Financial and compliance reporting software company Workiva (NYSE:WK) announced better-than-expected results in Q2 FY2023, with revenue up 17.8% year on year to $155 million. The company also expects next quarter's revenue to be around $155.5 million, roughly in line with expectations. Workiva made a GAAP loss of $20.9 million, improving from its loss of $28.9 million in the same quarter last year.

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Founded in 2010, Workiva (NYSE:WK) offers software as a service product that makes financial and compliance reporting easier, especially for publicly traded corporations.

The demand for software platforms that automate compliances processes is rising as keeping up with the latest financial reporting regulations and standards is difficult and expensive, especially as companies increasingly operate across several geographical regions with varying rules.

Sales Growth

As you can see below, Workiva's revenue growth has been strong over the last two years, growing from $105.6 million in Q2 FY2021 to $155 million this quarter.

This quarter, Workiva's quarterly revenue was once again up 17.8% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $4.83 million in Q2 compared to $6.39 million in Q1 2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that Workiva is expecting revenue to grow 17.1% year on year to $155.5 million, in line with the 17.9% year-on-year increase it recorded in the same quarter last year. Ahead of the earnings results announcement, the analysts covering the company were expecting sales to grow 16.4% over the next 12 months.

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Customer Growth

Workiva reported 5,860 customers at the end of the quarter, an increase of 106 from the previous quarter. That's a little better customer growth than last quarter but a bit below what we've typically seen over the last year, suggesting that the company may be reinvigorating growth.

Key Takeaways from Workiva's Q2 Results

Sporting a market capitalization of $5.44 billion, Workiva is among smaller companies, but its more than $466.3 million in cash on hand and positive free cash flow over the last 12 months puts it in an attractive position to invest in growth.

It was great to see Workiva improve its net revenue retention rate this quarter. We were also glad that its customer growth accelerated. On the other hand, its revenue guidance for next quarter slightly missed estimates. Overall, this was a mixed quarter for Workiva. The stock is flat after reporting and currently trades at $103.4 per share.

So should you invest in Workiva right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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The author has no position in any of the stocks mentioned in this report.