Stock Story -
Financial and compliance reporting software company Workiva (NYSE:WK) reported Q2 CY2024 results topping analysts' expectations, with revenue up 14.5% year on year to $177.5 million. Guidance for next quarter's revenue was also better than expected at $182.5 million at the midpoint, 1.1% above analysts' estimates. It made a non-GAAP profit of $0.16 per share, improving from its profit of $0.02 per share in the same quarter last year.
Is now the time to buy Workiva? Find out by reading the original article on StockStory, it's free.
Workiva (WK) Q2 CY2024 Highlights:
- Revenue: $177.5 million vs analyst estimates of $175.2 million (1.3% beat)
- Adjusted Operating Income: $3.63 million vs analyst estimates of $3.18 million (14.3% beat)
- EPS (non-GAAP): $0.16 vs analyst expectations of $0.18 (9% miss)
- Revenue Guidance for Q3 CY2024 is $182.5 million at the midpoint, above analyst estimates of $180.4 million
- The company slightly lifted its revenue guidance for the full year from $721 million to $728 million at the midpoint
- Gross Margin (GAAP): 76.8%, up from 74.5% in the same quarter last year
- Free Cash Flow was -$122,000, down from $24.64 million in the previous quarter
- Net Revenue Retention Rate: 109%, down from 111% in the previous quarter
- Customers: 6,147, up from 6,074 in the previous quarter
- Market Capitalization: $4.04 billion
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 SoftwareThe 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 GrowthAs you can see below, Workiva's revenue growth has been decent over the last three years, growing from $105.6 million in Q2 2021 to $177.5 million this quarter.
This quarter, Workiva's quarterly revenue was once again up 14.5% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $1.84 million in Q2 compared to $9.01 million in Q1 CY2024. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.
Next quarter's guidance suggests that Workiva is expecting revenue to grow 15.4% year on year to $182.5 million, slowing down from the 19.1% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 14% over the next 12 months before the earnings results announcement.
Customer Growth Workiva reported 6,147 customers at the end of the quarter, an increase of 73 from the previous quarter. That's a little better customer growth than last quarter and in line with what we've seen in past quarters, demonstrating that the company has the sales momentum required to drive continued growth. We've no doubt shareholders will take this as an indication that Workiva's go-to-market strategy is running smoothly.
Key Takeaways from Workiva's Q2 ResultsWe were impressed by Workiva's strong growth in customers this quarter. We were also glad next quarter's revenue guidance came in higher than Wall Street's estimates. On the other hand, its net revenue retention declined. Overall, this quarter seemed fairly positive and shareholders should feel optimistic. The stock traded up 3.5% to $75 immediately following the results.
