- 1Q24 Revenue of
$68.6 million at the high end of the guidance range. - 1Q24 Non-GAAP Operating Income of
$4.4 million or 6% compared to a loss of($8.8) million or (13%) in 1Q23. - Record high Free Cash Flow of
$16.6 million and 24% margin compared to cash burn of($8.3) million and (13%) in 1Q23. - Introducing
WalkMe X, the industry’s first always on, contextual AI copilot that proactively delivers next best actions to users across any workflow or application.
Management Commentary
“Q1 has been a great kickoff as we turn the corner on growth with a focus on doubling our net new ARR in 2024,” said
“I’m pleased we achieved the high end of our revenue guidance range and outperformed our profitability guidance with a record high free cash flow for the quarter,” said Hagit Ynon, CFO of
First Quarter 2024 Financial Highlights:
- Revenue: Subscription revenue was
$64.4 million , an increase of 6% year-over-year. Total revenue was$68.6 million , an increase of 4% year-over-year. - Gross Margin: GAAP Gross margin was 86%, compared to 81% in the first quarter of 2023. Non-GAAP Gross margin was 86%, compared to 83% in the first quarter of 2023.
- GAAP Operating Loss: was
$7.9 million , or 12% of total revenue, compared to$25.8 million , or 39% in the first quarter of 2023. - Non-GAAP Operating Income: was
$4.4 million or 6% of total revenue, compared to a loss of($8.8) million , or (13%) in the first quarter of 2023. - Diluted Earnings Per Share: Non-GAAP Net Income Per Share of
$0.07 and GAAP Net Loss Per Share of ($0.07 ), compared to a loss of ($0.08 ) and ($0.30 ) in the first quarter of 2023 respectively. - Operating Cash Flow: Net cash provided by operating activity was
$17.8 million , or 26% of total revenue, compared to($7.5) million used in operating activity or (11%) in the first quarter of 2023. - Free Cash Flow: was a positive
$16.6 million or 24% of total revenue, compared to negative($8.3) million , or (13%) in the first quarter of 2023. - Cash, Cash Equivalents,
Short-term Deposits and Marketable Securities : were$339.6 million as ofMarch 31, 2024
Recent Business Highlights:
WalkMe introduced its newest AI offering,WalkMe X, which democratizes the AI revolution to the entire workforce – regardless of digital dexterity or comfort with technology by suggesting the next best action to users right where they are, without needing to be prompted.WalkMe X is the only cross-application, contextual AI copilot that proactively meets the user wherever they are, within the flow of work.- Added Cognizant to our Global Partner ecosystem further expanding the
WalkMe ecosystem to leading global system integrators. WalkMe gathered key industry analysts inNew York City earlier this month for a milestone analyst day event focused on powering successful generative AI transformation with WalkMe’s patented AI-driven digital adoption.WalkMe will gather changemakers at its annual Realize conference virtually onJune 18, 2024 . This exciting annual event engages customers and partners, demonstrating whatWalkMe can do for them — both today and tomorrow.- Reached a new high of 42 customers with over
$1 million in annualized recurring revenue (“ARR”) and 536 customers with over$100,000 in ARR as ofMarch 31, 2024 . - DAP customers of 195 as of
March 31, 2024 , representing DAP customer count growth of 8% year-over-year.
Financial Outlook:
For the second quarter of 2024, the Company currently expects:
- Revenue of
$69 to$70 million - Non-GAAP Operating Income of
$2.3 to$3.3 million
For the full year 2024, the Company currently expects:
- Revenue of
$279 to$283 million - Increasing the Non-GAAP Operating Income guidance to the range of
$12.5 to$15 million
The section titled “Non-GAAP Financial Measures and Key Performance Indicators” below contains a description of the non-GAAP financial measures and Key Performance Indicators 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
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, amortization of acquired intangibles and restructuring expenses. 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 net income (loss) from operations excluding share-based compensation, amortization and impairment of acquired intangible assets, restructuring expenses and non-recurring legal settlement expenses related to a complex class action lawsuit and related claims which are considered outside of the company’s ordinary course of business. 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.
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. We believe these customers are an indication of the success of our customer acquisition and expansion strategy and demonstrate the strategic demand for our Digital Adoption Platform, the growth of our business, and our potential future business opportunities.
For more information on the non-GAAP financial measures, please see the reconciliation tables provided in this press release. 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:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release other than statements of historical fact, including, without limitation, statements regarding the Company’s future financial results, including revenue and non-GAAP operating loss guidance, and expectations regarding the Company’s ARR growth, operations and future profitability; the capabilities of and demand for the Company’s services including its generative AI offerings; the growth and evolution of the digital adoption platform industry; the Company’s participation in upcoming conferences, the Company's future financial strategy and competitive market position within the industry are all forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “potential,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “target,” and similar expressions are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions. These forward-looking statements are subject to risks, uncertainties and assumptions, some of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation, the following: our ability to manage our growth effectively, sustain our historical growth rate in the future or achieve or maintain profitability; the impact of adverse macro-economic changes 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; risks related to the war in
About
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 | ||||||
2024 | 2023 | |||||
Revenues | ||||||
Subscription | $ | 64,444 | $ | 60,629 | ||
Professional services | 4,130 | 5,263 | ||||
Total revenues | 68,574 | 65,892 | ||||
Cost of revenues | ||||||
Subscription(1)(2) | 6,297 | 6,389 | ||||
Professional services(1) | 3,579 | 5,803 | ||||
Total cost of revenues | 9,876 | 12,192 | ||||
Gross profit | 58,698 | 53,700 | ||||
Operating expenses | ||||||
Research and development(1) | 12,746 | 14,272 | ||||
Sales and marketing(1) | 41,428 | 44,458 | ||||
General and administrative(1) | 12,416 | 20,747 | ||||
Total operating expenses | 66,590 | 79,477 | ||||
Operating loss | (7,892) | (25,777) | ||||
Financial income, net | 3,670 | 3,243 | ||||
Loss before income taxes | (4,222) | (22,534) | ||||
Income taxes | (1,264) | (1,112) | ||||
Net loss | (5,486) | (23,646) | ||||
Net loss attributable to non-controlling interest | (40) | (23) | ||||
Adjustment attributable to non-controlling interest | 700 | 2,500 | ||||
Net loss attributable to | $ | (6,146) | $ | (26,123) | ||
Net loss per share attributable to | $ | (0.07) | $ | (0.30) | ||
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted | 91,321,856 | 87,288,085 | ||||
(1)Includes share-based compensation expense as follows: | ||||||
Three months ended | ||||||
2024 | 2023 | |||||
Cost of subscription revenues | $ | 267 | $ | 286 | ||
Cost of professional services | 278 | 537 | ||||
Research and development | 2,537 | 2,369 | ||||
Sales and marketing | 5,394 | 4,611 | ||||
General and administrative | 3,764 | 9,094 | ||||
Total share-based compensation expense | $ | 12,240 | $ | 16,897 | ||
(2)Includes amortization of acquired intangibles as follows: | ||||||
Three months ended | ||||||
2024 | 2023 | |||||
Cost of revenues | $ | 68 | $ | 68 | ||
Condensed Consolidated Balance Sheets | ||||
(in thousands; unaudited) | ||||
2024 | 2023 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 192,839 | $ | 177,223 |
Short-term deposits | 28,426 | 28,027 | ||
Short-term marketable securities | 58,103 | 60,290 | ||
Trade receivables, net | 42,334 | 40,494 | ||
Deferred contract acquisition costs | 26,376 | 26,793 | ||
Prepaid expenses and other current assets | 8,565 | 8,739 | ||
Total current assets | 356,643 | 341,566 | ||
Non-current assets: | ||||
Long-term marketable securities | 60,189 | 56,282 | ||
Deferred contract acquisition costs | 27,617 | 30,267 | ||
Other assets | 792 | 317 | ||
Property and equipment, net | 12,020 | 12,059 | ||
Operating lease right-of-use assets | 10,824 | 12,005 | ||
1,493 | 1,561 | |||
Total non-current assets | 112,935 | 112,491 | ||
Total assets | $ | 469,578 | $ | 454,057 |
Liabilities, redeemable non-controlling interest and shareholders’ equity | ||||
Current liabilities: | ||||
Trade payables | $ | 3,766 | $ | 3,508 |
Accrued expenses and other current liabilities | 43,300 | 47,772 | ||
Deferred revenues | 122,304 | 110,701 | ||
Total current liabilities | 169,370 | 161,981 | ||
Long-term liabilities: | ||||
Deferred revenues | 721 | 894 | ||
Other long-term liabilities | 12,728 | 12,384 | ||
Operating lease liabilities | 7,591 | 8,222 | ||
Total long-term liabilities | 21,040 | 21,500 | ||
Total liabilities | 190,410 | 183,481 | ||
Redeemable non-controlling interest | 11,075 | 10,429 | ||
Shareholders’ equity: | ||||
Share capital and additional paid-in capital | 762,868 | 748,801 | ||
Other comprehensive income (loss) | (197) | 478 | ||
Accumulated deficit | (494,578) | (489,132) | ||
Total shareholders’ equity | 268,093 | 260,147 | ||
Total Liabilities, redeemable non-controlling interest and shareholders’ equity | $ | 469,578 | $ | 454,057 |
Condensed Consolidated Statements of Cash Flow | |||||
(in thousands; unaudited) | |||||
Three months ended | |||||
2024 | 2023 | ||||
Cash flows from operating activities: | |||||
Net loss | $ | (5,486) | $ | (23,646) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||
Share-based compensation | 12,240 | 16,897 | |||
Depreciation, amortization and impairment | 1,446 | 1,355 | |||
Operating lease right-of-use assets and liabilities, net | (515) | (403) | |||
Finance (income) expense | 32 | (274) | |||
Amortization of premium and accretion of discount on marketable securities, net | (772) | (528) | |||
Increase in trade receivables, net | (1,840) | (3,720) | |||
Increase in prepaid expenses and other current and non-current assets | (218) | (2,118) | |||
Decrease in deferred contract acquisition costs | 3,067 | 3,386 | |||
Increase (decrease) in trade payables | 247 | (694) | |||
Decrease in accrued expenses and other current liabilities | (2,518) | (7,942) | |||
Increase in deferred revenues | 11,702 | 8,556 | |||
Increase in other long-term liabilities | 369 | 1,599 | |||
Net cash provided by (used in) operating activities | 17,754 | (7,532) | |||
Cash flows from investing activities: | |||||
Investment in equity securities | (325) | - | |||
Purchase of property and equipment | (97) | (180) | |||
Proceeds from short-term deposits | - | 37,000 | |||
Investment in marketable securities | (14,127) | (10,357) | |||
Proceeds from maturity of marketable securities | 12,573 | 10,460 | |||
Proceeds from restricted deposits | 170 | - | |||
Capitalization of software development costs | (1,020) | (567) | |||
Net cash provided by (used in) investing activities | (2,826) | 36,356 | |||
Cash flows from financing activities: | |||||
Proceeds from exercise of options | 423 | 542 | |||
Proceeds from employees share purchase plan | 879 | 1,194 | |||
Net cash provided by financing activities | 1,302 | 1,736 | |||
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash | (451) | (191) | |||
Increase in cash, cash equivalents and restricted cash | 15,779 | 30,369 | |||
Cash, cash equivalents and restricted cash - Beginning of period | 177,223 | 94,428 | |||
Cash, cash equivalents and restricted cash - End of period | $ | 193,002 | $ | 124,797 | |
Reconciliation from GAAP to Non-GAAP Results | |||||
(in thousands, except share and per share data; unaudited) | |||||
Three months ended | |||||
2024 | 2023 | ||||
Reconciliation of gross profit and gross margin | |||||
GAAP gross profit | $ | 58,698 | $ | 53,700 | |
Plus: Share-based compensation expense | 545 | 823 | |||
Plus: Amortization of acquired intangibles | 68 | 68 | |||
Non-GAAP gross profit | $ | 59,311 | $ | 54,591 | |
GAAP gross margin | 86% | 81% | |||
Non-GAAP gross margin | 86% | 83% | |||
Reconciliation of operating expenses | |||||
GAAP research and development | $ | 12,746 | $ | 14,272 | |
Less: Share-based compensation expenses | (2,537) | (2,369) | |||
Non-GAAP research and development | $ | 10,209 | $ | 11,903 | |
GAAP sales and marketing | $ | 41,428 | $ | 44,458 | |
Less: Share-based compensation expenses | (5,394) | (4,611) | |||
Non-GAAP sales and marketing | $ | 36,034 | $ | 39,847 | |
GAAP general and administrative | $ | 12,416 | $ | 20,747 | |
Less: Share-based compensation expenses | (3,764) | (9,094) | |||
Non-GAAP general and administrative | $ | 8,652 | $ | 11,653 | |
Reconciliation of operating income (loss) and operating margin | |||||
GAAP operating loss | $ | (7,892) | $ | (25,777) | |
Plus: Share-based compensation expense | 12,240 | 16,897 | |||
Plus: Amortization of acquired intangibles | 68 | 68 | |||
Non-GAAP operating income (loss) | $ | 4,416 | $ | (8,812) | |
GAAP operating margin | (12)% | (39)% | |||
Non-GAAP operating margin | 6% | (13)% | |||
Reconciliation of net income (loss) | |||||
GAAP net loss attributable to | $ | (6,146) | $ | (26,123) | |
Plus: Share-based compensation expense | 12,240 | 16,897 | |||
Plus: Amortization of acquired intangibles | 68 | 68 | |||
Plus: Adjustment attributable to non-controlling interest | 700 | 2,500 | |||
Non-GAAP net income (loss) attributable to | $ | 6,862 | $ | (6,658) | |
Non-GAAP net income (loss) per share attributable to | |||||
Basic | $ | 0.08 | $ | (0.08) | |
Diluted | $ | 0.07 | $ | (0.08) | |
Shares used in non-GAAP per share calculations: | |||||
Non-GAAP weighted-average shares used to compute net income (loss) per share | |||||
Basic | 91,321,856 | 87,288,085 | |||
Diluted | 96,556,802 | 87,288,085 | |||
Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow | ||||||
(in thousands; unaudited) | ||||||
Three months ended | ||||||
2024 | 2023 | |||||
Net cash provided by (used in) operating activities | $ | 17,754 | $ | (7,532) | ||
Less: Purchases of property and equipment | (97) | (180) | ||||
Less: Capitalized software development costs | (1,020) | (567) | ||||
Free Cash Flow | $ | 16,637 | $ | (8,279) | ||
Source:
2024 GlobeNewswire, Inc., source