsetting increase in personnel-related costs was driven primarily by an increase in employee headcount. The increases in software and cloud infrastructure service costs and professional service fees are the result of our continued investment in and support of our platform and solutions. The increase in rent expense was our investment in office space for our expanding worldwide footprint.

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Non-Operating Income (Expenses)

			Three months ended September 30,																					Nine months ended September 30,
			2021						2020						% Change									2021						2020						% Change
			(dollars in thousands)
Interest income			$	219					$	471					(53.5)%									$	834					$	2,832					(70.6)%
Interest expense			(3,508)						(3,500)						0.2%									(10,495)						(10,467)						0.3%
Other income (expense), net			3,805						(387)						*									3,265						263						*

(*) Percentage is not meaningful.

Interest Income, Interest Expense and Other (Expense) Income, Net

During the three months ended September 30, 2021, interest income and interest expense remained relatively flat compared to the same period in the prior year. Other income (expense), net increased $4.2 million during the three months ended September 30, 2021 compared to the same period a year ago due primarily to a $3.7 million gain recognized upon the settlement of our equity interest in OneCloud.

During the nine months ended September 30, 2021, interest income decreased $2.0 million compared to the same period in the prior year due primarily to lower interest rates on our investments. Other income (expense), net increased $3.0 million compared to the same period a year ago due primarily to the $3.7 million gain recognized upon the settlement of our equity interest in OneCloud. Interest expense remained relatively flat compared to the same time period in the prior year.

Results of Operations for Fiscal 2020 Compared to 2019

For a comparison of our results of operations for the fiscal years ended December 31, 2020 and 2019, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our annual report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 17, 2021.

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Liquidity and Capital Resources

			Three months ended September 30,												Nine months ended September 30,
			2021						2020						2021						2020
			(in thousands)
Cash flow provided by operating activities			$	16,313					$	7,874					$	40,576					$	19,890
Cash flow (used in) provided by investing activities			(38,536)						7,839						(64,899)						6,475
Cash flow (used in) provided by financing activities			(8,441)						7,952						(7,304)						18,157
Net (decrease) increase in cash and cash equivalents, net of impact of exchange rates			$	(31,069)					$	24,011					$	(31,706)					$	44,390

As of September 30, 2021, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $522.3 million, which were held for working capital purposes. We have financed our operations primarily through the proceeds of offerings of equity, convertible debt, 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. While we expect to continue to incur operating losses and may incur negative cash flows from operations in the future, we believe that current cash and cash equivalents and cash flows from operating activities will be sufficient to fund our operations for at least the next twelve months.

In August 2019, we issued $345.0 million aggregate principal amount of 1.125% convertible senior notes due 2026 (the “Notes”). The Notes are senior, unsecured obligations and bear interest at a fixed rate of 1.125% per annum, payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2020. Proceeds from the issuance of the Notes totaled $335.9 million, net of initial purchaser discounts and issuance costs.

During the third quarter of 2021 one of the conversion conditions was met and the Notes are now convertible at the option of the holders through December 31, 2021. Specifically, the last reported sale price of our Class A common stock exceeded 130% of the conversion price of the Notes for more than 20 trading days during the 30 consecutive trading days ended September 30, 2021. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our Class A common stock or a combination of cash and shares of our Class A common stock, at our election, in the manner and subject to the terms and conditions provided in the indenture. As of September 30, 2021, and through the date of this filing, we have not received any conversion requests for the Notes.

Operating Activities

For the three months ended September 30, 2021, cash provided by operating activities was $16.3 million. The primary factors affecting our operating cash flows during the period were our net loss of $6.6 million, adjusted for non-cash charges of $1.4 million for depreciation and amortization of our property and equipment and intangible assets, $12.7 million of stock-based compensation expense, $2.3 million for the amortization of our debt discount and issuance costs and a $10.3 million net change in operating assets and liabilities partially offset by a gain on the settlement of equity securities of $3.7 million. The primary drivers of the changes in operating assets and liabilities were a $2.2 million increase in accrued expenses and other liabilities, a $9.9 million increase in deferred revenue, a $0.5 million increase in accounts payable and a $2.1 million decrease in accounts receivable partially offset by a $2.0 million increase in deferred commissions, a $0.6 million increase in other receivables and a $1.0 million increase in prepaid expenses. Deferred commissions increased due primarily to payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. Customer growth as well as

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the prior year impact of the COVID-19 pandemic accounted for most of the increase in deferred revenue. The increases in accounts payable, prepaid expenses and accrued expenses and other liabilities as well as the decrease in accounts receivable were attributable primarily to the timing of our billings, cash collections, and cash payments.

For the three months ended September 30, 2020, cash provided by operating activities was $7.9 million. The primary factors affecting our operating cash flows during the period were our net loss of $10.4 million, adjusted for non-cash charges of $1.1 million for depreciation and amortization of our property and equipment and intangible assets, $10.6 million of stock-based compensation expense, $2.2 million for the amortization of our debt discount and issuance costs 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 $6.8 million increase in accrued expenses and other liabilities and a $16.2 million increase in deferred revenue partially offset by a $13.3 million increase in accounts receivable and a $4.8 million increase in deferred commissions. Customer growth and contract renewals for longer terms accounted for most of the increase in deferred revenue. Deferred commissions increased due primarily to payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. Increases in accrued expenses and other liabilities as well as the increase in accounts receivable, were attributable primarily to the timing of our billings, cash collections, and cash payments.

For the nine months ended September 30, 2021, cash provided by operating activities was $40.6 million. The primary factors affecting our operating cash flows during the period were our net loss of $23.4 million, adjusted for non-cash charges of $3.6 million for depreciation and amortization of our property and equipment and intangible assets, $35.4 million of stock-based compensation expense, $6.9 million for the amortization of our debt discount and issuance costs and a $20.8 million net change in operating assets and liabilities partially offset by a gain on the settlement of equity securities of $3.7 million. The primary drivers of the changes in operating assets and liabilities were a $10.3 million increase in accrued expenses and other liabilities, a $22.0 million increase in deferred revenue, a $1.2 million increase in accounts payable and a $5.2 million decrease in accounts receivable partially offset by a $4.0 million increase in prepaid expenses, a $1.2 million increase in other assets and a $12.1 million increase in deferred commissions. Deferred commissions increased due primarily to payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. Customer growth as well as the prior year impact of the COVID-19 pandemic accounted for most of the increase in deferred revenue. The increase in accounts payable and accrued expenses and other liabilities as well as the decrease in accounts receivable were attributable primarily to the timing of our billings, cash collections, and cash payments. The increase in prepaid expenses was due primarily to the timing of payments relating to annual subscriptions. The increase in other assets was primarily due to increases in deposits and tax credits receivable.

For the nine months ended September 30, 2020, cash provided by operating activities was $19.9 million. The primary factors affecting our operating cash flows during the period were our net loss of $40.4 million, adjusted for non-cash charges of $3.2 million for depreciation and amortization of our property and equipment and intangible assets, $35.4 million of stock-based compensation expense, $6.6 million for the amortization of our debt discount and issuance costs and a $14.9 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $12.5 million increase in accrued expenses and other liabilities, an $11.3 million increase in deferred revenue, and a $4.8 million decrease in accounts receivable partially offset by a $3.3 million decrease in accounts payable, a $3.1 million increase in prepaid expenses and a $6.4 million increase in deferred commissions. Deferred commissions increased due to payments made to our sales force related to the direct and incremental costs of obtaining a customer contract. Decreases in accounts receivable and accounts payable and the increase in accrued expenses and other liabilities were attributable primarily to

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the timing of our billings, cash collections, and cash payments. The increase in prepaid expenses was due primarily to timing of payments relating to annual contracts.

Investing Activities

Cash used in investing activities of $38.5 million for the three months ended September 30, 2021 was due primarily to the acquisition of OneCloud of $35.1 million and $48.2 million in purchases of marketable securities partially offset by $45.6 million from maturities of marketable securities.

Cash provided by investing activities of $7.8 million for the three months ended September 30, 2020 was due primarily to $8.0 million in purchases of marketable securities offset by $16.3 million from maturities of marketable securities.

Cash used in investing activities of $64.9 million for the nine months ended September 30, 2021 was due primarily to the acquisition of OneCloud of $35.1 million, $143.1 million in purchases of marketable securities, $2.4 million in purchases of fixed assets partially offset by $116.4 million from maturities of marketable securities. Our capital expenditures were associated primarily with computer equipment in support of expanding our infrastructure and work force.

Cash provided by investing activities of $6.5 million for the nine months ended September 30, 2020 was due primarily to $45.3 million in purchases of marketable securities and $1.8 million of capital expenditures offset by $42.3 million from maturities of marketable securities as well as $11.4 million from the sale of marketable securities. Our capital expenditures were associated primarily with computer equipment in support of expanding our infrastructure and workforce.

Financing Activities

Cash used in financing activities of $8.4 million for the three months ended September 30, 2021 was due primarily to $3.2 million in proceeds from option exercises and $4.6 million in proceeds from shares issued in connection with our employee stock purchase plan offset by $15.8 million in taxes paid related to net share settlements of stock-based compensation awards.

Cash provided by financing activities of $8.0 million for the three months ended September 30, 2020 was due primarily to $4.8 million in proceeds from option exercises as well as $3.6 million in proceeds from shares issued in connection with our employee stock purchase plan.

Cash used in financing activities of $7.3 million for the nine months ended September 30, 2021 was due primarily to $8.8 million in proceeds from option exercises and $8.9 million in proceeds from shares issued in connection with our employee stock purchase plan partially offset by $23.7 million in payroll taxes paid related to net share settlements of stock-based compensation awards and $1.3 million in principal payments on finance lease obligations.

Cash provided by financing activities of $18.2 million for the nine months ended September 30, 2020 was due primarily to $14.3 million in proceeds from option exercises and $7.2 million in proceeds from shares issued in connection with our employee stock purchase plan partially offset by $2.1 million in payroll taxes paid related to net share settlements of stock-based compensation awards and $1.2 million in payments on finance lease obligations.

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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, 2020 filed with the SEC on February 17, 2021, other than those in the notes to the consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, including the classification of our convertible senior notes as current liabilities on the condensed consolidated balance sheet discussed in Note 5 to our consolidated financial statements and our new London-based operating lease discussed in Note 6 to our consolidated financial statements.

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 accounting principles generally accepted in the United States. 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.

During the nine months ended September 30, 2021, there were 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, 2020 filed with the SEC on February 17, 2021.

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, 2020. Our exposures to market risk have not changed materially since December 31, 2020.

Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated 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 Securities Exchange Act of 1934, as amended, or the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q.

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Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, 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 principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any 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 and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

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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 2020 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 2021 to the risk factors that were included in the Form 10-K, other than what is set forth immediately below.

The COVID-19 pandemic has impacted our business, and its ultimate impact on our business and financial results is uncertain.

The COVID-19 pandemic has significantly impacted the global economy, disrupted global supply chains and created significant volatility and disruption in financial markets, and increased unemployment levels. Global health concerns relating to the COVID-19 pandemic continue to adversely affect the macroeconomic environment, and the pandemic has increased economic and stock market volatility and uncertainty. While it remains a developing situation, the the duration, spread, and severity and potential recurrence of the virus and its variants, quarantines, stay-at-home orders, COVID-19 vaccination rates and the availability of COVID-19 vaccines both globally and in the U.S, interruptions in travel and business disruptions with respect to us, our customers or partners have had and will continue to have an impact on our business. Although we are continuing to monitor and assess the effects of the COVID-19 pandemic, the ultimate impact of the COVID-19 pandemic on our business remains highly uncertain and will depend on certain developments, including the duration and spread of the outbreak, impact on our customers and our sales cycles, and effect on our vendors (including their data centers and computing infrastructure operations), all of which are uncertain and cannot be predicted. In addition, the stock market has experienced periods of high volatility during the COVID-19 pandemic and such volatility may continue. As a result, our stock price may be adversely impacted for reasons unrelated to our performance. A decline in stock price may make it more difficult for us to raise capital on terms acceptable to us or at all.

The COVID-19 pandemic has caused us to change our business practices, including implementing travel restrictions, allowing all non-essential personnel to work from home, prolonged closures of our offices, and cancellation of physical participation in sales activities, meetings, events and conferences. We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers and business partners, including vaccination requirements for our employees. These precautionary measures could have increasingly negative effects on employee productivity and morale, sales and marketing efforts, customer success efforts, and revenue growth rates or other financial metrics, or create operational or other challenges, any of which could adversely impact our business, financial condition, and operating results in any given period. The remote work measures that we implemented have generally allowed us to provide uninterrupted service to our customers, but have affected the way we conduct our sales, research and development, testing, customer support, and other activities. While we have not observed significant

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impacts to our workforce’s productivity, working remotely presents additional operational challenges that may impact productivity in the future. Remote work has made our employees more reliant on cloud-based communication services, and if those services are interrupted, or are less secure, employee productivity could be harmed. Our employees may also face unexpected child-care or other related family responsibilities while working from home that could impact productivity and employee retention, particularly if our employees, executives, or their family members experience health issues.

Following federal health guidelines and as local regulations permit, we have commenced re-opening our offices and allowing our employees to return to work, although we are not yet operating in a normal capacity. As we re-open our offices, it is possible that local authorities could impose stay at home orders which would require us to close our offices in the future. These efforts may divert management attention, and any new safety protocols may create logistical challenges for our workforce which could adversely impact employee productivity and morale. Even if we follow what we believe to be best practices, there can be no assurance that our measures will prevent the transmission of COVID-19 between workers. Any incidents of actual or perceived transmission may expose us to liability from employee claims, adversely impact employee productivity and morale, and even result in negative publicity and reputational harm.

The extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain the virus or address its impact, and how quickly and to what extent normal economic and operating activities can resume. To the extent the COVID-19 pandemic adversely affects our business, results of operations and financial condition, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section. Even after the pandemic has subsided, we may continue to experience an adverse impact to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future. For the reasons discussed above and others that we may not have foreseen, we expect that the pandemic will have adverse impacts to aspects of our business in the near term, any of which individually or together may have a material adverse impact on our results of operations, financial condition, growth prospects and stock price.

Proposed new regulations concerning mandatory COVID-19 vaccination of employees could have a material adverse effect on our business and results of operations.

On September 9, 2021, President Biden issued an Executive Order requiring all employers with at least 100 employees to ensure that their employees are fully vaccinated or require unvaccinated workers to be tested at least once a week. The Occupational Safety and Health Administration (“OSHA”) has drafted an emergency regulation to carry out this mandate and has sent it to the White House for approval. We expect it to take effect in the near future. There are many questions that remain unanswered at this time, including whether the vaccine mandate will apply to all employees or only to employees who work onsite, whether employers must offer the testing option, and if so, who pays for the testing. Because we have more than 100 employees, we will be required to comply with this order.

On September 24, 2021, the Safer Federal Workforce Task Force (“Task Force”) issued COVID-19 workplace safety guidance (“guidance”) implementing President Biden’s Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors. The guidance sets forth three main requirements: a vaccination requirement for employees of covered contractors; masking and physical distancing requirements in workplaces of covered contractors; and a requirement to designate a person or persons to coordinate and implement COVID-19 workplace safety efforts. The guidance requires agencies — beginning November 14 — to include a clause in certain federal contracts mandating that federal contractors ensure all employees working on or in connection with those contracts, or working at the contractors’ workplaces, are fully vaccinated against COVID-19. Covered contractors with new or newly

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revised contracts must ensure their employees are fully vaccinated by December 8, 2021, and for contracts that are new or revised following that date, employees must be fully vaccinated by the first day of the period of performance of the new contract. Because we are a covered contractor, we will be required to mandate COVID-19 vaccination of certain members of our workforce under the guidance, and there is no weekly testing option under the guidance as there is under the U.S. Department of Labor's (“DOL's”) emergency regulation.

It is not possible to predict the precise impact the new regulations will have on us. These regulations may result in employee attrition, which could be material as a substantial number of our employees are based in states where vaccination rates are below the national average. If we were to lose employees, there could be a material adverse effect on future revenues. Accordingly, the proposed new regulations when implemented could have a material adverse effect on our business and results of operations.

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 September 30, 2021 related to shares withheld upon vesting of restricted stock 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
July 2021						—						$	—					—						—
August 2021						—						—						—						—
September 2021						110,666						142.85						—						—
Total						110,666						$	142.85					—						—

(1) Total number of shares delivered to employees to use to satisfy the mandatory tax withholding requirement upon vesting of stock-based compensation awards.

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Item 6.    Exhibits

The following exhibits are being filed herewith or incorporated by reference herein:

Exhibit Number						Description
10.1						Form of Employment Agreement.
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						The following financial information from Workiva Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 formatted in Inline XBRL (Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Changes in Stockholders Equity (Deficit), (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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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 3rd day of November, 2021.

WORKIVA INC.
By:			/s/ Martin J. Vanderploeg, Ph.D.
Name:			Martin J. Vanderploeg, Ph.D.
Title:			President and Chief Executive Officer
By:			/s/ Jill Klindt
Name:			Jill Klindt
Title:			Senior Vice President, Chief Financial Officer, Chief Accounting Officer and Treasurer

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