2343

Workiva (NYSE:WK) Beats Q3 Sales Targets, Stock Jumps 13%


Adam Hejl /
2021/11/03 4:55 pm EDT
Add to Watchlist

Financial and compliance reporting software company Workiva (NYSE:WK) reported Q3 FY2021 results topping analyst expectations, with revenue up 27.9% year on year to $112.6 million. Guidance for next quarter's revenue was surprisingly good, being $117 million at the midpoint, 3.63% above what analysts were expecting. Workiva made a GAAP loss of $6.56 million, improving on its loss of $10.5 million, in the same quarter last year.

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

Workiva (WK) Q3 FY2021 Highlights:

  • Revenue: $112.6 million vs analyst estimates of $108.3 million (3.99% beat)
  • EPS (non-GAAP): $0.15 vs analyst estimates of -$0.11 ($0.26 beat)
  • Revenue guidance for Q4 2021 is $117 million at the midpoint, above analyst estimates of $112.8 million
  • Free cash flow of $15.5 million, up 30% from previous quarter
  • Net Revenue Retention Rate: 111%, in line with previous quarter
  • Customers: 4,146, up from 3,949 in previous quarter
  • Gross Margin (GAAP): 76.5%, up from 75.1% same quarter last year

"Workiva delivered another strong quarter, beating third quarter guidance for revenue and operating results," said Marty Vanderploeg, 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.

Keeping up with the latest financial reporting regulations and standards is difficult and expensive, especially as companies increasingly operate across several geographical regions and that drives the demand for platforms that automate the compliance process.

Sales Growth

As you can see below, Workiva's revenue growth has been strong over the last year, growing from quarterly revenue of $88 million, to $112.6 million.

Workiva Total Revenue

This quarter, Workiva's quarterly revenue was once again up a very solid 27.9% year on year. On top of that, revenue increased $7.1 million quarter on quarter, a very strong improvement on the $1.36 million increase in Q2 2021, which shows acceleration of growth, and is great to see.

Analysts covering the company are expecting the revenues to grow 17.2% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than Workiva. 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 400% since the IPO in December. You can find it on our platform for free.

Customer Growth

You can see below that Workiva reported 4,146 customers at the end of the quarter, an increase of 197 on last quarter. That is quite a bit better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

Workiva Customers

Key Takeaways from Workiva's Q3 Results

With a market capitalization of $7.33 billion Workiva is among smaller companies, but its more than $522.3 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

We enjoyed the positive outlook Workiva provided for the next quarter’s revenue. And we were also glad to see the acceleration in customer growth. Overall, we think this was a strong quarter, that should leave shareholders feeling very positive. The company is up 13% on the results and currently trades at $165 per share.

Should you invest in Workiva 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.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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