UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q
FORM 10-Q

___________________________________
(Mark One)
ý☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017 2021
OR
o☐ 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


WORKIVA INC.
(Exact name of registrant as specified in its charter)

___________________________________
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)


Delaware 47-2509828 Securities registered pursuant to Section 12(b) of the Act:
(State or other jurisdictionTitle of incorporation or organization) each classTrading Symbol(I.R.S. Employer Identification Number) Name of each exchange on which registered
2900 University Blvd Class A common stock, par value $.001
Ames, IA 50010 WK
(888) 275-3125 
(Address of principal executive offices and zip code) 
(888) 275-3125 
(Registrant's telephone number, including area code) 
___________________________________ 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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
o
Accelerated filer
ýo
Non-accelerated filer
o(Do not check if a smaller reporting company)  Smaller reporting company o☐
Emerging growth company ý☐

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. ý☐


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

As of November 3, 2017,October 29, 2021, there were approximately 31,382,17045,151,293 shares of the registrant's Class A common stock and 10,546,5345,710,181 shares of the registrant's Class B common stock outstanding.


WORKIVA INC.

TABLE OF CONTENTS


Page
Part I. Financial Information
1
1
3
4
5
57
79
1924
3438
3538
Part II. Other Information
3640
3640
3742
3843
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 December��31, 2016,2020, 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, 2017  As of December 31, 2016 
 (unaudited)   
ASSETS    
Current assets    
Cash and cash equivalents $62,718  $51,281 
Marketable securities 15,033  11,435 
Accounts receivable, net of allowance for doubtful accounts of $646 and $900 at September 30, 2017 and December 31, 2016, respectively 24,283  22,535 
Deferred commissions 2,208  1,864 
Other receivables 1,109  1,545 
Prepaid expenses 6,298  9,382 
Total current assets 111,649  98,042 
    
Property and equipment, net 41,300  42,590 
Intangible assets, net 1,088  1,012 
Other assets 1,553  1,499 
Total assets $155,590  $143,143 
    

WORKIVA INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
As of September 30, 2021As of December 31, 2020
(unaudited)
ASSETS
Current assets
Cash and cash equivalents$291,125 $322,831 
Marketable securities231,224 207,207 
Accounts receivable, net of allowance for doubtful accounts of $555 and $717 at September 30, 2021 and December 31, 2020, respectively64,099 68,922 
Deferred commissions28,021 21,923 
Other receivables3,354 3,155 
Prepaid expenses and other13,092 9,047 
Total current assets630,915 633,085 
Property and equipment, net28,490 29,365 
Operating lease right-of-use assets14,536 15,844 
Deferred commissions, non-current29,234 23,421 
Goodwill34,279 — 
Intangible assets, net8,193 1,583 
Other assets4,568 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, 2021As of December 31, 2020
(unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable$4,018 $2,843 
Accrued expenses and other current liabilities78,799 68,256 
Deferred revenue235,754 208,990 
Convertible senior notes, current296,341 — 
Finance lease obligations1,776 1,705 
Total current liabilities616,688 281,794 
Convertible senior notes, net— 289,490 
Deferred revenue, non-current31,463 35,894 
Other long-term liabilities1,335 1,680 
Operating lease liabilities, non-current15,231 17,209 
Finance lease obligations, non-current15,320 16,662 
Total liabilities680,037 642,729 
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, respectively45 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, respectively6 8 
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding— — 
Additional paid-in-capital508,025 478,698 
Accumulated deficit(438,106)(414,700)
Accumulated other comprehensive income208 230 
Total stockholders’ equity70,178 64,277 
Total liabilities and stockholders’ equity$750,215 $707,006 
See accompanying notes.
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WORKIVA INC.
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,
2021202020212020
Revenue
Subscription and support$98,912 $75,850 $275,053 $214,907 
Professional services13,781 12,249 47,449 42,853 
Total revenue112,693 88,099 322,502 257,760 
Cost of revenue
Subscription and support15,606 12,013 42,906 36,264 
Professional services10,799 9,873 31,766 30,262 
Total cost of revenue26,405 21,886 74,672 66,526 
Gross profit86,288 66,213 247,830 191,234 
Operating expenses
Research and development29,841 23,956 84,305 70,458 
Sales and marketing46,026 35,487 128,586 106,874 
General and administrative18,390 13,642 52,795 46,564 
Total operating expenses94,257 73,085 265,686 223,896 
Loss from operations(7,969)(6,872)(17,856)(32,662)
Interest income219 471 834 2,832 
Interest expense(3,508)(3,500)(10,495)(10,467)
Other income (expense), net3,805 (387)3,265 263 
Loss before (benefit) provision for income taxes(7,453)(10,288)(24,252)(40,034)
(Benefit) provision for income taxes(885)67 (846)351 
Net loss$(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 diluted51,441,688 48,840,131 50,921,612 48,188,183 

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)
(in thousands, except share and per share amounts)See accompanying notes.

 As of September 30, 2017  As of December 31, 2016 
 (unaudited)   
LIABILITIES AND STOCKHOLDERS’ DEFICIT 
Current liabilities    
Accounts payable $1,861  $849 
Accrued expenses and other current liabilities 20,771  20,695 
Deferred revenue 99,149  76,016 
Deferred government grant obligation 813  1,022 
Current portion of capital lease and financing obligations 1,184  1,285 
Current portion of long-term debt —  20 
Total current liabilities 123,778  99,887 
    
Deferred revenue 23,278  21,485 
Deferred government grant obligation 289  1,000 
Other long-term liabilities 4,008  4,100 
Capital lease and financing obligations 18,709  19,743 
Long-term debt —  53 
Total liabilities 170,062  146,268 
    
Stockholders’ deficit    
Class A common stock, $0.001 par value per share, 1,000,000,000 shares authorized, 31,358,479 and 30,369,199 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 31  30 
Class B common stock, $0.001 par value per share, 500,000,000 shares authorized, 10,546,534 and 10,891,888 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 11  11 
Preferred stock, $0.001 par value per share, 100,000,000 shares authorized, no shares issued and outstanding —  — 
Additional paid-in-capital 236,386  217,454 
Accumulated deficit (251,016) (220,911)
Accumulated other comprehensive income 116  291 
Total stockholders’ deficit (14,472) (3,125)
Total liabilities and stockholders’ deficit $155,590  $143,143 
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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,
2021202020212020
Net loss$(6,568)$(10,355)$(23,406)$(40,385)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment, net of tax22 30 226 (51)
Unrealized (loss) gain on available-for-sale securities, net of tax(18)(211)(248)251 
Other comprehensive income (loss), net of tax4 (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)
SharesAmountAdditional Paid-in-CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders' Equity
Balances at December 31, 202048,789 $49 $478,698 $230 $(414,700)$64,277 
Stock-based compensation expense— — 11,623 — — 11,623 
Issuance of common stock upon exercise of stock options312 1 4,137 — — 4,138 
Issuance of common stock under employee stock purchase plan93 — 4,237 — — 4,237 
Issuance of restricted stock units803 — — — — — 
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, 202149,927 $50 $491,549 $181 $(422,024)$69,756 
Stock-based compensation expense— — 11,052 — — 11,052 
Issuance of common stock upon exercise of stock options117 — 1,480 — — 1,480 
Issuance of restricted stock units318 — — — — — 
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, 202150,354 $50 $503,350 $204 $(431,538)$72,066 
Stock-based compensation expense——12,687——12,687 
Issuance of common stock upon exercise of stock options20013,173——3,174 
Issuance of common stock under employee stock purchase plan56—4,624——4,624 
Issuance of restricted stock units305————— 
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, 202150,804$51 $508,025 $208 $(438,106)$70,178 
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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, 
 2017  2016  2017  2016 
Revenue        
Subscription and support $43,214  $36,237  $123,734  $104,791 
Professional services 8,854  8,473  29,629  27,481 
Total revenue 52,068  44,710  153,363  132,272 
Cost of revenue        
Subscription and support 8,472  6,694  23,867  20,651 
Professional services 7,180  6,040  20,289  17,766 
Total cost of revenue 15,652  12,734  44,156  38,417 
Gross profit 36,416  31,976  109,207  93,855 
Operating expenses        
Research and development 17,527  14,342  49,302  42,905 
Sales and marketing 23,712  22,354  62,212  62,270 
General and administrative 8,959  8,015  27,323  24,850 
Total operating expenses 50,198  44,711  138,837  130,025 
Loss from operations (13,782) (12,735) (29,630) (36,170)
Interest expense (464) (462) (1,394) (1,420)
Other income, net 198  298  986  1,152 
Loss before provision (benefit) for income taxes (14,048) (12,899) (30,038) (36,438)
Provision (benefit) for income taxes 25  (8) 67  23 
Net loss $(14,073) $(12,891) $(30,105) $(36,461)
Net loss per common share:        
Basic and diluted $(0.34) $(0.32) $(0.73) $(0.90)
Weighted-average common shares outstanding - basic and diluted 41,815,139  40,762,960  41,453,736  40,603,430 
WORKIVA INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (continued)
(in thousands)
(unaudited)
Common Stock (Class A and B)
SharesAmountAdditional Paid-in-CapitalAccumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders' Equity
Balances at December 31, 201946,639 $47 $420,170 $287 $(366,302)$54,202 
Stock-based compensation expense— — 9,936 — — 9,936 
Issuance of common stock upon exercise of stock options225 02,794 — — 2,794 
Issuance of common stock under employee stock purchase plan94 — 3,660 — — 3,660 
Issuance of restricted stock units117 — — — — — 
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, 202047,045 $47 $435,181 $278 $(376,720)$58,786 
Stock-based compensation expense— — 14,894 — — 14,894 
Issuance of common stock upon exercise of stock options443 — 6,664 — — 6,664 
Issuance of restricted stock units153 — — — — — 
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, 202047,620 $47 $456,007 $668 $(396,332)$60,390 
Stock-based compensation expense— — 10,601 — — 10,601 
Issuance of common stock upon exercise of stock options371 1 4,794 — — 4,795 
Issuance of common stock under employee stock purchase plan93 — 3,567 — — 3,567 
Issuance of restricted stock units47 — — — — — 
Net loss— — — — (10,355)(10,355)
Other comprehensive income— — — (181)— (181)
Balances at September 30, 202048,131 $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,
2021202020212020
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 amortization1,429 1,080 3,580 3,195 
Stock-based compensation expense12,687 10,601 35,362 35,431 
Recovery of doubtful accounts(61)(550)(162)(191)
Amortization of premiums and discounts on marketable securities, net811 106 2,199 319 
Gain on settlement of equity securities(3,698)— (3,698)— 
Amortization of debt discount and issuance costs2,301 2,231 6,851 6,641 
Deferred income tax(930)63 (914)(68)
Changes in assets and liabilities:
Accounts receivable2,074 (13,307)5,233 4,805 
Deferred commissions(2,027)(4,818)(12,104)(6,381)
Operating lease right-of-use asset985 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 payable478 (181)1,214 (3,255)
Deferred revenue9,949 16,182 22,028 11,314 
Operating lease liability(1,112)(1,115)(3,390)(3,438)
Accrued expenses and other liabilities2,161 6,822 10,327 12,538 
Net cash provided by operating activities16,313 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 securities45,579 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 COMPREHENSIVE LOSS
(in thousands)
(unaudited)
 Three months ended September 30,  Nine months ended September 30, 
 2017  2016  2017  2016 
Net loss $(14,073) $(12,891) $(30,105) $(36,461)
Other comprehensive (loss) income, net of tax        
Foreign currency translation adjustment, net of income tax benefit of $0 for both of the three months ended September 30, 2017 and 2016, and net of income tax benefit of $2 and $21 for the nine months ended September 30, 2017 and 2016, respectively  (82) (4) (168) (37)
Unrealized (loss) gain on available-for-sale securities, net of income tax benefit of $0 and $5 for the three months ended September 30, 2017 and 2016, respectively, and net of income tax (expense) of ($2) and ($28) for the nine months ended September 30, 2017 and 2016, respectively (7) (8) (7) 46 
Other comprehensive (loss) income, net of tax (89) (12) (175) 9 
Comprehensive loss $(14,162) $(12,903) $(30,280) $(36,452)
WORKIVA INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(unaudited)
Three months ended September 30,Nine months ended September 30,
2021202020212020
Cash flows from financing activities
Proceeds from option exercises3,174 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 plan4,624 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 period322,194 402,121 322,831 381,742 
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.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Three months ended September 30,  Nine months ended September 30, 
 2017  2016  2017  2016 
Cash flows from operating activities        
Net loss $(14,073) $(12,891) $(30,105) $(36,461)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities        
Depreciation and amortization 854  944  2,612  2,916 
Stock-based compensation expense 4,664  3,670  13,200  10,562 
(Recovery of) provision for doubtful accounts (691) (92) (259) 78 
Realized gain on sale of available-for-sale securities, net —  —  —  (6)
Amortization of premiums and discounts on marketable securities, net 24  36  83  111 
Recognition of deferred government grant obligation (207) (247) (943) (910)
Deferred income tax —  5  —  (7)
Changes in assets and liabilities:        
Accounts receivable (757) (4,009) (1,299) (6,734)
Deferred commissions (179) (135) (330) (264)
Other receivables 468  (365) 443  (447)
Prepaid expenses and other 5,123  415  3,097  (1,098)
Other assets (87) (455) (74) (841)
Accounts payable 669  279  1,008  380 
Deferred revenue 5,904  13,228  24,398  15,412 
Accrued expenses and other liabilities 3,474  2,410  (83) (3,012)
Net cash provided by (used in) operating activities 5,186  2,793  11,748  (20,321)
        
Cash flows from investing activities        
Purchase of property and equipment (987) (91) (1,134) (1,100)
Purchase of marketable securities (5,017) —  (11,367) (802)
Maturities of marketable securities 2,830  —  7,681  — 
Sale of marketable securities —  —  —  7,197 
Purchase of intangible assets (55) (38) (144) (152)
Net cash (used in) provided by investing activities (3,229) (129) (4,964) 5,143 
        
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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, 
 2017  2016  2017  2016 
Cash flows from financing activities        
Proceeds from option exercises 1,154  840  6,669  1,360 
Taxes paid related to net share settlements of stock-based compensation awards—  —  (936) (761)
Repayment of other long-term debt(53) —  (73) (18)
Principal payments on capital lease and financing obligations (348) (538) (1,135) (1,446)
Proceeds from government grants —  —  22  183 
Deferred financing costs (71) —  (81) (33)
Net cash provided by (used in) financing activities 682  302  4,466  (715)
Effect of foreign exchange rates on cash 93  (9) 187  (15)
        
Net increase (decrease) in cash and cash equivalents 2,732  2,957  11,437  (15,908)
Cash and cash equivalents at beginning of period 59,986  39,885  51,281  58,750 
Cash and cash equivalents at end of period $62,718  $42,842  $62,718  $42,842 
        
Supplemental cash flow disclosure        
Cash paid for interest $447  $600  $1,194  $1,392 
Cash paid for income taxes, net of refunds $2  $(26) $42  $22 
        
Supplemental disclosure of noncash investing and financing activities        
Allowance for tenant improvements $—  $80  $—  $481 
Purchases of property and equipment, accrued but not paid $—  $505  $—  $505 

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 created Wdesk,(the “Company” or “we” or “us”) simplifies complex work for thousands of organizations worldwide. We are a collaborative work management platform for organizations to collect, link, report and analyze their business data. Wdesk’s proprietary word processing, spreadsheet and presentation applications are integrated and built upon a data management engine, offering synchronized data, controlled collaboration, granular permissions and a full audit trail. We offer Wdesk solutions for a wide rangeleading provider of use cases in the following markets: finance and accounting, audit and internal controls, risk andcloud-based compliance and operations.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, 20162020 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, 20172021 are not necessarily indicative of the results expected for the full year ending December 31, 2017. 2021.
Seasonality has affected our revenue, expenses and cash flow in the first and third quarters.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. PaymentOur 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 into employees during the first quarter affectsand 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'sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 20162020 filed with the SEC on February 23, 2017.

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 U.S. GAAPaccounting 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,
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collectability of accounts receivable, 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 March 2016,December 2019, the FASBFinancial 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 2016-09, Stock Compensation (Topic 718): Improvements2019-12 adds guidance to Employee Share-Based Payment Accounting. Under this ASU, entities are permittedreduce complexity in certain areas, including recognizing deferred taxes for tax basis goodwill and allocating taxes to make an accounting policy election to either estimate forfeitures on share-based payment awards, as required by current guidance, or to recognize forfeitures as they occur in addition to other changes.members of a consolidated group. The guidancestandard became effective for interim and annual periods beginning after December 15, 2016.2020, with early adoption permitted. The standard provides different transition methods for the various provisions. Effective January 1, 2017,2021, we adopted this standard. We elected to recognize forfeitures on share-based payment awards as they occur. The adoption along with the remaining provisions of ASU 2016-09,this new standard did not have a material impact on our consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted
In October 2016,August 2020, the FASB issued ASU 2016-16,2020-06, Income Taxes - Intra-Entity TransfersAccounting 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 Assets Other Than Inventory, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs.these changes. The new guidance isstandard will be effective for annual reporting periodsus 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, 2017. Early adoption is permitted as of2020. We intend to adopt this standard using the beginning of an annual reporting period. The new standard must be adopted using a modified retrospective transition method with the cumulative effect recognized as of the date of initial adoption. Effectiveon January 1, 2017, we adopted this standard. The adoption of this new guidance did not have a material2022 and are currently evaluating its impact on our consolidated financial statements.

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New Accounting Pronouncements Not Yet Adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued guidance codified in ASC 606, Revenue Recognition - Revenue from Contracts with Customers (ASU 2014-09), which amends the guidance in former ASC 605, Revenue Recognition. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments and updates to the new revenue standard, including guidance related to when an entity should recognize revenue gross as a principal or net as an agent and how an entity should identify performance obligations. As amended, ASU 2014-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted for all entities only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

We believe the adoption of ASU 2014-09 will require us to recognize revenue from certain of our professional services over time rather than upon completion of the services. We expect this change may result in some acceleration of revenue recognition.

We have determined that an agreement to purchase our professional services constitutes an option to purchase services in accordance with ASC 606-10-55-41 rather than an agreement that creates enforceable rights and obligations because of the customer’s contractual right to cancel the unused services. Based on our review, certain of our professional service agreements do not contain a material right and are only accounted for in accordance with ASU 2014-09 when the customer exercises its option to purchase additional goods or services. In the case of agreements where we have determined that the
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option provides the customer with a material right, we will be required to allocate a portion of the transaction price to the material right. The treatment of customer options under ASU 2014-09 may result in a different allocation of the transaction price than under current guidance.  

In addition, under current guidance, the amount that is allocated to, and recognized as revenue related to, a delivered service is limited to the amount that is not contingent on completion of the remaining performance obligations. We expect the removal of this limitation on contingent revenue under ASU 2014-09 to result in revenue being recognized earlier for certain contracts.

In addition, ASU 2014-09 requires that all incremental costs of obtaining a contract with a customer be recognized as an asset. We expect this requirement will result in an increase in the costs that we capitalize. The guidance also requires that these costs be deferred over a term that is consistent with the transfer of services related to the asset. Based on our preliminary analysis, we believe this term will be approximately three years compared to one year or less under current guidance.

Under ASU 2014-09, in addition to recording deferred revenue when the related cash payments are received for noncancellable services, we will record deferred revenue when payments are due in advance of our performance of those services. We expect this change will result in an offsetting increase in accounts receivable and deferred revenue.

We are still evaluating the ASU for other potential impacts to our consolidated financial statements. We plan to adopt the guidance as of January 1, 2018 and expect to utilize the modified retrospective transition method. We plan to apply this transition method only to contracts that are not completed as of January 1, 2018. We have a project plan in place guiding our transition that includes the necessary changes to accounting processes, procedures, systems and internal controls.

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The ASU is effective prospectively for the annual period ending December 31, 2018 and interim periods within that annual period. Early adoption is permitted. The implementation of this standard is not expected to have a significant impact on our consolidated financial statements.

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2. Supplemental Consolidated Balance Sheet and Statement of Operations Information

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):
As of September 30, 2021As of December 31, 2020
Accrued vacation$11,876 $10,294 
Accrued commissions6,975 12,678 
Accrued bonuses16,579 6,573 
Accrued payroll3,013 2,631 
Estimated health insurance claims1,605 1,224 
Accrued interest485 1,455 
ESPP employee contributions2,941 4,269 
Customer deposits24,592 18,283 
Operating lease liabilities4,233 4,541 
Accrued other liabilities6,500 6,308 
$78,799 $68,256 

 September 30, 2017 December 31, 2016
Accrued vacation $5,826  $4,368 
Accrued commissions 2,429  2,382 
Accrued bonuses 7,642  8,927 
Estimated health insurance claims 1,100  1,210 
Accrued other liabilities 3,774  3,808 
 $20,771  $20,695 

Other Income, net

Other income, net for the three and nine months ended September 30, 2017 and 2016 consisted of (in thousands):

 Three months ended September 30,  Nine months ended September 30, 
 2017  2016  2017  2016 
Interest income $168 $64 $388 $209 
Income from training reimbursement program 207 247 943 910 
Other (177)(13)(345)33 
$198 $298 $986 $1,152 
3. Cash Equivalents and Marketable Securities

At September 30, 2017,2021, cash equivalents and marketable securities consisted of the following (in thousands):

 Amortized Cost  Unrealized Gains  Unrealized Losses  Aggregate Fair Value 
U.S. treasury debt securities $2,888  $—  $(3) $2,885 
U.S. corporate debt securities 12,161  1  (14) 12,148 
Money market funds 52,027  —  —  52,027 
 $67,076  $1  $(17) $67,060 
Included in cash and cash equivalents $52,027  $—  $—  $52,027 
Included in marketable securities $15,049  $1  $(17) $15,033 




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Amortized CostUnrealized GainsUnrealized LossesAggregate Fair Value
Money market funds$253,079 $— $— $253,079 
Commercial paper12,487 — — 12,487 
U.S. treasury debt securities52,755 4 (28)52,731 
Corporate debt securities160,945 64 (41)160,968 
Foreign government debt securities5,037 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, 2016,2020, cash equivalents and marketable securities consisted of the following (in thousands):
Amortized CostUnrealized GainsUnrealized LossesAggregate Fair Value
Money market funds$265,578 $— $— $265,578 
Commercial paper21,489 — — 21,489 
U.S. treasury debt securities51,731 80 (2)51,809 
Corporate debt securities147,715 214 (47)147,882 
Foreign government debt securities1,025 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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 Amortized Cost  Unrealized Gains  Unrealized Losses  Aggregate Fair Value 
U.S. treasury debt securities $3,503  $—  $(5) $3,498 
U.S. corporate debt securities 7,943  1  (7) 7,937 
Money market funds 43,496  —  —  43,496 
 $54,942  $1  $(12) $54,931 
Included in cash and cash equivalents $43,496  $—  $—  $43,496 
Included in marketable securities $11,446  $1  $(12) $11,435 

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 years95,098 
Due in three to five years2,011 
$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, 2017,2021, 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, 2017 
 Less than 12 months  12 months or greater 
 Fair Value  Unrealized Loss  Fair Value  Unrealized Loss 
U.S. treasury debt securities $2,885  $(3) $—  $— 
U.S. corporate debt securities 9,884  (14) —  — 
Total $12,769  $(17) $—  $— 

As of September 30, 2021
Less than 12 months12 months or greater
Fair ValueUnrealized LossFair ValueUnrealized Loss
U.S. treasury debt securities$34,768 $(28)$— $— 
Corporate debt securities73,864 (41)— — 
Total$108,632 $(69)$— $— 
We do not believe any of the unrealized losses represented an other-than-temporary impairmentrepresent credit losses based on our evaluation of available evidence which includes our intent as of September 30, 20172021, which includes an assessment of whether it is more likely than not we will be required to hold these investments untilsell the investment before recovery of the investment's amortized cost basis is recovered.
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,
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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, 2017,2021, 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, 2021Fair Value Measurements as of December 31, 2020
DescriptionTotalLevel 1Level 2TotalLevel 1Level 2
Money market funds$253,079 $253,079 $— $265,578 $265,578 $— 
Commercial paper12,487 — 12,487 21,489 — 21,489 
U.S. treasury debt securities52,731 — 52,731 51,809 — 51,809 
Corporate debt securities160,968 — 160,968 147,882 — 147,882 
Foreign government debt securities5,038 — 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;
•
  Fair Value Measurements as of September 30, 2017 Fair Value Measurements as of December 31, 2016 
Description  Total  Level 1  Level 2 Total Level 1 Level 2 
Money market funds  $52,027  $52,027  $— $43,496 $43,496 $— 
U.S. treasury debt securities  2,885  —  2,885 3,498 — 3,498 
U.S. corporate debt securities  12,148  —  12,148 7,937 — 7,937 
  $67,060  $52,027  $15,033 $54,931 $43,496 $11,435 
      
Included in cash and cash equivalents  $52,027    $43,496 
Included in marketable securities  $15,033    $11,435 
during the 5 consecutive business day period immediately following any 10 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, 2021December 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,
2021202020212020
Contractual interest expense$970 $970 $2,911 $2,910 
Amortization of debt discount2,045 1,983 6,091 5,903 
Amortization of issuance costs256 248 760 738 
Total interest expense$3,271 $3,201 $9,762 $9,551 

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6. Commitments and Contingencies

Lease Commitments

There have been no material changes in our future estimated minimum lease payments under non-cancelable operating, capital and financing leases, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016.

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
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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.
6. Stock-Based CompensationLeases

We grant stock-based incentive awardsIn July 2021, we signed an operating lease agreement to attract, motivatelease 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 retain qualified employees, non-employee directors and consultants, and to align their financial interests with thosea base rent of our stockholders. We utilize stock-based compensation in the form of restricted stock awards, restricted stock units, options to purchase Class A common stock and ESPP purchase rights.

approximately $1.6 million per year.
As of September 30, 2017, awards outstanding under the 2009 Plan consisted of stock options, and awards outstanding under the 2014 Plan consisted of stock options, restricted stock awards and restricted stock units.

As of September 30, 2017, 2,271,466 shares of Class A common stock were available for grant under the 2014 Plan.

Our Employee Stock Purchase Plan (“ESPP”) became effective on June 13, 2017. Under the ESPP, eligible employees are granted options to purchase shares of Class A common stock at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. Options to purchase shares are granted twice yearly on or about January 15 and July 15 and are exercisable on or about the succeeding July 14 and January 14, respectively, of each year. As of September 30, 2017, 5,000,000 shares of common stock were available for issuance under the ESPP. No participant may purchase more than $12,500 worth of common stock in a six-month offering period. The ESPP's initial offering period began in July 2017. Accordingly, no shares of common stock had been purchased or distributed pursuant to the ESPP as of September 30, 2017.


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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, 
 2017  2016  2017  2016 
Cost of revenue        
Subscription and support $204  $122  $522  $365 
Professional services 129  100  329  315 
Operating expenses        
Research and development 601  594  1,566  1,787 
Sales and marketing 788  567  2,141  1,471 
General and administrative 2,942  2,287  8,642  6,624 
Total $4,664  $3,670  $13,200  $10,562 

The fair value of each option grant and each share issued under the ESPP is estimated on the date of grant using the Black-Scholes option-pricing model. For stock options, expected volatility is based on the historical volatility of our common stock and historical volatilities for publicly traded stock of comparable companies over the estimated expected life of the options. For the ESPP purchase rights, expected volatility is based on the historical volatility of our common stock. The expected term represents the period of time the options and the ESPP purchase rights are expected to be outstanding. For stock options, the expected term is based on the “simplified method” as defined by SEC Staff Accounting Bulletin No. 110 (Topic 14.D.2). We use the “simplified method” due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the options. The expected term for the ESPP purchase rights approximates the offering period. The risk-free interest rate is based on yields on U.S. Treasury STRIPS (Separate Trading of Registered Interest and Principal of Securities) with a maturity similar to the estimated expected term of the options and ESPP purchase rights. 

The fair value of our stock options and ESPP purchase rights was estimated assuming no expected dividends and the following weighted-average assumptions:

 Three months ended September 30, Nine months ended September 30, 
 2017 2016 2017 2016 
Stock Options 
Expected term (in years) 6.1 6.1 6.0 - 6.1 6.0 - 6.1 
Risk-free interest rate 1.9% - 2.1% 1.2% - 1.3% 1.9% - 2.1% 1.2% - 1.9% 
Expected volatility 38.9% - 39.1% 44.4% - 44.6% 38.9% - 43.8% 44.4% - 45.3% 
 
ESPP 
Expected term (in years) 0.5— 0.5— 
Risk-free interest rate 1.2%  —%  1.2%  — %
Expected volatility 28.5%  —%  28.5%  — %

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Three months ended September 30,Nine months ended September 30,
2021202020212020
Cost of revenue
Subscription and support$731 $426 $1,824 $1,293 
Professional services407 272 1,183 1,062 
Operating expenses
Research and development2,347 2,167 7,195 5,790 
Sales and marketing4,095 2,687 10,481 8,367 
General and administrative5,107 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, 2017:2021:

 Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value 
 (in thousands) 
Outstanding at December 31, 2016 7,532,455 $12.22 7.2$19,988 
Granted 1,772,353 14.99 
Forfeited (279,651)14.55 
Exercised (688,661)9.68 
Outstanding at September 30, 2017 8,336,496 $12.95 7.1$65,845 
 
Exercisable at September 30, 2017 4,727,976 $11.31 5.9$45,104 

Options to purchase Class A common stock generally vest over a three- or four-year period and are generally granted for a term of ten years. The total intrinsic value of options exercised during the nine months ended September 30, 2017 and 2016 was $5.5 millionand $3.4 million, respectively.

The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2017 and 2016 was $6.41 and $6.78, respectively. The total fair value of options vested during the nine months ended September 30, 2017 and 2016 was approximately $7.7 million and $6.9 million, respectively. Total unrecognized compensation expense of $20.5 million related to options will be recognized over a weighted-average period of 2.5 years.

Restricted Stock Awards

We have granted restricted stock awards to our executive officers that vest in three equal annual installments from the date of grant. The recipient of an award of restricted stock under the Plan may vote and receive dividends on the shares of restricted stock covered by the award. The fair value for restricted stock awards is calculated based on the stock price on the date of grant. The total fair value of restricted stock awards vested during the nine months ended September 30, 2017 and 2016 was approximately $2.4 millionand $3.3 million, respectively.




Options

Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (Years)
Outstanding at December 31, 20202,903,167 $14.48 4.7
Granted— — 
Forfeited(6,380)19.25 
Exercised(629,755)13.96 
Outstanding at September 30, 20212,267,032 $14.61 4.1
Exercisable at September 30, 20212,259,753 $14.59 4.1









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The following table summarizes the restricted stock award activity under the Plan for the nine months ended September 30, 2017:

 Number of Shares  Weighted-Average Grant Date Fair Value 
    
Unvested at December 31, 2016 353,335  $13.40 
Granted —  — 
Forfeited —  — 
Vested (176,670) 13.40 
Unvested at September 30, 2017 176,665  $13.40 

Compensation expense associated with unvested restricted stock awards is recognized on a straight-line basis over the vesting period. At September 30, 2017, there was approximately $0.8 million of total unrecognized compensation expense related to restricted stock awards, which is expected to be recognized over a weighted-average period of 0.4 years.

Restricted Stock Units

We have granted restricted stock units to our executive officers that vest in three equal annual installments from the date of grant and to non-employee members of our Board of Directors with one-year cliff vesting from the date of grant. The recipient of a restricted stock unit award under the Plan will have no rights as a stockholder until share certificates are issued by us, but, at the discretion of our Compensation Committee, has the right to receive a dividend equivalent payment in the form of additional restricted stock units. Additionally, until the shares are issued, they have no voting rights and may not be bought or sold. The fair value for restricted stock units is calculated based on the stock price on the date of grant. The total fair value of restricted stock units vested during the nine months ended September 30, 2017 was approximately $2.5 million. No restricted stock units vested during the nine months ended September 30, 2016.

The following table summarizes the restricted stock unit activity under the Plan for the nine months ended September 30, 2017:2021:

Number of Shares  Weighted-Average Grant Date Fair Value 




Number of Shares
Weighted-
Average
Grant Date Fair Value
   
Unvested at December 31, 2016 381,952  $15.11 
Unvested at December 31, 2020Unvested at December 31, 20202,904,616 $35.72 
Granted Granted 413,792  13.95 Granted872,135 108.00 
Forfeited Forfeited —  — Forfeited(182,761)63.62 
Vested(1)
Vested(1)
(174,211) 14.58 
Vested(1)
(1,557,830)30.63 
Unvested at September 30, 2017 621,533  $14.48 
Unvested at September 30, 2021Unvested at September 30, 20212,036,160 $68.96 
(1) As ofDuring the nine months ended September 30, 2017,2021, in accordance with our Nonqualified Deferred Compensation Plan, recipients of 146,075402,832 shares had elected to defer settlement of the vested restricted stock units and 270,567 shares were released from deferral. This resulted in accordance with our Nonqualified Deferred Compensation Plan.

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Compensation expense associated with unvested restricted stock units is recognized on a straight-line basis over the vesting period. At695,869 as of September 30, 2017, there was approximately $6.5 million of total unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 1.8 years.

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, 2017,2021, there was approximately $0.2$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,
2021202020212020
Information technology$16,097 $11,983 $44,953 $34,264 
Diversified financials13,538 10,665 38,094 31,232 
Consumer discretionary12,148 9,748 34,019 28,497 
Healthcare11,860 8,772 34,003 25,517 
Industrials11,826 9,365 33,739 27,768 
Banks9,940 8,959 30,247 25,914 
Insurance7,547 5,828 22,106 17,173 
Energy6,818 5,812 20,178 17,793 
Utilities6,040 3,538 16,795 10,707 
Real estate4,608 3,769 13,727 11,810 
Materials4,570 3,824 13,040 10,735 
Other7,701 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,
2021202020212020
Subscription and support$98,912 $75,850 $275,053 $214,907 
XBRL professional services9,003 7,798 33,558 29,543 
Other services4,778 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 ourconvertible senior notes, outstanding stock options, stock related to unvested restricted stock awards,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.

We consider unvested restricted stock awards granted under the 2014 Equity Incentive Plan to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares. In future periods to the extent we are profitable, we will subtract earnings allocated to these participating securities from net income to determine net income attributable to common stockholders.

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 Three months ended
September 30, 2017September 30, 2016September 30, 2021September 30, 2020
Class A Class B Class A Class B Class AClass BClass AClass B
Numerator Numerator     Numerator
Net loss Net loss $(10,467)$(3,606)$(9,369)$(3,522)Net loss$(5,731)$(837)$(8,566)$(1,789)
    
Denominator Denominator Denominator
Weighted-average common shares outstanding - basic and diluted Weighted-average common shares outstanding - basic and diluted 31,100,994 10,714,145 29,624,794 11,138,166 Weighted-average common shares outstanding - basic and diluted44,886,268 6,555,420 40,400,270 8,439,861 
Basic and diluted net loss per share Basic and diluted net loss per share $(0.34)$(0.34)$(0.32)$(0.32)Basic and diluted net loss per share$(0.13)$(0.13)$(0.21)$(0.21)

Nine months ended
September 30, 2021September 30, 2020
Class AClass BClass AClass B
Numerator
Net loss$(19,993)$(3,413)$(33,239)$(7,146)
Denominator
Weighted-average common shares outstanding - basic and diluted43,496,619 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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 Nine months ended 
 September 30, 2017September 30, 2016
 Class A Class B Class A Class B 
Numerator     
Net loss $(22,255)$(7,850)$(26,076)$(10,385)
     
Denominator 
Weighted-average common shares outstanding - basic and diluted30,644,955 10,808,781 29,038,566 11,564,864 
Basic and diluted net loss per share $(0.73)$(0.73)$(0.90)$(0.90)

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, 2021September 30, 2020
Shares subject to outstanding common stock options2,267,032 3,265,977 
Shares subject to unvested restricted stock units2,036,160 2,974,719 
Shares issuable pursuant to the ESPP55,561 95,084 
 As of 
 September 30, 2017 September 30, 2016
Shares subject to outstanding common stock options 8,336,496  7,589,951 
Shares subject to unvested restricted stock awards 176,665  353,335 
Shares issuable pursuant to the ESPP 87,265  — 
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 interest4,698 
Total consideration$41,262 
Cash$1,497 
Intangible assets7,000 
Goodwill34,279 
Other assets548 
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 $0.4 million during the nine months ended September 30, 2021. All acquisition related costs were expensed as incurred and have been recorded in general and administrative expenses in our condensed consolidated statements of operations.
The amount of revenues and net loss from the acquisition included in our condensed consolidated statements of operations for the three and nine months ended September 30, 2021 were insignificant.
11. Goodwill and Intangible Assets
Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. Goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. We perform our annual goodwill impairment test as of October 1. As of September 30, 2021, no impairment charges have been recorded.
The changes in the carrying amount of goodwill were as follows (in thousands):
December 31, 2020$— 
Acquisition34,279 
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, 2021As of December 31, 2020
Weighted Average Useful Life (Years)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount
Acquired technology4$6,600 $(275)$6,325 $— $— $— 
Acquired customer relationships10300 (5)295 — — — 
Acquired trade name2100 (8)92 — — — 
Patents102,708 (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 
20222,021 
20231,910 
20241,867 
20251,154 
2026160 
Thereafter540 
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 23, 2017.17, 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, 2016,2020, 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 provideschanges the way enterprises with cloud solutions for improving productivity, accountabilitymanage and insight intoreport business data. Workiva created Wdesk, a collaborative work managementOur open, intelligent and intuitive platform for organizations to collect, link, reportis based on single instance, multi-tenant software applications deployed in the cloud. Our platform connects data, documents and analyze their business data. Wdesk’s proprietary word processing, spreadsheetteams, which results in improved efficiency, greater transparency and presentation applications are integrated and built upon a data management engine, offering synchronized data,reduced risk of errors. We offer customers controlled collaboration, data linking, data integrations, granular permissions, process management and a full audit trail. Wdesk helps mitigate risk, improves productivity and gives users confidence to make decisions with real-time data.trail on our proprietary platform. As of September 30, 2017, we provided2021, 4,146 organizations subscribed to our solutionsplatform for at least one solution.
Customers use our platform to more than 2,900 enterprisecreate, 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 including over 70% of FORTUNE 500® companies(1).

(1) Claim not confirmed by FORTUNE or Time Inc. FORTUNE 500 is a registered trademark of Time Inc.can easily adapt it to define, automate and is used under license. FORTUNE and Time Inc. are not affiliated with, and do not endorse products or services of, Workiva Inc.

change their business processes in real time.
Our scalable, enterprise-gradeplatform lets our customers connect data engine enables users to collect, aggregatefrom Enterprise Resource Planning (“ERP”), Human Capital Management (“HCM”) and manage their unstructuredCustomer Relationship Management (“CRM”) systems, as well as other third-party cloud and structured data in Wdesk. We offer Wdesk solutionson-premise applications.
While our customers use our platform for a wide rangedozens of different use cases, in the following markets: financeour sales and accounting, auditmarketing resources are organized into four solution groups: Regulatory Reporting, Operational & Financial Reporting, Financial Services and internal controls, risk and compliance and operations. Underlying these solutions is our scalable, enterprise-grade data engine that enables users to collect, aggregate and manage their unstructured and structured data in Wdesk.

Governance, Risk & Compliance.
We operate our business on a software-as-a-service (SaaS)Software-as-a-Service (“SaaS”) model. Customers enter into quarterly, annual and multi-year subscription contracts to utilize Wdesk.gain access to our platform. Our subscription fee includes the use of our servicesoftware and technical support. OurPrior to the third quarter of 2018, our subscription pricing iswas based primarily on the number of corporate entities, number of users, Wdesk functionality, level of customer support and length of contract. Our pricingThereafter, we began converting existing customer orders to, and signing new orders primarily based on, a solution-based licensing model. Under this model, is scaledoperating metrics related to a customer’s expected use of each solution determine the numberprice. At September 30, 2021, over 80% of users, so theour subscription price per user typically decreases as the number of users increases.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 teamsteams. 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 partners. Over time, we expect our partners to include technology companies, consultants, service providers and accounting firms. We expect our partners to support our sales efforts through referrals and co-selling arrangements, as well as expand the use of Wdesk through complementary technology offerings and software integrations.

Our integrated platform, subscription-based model, and exceptional customer support have contributed to a low rate of customer turnover while achieving strong revenue growth. Our subscriptionbringing scale and support revenue retention rate was 96.5% (excluding add-on seats) for the twelve months ended September 30, 2017.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 1,2842,014 at September 30, 20172021 from 1,1661,670 at September 30, 2016,2020, an increase of 10.1%20.6%.

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We have achieved significant revenue growth in recent periods. Our revenue grew to $52.1$112.7 million and $153.4$322.5 million during the three and nine months ended September 30, 20172021, respectively from $44.7$88.1 million and $132.3$257.8 million during the three and nine months ended September 30, 2016.2020, respectively. We incurred a net lossesloss of $14.1$6.6 million and $30.1$23.4 million, during the three and nine months ended September 30, 20172021, respectively compared to $12.9$10.4 million and $36.5$40.4 million during the three and nine months ended September 30, 2016.2020, respectively.

Recent Business Developments
We are an “emerging growth company,” as defined in the JOBS Act. We will cease to be an “emerging growth company” upon the earliest of (i) December 31, 2019, (ii) the last dayOn July 30, 2021, we acquired all of the first fiscal yearequity interest in which our annual gross revenue is $1 billion or more, (iii) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in nonconvertible debt securities or (iv) the date on which we qualifyOneCloud, Inc., an integration platform as a “large accelerated filer” with at least $700 million of equity securities held by non-affiliates.

We planservice (“iPaaS”) company, in order to adopt the guidance in ASU 2014-09 effective January 1, 2018. We expect the application of this guidance may result in timingextend our integration and presentation changes impacting our consolidated balance sheet and statement of operations, including, acceleration of revenue for certain contracts, longer deferral of the incremental costs of obtaining a contract, and increases in accounts receivable and deferred revenue. Refer todata preparation capabilities. See Note 1 of the notes10 to the condensed consolidated financial statements for additional detailsmore 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 evaluationCOVID-19 outbreak, substantially all of ASU 2014-09.

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 customersCustomers. We employsell 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 “land-and-expand”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, strategyproduct 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 focuses on acquiringenterprise-wide deals across both new and existing customers through our directwill be larger and more complex, which tend to lengthen the sales modelcycle.
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Add Partners. We continue to expand and buildingdeepen our relationships with existingglobal 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 over time. Acquiring new customers is a key componentconnect 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 continued successplatform, and enables more efficient delivery of professional services.
Investment in the marketplace, growth opportunity and future revenue.. We have aggressively invested in and intendplan to continue to invest in our direct sales force.

Further penetrationthe development of existing customers. Our account management teams seek to generate additional revenue from our customers by adding seats to existing subscriptions and by signing new subscriptions for additional business solutions on our platform. We believe a significant opportunity exists for us to sell additional subscriptions to current customers as they become more familiar with our platform and adopt our solutions to address additional business use cases.

Investment in growth. We plan to continue to increase our headcount and develop software to both enhance our current offerings and build new features. As a result, we expect our total operating expenses to increase. 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 growthneeds of our growing customer base. Investmentsbase and to take advantage of opportunities that we makehave identified in our salesEurope, Middle East, and marketingAfrica (“EMEA”), as well as use cases for integrated risk, global statutory reporting, and research and development organizations will occur in advance of experiencing any benefits from such investments.the U.S. government.

Seasonality.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. As our non-SEC offerings continue to grow, we expect our professional services revenue to continue to become less seasonal. Our sales and marketing expense also has some degree of seasonality. Sales and marketing expense is generallyhas historically been higher in the third quarter since we holddue 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,
2021202020212020
(dollars in thousands)
Financial metrics
Total revenue$112,693 $88,099 $322,502 $257,760 
Percentage increase in total revenue27.9 %18.8 %25.1 %18.4 %
Subscription and support revenue$98,912 $75,850 $275,053 $214,907 
Percentage increase in subscription and support revenue30.4 %20.4 %28.0 %19.6 %
Subscription and support as a percent of total revenue87.8 %86.1 %85.3 %83.4 %

As of September 30,
20212020
Operating metrics
Number of customers4,1463,583
Subscription and support revenue retention rate96.5%94.9%
Subscription and support revenue retention rate including add-ons111.1%110.0%
Number of customers with annual contract value $100k+1,043785
Number of customers with annual contract value $150k+541383
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Key Performance Indicators

 Three months ended September 30,  Nine months ended September 30, 
 2017  2016  2017  2016 
 (dollars in thousands) 
Financial metrics        
Total revenue $52,068  $44,710  $153,363  $132,272 
Percentage increase in total revenue 16.5%   23.3%   15.9%   25.5%  
Subscription and support revenue $43,214  $36,237  $123,734  $104,791 
Percentage increase in subscription and support revenue 19.3%    21.5%    18.1%    24.5%  
Subscription and support as a percent of total revenue 83.0%    81.0%    80.7%    79.2%  

 As of September 30, 
 2017  2016 
Operating metrics    
Number of customers 2,991  2,696 
Subscription and support revenue retention rate 96.5%    95.0%  
Subscription and support revenue retention rate including add-ons 108.6%    108.7%  

Total customers.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 listedpublicly-listed securities account for a substantial majority of our customers.

Subscription and support revenue retention rate.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 first monthsame calendar quarter of the measurement periodprior year for only those base customers in place throughoutwho are still active at the entire measurement period, thereby excluding any attrition.end of the current quarter. We divide the result by the annualized subscription and support revenue in the first monthsame quarter of the measurement periodprior year for all customers in place at the beginning of the measurement period. The measurement period is based on the trailing twelve months.

base customers.
Our subscription and support revenue retention rate was 96.5% at the September 2017 measurement date, up from 95.0% as of September 2016.30, 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 being acquiredwhose securities were deregistered due to merger or ceasing to file SEC reports has been the largest contributing factor toacquisition or financial distress accounted for just over half of our revenue attrition.

attrition in the latest quarter.
Subscription and support revenue retention rate including add-ons. Add-on revenue includes the change in both seats purchasedsolutions and seat 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 last monthcurrent quarter for our base customers that were active at the end of the measurement period for only those customers in place throughout the entire measurement period.current quarter. We divide the result by the annualized subscription and support revenue in the first monthsame quarter of the measurement periodprior year for all customers in place at the beginning of the measurement
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period. The measurement period is based on the trailing twelve months.

base customers.
Our subscription and support revenue retention rate including add-ons was 108.6% at111.1% as of the quarter ended September 2017 measurement date, essentially flat30, 2021, up from 108.7%110.0% as of September 2016. As we pursue30, 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 opportunities, we are seeing lengthening and more complex sales cycles.

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, 20172021 and 2016,2020, no single customer represented more than 1% of our revenue, and our largest ten10 customers accounted for less than 5%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 threetwelve 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. We typically invoice our customers for subscription fees in advance on a quarterly, annual, two-year or three-year basis, with payment due at the start of the subscription term. In 2015, we began to move toward a standard minimum subscription term of one year. We plan to convert a substantial majority of our remaining quarterly contracts to annual terms over the next fifteen months. In addition, we continue to offer limited incentives for customers to enter into contract terms of more than one year, typically for terms of two or three years. Unpaid invoice amounts for services starting in future periods are excluded from accounts receivable and deferred revenue. Invoiced amounts are reflected as accounts receivable once we have initiated services with an offset to deferred revenue or revenue depending on whether the revenue recognition criteria have been met.

Subscription and Support Revenue.Revenue. We recognize the aggregate minimum subscription and support fees ratablyrevenue on a straight-lineratable basis over the subscriptioncontract term providedbeginning on the date that an enforceable contract has been signed by both parties, access to our SaaS solutions has been grantedservice is made available to the customer, the fee for the subscription and support is fixed or determinable, and collection is reasonably assured.

customer. Amounts that are invoiced are initially recorded as deferred revenue.
Professional Services Revenue.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 withto help our customers onwith business processes and best practices for using Wdesk.our platform. Our professional services are not required for customers to utilize our solution. We recognize revenue for our professionaldocument set ups when the service is complete and control has transferred to the customer. Revenues from XBRL tagging and consulting services contracts whenare 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 costscosts; and facility costs. Costs of server usage are comprised primarily of fees paid to Amazon Web Services and Google Cloud Platform and Amazon Web Services.


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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 capitalize and amortizepay sales commissions thatfor 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 directly attributable toconsidered incremental costs of obtaining a contract with a customer and are deferred and amortized on a straight-line basis over the lessera period of twelve months or the non-cancelable term of the customer contract based on the terms of our commission arrangements.

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, 
 2017  2016  2017  2016 
 (in thousands) 
Revenue        
Subscription and support $43,214  $36,237  $123,734  $104,791 
Professional services 8,854  8,473  29,629  27,481 
Total revenue 52,068  44,710  153,363  132,272 
Cost of revenue        
 Subscription and support(1) 
8,472  6,694  23,867  20,651 
 Professional services(1) 
7,180  6,040  20,289  17,766 
Total cost of revenue 15,652  12,734  44,156  38,417 
Gross profit 36,416  31,976  109,207  93,855 
Operating expenses        
 Research and development(1) 
17,527  14,342  49,302  42,905 
 Sales and marketing(1) 
23,712  22,354  62,212  62,270 
 General and administrative(1) 
8,959  8,015  27,323  24,850 
Total operating expenses 50,198  44,711  138,837  130,025 
Loss from operations (13,782) (12,735) (29,630) (36,170)
Interest expense (464) (462) (1,394) (1,420)
Other income, net 198  298  986  1,152 
Loss before provision for income taxes (14,048) (12,899) (30,038) (36,438)
Provision (benefit) for income taxes 25  (8) 67  23 
Net loss $(14,073) $(12,891) $(30,105) $(36,461)

Three months ended September 30,Nine months ended September 30,
2021202020212020
(in thousands)
Revenue
Subscription and support$98,912 $75,850 $275,053 $214,907 
Professional services13,781 12,249 47,449 42,853 
Total revenue112,693 88,099 322,502 257,760 
Cost of revenue
Subscription and support(1)
15,606 12,013 42,906 36,264 
Professional services(1)
10,799 9,873 31,766 30,262 
Total cost of revenue26,405 21,886 74,672 66,526 
Gross profit86,288 66,213 247,830 191,234 
Operating expenses
Research and development(1)
29,841 23,956 84,305 70,458 
Sales and marketing(1)
46,026 35,487 128,586 106,874 
General and administrative(1)
18,390 13,642 52,795 46,564 
Total operating expenses94,257 73,085 265,686 223,896 
Loss from operations(7,969)(6,872)(17,856)(32,662)
Interest income219 471 834 2,832 
Interest expense(3,508)(3,500)(10,495)(10,467)
Other income (expense), net3,805 (387)3,265 263 
Loss before provision for income taxes(7,453)(10,288)(24,252)(40,034)
(Benefit) provision for income taxes(885)67 (846)351 
Net loss$(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, 
 2017  2016  2017  2016 
 (in thousands) 
Cost of revenue        
Subscription and support $204  $122  $522  $365 
Professional services 129  100  329  315 
Operating expenses        
Research and development 601  594  1,566  1,787 
Sales and marketing 788  567  2,141  1,471 
General and administrative 2,942  2,287  8,642  6,624 
Total stock-based compensation expense $4,664  $3,670  $13,200  $10,562 

Three months ended September 30,Nine months ended September 30,
2021202020212020
(in thousands)
Cost of revenue
Subscription and support$731 $426 $1,824 $1,293 
Professional services407 272 1,183 1,062 
Operating expenses
Research and development2,347 2,167 7,195 5,790 
Sales and marketing4,095 2,687 10,481 8,367 
General and administrative5,107 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, 
 2017 2016 2017 2016 
Revenue     
Subscription and support 83.0 %81.0 %80.7 %79.2 %
Professional services 17.0  19.0  19.3  20.8  
Total revenue 100.0  100.0  100.0  100.0  
Cost of revenue         
Subscription and support 16.3  15.0  15.6  15.6  
Professional services 13.8  13.5  13.2  13.4  
Total cost of revenue 30.1  28.5  28.8  29.0  
Gross profit 69.9  71.5  71.2  71.0  
Operating expenses         
Research and development 33.7  32.1  32.1  32.4  
Sales and marketing 45.5  50.0  40.6  47.1  
General and administrative 17.2  17.9  17.8  18.8  
Total operating expenses 96.4  100.0  90.5  98.3  
Loss from operations (26.5) (28.5) (19.3) (27.3) 
Interest expense (0.9) (1.0) (0.9) (1.1) 
Other income, net 0.4  0.7  0.6  0.9  
Loss before provision for income taxes (27.0) (28.8) (19.6) (27.5) 
Provision (benefit) for income taxes —  —  —  —  
Net loss (27.0)%(28.8)%(19.6)%(27.5)%

Three months ended September 30,Nine months ended September 30,
2021202020212020
Revenue
Subscription and support87.8 %86.1 %85.3 %83.4 %
Professional services12.2 13.9 14.7 16.6 
Total revenue100.0 100.0 100.0 100.0 
Cost of revenue
Subscription and support13.8 13.6 13.3 14.1 
Professional services9.6 11.2 9.8 11.7 
Total cost of revenue23.4 24.8 23.1 25.8 
Gross profit76.6 75.2 76.9 74.2 
Operating expenses
Research and development26.5 27.2 26.1 27.3 
Sales and marketing40.8 40.3 39.9 41.5 
General and administrative16.3 15.5 16.4 18.1 
Total operating expenses83.6 83.0 82.4 86.9 
Loss from operations(7.0)(7.8)(5.5)(12.7)
Interest income0.2 0.5 0.3 1.1 
Interest expense(3.1)(4.0)(3.3)(4.1)
Other income (expense), net3.4 (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, 20172021 and 20162020

Revenue
Revenue

 Three months ended September 30,    Nine months ended September 30,   
 2017  2016  % Change  2017  2016  % Change 
 (dollars in thousands) 
Revenue            
Subscription and support $43,214  $36,237  19.3 % $123,734  $104,791  18.1 %
Professional services 8,854  8,473  4.5 % 29,629  27,481  7.8 %
Total revenue $52,068  $44,710  16.5 % $153,363  $132,272  15.9 %

Three months ended September 30,Nine months ended September 30,
20212020% Change20212020% Change
(dollars in thousands)
Revenue
Subscription and support$98,912 $75,850 30.4%$275,053 $214,907 28.0%
Professional services13,781 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 $7.4$24.6 million for the three months ended September 30, 20172021 compared to
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the same quarter a year ago due primarily to a $7.0$23.1 million increase in subscription and support revenue. Of the total gainGrowth in subscription and support revenue 48.2% represented revenue from new customers acquired after September 30, 2016in the third quarter was attributable mainly to strong demand and 51.8% represented revenue from existing customers at or prior to September 30, 2016.better pricing for a broad range of use cases. The total number of our customers expanded 10.9%increased 15.7% from September 30, 20162020 to September 30, 2017.2021. 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 $21.1$64.7 million for the nine months ended September 30, 20172021 compared to the same period a year ago due primarily to a $18.9$60.1 million increase in subscription and support revenue. Of the total gainAdditionally, professional services revenue increased $4.6 million due to growth in subscription and support revenue, 34.4% represented revenue from new customers acquired after September 30, 2016 and 65.6% represented revenue from existing customers at or prior to September 30, 2016.XBRL professional services.

Cost of Revenue

 Three months ended September 30,    Nine months ended September 30,   
 2017  2016  % Change  2017  2016  % Change 
 (dollars in thousands) 
Cost of revenue            
Subscription and support $8,472  $6,694  26.6 % $23,867  $20,651  15.6 %
Professional services 7,180  6,040  18.9 % 20,289  17,766  14.2 %
Total cost of revenue $15,652  $12,734  22.9 % $44,156  $38,417  14.9 %

Three months ended September 30,Nine months ended September 30,
20212020% Change20212020% Change
(dollars in thousands)
Cost of revenue
Subscription and support$15,606 $12,013 29.9%$42,906 $36,264 18.3%
Professional services10,799 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 $2.9$4.5 million duringin the three months ended September 30, 2017 versus2021 compared to the same quarter a year ago, attributableago. Subscription and support cost of revenue increased $3.6 million due primarily to an aggregate$3.0 million in higher cash-based compensation and benefits due mostly to increased headcount. This increase resulted primarily from our continued investment in headcount, employee compensation, benefits, and travel costs of $2.4 million. During the third quarter, we increased headcount to support initiatives in new markets and distribution channels, which adversely affected the utilization rate of our professionalplatform and solutions. Professional services team.

cost of revenue increased $0.9 million due primarily to increased headcount.
Cost of revenue increased $5.7$8.1 million during the nine months ended September 30, 20172021 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,
20212020% Change20212020% Change
(dollars in thousands)
Operating expenses
Research and development$29,841 $23,956 24.6%$84,305 $70,458 19.7%
Sales and marketing46,026 35,487 29.7%128,586 106,874 20.3%
General and administrative18,390 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 an aggregatehigher cash-based compensation and benefits of $10.9 million, a $1.4 million increase in headcount, employeestock-based compensation benefits, and travel costsa $1.4 million increase in professional service fees. The increases in compensation and professional service fees were the result of $5.1 million.our continued investment in and support of our platform and solutions.

Sales and Marketing
Operating Expenses

 Three months ended September 30,    Nine months ended September 30,   
 2017  2016  % Change  2017  2016  % Change 
 (dollars in thousands) 
Operating expenses            
Research and development $17,527  $14,342  22.2 % $49,302  $42,905  14.9 %
Sales and marketing 23,712  22,354  6.1 % 62,212  62,270  (0.1)%
General and administrative 8,959  8,015  11.8 % 27,323  24,850  10.0 %
Total operating expenses $50,198  $44,711  12.3 % $138,837  $130,025  6.8 %

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ResearchSales and Development

Research and developmentmarketing expenses increased $3.2$10.5 million induring the three months ended September 30, 20172021 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 due primarily to $1.6ago. In the third quarter of 2021, we recognized an additional $1.0 million in higher cash-basedstock-based compensation benefits,pursuant to severance obligations. The increases in marketing and traveladvertising costs and a $1.0 million increasesoftware expense supports our continued investment in professional services expense relatedand support of our platform and solutions. We expect to an increase in technology consultants. We continue to dedicate resourcesinvest in sales and marketing to developing the next generation of Wdesk, which has resulted in higher headcounthelp drive revenue growth.
Sales and additional consultants in research and development.

Research and developmentmarketing expenses increased $6.4$21.7 million induring the nine months ended September 30, 20172021 compared to the same period a year ago due primarily to $3.7$18.6 million higher cash-based compensation and benefits, an additional $2.1 million in higher employee cash-basedstock-based compensation, benefits,$1.3 million in marketing and travel costsadvertising fees and a $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 professional services. We continuecompensation was due to dedicate resourcesan increase in employee headcount. During 2021, we recognized an additional $1.7 million in stock-based compensation pursuant to developingseverance obligations. The increase in marketing and advertising costs as well as the next generationremaining increase in software expense supports our continued investment in and support of Wdesk, which has resulted in higher headcountour platform and additional consultants in researchsolutions.
General and development.Administrative

SalesGeneral and Marketing

Sales and marketingadministrative expenses increased $1.4$4.7 million during the three months ended September 30, 20172021 compared to the three months ended September 30, 20162020 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 travel costs. 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.

SalesGeneral and marketingadministrative expenses remained relatively flatincreased $6.2 million during the nine months ended September 30, 20172021 compared to the same period a year ago. AnThis increase of $1.0was due primarily to $7.8 million in employeehigher cash-based compensation and benefits, wasa $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 $0.6$3.7 million decrease in consulting services. We expect to continue to investstock-based compensation. In addition, in sales and marketing employees for future revenue growth. The decrease in consulting services was largely duethe second quarter of 2020, we also recorded one-time fees of $0.6 million related to the simplificationcancellation of certain events. In the salessecond quarter of 2020, we recorded an additional $1.2 million and marketing organization.$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,
20212020% Change20212020% 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), net3,805 (387)*3,265 263 *
General(*) Percentage is not meaningful.
Interest Income, Interest Expense and AdministrativeOther (Expense) Income, Net

GeneralDuring the three months ended September 30, 2021, interest income and administrative expensesinterest expense remained relatively flat compared to the same period in the prior year. Other income (expense), net increased $0.9$4.2 million during the three months ended September 30, 2017 compared to the same quarter a year ago. This increase was due to additional employee compensation, benefits, and travel costs of $1.2 million partially offset by a reduction in bad debt expense of $0.5 million.

General and administrative expenses rose $2.5 million during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 due primarily to additional employee cash-based compensation, benefits, and travel costs of $0.8 million and employee stock-based compensation of $1.9 million. Higher stock-based compensation expense was driven primarily by restricted stock grants to executive officers in February 2015, January 2016, and January 2017 with a vesting term of three years, as well as stock option grants to executive officers in February 2016 and 2017 with a vesting term of three years.


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Non-Operating Income (Expenses)

 Three months ended September 30,  Nine months ended September 30, 
 2017  2016  2017  2016 
 (dollars in thousands) 
Interest expense $(464) $(462) $(1,394) $(1,420)
Other income, net 198  298  986  1,152 

Interest Expense and Other Income, Net

Interest expense remained relatively flat during the three and nine months ended September 30, 2017 compared to the same period a year ago.

Other income, net decreased during the three and nine months ended September 30, 20172021 compared to the same period a year ago due primarily to lossesa $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 foreign currency transactions partially offset by increasesour 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 interest income.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, 
 2017 2016 2017 2016 
 (in thousands) 
Cash flow provided by (used in) operating activities $5,186 $2,793 $11,748 $(20,321)
Cash flow (used in) provided by investing activities (3,229)(129)(4,964)5,143 
Cash flow provided by (used in) financing activities 682 302 4,466 (715)
Net increase (decrease) in cash and cash equivalents, net of impact of exchange rates $2,732 $2,957 $11,437 $(15,908)

Three months ended September 30,Nine months ended September 30,
2021202020212020
(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, 2017,2021, our principal sources of liquidity were cash, cash equivalents and marketable securities totaled $77.8 million. To date, wetotaling $522.3 million, which were held for working capital purposes. We have financed our operations primarily through the proceeds of our initial public offering, private placementsofferings of equity, convertible debt, that was settled in equity 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. WeWhile we expect to continue to incur operating losses and may incur negative cash flows from operations in the future. As a result,future, we may require additional capital resources to continue to grow our business. We believe that current cash and cash equivalents and cash flows from operating activities availability under our existing credit facility and the ability to offer and sell securities pursuant to our shelf registration statement will be sufficient to fund our operations for at least the next twelve months.

In August 2014,2019, we entered intoissued $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 $15.0fixed 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, credit facility with Silicon Valley Bank. Borrowing capacity is equalnet 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 most recent month’s subscriptionterms and support revenue multiplied by a percentage that adjusts based onconditions provided in the prior quarter’s customer retention rate. The credit facility can be used to fund working capital and general business requirements. The credit facility is secured by all of our assets, has first priority over our other debt obligations, and requires us to maintain certain financial covenants, including the maintenance of at least $5.0 million of cash on hand or unused borrowing capacity. The credit facility contains certain restrictive covenants that limit our ability to transfer or dispose of assets, merge with other companies or consummate certain changes of control, acquire other companies, pay dividends, incur additional indebtedness and liens, effect changes in management and enter into new businesses. The credit facility has a variable interest rate equal to the bank’s prime lending rate with interest payable monthly and the principal balance due at maturity. The credit facility matures in August 2018, and no amount was outstanding under the credit facility asindenture. As of September 30, 2017.

We2021, and through the date of this filing, we have filed a universal shelf registration statement on Form S-3 withnot received any conversion requests for the SEC, which became effective August 10, 2017. Under the shelf registration statement, we may offer and sell, from time to time in the future in one or more public offerings, our common stock, preferred stock, debt securities, warrants, rights and units. The aggregate initial offering price of all securities sold by us under the shelf registration statement will not exceed $250,000,000.

Notes.
Operating Activities

For the three months ended September 30, 2017,2021, cash provided by operating activities was $5.2$16.3 million. The primary factors affecting our operating cash flows during the period were our net loss of $14.1$6.6 million, adjusted for non-cash charges of $0.9$1.4 million for depreciation and amortization of our property and equipment and intangible assets, and $4.7$12.7 million of stock-based compensation.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 $5.9 million increase in deferred revenue,
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a $3.5$2.2 million increase in accrued expenses and other liabilities, a $0.7$9.9 million increase in deferred revenue, a $0.5 million increase in accounts payable and a $5.1$2.1 million decrease in prepaid expenses and other,accounts receivable partially offset by a $0.8$2.0 million increase in accounts receivable. Short-term deferred revenue from subscriptioncommissions, a $0.6 million increase in other receivables and support contractsa $1.0 million increase in prepaid expenses. Deferred commissions increased $7.2 million from June 30, 2017due primarily to September 30, 2017. Long-term deferred revenue from subscriptionpayments made to our sales force related to the direct and support contracts decreased by $1.1 million from June 30, 2017 to September 30, 2017. New and existingincremental costs of obtaining a customer sales along with contract renewals for longer termscontract. 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 conversion of quarterly contracts to annual terms positively impacts our operating cash flow. We expect to convert a substantial majority of our remaining quarterly contracts to annual terms over the next fifteen months. The increaseincreases in accounts payable, prepaid expenses and accrued expenses and other liabilities was attributable primarily toas well as the timing of our cash payments, including payment of annual bonuses. The increasesdecrease in accounts receivable and accounts payable were attributable primarily attributable to the timing of our billings, cash collections, and cash payments. The decrease in prepaid expenses was attributable primarily to the timing of payments for our annual user conference.

For the three months ended September 30, 2016,2020, cash provided by operating activities was $2.8$7.9 million. The primary factors affecting our operating cash flows during the period were our net loss of $12.9 million, adjusted for $0.9 million for depreciation and amortization of our property and equipment and intangible assets, $3.7 million of stock-based compensation, and a $13.2 million increase in deferred revenue. Short-term deferred revenue from subscription and support contracts increased $6.8 million from June 30, 2016 to September 30, 2016. Long-term deferred revenue from subscription and support contracts increased by $6.7 million from June 30, 2016 to September 30, 2016. Contract renewals for longer terms accounted for most of the increase in deferred revenue. In addition, a $2.4 million increase in accrued expenses and other liabilities was offset by a $4.0 million increase in accounts receivable and a $0.5 million increase in other assets. The increases in accounts receivable and accrued expenses and other liabilities was primarily attributable to the timing of our billings, cash collections, and cash payments. The increase in other assets was due to an increase in deposits and prepayments in addition to an increase in our refundable research and development tax credit.

For the nine months ended September 30, 2017, cash provided by operating activities was $11.7 million. The primary factors affecting our operating cash flows during the period were our net loss of $30.1$10.4 million, adjusted for non-cash charges of $2.6 million for depreciation and amortization of our property and equipment and intangible assets, $13.2 million of stock-based compensation, and $0.9 million for recognition of other income from government grants. The primary drivers of the changes in operating assets and liabilities were a $24.4 million increase in deferred revenue, a $3.1 million decrease in prepaid expenses and other and a $1.0 million increase in accounts payable, partially offset by a $1.3 million increase in accounts receivable. Short-term deferred revenue from subscription and support contracts increased $23.9 million from December 31, 2016 to September 30, 2017. Long-term deferred revenue from subscription and support contracts increased by $1.5 million from December 31, 2016 to September 30, 2017. Deferred revenue from short-term professional services decreased by $0.8 million from December 31, 2016 to September 30, 2017. The decrease in prepaid expenses was attributable primarily to the timing of payments for our annual user conference. The increases in accounts receivable and accounts payable were attributable primarily to the timing of our billings, cash collections and cash payments.

For the nine months ended September 30, 2016, cash used in operating activities was $20.3 million. The primary factors affecting our operating cash flows during the period were our net loss of $36.5 million, adjusted for non-cash charges of $2.9$1.1 million for depreciation and amortization of our property and equipment and intangible assets, $10.6 million of stock-based compensation and $0.9expense, $2.2 million for recognitionthe amortization of other income from government grants.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 $6.7$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 a $1.1 million increase in prepaid expenses, a $0.8 million increase in other assets and a $3.0 million decrease in accrued
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expenses and other liabilities offset by a $15.4$4.8 million increase in deferred revenue. Short-term deferred revenue from subscription and support contracts increased $10.4 million from December 31, 2015 to September 30, 2016. Long-term deferred revenue from subscription and support contracts increased by $7.5 million from December 31, 2015 to September 30, 2016. Short-term deferred revenue from professional services decreased by $2.6 million from December 31, 2015 to September 30, 2016.commissions. Customer growth and contract renewals for longer terms accounted for most of the increase in deferred revenue. TheDeferred 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, waswere attributable primarily to the timing of our billings, cash collections, and cash collections.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 purchasing server capacity upfront.the timing of payments relating to annual subscriptions. The increase in other assets was primarily due to an increaseincreases in deposits and prepaymentstax 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 addition to anoperating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $12.5 million increase in our refundable research and development tax credit. The decrease in accrued expenses and other liabilities, wasan $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 including payment ofrelating to annual bonuses.

contracts.
Investing Activities

Cash used in investing activities of $3.2$38.5 million for the three months ended September 30, 20172021 was due primarily to $5.0the 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 purchasethree months ended September 30, 2020 was due primarily to $8.0 million in purchases of marketable securities and $1.0offset by $16.3 million from maturities of capital expendituresmarketable 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 proceeds of $2.8$116.4 million from maturities of marketable securities. Our capital expenditures were associated primarily with computer equipment and furniture and fixtures in support of expanding our infrastructure and work force.

Cash used inprovided by investing activities of $0.1 million for the three months ended September 30, 2016 was due primarily to $0.1 million of capital expenditures. Our capital expenditures were associated primarily with leasehold improvements, computer equipment and furniture and fixtures in support of expanding our infrastructure and work force.

Cash used in investing activities of $5.0$6.5 million for the nine months ended September 30, 20172020 was due primarily to $11.4$45.3 million for the purchasein purchases of marketable securities and $1.1$1.8 million of capital expenditures partially offset by proceeds of $7.7$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 and furniture and fixtures in support of expanding our infrastructure and work force.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 investingfinancing activities of $5.1$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, 20162021 was due primarily to $8.8 million in proceeds of $7.2from option exercises and $8.9 million in proceeds from the sale of marketable securities, which wasshares issued in connection with our employee stock purchase plan partially offset by $0.8$23.7 million in payroll taxes paid related to net share settlements of purchases of marketable securitiesstock-based compensation awards and $1.1$1.3 million of capital expenditures. Our capital expenditures were associated primarily with leasehold improvements, computer equipment and furniture and fixtures in support of expanding our infrastructure and work force.

Financing Activities

principal payments on finance lease obligations.
Cash provided by financing activities of $0.7 million for the three months ended September 30, 2017 was due primarily to $1.2 million in proceeds from option exercises partially offset by an aggregate $0.4 million in repayments on long-term debt and payments on capital lease and financing obligations.

Cash provided by financing activities of $0.3 million for the three months ended September 30, 2016 was due primarily to $0.8 million in proceeds from option exercises partially offset by $0.5 million in payments on capital lease and financing obligations.

Cash provided by financing activities of $4.5$18.2 million for the nine months ended September 30, 20172020 was due primarily to $6.7$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 $0.9$2.1 million in payroll taxes paid related to the net share settlements of stock-based compensation awards and an$1.2 million in payments on finance lease obligations.
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aggregate $1.2 million in repayments on long-term debt and payments on capital lease and financing obligations.

Cash used in financing activities of $0.7 million for the nine months ended September 30, 2016 was due primarily to $0.8 million in taxes paid related to the net share settlements of stock-based compensation awards and an aggregate $1.5 million in repayments on long-term debt and payments on capital lease and financing obligations, partially offset by $1.4 million in proceeds from option exercises.
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, 20162020 filed with the SEC on February 23, 2017.
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.

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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, 2017,2021, 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, 20162020 filed with the SEC on February 23, 2017.

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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, 2016.2020. Our exposures to market risk have not changed materially since December 31, 2016.
2020.

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Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision andOur management, with the participation of our principal executive officer and principal financial officer, our management conducted an evaluation ofhas evaluated the effectiveness of the design and operation of our disclosure controls and procedures as(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 report. Our disclosure controls and procedures are intended 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 Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.Quarterly Report on Form 10-Q.
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In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure 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 must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on management’ssuch 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 Chief Executive Officerprincipal executive officer and Chief Financial Officer,principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of anyThere were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our principal executive officer and principal financial officer concluded that there has not been any material change in our internal control over financial reporting during the quarterperiod covered by this reportQuarterly 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 October 2017, we implemented a new financial accounting module to our accounting system to support revenue recognition in accordance with ASU 2014-09. In addition, we are indesigning and evaluating the process of making enhancements and modifications to existing internaldisclosure 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 ensure compliance withapply judgment in evaluating the new guidance. We expect these changesbenefits of possible controls and procedures relative to our control environment to be substantially completed in the fourth quarter of 2017.

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 20162020 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 20172021 to the risk factors that were included in the Form 10-K.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 ShareTotal Number of Shares Purchased as Part of Publicly Announced ProgramMaximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under Program
July 2021— $— — — 
August 2021— — — — 
September 2021110,666 142.85 — — 
Total110,666 $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:

herewith or incorporated by reference herein:
Exhibit
Number
Description
10.1
31.1
31.2
32.1     
32.2     
101.INS 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.
104XBRL Instance Document - the instance document does not appear in theCover Page Interactive Data File because its XBRL tags are embedded within the(formatted as Inline XBRL document. 
101.SCH XBRL Taxonomy Extension Schema Document. 
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. 
101.DEF XBRL Taxonomy Extension Definition Linkbase Document. 
101.LAB XBRL Taxonomy Extension Label Linkbase Document. 
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. 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 7th3rd day of November, 2017.2021.

WORKIVA INC.
By:/s/ Matthew M. Rizai,Martin J. Vanderploeg, Ph.D.
Name:Matthew M. Rizai,Martin J. Vanderploeg, Ph.D.
Title:ChairmanPresident and Chief Executive Officer
��
By:/s/ J. Stuart Miller 
Name: J. Stuart Miller 
Title: Executive Vice President and Chief Financial Officer 
By: /s/ Jill Klindt
Name:Jill Klindt
Title:Senior Vice President, Treasurer andChief Financial Officer, Chief Accounting Officer and Treasurer

S-1