WalkMe (NASDAQ:WKME) Posts Better-Than-Expected Sales In Q4, Outlook For Next Year Is Optimistic

Kayode Omotosho /
2022/02/16 4:11 pm EST

User support software provider WalkMe (NASDAQ: WKME) reported Q4 FY2021 results beating Wall St's expectations, with revenue up 36.9% year on year to $53.2 million. Guidance for next quarter's revenue was $56 million at the midpoint, 2.19% above the average of analyst estimates. WalkMe made a GAAP loss of $29.4 million, down on its loss of $9.9 million, in the same quarter last year.

Is now the time to buy WalkMe? Access our full analysis of the earnings results here, it's free.

WalkMe (WKME) Q4 FY2021 Highlights:

  • Revenue: $53.2 million vs analyst estimates of $52 million (2.34% beat)
  • EPS (non-GAAP): -$0.23 vs analyst estimates of -$0.22
  • Revenue guidance for Q1 2022 is $56 million at the midpoint, above analyst estimates of $54.7 million
  • Management's revenue guidance for upcoming financial year 2022 is $253 million at the midpoint, beating analyst estimates by 3.03% and predicting 30.8% growth (vs 31.1% in FY2021)
  • Free cash flow was negative $16.3 million, compared to negative free cash flow of $12.9 million in previous quarter
  • Gross Margin (GAAP): 75.6%, up from 73% same quarter last year

“We completed 2021 with great momentum by accelerating our subscription revenue landing some great new logos and expanding within some of the largest organizations in the world. Digital adoption is being seen as a must have for CIOs and we are seeing the results with deeper strategic conversations and longer contract terms,” said Dan Adika, CEO of WalkMe.

Founded in Israel in 2011, WalkMe (NASDAQ:WKME) is software that teaches users how to get the most out of new applications.

Companies need to be able to interact with and sell to their customers as efficiently as possible. This reality, coupled with the ongoing migration of enterprises to the cloud drives demand for cloud-based customer relationship management (CRM) software that integrate data analytics with sales and marketing functions.

Sales Growth

As you can see below, WalkMe's revenue growth has been very strong over the last year, growing from quarterly revenue of $38.9 million, to $53.2 million.

WalkMe Total Revenue

And unsurprisingly, this was another great quarter for WalkMe with revenue up 36.9% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $2.66 million in Q4, compared to $3.78 million in Q3 2021. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Guidance for the next quarter indicates WalkMe is expecting revenue to grow 31.2% year on year to $56 million, improving on the 24.6% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $253 million at the midpoint, growing 30.8% compared to 31.1% increase in FY2021.

There are others doing even better than WalkMe. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. WalkMe's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 75.6% in Q4.

WalkMe Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.75 left to spend on developing new products, marketing & sales and the general administrative overhead. Despite the recent drop, this is still a good gross margin that allows companies like WalkMe to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.

Key Takeaways from WalkMe's Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on WalkMe’s balance sheet, but we note that with a market capitalization of $1.41 billion and more than $342.3 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We enjoyed seeing WalkMe’s impressive revenue growth this quarter. And we were also glad that the revenue guidance for the next year looks positive. On the other hand, there was a deterioration in gross margin. Overall, we think this was a really good quarter, that should leave shareholders feeling positive. But the market was likely expecting more and the company is slightly down 0.64% on the results and currently trades at $16.9 per share.

Should you invest in WalkMe right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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