Workiva (NYSE:WK) Surprises With Q4 Sales, Guides For 20% Growth Next Year

Radek Strnad /
2022/02/22 4:21 pm EST
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Financial and compliance reporting software company Workiva (NYSE:WK) reported Q4 FY2021 results topping analyst expectations, with revenue up 28.7% year on year to $120.7 million. Guidance for next quarter's revenue was $127.5 million at the midpoint, which is 1.38% above the analyst consensus. Workiva made a GAAP loss of $14.3 million, down on its loss of $7.55 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) Q4 FY2021 Highlights:

  • Revenue: $120.7 million vs analyst estimates of $117 million (3.14% beat)
  • EPS (non-GAAP): $0.03 vs analyst estimates of -$0.06 ($0.09 beat)
  • Revenue guidance for Q1 2022 is $127.5 million at the midpoint, above analyst estimates of $125.7 million
  • Management's revenue guidance for upcoming financial year 2022 is $533 million at the midpoint, in line with analyst expectations and predicting 20.2% growth (vs 22% in FY2021)
  • Free cash flow of $8.16 million, down 47.4% from previous quarter
  • Net Revenue Retention Rate: 110%, in line with previous quarter
  • Customers: 4,315, up from 4,146 in previous quarter
  • Gross Margin (GAAP): 75.8%, up from 74.7% same quarter last year

"The Workiva team once again delivered strong financial results. In both the fourth quarter and full-year, we beat the high end of our guidance in revenue and operating profit," 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.

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 year, growing from quarterly revenue of $93.8 million, to $120.7 million.

Workiva Total Revenue

This quarter, Workiva's quarterly revenue was once again up a very solid 28.7% year on year. On top of that, revenue increased $8.09 million quarter on quarter, a solid improvement on the $7.1 million increase in Q3 2021. Happily, that's a slight re-acceleration of growth.

Guidance for the next quarter indicates Workiva is expecting revenue to grow 22.3% year on year to $127.5 million, in line with the 21.4% 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 $533 million at the midpoint, growing 20.2% compared to 22% increase in FY2021.

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Customer Growth

You can see below that Workiva reported 4,315 customers at the end of the quarter, an increase of 169 on last quarter. That is a little slower customer growth than last quarter but quite a bit still above what we have typically seen over the last year, suggesting sales momentum is coming off slightly after a stronger quarter.

Workiva Customers

Key Takeaways from Workiva's Q4 Results

With a market capitalization of $5.28 billion Workiva is among smaller companies, but its more than $530.4 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 optimistic revenue guidance Workiva provided for the next year. And we were also excited to see that it outperformed analysts' revenue expectations. On the other hand, there was a slight slowdown in customer growth. Zooming out, we think this was still a decent, albeit mixed, quarter, showing the company is staying on target. But the market was likely expecting more and the company is down 0.88% on the results and currently trades at $101.43 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.

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