Workiva's (NYSE:WK) Q1 Sales Top Estimates But Quarterly Guidance Underwhelms
Financial and compliance reporting software company Workiva (NYSE:WK) reported results ahead of analysts' expectations in Q1 CY2024, with revenue up 17% year on year to $175.7 million. On the other hand, next quarter's revenue guidance of $175 million was less impressive, coming in 1.3% below analysts' estimates. It made a non-GAAP profit of $0.22 per share, improving from its loss of $0.12 per share in the same quarter last year.
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Workiva (WK) Q1 CY2024 Highlights:
- Revenue: $175.7 million vs analyst estimates of $174.2 million (small beat)
- EPS (non-GAAP): $0.22 vs analyst estimates of $0.17 (29.1% beat)
- Revenue Guidance for Q2 CY2024 is $175 million at the midpoint, below analyst estimates of $177.3 million
- The company reconfirmed its revenue guidance for the full year of $721 million at the midpoint
- Gross Margin (GAAP): 76.4%, up from 74.4% in the same quarter last year
- Free Cash Flow of $24.64 million, similar to the previous quarter
- Net Revenue Retention Rate: 111%, in line with the previous quarter
- Customers: 6,074, up from 6,034 in the previous quarter
- Market Capitalization: $4.40 billion
"The Workiva team delivered another solid quarter, resulting in subscription revenue growth of 20%," said Julie Iskow, President & Chief Executive Officer.
Founded in 2010, Workiva (NYSE:WK) offers software as a service product that makes financial and compliance reporting easier, especially for publicly traded corporations.
Compliance Software
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 three years, growing from $104.2 million in Q1 2021 to $175.7 million this quarter.
This quarter, Workiva's quarterly revenue was once again up 17% year on year. We can see that Workiva's revenue increased by $9.01 million in Q1, up from $8.48 million in Q4 CY2023. While we've no doubt some investors were looking for higher growth, it's good to see that quarterly revenue is re-accelerating.
Next quarter's guidance suggests that Workiva is expecting revenue to grow 12.9% year on year to $175 million, slowing down from the 17.8% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 13.4% over the next 12 months before the earnings results announcement.
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Customer Growth
Workiva reported 6,074 customers at the end of the quarter, an increase of 40 from the previous quarter. That's slower customer growth than we have seen previously, suggesting that the company's customer acquisition momentum is slowing.
Key Takeaways from Workiva's Q1 Results
Strong free cash flow was a highlight of Workiva's Q1, on the other hand its customer growth decelerated and guidance for Q2 was below estimates. Overall, this was a mixed quarter for Workiva. The stock is up 4.3% after reporting and currently trades at $83.5 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.
