Workiva's (NYSE:WK) Q2 Sales Top Estimates, Upgrades Full Year Guidance

Radek Strnad /
2021/08/03 4:35 pm EDT
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Financial and compliance reporting software company Workiva (NYSE:WK) reported Q2 FY2021 results that beat analyst expectations, with revenue up 25.9% year on year to $105.5 million. Workiva made a GAAP loss of $9.51 million, improving on its loss of $19.7 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) Q2 FY2021 Highlights:

  • Revenue: $105.5 million vs analyst estimates of $101.6 million (3.85% beat)
  • EPS (non-GAAP): $0.07 vs analyst estimates of $0.01 ($0.06 beat)
  • Revenue guidance for Q3 2021 is $108.5 million at the midpoint, above analyst estimates of $104 million
  • The company lifted revenue guidance for the full year, from $419 million to $431 million at the midpoint, a 2.86% increase
  • Free cash flow of $11.9 million, up 12.1% from previous quarter
  • Net Revenue Retention Rate: 112%, in line with previous quarter
  • Customers: 3,949, up from 3,800 in previous quarter
  • Gross Margin (GAAP): 76.7%, in line with previous quarter

"Our results continue to build on our market leadership and the increased demand for regulatory reporting and fit-for-purpose solutions to support digital transformations," said Marty Vanderploeg, Chief Executive Officer.

Founded in 2010, Workiva 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 $83.8 million, to $105.5 million.

Workiva Total Revenue

This quarter, Workiva's quarterly revenue was once again up a very solid 25.9% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $1.36 million in Q2, compared to $10.3 million in Q1 2021. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Analysts covering the company are expecting the revenues to grow 14.7% over the next twelve months, although we would expect them to review their estimates once they get to read these results.

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Customer Growth

You can see below that Workiva reported 3,949 customers at the end of the quarter, an increase of 149 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 Q2 Results

With market capitalisation of $6.45 billion Workiva is among smaller companies, but its more than $551.6 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 were very impressed by Workiva’s very strong acceleration in customer growth this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Overall, we think this was a strong quarter, that should leave shareholders feeling very positive. The company is flat on the results and currently trades at $128.66 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 full report which you can read here, it's free.

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