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U.S. Research Published by Raymond James & Associates

Please read domestic and foreign disclosure/risk information beginning on page 7 and Analyst Certification on page 8.

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863

Workiva Inc. November 7, 2017 (WK-NYSE) Company Comment Brian Peterson, CFA, (404) 442-5888, [email protected] Vincent Celentano, CFA, Sr. Res. Assoc., (404) 442-5818, [email protected] Kevin J. Ruth, CFA, Sr. Res. Assoc., (404) 442-5834, [email protected]

Application Software __________________________________________________

Margin Ramp Continues; Strong Upsell Opportunity; PT to $26; Outperform

Recommendation: We reiterate our Outperform rating on WK following another quarter of margin upside and solid net add activity, which should offset volatility in quarterly billings (flat growth y/y off a difficult 53% comp). Management’s preliminary 2018 outlook that endorsed consensus at a low double digit growth rate, and also assumes little benefit from recent efforts to closer larger enterprise wide deals, which could prove conservative. With a dominant (and growing) share in the SEC market, we believe WK has ample opportunity to upsell additional use cases into a sticky installed base of ~3k customers. At 4x our 2018 sales forecast, we don’t believe this is appropriately factored into shares, and think the risk/reward remains attractive.

 Strong 3Q17 Report: Workiva reported total revenue of $52.1 million (+16% y/y), 3% ahead of our $50.6 million estimate. Note that results still would have beat our model despite $500k of services revenue pulled from 4Q into 3Q, with subscription revenue growth accelerating 2 points y/y to 19%. Non-GAAP EPS of $(0.23) was also above our estimate and consensus of $(0.29), with upside driven primarily by better than expected opex leverage. Billings of $58.1 million grew 0.4% y/y, below consensus of $59.2 million, although we wouldn’t overreact to quarterly variances in this metric. FCF of $4.2 million was well above our $0.4 million estimate.

 Strong Net Adds in 3Q17: WK’s total customer count of 2,991 increased by 83 sequentially, with the total customer count up ~11% over prior year levels. YTD net adds of 219 are also up an impressive 27% vs. 2016 levels, and shows that WK still has ample room to add customers for many different use cases. While the average revenue per customer has increased in the mid-single digit range over the last few quarters, potential enterprise deals and additional upsell opportunities give us optimism about future increases in this metric. Net retention excluding add-ons improved modestly during the quarter to 96.5%, with retention including add-ons also increasing to 108.6%.

 Early 2018 Outlook Endorses Consensus: Workiva tweaked its 2017 outlook, increasing its revenue guidance to $206.4-206.8 million (was $205-206 million), with Non-GAAP EPS of $(0.63)-(0.64) [was $(0.62)-(0.64)]. Note that the EPS dynamic mostly relates to cash bonuses getting pulled from 1Q18 into 4Q17, and thus would suggest more potential leverage in 2018. Management’s preliminary 2018 outlook also endorsed current consensus that implies 14% growth y/y. Assuming roughly similar net add dynamics in 2018 vs. our 2017 projection, this implies modest growth in average revenue per customer next year (which seems conservative to us).

Valuation: We’re are raising our price target to $26 (from $23), which reflects a 4.5x revenue multiple on our revised 2018 revenue estimate. This represents a discount to the broader SaaS group, partially due to Workiva’s higher-than-average loss profile.

Non-GAAP Q1 Q2 Q3 Q4 Full GAAP EPS Revenues EPS Mar Jun Sep Dec Year Full Year (mil.)

2016A $(0.21) $(0.20) $(0.23) $(0.09) $(0.73) $(1.08) $179 Old 2017E (0.04)A (0.14)A (0.29) (0.16) (0.63) (1.06) 205

New 2017E (0.04)A (0.14)A (0.23)A (0.22) (0.63) (1.07) 207 Old 2018E (0.04) (0.12) (0.20) (0.08) (0.44) (0.87) 233

New 2018E (0.05) (0.13) (0.18) (0.08) (0.44) (0.88) 235 Old 2019E NA NA NA NA NA NA NA

New 2019E NA NA NA NA (0.23) (0.69) 263

Rows may not add due to rounding. Non-GAAP EPS excludes stock-based compensation. UR: Under Review.

Rating _________________________________ Outperform 2 Current and Target Price __________________ Current Price (Nov-07-17 close) $22.60 Target Price: Old: $23.00 New: $26.00 52-Week Range $23.00 - $12.15 Suitability High Risk/Growth Market Data ____________________________ Shares Out. (mil.) 41.8 Market Cap. (mil.) $945 Avg. Daily Vol. (10 day) 113,871 Dividend/Yield $0.00/0.0% Book Value (Sep-17) NM ROE % NM LT Debt (mil.)/% Cap. $19/NM Earnings & Valuation Metrics ______________

2016A 2017E 2018E 2019E

P/E Ratios (Non-GAAP) NM NM NM NM

FCF (mil.) Old $(12) $7 $9 NA New $(12) $9 $10 $19 Company Description ____________________ Based in Ames, Iowa, Workiva provides a cloud-based analytics and reporting platform. The company’s Wdesk solution serves the needs of 2,600 large enterprises with a focus on compliance reporting, risk reporting, sustainability reporting, management reporting, and enterprise risk management.

Upcoming Catalyst_______________________ This company will be presenting at the Raymond James Technology Investors Conference held on December 4-6 in New York City. Please contact your Raymond James representative for more information.

mailto:[email protected]

Raymond James U.S. Research

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 2

Figure 1 - Workiva Variance Analysis ($K) Consensus RJ

Y/Y Q/Q

3Q17A 3Q17E $ Variance Variance EPS impact Growth Growth

TOTAL REVENUE 52,068 50,633 50,631 1,436.9 2.8% ($0.01) 16.5% 5.4%

COST OF GOODS SOLD (NON-GAAP) 15,319 14,445 874.1 6.1%

% of rev 29.4% 28.5% 89bp

GROSS PROFIT (NON-GAAP) 36,749 36,328 36,186 562.8 1.6%

% of rev 70.6% 71.7% 71.5% -89bp ($0.01)

SALES, MARKETING & CUSTOMER SUCCESS (NON-GAAP) 22,924 23,236 (312.2) -1.3% 5.2% 20.1%

% of rev 44.0% 45.9% -186bp $0.02

R&D (NON-GAAP) 16,926 18,132 (1,206.1) -6.7% 23.1% 7.4%

% of rev 32.5% 35.8% -330bp $0.04

G&A (NON-GAAP) 6,017 6,829 (811.6) -11.9% 5.0% 0.5%

% of rev 11.6% 13.5% -193bp $0.02

OPER INC (NON-GAAP) (9,118) (11,954) (12,011) 2,892.6 -24.1%

% of rev -17.5% -23.6% -23.7% 621bp $0.08

OTHER INCOME (EXPENSE) (NON-GAAP) (266) (299) 33.0 -11.0% $0.00

PRE-TAX (NON-GAAP) (9,384) (12,310) 2,925.6 -23.8%

% of rev -18.0% -24.3% 628bp

TAX-RATE % -0.3% -0.1% -18bp ($0.00)

NET INCOME (NON-GAAP) (9,409) (12,320) 2,910.6 -23.6%

% of rev -18.1% -24.3% 626bp

EPS (NON-GAAP) ($0.23) ($0.29) ($0.29) $0.07 -23.4%

EPS (GAAP) ($0.34) ($0.40) $0.07 -16.5%

SHARES OUT 41.8 42.0 -0.14 ($0.00)

ADJUSTED EBITDA (8,264) (10,900) 2,635.9 -24.2%

% of rev -15.9% -21.5%

OPERATING CASH FLOW 5,186 1,273 3,913.0 307.4%

FREE CASH FLOW 4,199 423 3,776.0 892.6%

Segment Level Variance SUBSCRIPTION & SUPPORT REVENUE 43,214 41,800 1,414.4 3.4% 19.3% 5.5%

% of rev 83.0% 82.6% 43bp

SERVICES REVENUE 8,854 8,832 22.4 0.3% 4.5% 5.3%

% of rev 17.0% 17.4% -43bp

TOTAL REVENUE 52,068 50,631 1,436.9 2.8% 16.5% 5.4%

RECURRING GROSS PROFIT 34,946 34,067 879.3 2.6%

Gros s Margi n 80.9% 81.5% -63bp

SERVICES GROSS PROFIT 1,803 2,120 (316.6) -14.9%

Gros s Margi n 20.4% 24.0% -363bp

TOTAL GROSS PROFIT 36,749 36,186 $562.8 1.6%

Gros s Margi n 70.6% 71.5% -89bp

Source : Compa ny re ports , Fa cts te t a nd Ra ymond Ja me s re s e a rch

Raymond James U.S. Research

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 3

Figure 2 - Financial Model Revisions

($ in thousands, except per share data)

Before After Before After Before After Initial

4Q17E 4Q17E 2017E 2017E 2018E 2018E 2019E

Subs cri pti on & Support Revenue 43,890$ 44,510$ 166,209$ 168,244$ 190,548$ 193,239$ 218,600$

Yr./Yr. Growth 14.5% 16.1% 16.1% 17.6% 14.6% 14.9% 13.1%

Q/Q Growth 5.0% 3.0%

Profes s i onal Servi ces Revenue 9,671$ 8,695$ 39,277$ 38,324$ 42,660$ 41,726$ 44,886$

Yr./Yr. Growth 20.2% 8.1% 10.6% 7.9% 8.6% 8.9% 7.6%

Q/Q Growth 9.5% -1.8%

Total Revenues 53,560$ 53,205$ 205,486$ 206,568$ 233,208$ 234,965$ 263,487$

Y/Y % Growth 15.5% 14.7% 15.0% 15.6% 13.5% 13.7% 12.1%

Q/Q % Growth 5.8% 2.2%

Total Gros s Margi n 73.0% 71.2% 72.3% 71.6% 72.9% 72.3% 72.9%

Non-GAAP Operati ng Margi n -11.8% -17.0% -12.5% -12.3% -8.3% -8.0% -3.6%

Non-GAAP Net Income (6,655)$ (9,323)$ (26,470)$ (26,228)$ (19,803)$ (19,301)$ (10,072)$

Non-GAAP EPS (0.16)$ (0.22)$ (0.63)$ (0.63)$ (0.44)$ (0.44)$ (0.23)$

Adjus ted EBITDA (5,242)$ (7,917)$ (21,696)$ (21,735)$ (15,156)$ (14,552)$ (5,677)$

EBITDA Margin -9.8% -14.9% -10.6% -10.5% -6.5% -6.2% -2.2%

Operati ng Cas h Fl ow 834$ (1,002)$ 8,669$ 10,746$ 9,983$ 10,818$ 19,318$

Free Cas h Fl ow (16)$ (1,852)$ 6,822$ 8,762$ 9,183$ 10,018$ 18,518$

Source: Raymond James Estimates.

Figure 3 - WK Valuation Analysis

($ in millions)

2016 2017E 2018E 2019E

Revenues 179$ 207$ 235$ 263$

EV/Sales 5.1x 4.4x 3.9x 3.5x

Operati ng Cash Fl ow (OCF) (10)$ 11$ 11$ 19$

EV/OCF N/M N/M N/M N/M

Free Cash Fl ow (FCF) (12)$ 9$ 10$ 19$

EV/FCF N/M N/M N/M N/M

Adj EBITDA (26)$ (22)$ (15)$ (6)$

EV/EBITDA N/M N/M N/M N/M

Source: Company reports, Raymond James estimates.

Note: Enterprise Value(EV) based on closing stock price as of

November 07, 2017

Raymond James U.S. Research

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 4

Workiva, Inc. Income Statement

($ in thousands; fiscal year ends Decemb er)

FYE FYE 1Q16 2Q16 3Q16 4Q16 FYE 1Q17 2Q17 3Q17 4Q17E FYE 1Q18E 2Q18E 3Q18E 4Q18E FYE FYE

2014 2015 Mar-16 Jun-16 Sep-16 Dec-16 2016 Mar-17 Jun-17 Sep-17 Dec-17 2017E Mar-18 Jun-18 Sep-18 Dec-18 2018E 2019E

Revenue:

Subscription & Support 91,317 116,288 33,585 34,969 36,237 38,329 143,120 39,540 40,980 43,214 44,510 168,244 45,846 47,496 48,921 50,976 193,239 218,600

Y/Y % Change 40.1% 27.3% 27.9% 24.5% 21.5% 19.4% 23.1% 17.7% 17.2% 19.3% 16.1% 17.6% 15.9% 15.9% 13.2% 14.5% 14.9% 13.1%

Q/Q % Change 4.6% 4.1% 3.6% 5.8% 3.2% 3.6% 5.5% 3.0% 3.0% 3.6% 3.0% 4.2%

Professional Services 21,377 28,984 10,966 8,042 8,473 8,045 35,526 12,364 8,411 8,854 8,695 38,324 13,042 9,129 9,586 9,969 41,726 44,886

Y/Y % Change 7.0% 35.6% 23.4% 36.7% 31.7% 3.4% 22.6% 12.7% 4.6% 4.5% 8.1% 7.9% 5.5% 8.5% 8.3% 14.7% 8.9% 7.6%

Q/Q % Change 41.0% -26.7% 5.4% -5.1% 53.7% -32.0% 5.3% -1.8% 50.0% -30.0% 5.0% 4.0%-27.0% -27.0% -27.0%

Total Revenue 112,694 145,272 44,551 43,011 44,710 46,374 178,646 51,904 49,391 52,068 53,205 206,568 58,888 56,626 58,507 60,945 234,965 263,487

Y/Y % Change 32.3% 28.9% 26.7% 26.6% 23.3% 16.3% 23.0% 16.5% 14.8% 16.5% 14.7% 15.6% 13.5% 14.6% 12.4% 14.5% 13.7% 12.1%

Q/Q % Change 11.7% -3.5% 4.0% 3.7% 11.9% -4.8% 5.4% 2.2% 10.7% -3.8% 3.3% 4.2%

Cost of Subscription Revenue 20,680 22,196 6,800 6,914 6,572 7,116 27,402 7,497 7,580 8,268 8,457 31,802 8,601 8,690 9,262 9,583 36,137 40,441

Gross Margin 77.4% 80.9% 79.8% 80.2% 81.9% 81.4% 80.9% 81.0% 81.5% 80.9% 81.0% 81.1% 81.2% 81.7% 81.1% 81.2% 81.3% 81.5%

Cost of Professional Services Revenue 12,359 17,296 6,066 5,445 5,940 5,868 23,319 6,481 6,428 7,051 6,869 26,829 6,651 6,940 7,595 7,836 29,023 31,016

Gross Margin 42.2% 40.3% 44.7% 32.3% 29.9% 27.1% 34.4% 47.6% 23.6% 20.4% 21.0% 30.0% 49.0% 24.0% 20.8% 21.4% 30.4% 30.9%

Total Cost of Revenue 33,039 39,492 12,866 12,359 12,512 12,984 50,721 13,978 14,008 15,319 15,326 58,631 15,252 15,631 16,858 17,419 65,160 71,458

Gross Profit 79,655 105,780 31,685 30,652 32,198 33,390 127,925 37,926 35,383 36,749 37,879 147,937 43,635 40,995 41,649 43,526 169,805 192,029 Gross M argi n 70.7% 72.8% 71.1% 71.3% 72.0% 72.0% 71.6% 73.1% 71.6% 70.6% 71.2% 71.6% 74.1% 72.4% 71.2% 71.4% 72.3% 72.9%

Research and Development 42,388 48,542 13,932 13,438 13,748 13,955 55,073 15,043 15,767 16,926 17,942 65,678 17,942 17,762 17,940 18,299 71,942 78,270 % of Revenue 37.6% 33.4% 31.3% 31.2% 30.7% 30.1% 30.8% 29.0% 31.9% 32.5% 33.7% 31.8% 30.5% 31.4% 30.7% 30.0% 30.6% 29.7%

Y/Y % Change 27.1% 14.5% 19.3% 13.6% 12.9% 8.5% 13.5% 8.0% 17.3% 23.1% 28.6% 19.3% 19.3% 12.7% 6.0% 2.0% 9.5% 8.8%

Q/Q % Change 8.3% -3.5% 2.3% 1.5% 7.8% 4.8% 7.4% 6.0% 0.0% -1.0% 1.0% 2.0%

Sales and Marketing 52,257 67,842 19,633 19,379 21,787 17,592 78,391 18,054 19,093 22,924 22,351 82,422 21,233 22,507 24,871 21,886 90,497 93,778 % of Revenue 46.4% 46.7% 44.1% 45.1% 48.7% 37.9% 43.9% 34.8% 38.7% 44.0% 42.0% 39.9% 36.1% 39.7% 42.5% 35.9% 38.5% 35.6%

Y/Y % Change 29.8% 29.8% 47.0% 21.9% 6.6% -3.1% 15.5% -8.0% -1.5% 5.2% 27.1% 5.1% 17.6% 17.9% 8.5% -2.1% 9.8% 3.6%

Q/Q % Change 8.2% -1.3% 12.4% -19.3% 2.6% 5.8% 20.1% -2.5% -5.0% 6.0% 10.5% -12.0%

General and Administrative 16,235 22,079 6,842 5,656 5,728 5,566 23,792 6,674 5,990 6,017 6,619 25,300 6,619 6,222 6,533 6,794 26,167 29,553 % of Revenue 14.4% 15.2% 15.4% 13.2% 12.8% 12.0% 13.3% 12.9% 12.1% 11.6% 12.4% 12.2% 11.2% 11.0% 11.2% 11.1% 11.1% 11.2%

Y/Y % Change 23.3% 36.0% 26.4% 21.7% 8.1% -17.2% 7.8% -2.5% 5.9% 5.0% 18.9% 6.3% -0.8% 3.9% 8.6% 2.6% 3.4% 12.9%

Q/Q % Change 1.8% -17.3% 1.3% -2.8% 19.9% -10.2% 0.5% 10.0% 0.0% -6.0% 5.0% 4.0%

Total Operating Expenses 110,880 138,463 40,407 38,473 41,263 37,113 157,256 39,771 40,850 45,867 46,911 173,399 45,794 46,491 49,343 46,979 188,606 201,601

Non-GAAP Operating Income (31,225) (32,683) (8,722) (7,821) (9,065) (3,723) (29,331) (1,845) (5,467) (9,118) (9,032) (25,462) (2,158) (5,496) (7,694) (3,453) (18,801) (9,572) Operating Margin -27.7% -22.5% -19.6% -18.2% -20.3% -8.0% -16.4% -3.6% -11.1% -17.5% -17.0% -12.3% -3.7% -9.7% -13.2% -5.7% -8.0% -3.6%

Stock-Based Compensation 7,385 11,000 3,390 3,502 3,670 3,685 14,247 4,139 4,397 4,664 5,000 18,200 4,600 4,700 4,800 4,900 19,000 20,600

Other Non-Operating Items - - - - - - - - - - - - - - - - - -

GAAP Operating Income (38,610) (43,683) (12,112) (11,323) (12,735) (7,408) (43,578) (5,984) (9,864) (13,782) (14,032) (43,662) (6,758) (10,196) (12,494) (8,353) (37,801) (30,172)

GAAP Other Income (Expense) (2,512) 277 86 (190) (164) (107) (375) 157 (299) (266) (266) (674) (100) (100) (100) (100) (400) (400)

Other Income (Expense) (2,512) 277 86 (190) (164) (107) (375) 157 (299) (266) (266) (674) (100) (100) (100) (100) (400) (400)

Pre-Tax Income (Non-GAAP) (33,737) (32,406) (8,636) (8,011) (9,229) (3,830) (29,706) (1,688) (5,766) (9,384) (9,298) (26,136) (2,258) (5,596) (7,794) (3,553) (19,201) (9,972)

GAAP Pre-Tax Income (41,122) (43,406) (12,026) (11,513) (12,899) (7,515) (43,953) (5,827) (10,163) (14,048) (14,298) (44,336) (6,858) (10,296) (12,594) (8,453) (38,201) (30,572)

Taxes (Non- GAAP) 32 (7) 19 12 (8) 1 24 9 33 25 25 92 25 25 25 25 100 100

Tax Rate -0.1% 0.0% -0.2% -0.1% 0.1% 0.0% -0.1% -0.5% -0.6% -0.3% -0.3% -0.4% -1.1% -0.4% -0.3% -0.7% -0.5% -1.0%

Taxes (GAAP) 32 (7) 19 12 (8) 1 24 9 33 25 25 92 25 25 25 25 100 100

Tax Rate -0.1% 0.0% -0.2% -0.1% 0.1% 0.0% -0.1% -0.5% -0.6% -0.3% -0.3% -0.4% -1.1% -0.4% -0.3% -0.7% -0.5% -1.0%

Non-GAAP Net Income (33,769) (32,399) (8,655) (8,023) (9,221) (3,831) (29,730) (1,697) (5,799) (9,409) (9,323) (26,228) (2,283) (5,621) (7,819) (3,578) (19,301) (10,072) Net M argi n -30.0% -22.3% -19.4% -18.7% -20.6% -8.3% -16.6% -3.3% -11.7% -18.1% -17.5% -12.7% -3.9% -9.9% -13.4% -5.9% -8.2% -3.8%

GAAP Net Income (41,154) (43,399) (12,045) (11,525) (12,891) (7,516) (43,977) (5,836) (10,196) (14,073) (14,323) (44,428) (6,883) (10,321) (12,619) (8,478) (38,301) (30,672) Net Margin -36.5% -29.9% -27.0% -26.8% -28.8% -16.2% -24.6% -11.2% -20.6% -27.0% -26.9% -21.5% -11.7% -18.2% -21.6% -13.9% -16.3% -11.6%

Adjusted EBITDA (28,804) (29,947) (7,725) (6,846) (8,121) (2,819) (25,511) (954) (4,600) (8,264) (7,917) (21,735) (1,091) (4,412) (6,633) (2,416) (14,552) (5,677) EBITDA M argi n -25.6% -20.6% -17.3% -15.9% -18.2% -6.1% -14.3% -1.8% -9.3% -15.9% -14.9% -10.5% -1.9% -7.8% -11.3% -4.0% -6.2% -2.2%

Basic Shares 33.1 39.9 40.5 40.6 40.8 40.9 40.7 41.1 41.4 41.8 42.0 41.6 42.7 43.5 43.7 43.7 43.4 44.4

Diluted Shares 33.1 39.9 40.5 40.6 40.8 40.9 40.7 41.1 41.4 41.8 42.0 41.6 42.7 43.5 43.7 43.7 43.4 44.4

Non-GAAP EPS - Diluted (1.02)$ (0.81)$ (0.21)$ (0.20)$ (0.23)$ (0.09)$ (0.73)$ (0.04)$ (0.14)$ (0.23)$ (0.22)$ (0.63)$ (0.05)$ (0.13)$ (0.18)$ (0.08)$ (0.44)$ (0.23)$

GAAP EPS - Diluted (1.24)$ (1.09)$ (0.30)$ (0.28)$ (0.32)$ (0.18)$ (1.08)$ (0.14)$ (0.25)$ (0.34)$ (0.34)$ (1.07)$ (0.16)$ (0.24)$ (0.29)$ (0.19)$ (0.88)$ (0.69)$

Brian Peterson

Note: Non-GAAP measures exclude stock-based compensation. Raymond James & Associates

Source: Company reports and Raymond James estimates. 404-442-5888

Raymond James U.S. Research

International Headquarters: The Raymond James Financial Center | 880 Carillon Parkway | St. Petersburg, Florida 33716 | 800-248-8863 5

Workiva, Inc. Balance Sheet

($ in thousands; fiscal year ends Decemb er)

Dec-11 Dec-12 Dec-13 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17E Mar-18E Jun-18E Sep-18E Dec-18E Dec-19E

Assets:

Cash and Cash Equivalents 10,029$ 24,979$ 15,515$ 101,131$ 89,893$ 86,432$ 69,094$ 58,750$ 43,226$ 39,885$ 42,842$ 51,281$ 52,204$ 59,986$ 62,718$ 60,866$ 62,167$ 65,206$ 60,216$ 70,884$ 89,401$

Marketable Securities - 5,200 2,436 - - - 12,659 17,420 12,665 11,044 10,995 11,435 12,498 12,877 15,033 15,033 15,033 15,033 15,033 15,033 15,033

Accounts Receivable 6,364 5,167 13,885 11,120 11,913 12,452 12,133 15,647 16,470 18,260 22,353 22,535 19,580 22,733 24,283 25,538 23,555 21,518 22,233 21,940 21,063

Deferred Commissions 503 546 301 852 706 738 953 1,368 1,383 1,500 1,634 1,864 1,867 2,021 2,208 2,128 1,767 1,699 1,755 1,828 2,038

Prepaid Expenses and Other Current Assets 614 1,455 3,747 3,438 3,480 3,971 4,233 4,693 5,105 6,284 6,233 10,927 9,285 12,989 7,407 8,513 4,122 3,964 4,095 4,266 4,756

Total Current Assets 17,510 37,347 35,884 116,541 105,992 103,593 99,072 97,878 78,849 76,973 84,057 98,042 95,434 110,606 111,649 112,078 106,644 107,419 103,332 113,951 132,292

Property and Equipment 1,897 15,561 34,715 46,265 46,838 46,226 45,754 44,410 43,747 43,619 43,287 42,590 41,949 41,138 41,300 41,035 40,168 39,283 38,423 37,585 34,490

Restricted Cash 65 199 2,547 401 73 - - - - - - - - - - - - - - - -

Intangible Assets - - 167 549 625 812 868 896 936 978 995 1,012 1,021 1,056 1,088 1,088 1,088 1,088 1,088 1,088 1,088

Other Assets 82 415 631 795 736 699 626 711 774 1,126 1,583 1,499 1,418 1,393 1,553 1,553 1,553 1,553 1,553 1,553 1,553

Total Assets 19,554$ 53,522$ 73,944$ 164,551$ 154,264$ 151,330$ 146,320$ 143,895$ 124,306$ 122,696$ 129,922$ 143,143$ 139,822$ 154,193$ 155,590$ 155,754$ 149,453$ 149,343$ 144,396$ 154,178$ 169,424$

Liabilities and Stockholders'

Equity:

Accounts Payable 1,569 2,396 3,993 3,011 2,621 3,875 4,730 5,138 4,156 4,965 5,637 849 1,867 1,191 1,861 2,128 2,356 2,265 2,340 2,438 2,718

Accrued Expenses and Other Accrued Liabilities 2,535 6,703 8,939 19,089 14,698 16,472 19,865 21,379 15,601 15,700 18,341 21,717 15,730 17,286 20,771 21,282 19,433 19,253 18,722 21,940 27,178

Short-term Debt 1,151 185 3,026 2,025 2,020 2,107 2,003 1,826 1,750 1,645 1,452 1,305 1,278 1,263 1,184 1,184 1,184 1,184 1,184 1,184 1,184

Deferred Revenue 9,230 17,120 27,467 42,605 42,976 47,786 51,047 55,741 53,101 57,291 63,629 76,016 79,087 92,818 99,962 105,346 101,287 107,589 109,408 118,843 133,853

Total Current Liabilities 14,485 26,404 43,425 66,730 62,315 70,240 77,645 84,084 74,608 79,601 89,059 99,887 97,962 112,558 123,778 129,940 124,259 130,290 131,654 144,405 164,933

Deferred Revenue - LT 198 2,918 12,311 13,671 12,539 10,262 8,584 7,597 7,138 8,340 15,216 21,485 22,573 24,342 23,278 26,603 28,266 27,747 29,253 29,863 34,652

Debt & Capital Leases 13,218 11,986 24,660 22,838 22,324 22,055 21,578 21,156 20,800 20,411 20,066 19,796 19,526 19,031 18,709 18,709 18,709 18,709 18,709 18,709 18,709

Other Noncurrent Liabilities 257 67 335 5,493 6,454 6,196 6,359 5,339 5,199 5,523 5,153 5,100 4,745 4,390 4,297 4,297 4,297 4,297 4,297 4,297 4,297

Total Liabilities 28,158$ 41,375$ 80,731$ 108,732$ 103,632$ 108,753$ 114,166$ 118,176$ 107,745$ 113,875$ 129,494$ 146,268$ 144,806$ 160,321$ 170,062$ 179,549$ 175,531$ 181,043$ 183,914$ 197,274$ 222,592$

Total Stockholders' Equity (8,604) 12,147 (6,787) 55,819 50,632 42,577 32,154 25,719 16,561 8,821 428 (3,125) (4,984) (6,128) (14,472) (23,795) (26,078) (31,699) (39,518) (43,096) (53,168)

Total Liabilities and Stockholders' Equity 19,554$ 53,522$ 73,944$ 164,551$ 154,264$ 151,330$ 146,320$ 143,895$ 124,306$ 122,696$ 129,922$ 143,143$ 139,822$ 154,193$ 155,590$ 155,754$ 149,453$ 149,343$ 144,396$ 154,178$ 169,424$

Deferred Revenue 9,428 20,038 39,778 56,276 55,515 58,048 59,631 63,338 60,239 65,631 78,845 97,501 101,660 117,160 123,240 131,949 129,553 135,335 138,661 148,706 168,506

Y/Y % Change 98.5% 41.5% 27.5% 19.2% 14.9% 12.5% 8.5% 13.1% 32.2% 53.9% 68.8% 78.5% 56.3% 35.3% 27.4% 15.5% 12.5% 12.7% 13.3%

Q/Q % Change -0.6% 63.1% 8.5% -1.4% 4.6% 2.7% 6.2% -4.9% 9.0% 20.1% 23.7% 4.3% 15.2% 5.2% 7.1% -1.8% 4.5% 2.5% 7.2% 6.6%

Billings 17,169 38,953 34,528 34,393 36,501 37,851 43,589 41,452 48,403 57,924 65,030 56,063 64,891 58,148 61,914 56,492 62,408 61,833 70,989 78,347 Y/Y % Change 126.9% -11.4% 7.9% 15.2% 21.7% 26.2% 20.5% 32.6% 53.0% 49.2% 35.2% 34.1% 0.4% -4.8% 0.8% -3.8% 6.3% 14.7% 10.4%

Q/Q % Change -10.2% 50.9% 11.1% -0.4% 6.1% 3.7% 15.2% -4.9% 16.8% 19.7% 12.3% -13.8% 15.7% -10.4% 6.5% -8.8% 10.5% -0.9% 14.8% 3.8%

Total Cash and Investments 30,179 17,951 101,131 89,893 86,432 81,753 76,170 55,891 50,929 53,837 62,716 64,702 72,863 77,751 75,899 77,200 80,239 75,249 85,917 104,434

Total Debt 12,171 27,686 24,863 24,344 24,162 23,581 22,982 22,550 22,056 21,518 21,101 20,804 20,294 19,893 19,893 19,893 19,893 19,893 19,893 19,893

Net Cash 18,008 (9,735) 76,268 65,549 62,270 58,172 53,188 33,341 28,873 32,319 41,615 43,898 52,569 57,858 56,006 57,307 60,346 55,356 66,024 84,541

Source: Company reports and Raymond James estimates.

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Workiva, Inc. Cash Flow Statement

($ in thousands; fiscal year ends Decemb er)

1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17E 1Q18E 2Q18E 3Q18E 4Q18E

2014 2015 Mar-16 Jun-16 Sep-16 Dec-16 2016 Mar-17 Jun-17 Sep-17 Dec-17 2017E Mar-18 Jun-18 Sep-18 Dec-18 2018E 2019E

Operating Activities:

GAAP Net Income (41,011)$ (43,399)$ (12,045)$ (11,525)$ (12,891)$ (7,516)$ (43,977)$ (5,836)$ (10,196)$ (14,073)$ (14,323)$ (44,428)$ (6,883)$ (10,321)$ (12,619)$ (8,478)$ (38,301)$ (30,672)$

Depreciation and Amortization 3,877 4,410 997 975 944 904 3,820 891 867 854 1,115 3,727 1,067 1,085 1,061 1,037 4,250 3,895

Working Capital Changes 25,223 8,343 (11,146) 3,174 11,368 12,992 16,388 3,607 8,938 14,615 7,205 34,365 2,718 7,775 1,968 13,409 25,870 25,495

Other Non-Operating Items 8,300 9,054 3,116 3,340 3,372 3,572 13,400 3,918 4,373 3,790 5,000 17,081 4,600 4,700 4,800 4,900 19,000 20,600

Cash Flow From Oper. Activities (3,611)$ (21,592)$ (19,078)$ (4,036)$ 2,793$ 9,952$ (10,369)$ 2,580$ 3,982$ 5,186$ (1,002)$ 10,746$ 1,502$ 3,238$ (4,790)$ 10,868$ 10,818$ 19,318$

Investing Activities:

Capital Expenditures (8,566) (1,843) (412) (597) (91) (801) (1,901) (121) (26) (987) (850) (1,984) (200) (200) (200) (200) (800) (800)

Purchase/Sale of Investments 4,864 (17,548) 4,793 1,602 - (499) 5,896 (1,090) (409) (2,187) - (3,686) - - - - - -

Capitalized Software Development - - - - - - - - - - - - - - - - - -

Other/Acquisitions (394) (386) (55) (59) (38) (38) (190) (31) (58) (55) - (144) - - - - - -

Cash Flow From Invest. Activities (4,096)$ (19,777)$ 4,326$ 946$ (129)$ (1,338)$ 3,805$ (1,242)$ (493)$ (3,229)$ (850)$ (5,814)$ (200)$ (200)$ (200)$ (200)$ (800)$ (800)$

Free Cash Flow (CFFO - Capex) (12,177)$ (23,435)$ (19,490)$ (4,633)$ 2,702$ 9,151$ (12,270)$ 2,459$ 3,956$ 4,199$ (1,852)$ 8,762$ 1,302$ 3,038$ (4,990)$ 10,668$ 10,018$ 18,518$

10,418

Financing Activities:

Stock Issuance 91,826 353 - 236 840 237 1,313 806 4,709 1,154 - 6,669 - - - - - -

Debt Issuance (834) (2,366) (432) (494) (538) (417) (1,881) (297) (488) (401) - (1,186) - - - - - -

Other/FX Changes 2,331 1,001 (340) 7 (9) 5 (337) (924) 72 22 - (830) - - - - - -

Cash Flow From Fin. Activities 93,323$ (1,012)$ (772)$ (251)$ 293$ (175)$ (905)$ (415)$ 4,293$ 775$ -$ 4,653$ -$ -$ -$ -$ -$ -$

Net Change in Cash 85,616$ (42,381)$ (15,524)$ (3,341)$ 2,957$ 8,439$ (7,469)$ 923$ 7,782$ 2,732$ (1,852)$ 9,585$ 1,302$ 3,038$ (4,990)$ 10,668$ 10,018$ 18,518$

Source: Company reports and Raymond James estimates.

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Ratings and Definitions

Raymond James & Associates (U.S.) definitions

Strong Buy (SB1) Expected to appreciate, produce a total return of at least 15%, and outperform the S&P 500 over the next six to 12 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, a total return of at least 15% is expected to be realized over the next 12 months. Outperform (MO2) Expected to appreciate and outperform the S&P 500 over the next 12-18 months. For higher yielding and more conservative equities, such as REITs and certain MLPs, an Outperform rating is used for securities where we are comfortable with the relative safety of the dividend and expect a total return modestly exceeding the dividend yield over the next 12-18 months. Market Perform (MP3) Expected to perform generally in line with the S&P 500 over the next 12 months. Underperform (MU4) Expected to underperform the S&P 500 or its sector over the next six to 12 months and should be sold. Suspended (S) The rating and price target have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and price target are no longer in effect for this security and should not be relied upon. Raymond James Ltd. (Canada) definitions

Strong Buy (SB1) The stock is expected to appreciate and produce a total return of at least 15% and outperform the S&P/TSX Composite Index over the next six months. Outperform (MO2) The stock is expected to appreciate and outperform the S&P/TSX Composite Index over the next twelve months. Market Perform (MP3) The stock is expected to perform generally in line with the S&P/TSX Composite Index over the next twelve months and is potentially a source of funds for more highly rated securities. Underperform (MU4) The stock is expected to underperform the S&P/TSX Composite Index or its sector over the next six to twelve months and should be sold. Raymond James Europe (Raymond James Euro Equities SAS & Raymond James Financial International Limited) rating definitions

Strong Buy (1) Expected to appreciate, produce a total return of at least 15%, and outperform the Stoxx 600 over the next 6 to 12 months. Outperform (2) Expected to appreciate and outperform the Stoxx 600 over the next 12 months. Market Perform (3) Expected to perform generally in line with the Stoxx 600 over the next 12 months. Underperform (4) Expected to underperform the Stoxx 600 or its sector over the next 6 to 12 months. Suspended (S) The rating and target price have been suspended temporarily. This action may be due to market events that made coverage impracticable, or to comply with applicable regulations or firm policies in certain circumstances, including when Raymond James may be providing investment banking services to the company. The previous rating and target price are no longer in effect for this security and should not be relied upon. In transacting in any security, investors should be aware that other securities in the Raymond James research coverage universe might carry a higher or lower rating. Investors should feel free to contact their Financial Advisor to discuss the merits of other available investments.

Rating Distributions

Coverage Universe Rating Distribution* Investment Banking Distribution

RJA RJL RJEE/RJFI RJA RJL RJEE/RJFI

Strong Buy and Outperform (Buy) 52% 68% 53% 23% 44% 0%

Market Perform (Hold) 43% 31% 35% 12% 22% 0%

Underperform (Sell) 5% 2% 12% 7% 25% 0%

* Columns may not add to 100% due to rounding.

Suitability Ratings (SR)

Medium Risk/Income (M/INC) Lower to average risk equities of companies with sound financials, consistent earnings, and dividend yields above that of the S&P 500. Many securities in this category are structured with a focus on providing a consistent dividend or return of capital.

Medium Risk/Growth (M/GRW) Lower to average risk equities of companies with sound financials, consistent earnings growth, the potential for long-term price appreciation, a potential dividend yield, and/or share repurchase program.

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High Risk/Income (H/INC) Medium to higher risk equities of companies that are structured with a focus on providing a meaningful dividend but may face less predictable earnings (or losses), more leveraged balance sheets, rapidly changing market dynamics, financial and competitive issues, higher price volatility (beta), and potential risk of principal. Securities of companies in this category may have a less predictable income stream from dividends or distributions of capital.

High Risk/Growth (H/GRW) Medium to higher risk equities of companies in fast growing and competitive industries, with less predictable earnings (or losses), more leveraged balance sheets, rapidly changing market dynamics, financial or legal issues, higher price volatility (beta), and potential risk of principal.

High Risk/Speculation (H/SPEC) High risk equities of companies with a short or unprofitable operating history, limited or less predictable revenues, very high risk associated with success, significant financial or legal issues, or a substantial risk/loss of principal.

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Raymond James expects to receive or intends to seek compensation for investment banking services from the subject companies in the next three months.

Company Name Disclosure

Workiva Inc. Raymond James & Associates makes a market in shares of WK.

Stock Charts, Target Prices, and Valuation Methodologies

Valuation Methodology: The Raymond James methodology for assigning ratings and target prices includes a number of qualitative and quantitative factors including an assessment of industry size, structure, business trends and overall attractiveness; management effectiveness; competition; visibility; financial condition, and expected total return, among other factors. These factors are subject to change depending on overall economic conditions or industry- or company-specific occurrences. Only stocks rated Strong Buy (SB1) or Outperform (MO2) have target prices and thus valuation methodologies.

Target Prices: The information below indicates our target price and rating changes for WK stock over the past three years.

Valuation Methodology: We believe enterprise value-to-sales (EV/sales) represents a reasonable valuation metric given the immature nature of the company’s financial model with significant growth investments being made today to drive future high-margin recurring revenue over a long-term basis. While sentiment has shifted and places a greater emphasis on operating leverage and attainment of long-term model targets for earnings and cash flow, we believe the primary emphasis in small-cap tech investing will remain on maximizing growth. We believe EV/sales remains the most appropriate valuation methodology for many of our SaaS stocks that remain in this high-growth investment mode and still lack scale. This is further supported by an active M&A environment for SaaS companies, which have commonly entailed premium EV/sales takeout multiples. We believe other valuation metrics such as EV/EBITDA, EV/free cash flow (FCF), and price-to- earnings (P/E) will likely remain less relevant in the case of high-growth SaaS stories, in our opinion. Longer term, we believe significant operating leverage could materialize given the high-margin nature of recurring revenue and additional valuation metrics that take into account

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Risk Factors

General Risk Factors: Following are some general risk factors that pertain to the businesses of the subject companies and the projected target prices and recommendations included on Raymond James research: (1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or practices could alter the prospective valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major segments of the economy could alter investor confidence and investment prospects. International investments involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability.

Specific Investment Risks Related to the Industry or Issuer

Application Software Industry Risk Factors Early-Stage Growth Presents Challenges and Opportunities We believe many of the publicly traded SaaS applications vendors remain early in monetizing their respective growth opportunities. We anticipate continued rapid investment in required infrastructure, such as data center operations, in order to address growing customer transaction volumes and geographic expansion, sales and marketing build out to better serve both lower end and enterprise market opportunities, and general and administrative investments in order to enhance internal finance, human resources, legal, and IT processes to handle rapid growth. Such expenses, along with required capital expenditures, could hamper earnings leverage over the intermediate term, and/or create volatile cash flow performance.

Measuring the Size of SaaS Markets It is evident that SaaS represents a secular growth opportunity in an otherwise slower growing, cyclical enterprise software market. Many of the publicly traded SaaS vendors have achieved robust growth, in a number of cases exceeding 30%-plus in revenue, and have experienced a strong uptick in cash flow. Industry forecasts suggest that this strong relative growth will persist highlighted by in excess of 5x the growth of more traditional applications software market over a long-term basis. While it is clear that the relative growth of SaaS markets will remain pronounced, the slope of the growth curve could prove less steep, adoption rates could prove uneven, and SaaS markets could prove less recession-resilient that many anticipate. Slower-than-expected growth in SaaS markets could impact profitability, especially for many of the SaaS vendors that remain focused on rapid investment and maximizing top-line growth and bookings at the expense of near-term profitability.

Complexity in Financial Model With SaaS vendors, we believe there is greater financial complexity versus the typical enterprise software license model. The SaaS, on- demand model encompasses upfront costs associated with gaining business and delivering services; however, associated revenue is spread out ratably over the life of the contract in the form of subscription revenue. Understanding the true quarter-to-quarter success in new customer sales requires a focus on various metrics, such as billings, bookings, backlog, etc. While deferred revenue can sometimes represent a solid proxy for measuring quarterly sales success, it is not an absolute metric and can often exclude off-balance-sheet contracted backlog that has not yet been invoiced. Furthermore, renewal characteristics from the installed base are difficult to measure and investors and the Street are typically at the mercy of company management to get updates on key metrics like bookings, backlog, renewal rates, average deal size, contract duration, etc. Unfortunately, these metrics can be inconsistently provided or not provided at all. Lastly, another complicating factor is the fact that no two SaaS vendors have identical methods for invoicing new sales (e.g., some may invoice annually, others quarterly or monthly) and accounting practices in areas like sales commissions and capitalized software; thus, apples-to-apples comparisons on a variety of items like profitability and cash flows can vary dramatically.

Data Protection, Privacy, and Performance Concerns Our checks indicate SaaS vendors are making aggressive steps to minimize customer and prospect concerns over the protection of key company information (e.g., customer records, key profit and loss data, compliance information, etc.). Such steps include heightened investment in SaaS infrastructure such as redundant server hardware, grid computing, virtualization, encryption, and data management technologies. Still, data protection and privacy concerns will remain a relevant issue and could represent a gaiting factor in some vertical markets, like financial services, whereby sensitivity to customer data is paramount. Independent of perceived data protection issues, SaaS vendors must continue to gain confidence from their customers that the underlying SaaS applications will maintain high levels of performance reliability.

Company-Specific Risks for Workiva Inc. Adjacent Market Traction Could Prove More Difficult Than Expected Wdesk has shown a great deal of success with customers around the SEC reporting use case over the last several years. While we still see attractive growth opportunities associated with SEC reporting, the company is looking to address adjacent markets such as Sarbanes-Oxley compliance, risk reporting, sustainability reporting, management reporting, and enterprise risk management. While we believe the linked data embedded by existing customers will help facilitate cross-selling for other use cases, we note that selling a different use case usually has a different point of contact within an organization. In this scenario, a customer satisfied with one solution may require more significant upsell

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efforts than in other instances. Moreover, the company has invested in additional go-to-market resources to target these opportunities, which may lead to higher costs and losses if the revenue ramp does not progress as expected.

Model Reflects Significant Investments and Losses for Foreseeable Future As the company looks to expand its solutions into adjacent markets, we expect large and ongoing investments in service delivery, sales and marketing, and product development. If management cannot adequately monetize its growth investments, revenue growth could disappoint and operating losses and cash flow burn could deteriorate further.

Competition Although the company has established an impressive leadership position as a provider of cloud-based SEC reporting software, existing competitors including RR Donnelly, Merrill, and Thomson Reuters have notable customers in the market. These competitors or other large enterprise software providers may accelerate investments in a cloud-based platform, which could pressure either revenue growth or pricing dynamics for Workiva. We also believe that as Workiva looks to expand its Wdesk platform into broader analytics markets, it may eventually bump heads with big data or analytic software players, which could create a new source of significant competition.

Regulatory Changes Could Impact the Demand for Workiva’s Solutions Increased complexity related to regulatory requirements has been a key demand driver for Workiva’s solutions, including the XBRL mandate for SEC and higher standards for Sarbanes-Oxley (SOX). Note that the rules and regulations in these markets remain subject to change, which could lead to disruption in sales cycles or ultimately the need for Workiva solutions. While we believe the trends should ultimately lead to increased regulatory hurdles and thus more utility from the Wdesk solution, there are no assurances that this will continue.

Dual Class Common Stock Structure The company has a dual class common stock structure with Class A and Class B common shares. Owners of Class B common shares have ten votes per share, while holders of Class A common stock have one vote per share. The holders of Class B common stock consist of previous investors, executive officers, employees, and directors. Concentrated voting control among Class B shares enables these shareholders to exercise significant control over the strategic direction of the company. We estimate that ~80% of the voting power remains with Class B shareholders following.

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