WALKME LTD. - ARR grows 31% year-over-year to
$191 million - Q2 Subscription revenue grows 31% year-over-year to
$42.2 million - Enterprise-wide DAP customers grew 110% year-over-year to 103 customers
“We are very pleased with the strong results we achieved in our first quarter as a public company,” said
Second quarter 2021 Financial Highlights:
- ARR: Ending Annualized Recurring Revenue as of
June 30, 2021 grew 31% year-over-year to$191.0 million . - Revenue: Total revenue was
$46.8 million , an increase of 28% year-over-year. Subscription revenue was$42.2 million , an increase of 31% year-over-year. - Remaining Performance Obligation (RPO): RPO was
$260.5 million , an increase of 48% year-over-year. - GAAP Operating Loss: GAAP operating loss was
$17.8 million , or 38.1% of total revenue, compared to$3.5 million , or 9.6% of total revenue, in the second quarter of 2020. - Non-GAAP Operating Loss* was
$11.7 million , or 25.0% of total revenue, compared to$2.9 million , or 7.9% of total revenue, in the second quarter of 2020. - Cash Flow: Net cash used in operations was
$6.2 million , or 13.2% of total revenue, compared to$0.4 million provided by operations or 1.2% of total revenue, in the second quarter of 2020. - Free Cash Flow* was negative
$7.4 million , or 15.9% of total revenue, compared to negative$0.1 million , or 0.3% of total revenue, in the second quarter of 2020. - Cash, Cash Equivalents, and Short-term Deposits were
$371.7 million as ofJune 30, 2021 .
“Our strong second quarter results demonstrate the market tailwinds for Digital Adoption and traction we are gaining with our ongoing strategic initiatives: penetrating deeper into our existing customer base with company-wide DAP deployments and expanding our footprint in the enterprise market,” said
Second Quarter and Recent Business Highlights
- Completed the company’s Initial Public Offering on Nasdaq, raising net proceeds of approximately
$264 million . - Added 15 net new enterprise-wide DAP customers, representing growth of 110% year-over-year. ARR from DAP customers grew 129% year-over-year.
- ARR from customers with more than 500 employees grew 38% year-over-year and represented 87% of total ARR.
- Customers with over
$100K in ARR grew 30% year-over-year to 397. - Hosted Elevate, the industry’s largest conference of DAP professionals, and announced a number of product enhancements in the latest DAP release, including the availability of Desktop for Microsoft Teams, the release of Digital Adoption KPI templates, enhanced AI/ML capabilities in UI Intelligence, new features for our enterprise customer base, as well as community-generated templates and report builders. The updates are designed to provide organizations with further opportunities to accelerate digital transformation and recognize quicker time to value of their technology investments through driving user adoption of digital assets.
- Completed the acquisition of certain assets of Zest, an AI-driven enterprise search company, which provides a fast and efficient mechanism for retrieving any document, file, contact or record from the cloud. Zest’s AI-driven search leverages NLP (Natural Language Processing) to create an on-demand, graph database which is designed to increase the predictability of user search for faster, more relevant results. As a critical building block for making search more efficient, Zest is now integrated into WalkMe’s desktop product, Workstation.
- Expanded sales leadership globally and vertically to support the growing demand for
WalkMe in APAC, EMEA, and within theU.S. Fed/SLED space with the appointments ofSandie Overtveld , Vice President andGM of APAC;Simon Blunn , Vice President andGM of EMEA; andBilly Biggs , Vice President, Public Sector Sales. - Announced the appointments of
Michele Bettencourt and Haleli Barath to the company’s Board of Directors. As the company continues to scale, the addition of two new board members with deep expertise leading fast-growing, international technology companies, and navigating complex international regulatory environments, is expected to support its next phase of growth and global expansion.
Financial Outlook:
For the third quarter of 2021, the Company currently expects:
- Total revenue of
$48.5 to$50.0 million , representing a growth rate of 25% to 29% year-over-year - Non-GAAP operating loss* of
$17.0 to$15.5 million
For the full year 2021, the Company currently expects:
- Total revenue of
$189.5 to$191.5 million , representing a growth rate of 28% to 29% year-over-year - Non-GAAP operating loss* of
$59.0 to$57.0 million
*The section titled “Non-GAAP Financial Measures” below contains a description of the non-GAAP financial measures discussed in this press release and reconciliations between historical GAAP and non-GAAP information are contained in the tables below. The Company is unable to provide a reconciliation of non-GAAP Operating Income (Loss) to Operating Income (Loss), its most directly comparable GAAP financial measure, on a forward- looking basis without unreasonable effort because items that impact this GAAP financial measure are not within the Company’s control and/or cannot be reasonably predicted. These items may include, but are not limited to, predicting forward-looking share-based compensation. Such information may have a significant, and potentially unpredictable, impact on the Company’s future financial results.
Conference Call Information:
A live webcast of the conference call will be accessible from the
Supplemental Financial and Other Information:
Supplemental financial and other information can be accessed through the Company’s investor relations website at ir.walkme.com.
Non-GAAP Financial Measures:
In addition to our financial results reported in accordance with GAAP, this press release and the accompanying tables contain the following non-GAAP financial measures: Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Income (Loss), Non-GAAP Operating Margin, Non-GAAP Net Income (Loss) attributable to
Non-GAAP Gross Profit and Non-GAAP Gross Margin. We define Non-GAAP Gross Profit as gross profit excluding share-based compensation and amortization of acquired intangibles. We exclude these items because they occur for reasons that may be unrelated to our core operating performance during the period, and because we believe that such items may obscure underlying business trends and make comparisons of long-term performance difficult. We use Non-GAAP Gross Profit with traditional GAAP measures to evaluate our financial performance. Non-GAAP Gross Margin is calculated as a percentage of revenues.
Non-GAAP Operating Income (Loss) and Non-GAAP Operating Margin. We define Non-GAAP Operating Income (Loss) as income (loss) from operations excluding share-based compensation and amortization of acquired intangibles. We exclude these items because they occur for reasons that may be unrelated to our core operating performance during the period, and because we believe that such items may obscure underlying business trends and make comparisons of long-term performance difficult. We use Non-GAAP Operating Income (Loss) with traditional GAAP measures to evaluate our financial performance. Non-GAAP Operating Margin is calculated as a percentage of revenues.
Non-GAAP Net Income (Loss) attributable to WalkMe Ltd. We define Non-GAAP Net Income (Loss) attributable to
Free Cash Flow. We define Free Cash Flow as net cash provided by (used in) operating activities, less cash used for purchases of property and equipment and capitalized internal-use software costs. We believe that Free Cash Flow is a useful indicator of liquidity that provides information to management and investors, even if negative, about the amount of cash used in our business. Our Free Cash Flow may vary from period to period and be impacted as we continue to invest for growth in our business.
For more information on the non-GAAP financial measures, please see the reconciliation tables provided below. The accompanying reconciliation tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.
Special Note Regarding Forward-Looking Statements:
Certain statements in this press release may constitute “forward-looking” statements and information, within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the
our future financial performance, including our expectations regarding our revenue, cost of revenue, gross margin, operating expenses, cash flow and deferred revenue; our ability to manage our growth effectively, sustain our historical growth rate in the future or achieve or maintain profitability; the impact of the COVID-19 pandemic, including variants, on our business, financial condition and results of operations; the growth and expansion of the markets for our offerings and our ability to adapt and respond effectively to evolving market conditions; our estimates of, and future expectations regarding, our market opportunity; our ability to keep pace with technological and competitive developments and develop or otherwise introduce new products and solutions and enhancements to our existing offerings; our ability to maintain the interoperability of our offerings across devices, operating systems and third-party applications and to maintain and expand our relationships with third-party technology partners; the effects of increased competition in our target markets and our ability to compete effectively; our ability to attract and retain new customers and to expand within our existing customer base; the success of our sales and marketing operations, including our ability to realize efficiencies and reduce customer acquisition costs; the percentage of our remaining performance obligations that we expect to recognize as revenue; our ability to meet the service-level commitments under our customer agreements and the effects on our business if we are unable to do so; our relationships with, and dependence on, various third-party service providers; our dependence on our management team and other key employees; our ability to maintain and enhance awareness of our brand; our ability to offer high quality customer support; our ability to effectively develop and expand our marketing and sales capabilities; our ability to maintain the sales prices of our offerings and the effects of pricing fluctuations; the sustainability of, and fluctuations in, our gross margin; risks related to our international operations and our ability to expand our international business operations; the effects of currency exchange rate fluctuations on our results of operations; challenges and risks related to our sales to government entities; our ability to consummate acquisitions at our historical rate and at acceptable prices, to enter into other strategic transactions and relationships, and to manage the risks related to these transactions and arrangements; our ability to protect our proprietary technology, or to obtain, maintain, protect and enforce sufficiently broad intellectual property rights therein; our ability to maintain the security and availability of our platform, products and solutions; our ability to comply with current and future legislation and governmental regulations to which we are subject or may become subject in the future; changes in applicable tax law, the stability of effective tax rates and adverse outcomes resulting from examination of our income or other tax returns; risks related to political, economic and security conditions in
About
WalkMe’s cloud-based Digital Adoption Platform enables organizations to measure, drive and act to ultimately accelerate their digital transformations and better realize the value of their software investments. Our code-free platform leverages our proprietary technology to provide visibility to an organization’s Chief Information Officer and business leaders, while improving user experience, productivity and efficiency for employees and customers. Alongside walkthroughs and third-party integration capabilities, our platform can be customized to fit an organization’s needs.
Media Contact:
PR Director press@walkme.com
Investor Contact:
investors@walkme.com
SOURCE
| Condensed Consolidated Statements of Operations | ||||||||||||
| (in thousands, except share and per share data; unaudited) | ||||||||||||
| Three months ended | Six months ended | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Revenues | ||||||||||||
| Subscription | $ | 42,211 | $ | 32,112 | $ | 80,685 | $ | 61,764 | ||||
| Professional services | 4,591 | 4,409 | 8,771 | 8,978 | ||||||||
| Total revenues | 46,802 | 36,521 | 89,456 | 70,742 | ||||||||
| Cost of revenues | ||||||||||||
| Subscription(1)(2) | 5,784 | 4,220 | 11,473 | 8,407 | ||||||||
| Professional services(1) | 5,409 | 4,724 | 10,489 | 9,797 | ||||||||
| Total cost of revenues | 11,193 | 8,944 | 21,962 | 18,204 | ||||||||
| Gross profit | 35,609 | 27,577 | 67,494 | 52,538 | ||||||||
| Operating expenses | ||||||||||||
| Research and development(1) | 11,554 | 6,781 | 21,976 | 14,394 | ||||||||
| Sales and marketing(1) | 29,405 | 19,547 | 54,540 | 42,838 | ||||||||
| General and administrative(1) | 12,488 | 4,764 | 21,861 | 10,070 | ||||||||
| Total operating expenses | 53,447 | 31,092 | 98,377 | 67,302 | ||||||||
| Operating loss | (17,838 | ) | (3,515 | ) | (30,883 | ) | (14,764 | ) | ||||
| Financial income (expense), net | 2 | 115 | 47 | (444 | ) | |||||||
| Loss before income taxes | (17,836 | ) | (3,400 | ) | (30,836 | ) | (15,208 | ) | ||||
| Income taxes | (798 | ) | (136 | ) | (1,202 | ) | (605 | ) | ||||
| Net loss | (18,634 | ) | (3,536 | ) | (32,038 | ) | (15,813 | ) | ||||
| Net loss attributable to non-controlling interest | (375 | ) | (410 | ) | (621 | ) | (867 | ) | ||||
| Adjustment attributable to non-controlling interest | 4,287 | 481 | 15,103 | 962 | ||||||||
| Deemed dividend to ordinary shareholders | - | - | - | 4,569 | ||||||||
| Net loss attributable to | $ | (22,546 | ) | $ | (3,607 | ) | $ | (46,520 | ) | $ | (20,477 | ) |
| Net loss per share attributable to WalkMe Ltd. basic and diluted | $ | (0.90 | ) | $ | (0.28 | ) | $ | (2.38 | ) | $ | (1.58 | ) |
| Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted | 24,960,581 | 13,078,576 | 19,509,660 | 12,935,628 | ||||||||
| (1) Includes share-based compensation expense as follows: | ||||||||||||
| Three months ended | Six months ended | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Cost of subscription revenues | $ | 88 | $ | 15 | $ | 142 | $ | 23 | ||||
| Cost of professional services | 191 | 28 | 314 | 54 | ||||||||
| Research and development | 811 | 103 | 1,282 | 343 | ||||||||
| Sales and marketing | 1,262 | 206 | 2,055 | 428 | ||||||||
| General and administrative | 3,733 | 265 | 5,824 | 550 | ||||||||
| Total share-based compensation expense | $ | 6,085 | $ | 617 | $ | 9,617 | $ | 1,398 | ||||
| (2) Includes amortization of acquired intangibles as follows: | ||||||||||||
| Three months ended | Six months ended | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Cost of revenues | $ | 56 | $ | - | $ | 56 | $ | 44 | ||||
| Condensed Consolidated Balance Sheets | ||||
| (in thousands; unaudited) | ||||
| 2021 | 2020 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 349,702 | $ | 62,328 |
| Short term deposits | 22,035 | 44,159 | ||
| Trade receivables, net | 40,403 | 30,859 | ||
| Deferred contract acquisition costs | 15,020 | 10,712 | ||
| Prepaid expenses and other current assets | 7,141 | 4,067 | ||
| Total current assets | 434,301 | 152,125 | ||
| Non-current assets: | ||||
| Deferred contract acquisition costs | 25,940 | 19,017 | ||
| Other long-term assets | 2,664 | 3,036 | ||
| Property and equipment, net | 9,067 | 8,629 | ||
| 2,234 | 1,481 | |||
| Total long-term assets | 39,905 | 32,163 | ||
| Total assets | $ | 474,206 | $ | 184,288 |
| Liabilities, redeemable non-controlling interest, convertible preferred shares and shareholders’ equity (deficit) | ||||
| Current liabilities: | ||||
| Trade payables | $ | 3,661 | $ | 5,513 |
| Accrued expenses and other current liabilities | 38,598 | 29,543 | ||
| Deferred revenues | 86,204 | 57,467 | ||
| Total current liabilities | 128,463 | 92,523 | ||
| Long-term liabilities: | ||||
| Deferred revenues | 1,285 | 1,478 | ||
| Deferred tax liabilities, net | 3,423 | 3,101 | ||
| Other long-term liabilities | 2,612 | 2,308 | ||
| Total long-term liabilities | 7,320 | 6,887 | ||
| Total liabilities | 135,783 | 99,410 | ||
| Redeemable non-controlling interest | 22,966 | 8,647 | ||
| Convertible preferred shares | - | 300,490 | ||
| Shareholders’ equity (deficit): | ||||
| Share capital and additional paid-in capital | 592,648 | 21,524 | ||
| Other comprehensive income | 140 | 131 | ||
| Accumulated deficit | (277,331) | (245,914) | ||
| Total shareholders’ equity (deficit) | 315,457 | (224,259) | ||
| Total Liabilities, redeemable non-controlling interest, convertible preferred shares and shareholders’ equity (deficit) | $ | 474,206 | $ | 184,288 |
| Condensed Consolidated Statements of Cash Flow | ||||||||||||
| (in thousands; unaudited) | ||||||||||||
| Three months ended | Six months ended | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (18,634 | ) | $ | (3,536 | ) | $ | (32,038 | ) | $ | (15,813 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||
| Share-based compensation | 6,085 | 617 | 9,617 | 1,398 | ||||||||
| Depreciation and amortization | 1,102 | 1,174 | 2,116 | 2,436 | ||||||||
| Increase in accrued interest on short term and long-term deposits | (68 | ) | (63 | ) | (160 | ) | (42 | ) | ||||
| Decrease (increase) in trade receivables, net | 4,185 | (2,294 | ) | (9,611 | ) | 2,823 | ||||||
| Decrease (increase) in prepaid expenses, other current assets and other long-term assets | (272 | ) | 211 | (1,250 | ) | (122 | ) | |||||
| Increase in deferred contract acquisition costs | (5,250 | ) | (1,710 | ) | (11,231 | ) | (3,850 | ) | ||||
| Increase (decrease) in trade payables | (2,129 | ) | 2,026 | (2,005 | ) | 2,847 | ||||||
| Increase in accrued expenses, other current liabilities and other long-term liabilities | 646 | 1,868 | 6,209 | 756 | ||||||||
| Increase in deferred revenues | 7,581 | 2,024 | 28,660 | 2,251 | ||||||||
| Deferred taxes, net | 238 | 43 | 322 | 192 | ||||||||
| Increase in other long-term liabilities | 331 | 83 | 304 | 139 | ||||||||
| Net cash provided by (used in) operating activities | (6,185 | ) | 443 | (9,067 | ) | (6,985 | ) | |||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property and equipment | (340 | ) | (151 | ) | (828 | ) | (557 | ) | ||||
| Investment in short term deposits | (15,000 | ) | (45,997 | ) | (15,000 | ) | (45,997 | ) | ||||
| Proceeds from short term deposits | 36,285 | - | 37,287 | - | ||||||||
| Investment in restricted deposits | (296 | ) | - | (1,298 | ) | - | ||||||
| Proceeds from restricted deposits | 296 | - | 296 | - | ||||||||
| Capitalization of software development costs | (911 | ) | (406 | ) | (1,622 | ) | (723 | ) | ||||
| Net cash provided by (used in) investing activities | 20,034 | (46,554 | ) | 18,835 | (47,277 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from initial public offering, net of underwriting discounts and commissions and other issuance costs | 266,936 | - | 266,885 | - | ||||||||
| Proceeds from exercise of options | 431 | 97 | 1,153 | 280 | ||||||||
| Issuance of preferred shares, net of issuance costs | - | 35,000 | 10,000 | 38,495 | ||||||||
| Net cash provided by financing activities | 267,367 | 35,097 | 278,038 | 38,775 | ||||||||
| Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash | 16 | 30 | (439 | ) | 4 | |||||||
| Increase (decrease) in cash, cash equivalents and restricted cash | 281,232 | (10,984 | ) | 287,367 | (15,483 | ) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | 69,030 | 70,916 | 62,895 | 75,415 | ||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 350,262 | $ | 59,932 | $ | 350,262 | $ | 59,932 | ||||
| Reconciliation from GAAP to Non-GAAP Results | ||||||||||||
| (In thousands, except share and per share data; unaudited) | ||||||||||||
| Three months ended | Six months ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Reconciliation of gross profit and gross margin | ||||||||||||
| GAAP gross profit | $ | 35,609 | $ | 27,577 | $ | 67,494 | $ | 52,538 | ||||
| Plus: Share-based compensation expense | 279 | 43 | 456 | 77 | ||||||||
| Plus: Amortization of acquired intangibles | 56 | - | 56 | 44 | ||||||||
| Non-GAAP gross profit | $ | 35,944 | $ | 27,620 | $ | 68,006 | $ | 52,659 | ||||
| GAAP gross margin | 76 | % | 76 | % | 75 | % | 74 | % | ||||
| Non-GAAP gross margin | 77 | % | 76 | % | 76 | % | 74 | % | ||||
| Reconciliation of operating loss and operating margin | ||||||||||||
| GAAP operating loss | $ | (17,838 | ) | $ | (3,515 | ) | $ | (30,883 | ) | $ | (14,764 | ) |
| Plus: Share-based compensation expense | 6,085 | 617 | 9,617 | 1,398 | ||||||||
| Plus: Amortization of acquired intangibles | 56 | - | 56 | 44 | ||||||||
| Non-GAAP operating loss | $ | (11,697 | ) | $ | (2,898 | ) | $ | (21,210 | ) | $ | (13,322 | ) |
| GAAP operating margin | (38 | %) | (10 | %) | (35 | %) | (21 | %) | ||||
| Non-GAAP operating margin | (25 | %) | (8 | %) | (24 | %) | (19 | %) | ||||
| Reconciliation of net loss | ||||||||||||
| GAAP net loss attributable to WalkMe Ltd. | $ | (22,546 | ) | $ | (3,607 | ) | $ | (46,520 | ) | $ | (20,477 | ) |
| Plus: Share-based compensation expense | 6,085 | 617 | 9,617 | 1,398 | ||||||||
| Plus: Amortization of acquired intangibles | 56 | - | 56 | 44 | ||||||||
| Plus: Adjustment attributable to non-controlling interest | 4,287 | 481 | 15,103 | 962 | ||||||||
| Plus: Deemed dividend to ordinary shareholders | - | - | - | 4,569 | ||||||||
| Non-GAAP net loss attributable to WalkMe Ltd. | $ | (12,118 | ) | $ | (2,509 | ) | $ | (21,744 | ) | $ | (13,504 | ) |
| Non-GAAP net loss per share attributable to | $ | (0.16 | ) | $ | (0.04 | ) | $ | (0.29 | ) | $ | (0.19 | ) |
| Shares used in non-GAAP per share calculations: | ||||||||||||
| GAAP weighted-average shares used to compute net loss per share, basic and diluted | 24,960,581 | 13,078,576 | 19,509,660 | 12,935,628 | ||||||||
| Add: | ||||||||||||
| Additional weighted average shares giving effect to exchange of convertible preferred shares at the beginning of the period | 50,075,826 | 58,030,923 | 54,603,023 | 57,542,205 | ||||||||
| Non-GAAP weighted-average shares used to compute net loss per share, basic and diluted | 75,036,407 | 71,109,499 | 74,112,683 | 70,477,833 | ||||||||
| Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow | ||||||||||||
| (In thousands; unaudited) | ||||||||||||
| Three months ended | Six months ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net cash provided by (used in) operating activities | $ | (6,185 | ) | $ | 443 | $ | (9,067 | ) | $ | (6,985 | ) | |
| Less: Purchases of property and equipment | (340 | ) | (151 | ) | (828 | ) | (557 | ) | ||||
| Less: Capitalized software development costs | (911 | ) | (406 | ) | (1,622 | ) | (723 | ) | ||||
| Free cash flow | $ | (7,436 | ) | $ | (114 | ) | $ | (11,517 | ) | $ | (8,265 | ) |
Source: 2021 GlobeNewswire, Inc., source
