- DAP customers grew to 155 and ARR from DAP customers grew 63% year-over-year
- ARR from customers with greater than 500 employees grew 31% year-over-year
- Improved operating efficiency for third straight quarter
"I'm pleased to see as we continue to transition our business to focus on large organizations with complex business processes that our customers are not pausing their efforts to optimize their organizations," said
Third Quarter 2022 Financial Highlights:
- Revenue: Total revenue was
$63.4 million in the third quarter of 2022, an increase of 25% year-over-year. Subscription revenue was$56.7 million , an increase of 23% year-over-year. - Annualized Recurring Revenue (ARR)*: grew 26% year-over-year to
$254 million as ofSeptember 30, 2022 . - Remaining Performance Obligation (RPO): was
$351 million as ofSeptember 30, 2022 , an increase of 29% year-over-year. - GAAP Operating Loss: was
$26.4 million in the third quarter of 2022, or 42% of total revenue, compared to$17.9 million , or 35% of total revenue, in the third quarter of 2021. - Non-GAAP Operating Loss*: was
$12.5 million in the third quarter of 2022 compared to$10.1 million in the third quarter of 2021 or 20% of total revenue. - Cash Flow: Net cash used in operations in the third quarter of 2022 was
$9.7 million , or 15% of total revenue, compared to$11.3 million used in operations or 22% of total revenue, in the third quarter of 2021. - Free Cash Flow*: was negative
$11.2 million in the third quarter of 2022, or 18% of total revenue, compared to negative$12.9 million , or 26% of total revenue, in the third quarter of 2021. - Cash, Cash Equivalents, and Short-term Deposits were
$309.2 million as ofSeptember 30, 2022 .
"We're pleased to see ARR growth from customers with more than 500 employees grow by 31%, ahead of our total ARR growth while we have worked to drive greater efficiencies within our organization," said Hagit Ynon, Interim CFO of
Third Quarter and Recent Business Highlights:
- In the third quarter,
WalkMe added thirteen net new Enterprise-Wide DAP customers for a total of 155, representing DAP customer count growth of 38% year-over-year. ARR from DAP customers grew 63% year-over-year. - Customers with over
$100,000 in ARR grew 22% year-over-year to 511 and customers with over$1 million in ARR grew 30% year-over-year to 35. - In the fourth quarter of 2021,
WalkMe updated and enhanced its third-party data sources for identifying customers with 500 or more employees and as a result now captures a greater number of customers in this category in the same period compared to the previous methodology. ARR from customers with 500 or more employees grew 31% year-over-year and represented 89% of total ARR without the new data sources. With the new data sources, ARR from customers with 500 or more employees is now 94% of total ARR. WalkMe received approval to join theUK government'sG-Cloud Digital Marketplace , a centralized hub for the streamlined procurement of cloud-related IT services and technologies by public sector organizations such as central and local governments, non-profit organizations, education, defense, and emergency and health services.WalkMe expanded its partnership with Deloitte through a strategic alliance with Deloitte Australia andJapan to bring digital adoption best practices to Australian and Japanese enterprises.
Financial Outlook:
For the fourth quarter of 2022, the Company currently expects:
- Total revenue of
$62.9 to$64.9 million , representing a growth rate of 18% to 22% year-over-year - Non-GAAP operating loss* of
$13.2 to$11.2 million
For the full year 2022, the Company currently expects:
- Total revenue of
$243 to$245 million , representing a growth rate of 26% to 27% year-over-year - Non-GAAP operating loss* of
$61 to$59 million
*The section titled “Non-GAAP Financial Measures and Key Performance Indicators” 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.
Throughout this press release, we provide a number of key performance indicators used by our management and often used by competitors in our industry. These and other key performance indicators are discussed in more detail in the section entitled “Non-GAAP Financial Measures and Key Performance Indicators” in this press release.
Conference Call Information:
A live webcast of the conference call will be accessible on the
Approximately one hour after completion of the live call and for at least 30 days thereafter, an archived version of the webcast will be available on the Company’s investor relations website at https://ir.walkme.com.
Supplemental Financial and Other Information:
We intend to announce material information to the public through the WalkMe Investor Relations website at ir.walkme.com,
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page of our website.
Non-GAAP Financial Measures and Key Performance Indicators:
In addition to our financial results reported in accordance with GAAP, this press release and the accompanying tables and related presentation materials may contain one or more of 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 and impairment 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
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 development 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.
ARR. We define ARR as the annualized value of customer subscription contracts as of the measurement date, assuming any contract that expires during the next 12 months is renewed on its existing terms (including contracts for which we are negotiating a renewal). Our calculation of ARR is not adjusted for the impact of any known or projected future events (such as customer cancellations, upgrades or downgrades, or price increases or decreases) that may cause any such contract not to be renewed on its existing terms. In addition, the amount of actual revenue that we recognize over any 12-month period is likely to differ from ARR at the beginning of that period, sometimes significantly. This may occur due to new bookings, cancellations, upgrades, downgrades or other changes in pending renewals, as well as the effects of professional services revenue and acquisitions or divestitures. As a result, ARR should be viewed independently of, and not as a substitute for or forecast of, revenue and deferred revenue. Our calculation of ARR may differ from similarly titled metrics presented by other companies.
Enterprise-Wide DAP Customers: We define Enterprise-Wide DAP Customers as those who have purchased enterprise-wide subscriptions or who have department-wide usage of our Digital Adoption Platform across four or more applications.
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
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:
press@walkme.com
Investor Contact:
investors@walkme.com
Condensed Consolidated Statements of Operations | |||||||||||||||
(in thousands, except share and per share data; unaudited) | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Revenues | |||||||||||||||
Subscription | $ | 56,681 | $ | 46,088 | $ | 162,270 | $ | 126,773 | |||||||
Professional services | 6,672 | 4,501 | 17,873 | 13,272 | |||||||||||
Total revenues | 63,353 | 50,589 | 180,143 | 140,045 | |||||||||||
Cost of revenues | |||||||||||||||
Subscription(1)(2) | 6,481 | 5,957 | 20,052 | 17,430 | |||||||||||
Professional services(1) | 7,096 | 5,761 | 21,383 | 16,250 | |||||||||||
Total cost of revenues | 13,577 | 11,718 | 41,435 | 33,680 | |||||||||||
Gross profit | 49,776 | 38,871 | 138,708 | 106,365 | |||||||||||
Operating expenses | |||||||||||||||
Research and development(1) | 13,909 | 11,800 | 45,504 | 33,776 | |||||||||||
Sales and marketing(1) | 45,801 | 31,885 | 130,993 | 86,425 | |||||||||||
General and administrative(1)(2) | 16,483 | 13,034 | 49,501 | 34,895 | |||||||||||
Total operating expenses | 76,193 | 56,719 | 225,998 | 155,096 | |||||||||||
Operating loss | (26,417 | ) | (17,848 | ) | (87,290 | ) | (48,731 | ) | |||||||
Financial income (expense), net | 1,241 | (184 | ) | 2,368 | (137 | ) | |||||||||
Loss before income taxes | (25,176 | ) | (18,032 | ) | (84,922 | ) | (48,868 | ) | |||||||
Income taxes | (942 | ) | (771 | ) | (2,100 | ) | (1,973 | ) | |||||||
Net loss | (26,118 | ) | (18,803 | ) | (87,022 | ) | (50,841 | ) | |||||||
Net loss attributable to non-controlling interest | (18 | ) | (280 | ) | (367 | ) | (901 | ) | |||||||
Adjustment attributable to non-controlling interest | (3,010 | ) | 4,289 | (12,642 | ) | 19,392 | |||||||||
Net loss attributable to | $ | (23,090 | ) | $ | (22,812 | ) | $ | (74,013 | ) | $ | (69,332 | ) | |||
Net loss per share attributable to | $ | (0.27 | ) | $ | (0.27 | ) | $ | (0.87 | ) | $ | (1.69 | ) | |||
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted | 85,508,974 | 83,347,949 | 84,739,275 | 41,022,927 | |||||||||||
(1)Includes share-based compensation expense as follows: | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Cost of subscription revenues | $ | 293 | $ | 165 | $ | 832 | $ | 307 | |||||||
Cost of professional services | 782 | 376 | 2,054 | 690 | |||||||||||
Research and development | 1,756 | 1,120 | 5,396 | 2,402 | |||||||||||
Sales and marketing | 5,478 | 2,264 | 13,935 | 4,319 | |||||||||||
General and administrative | 5,505 | 3,759 | 15,891 | 9,583 | |||||||||||
Total share-based compensation expense | $ | 13,814 | $ | 7,684 | $ | 38,108 | $ | 17,301 | |||||||
(2)Includes amortization and impairment of acquired intangibles as follows: | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Cost of revenues | $ | 68 | $ | 67 | $ | 420 | $ | 123 | |||||||
General and administrative | - | - | 979 | - | |||||||||||
Total amortization and impairment | $ | 68 | $ | 67 | $ | 1,399 | $ | 123 | |||||||
Condensed Consolidated Balance Sheets | |||||||
(in thousands; unaudited) | |||||||
2022 | 2021 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 194,900 | $ | 276,889 | |||
Short-term deposits | 114,272 | 65,478 | |||||
Trade receivables, net | 35,023 | 37,754 | |||||
Deferred contract acquisition costs | 23,809 | 20,405 | |||||
Prepaid expenses and other current assets | 8,175 | 7,954 | |||||
Total current assets | 376,179 | 408,480 | |||||
Non-current assets: | |||||||
Deferred contract acquisition costs | 36,121 | 35,969 | |||||
Other assets | 515 | 987 | |||||
Property and equipment, net | 12,840 | 10,885 | |||||
Operating lease right-of-use assets | 8,089 | - | |||||
1,897 | 3,296 | ||||||
Total non-current assets | 59,462 | 51,137 | |||||
Total assets | $ | 435,641 | $ | 459,617 | |||
Liabilities, redeemable non-controlling interest and shareholders’ equity | |||||||
Current liabilities: | |||||||
Trade payables | $ | 4,506 | $ | 6,592 | |||
Accrued expenses and other current liabilities | 45,276 | 49,310 | |||||
Deferred revenues | 102,937 | 86,024 | |||||
Total current liabilities | 152,719 | 141,926 | |||||
Long-term liabilities: | |||||||
Deferred revenues | 1,594 | 1,288 | |||||
Other long-term liabilities | 8,902 | 6,892 | |||||
Operating lease liabilities | 5,012 | - | |||||
Total long-term liabilities | 15,508 | 8,180 | |||||
Total liabilities | 168,227 | 150,106 | |||||
Redeemable non-controlling interest | 10,564 | 23,901 | |||||
Shareholders’ equity: | |||||||
Share capital and additional paid-in capital | 671,757 | 610,193 | |||||
Other comprehensive income (loss) | (3,214 | ) | 455 | ||||
Accumulated deficit | (411,693 | ) | (325,038 | ) | |||
Total shareholders’ equity | 256,850 | 285,610 | |||||
Total Liabilities, redeemable non-controlling interest and shareholders’ equity | $ | 435,641 | $ | 459,617 | |||
Condensed Consolidated Statements of Cash Flow | |||||||||||||||
(in thousands; unaudited) | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | $ | (26,118 | ) | $ | (18,803 | ) | $ | (87,022 | ) | $ | (50,841 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||
Share-based compensation | 13,814 | 7,684 | 38,108 | 17,301 | |||||||||||
Depreciation, amortization and impairment | 2,690 | 1,230 | 6,663 | 3,346 | |||||||||||
Operating lease right-of-use assets and liabilities, net | (392 | ) | (392 | ) | |||||||||||
Interest on short-term and long-term deposits | (498 | ) | (103 | ) | (532 | ) | (263 | ) | |||||||
Decrease (increase) in trade receivables, net | 5,778 | 3,133 | 2,584 | (6,478 | ) | ||||||||||
increase in prepaid expenses and other current assets and other non-current assets | (568 | ) | (2,974 | ) | (709 | ) | (4,224 | ) | |||||||
Increase in deferred contract acquisition costs | (630 | ) | (5,323 | ) | (3,805 | ) | (16,554 | ) | |||||||
Decrease (increase) in trade payables | 277 | 2,161 | (1,787 | ) | 156 | ||||||||||
Increase (decrease) in accrued expenses and other current liabilities | (3,046 | ) | 1,904 | (11,000 | ) | 8,113 | |||||||||
Increase (decrease) in deferred revenues | (1,925 | ) | (818 | ) | 17,873 | 27,842 | |||||||||
Increase in other long-term liabilities | 921 | 655 | 2,010 | 1,281 | |||||||||||
Net cash used in operating activities | (9,697 | ) | (11,254 | ) | (38,009 | ) | (20,321 | ) | |||||||
Cash flows from investing activities: | |||||||||||||||
Purchase of property and equipment | (635 | ) | (547 | ) | (2,673 | ) | (1,375 | ) | |||||||
Investment in short-term deposits | (97,000 | ) | (51,003 | ) | (140,500 | ) | (66,003 | ) | |||||||
Proceeds from short-term deposits | 35,000 | - | 92,257 | 37,287 | |||||||||||
Investment in restricted deposits | - | - | - | (1,298 | ) | ||||||||||
Proceeds from restricted deposits | - | 2,362 | 295 | 2,658 | |||||||||||
Capitalization of software development costs | (879 | ) | (1,101 | ) | (3,064 | ) | (2,723 | ) | |||||||
Net cash provided by investing activities | (63,514 | ) | (50,289 | ) | (53,685 | ) | (31,454 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Proceeds from initial public offering, net of underwriting discounts and commissions and other issuance costs | - | (596 | ) | - | 266,289 | ||||||||||
Proceeds from exercise of options | 787 | 1,092 | 2,585 | 2,245 | |||||||||||
Proceeds from employees share purchase plan | 1,489 | - | 8,223 | - | |||||||||||
Issuance of preferred shares, net | - | - | - | 10,000 | |||||||||||
Net cash provided by financing activities | 2,276 | 496 | 10,808 | 278,534 | |||||||||||
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash | (319 | ) | (105 | ) | (1,145 | ) | (544 | ) | |||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (71,254 | ) | (61,152 | ) | (82,031 | ) | 226,215 | ||||||||
Cash, cash equivalents and restricted cash - Beginning of period | 266,474 | 350,262 | 277,251 | 62,895 | |||||||||||
Cash, cash equivalents and restricted cash - End of period | $ | 195,220 | $ | 289,110 | $ | 195,220 | $ | 289,110 | |||||||
Reconciliation from GAAP to Non-GAAP Results | |||||||||||||||
(in thousands, except share and per share data; unaudited) | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Reconciliation of gross profit and gross margin | |||||||||||||||
GAAP gross profit | $ | 49,776 | $ | 38,871 | $ | 138,708 | $ | 106,365 | |||||||
Plus: Share-based compensation expense | 1,075 | 541 | 2,886 | 997 | |||||||||||
Plus: Amortization of acquired intangibles | 68 | 67 | 420 | 123 | |||||||||||
Non-GAAP gross profit | $ | 50,919 | $ | 39,479 | $ | 142,014 | $ | 107,485 | |||||||
GAAP gross margin | 79 | % | 77 | % | 77 | % | 76 | % | |||||||
Non-GAAP gross margin | 80 | % | 78 | % | 79 | % | 77 | % | |||||||
Reconciliation of operating loss and operating margin | |||||||||||||||
GAAP operating loss | $ | (26,417 | ) | $ | (17,848 | ) | $ | (87,290 | ) | $ | (48,731 | ) | |||
Plus: Share-based compensation expense | 13,814 | 7,684 | 38,108 | 17,301 | |||||||||||
Plus: Amortization and impairment of acquired intangibles | 68 | 67 | 1,399 | 123 | |||||||||||
Non-GAAP operating loss | $ | (12,535 | ) | $ | (10,097 | ) | $ | (47,783 | ) | $ | (31,307 | ) | |||
GAAP operating margin | (42 | )% | (35 | )% | (48 | )% | (35 | )% | |||||||
Non-GAAP operating margin | (20 | )% | (20 | )% | (27 | )% | (22 | )% | |||||||
Reconciliation of net loss | |||||||||||||||
GAAP net loss attributable to | $ | (23,090 | ) | $ | (22,812 | ) | $ | (74,013 | ) | $ | (69,332 | ) | |||
Plus: Share-based compensation expense | 13,814 | 7,684 | 38,108 | 17,301 | |||||||||||
Plus: Amortization and impairment of acquired intangibles | 68 | 67 | 1,399 | 123 | |||||||||||
Plus: Adjustment attributable to non-controlling interest | (3,010 | ) | 4,289 | (12,642 | ) | 19,392 | |||||||||
Non-GAAP net loss attributable to | $ | (12,218 | ) | $ | (10,772 | ) | $ | (47,148 | ) | $ | (32,516 | ) | |||
Non-GAAP net loss per share attributable to | $ | (0.14 | ) | $ | (0.13 | ) | $ | (0.56 | ) | $ | (0.42 | ) | |||
Shares used in non-GAAP per share calculations: | |||||||||||||||
GAAP weighted-average shares used to compute net loss per share, basic and diluted | 85,508,974 | 83,347,949 | 84,739,275 | 41,022,927 | |||||||||||
Add: | |||||||||||||||
Additional weighted average shares giving effect to exchange of convertible preferred shares at the beginning of the period | - | - | - | 36,202,004 | |||||||||||
Non-GAAP weighted-average shares used to compute net loss per share, basic and diluted | 85,508,974 | 83,347,949 | 84,739,275 | 77,224,931 | |||||||||||
Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow | |||||||||||||||
(in thousands; unaudited) | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
2022 | 2021 | 2022 | 2021 | ||||||||||||
Net cash used in operating activities | $ | (9,697 | ) | $ | (11,254 | ) | $ | (38,009 | ) | $ | (20,321 | ) | |||
Less: Purchases of property and equipment | (635 | ) | (547 | ) | (2,673 | ) | (1,375 | ) | |||||||
Less: Capitalized software development costs | (879 | ) | (1,101 | ) | (3,064 | ) | (2,723 | ) | |||||||
Free Cash Flow | $ | (11,211 | ) | $ | (12,902 | ) | $ | (43,746 | ) | $ | (24,419 | ) | |||
Source:
2022 GlobeNewswire, Inc., source