Yahoo Finance Workiva (NYSE:WK) Posts Better-Than-Expected Sales In Q2, Next Quarter's Growth Looks Optimistic
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.
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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
"In Q2, we saw a healthy improvement in the buying environment marked by broad-based demand across our entire solution portfolio," said Julie Iskow, President & 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.
Compliance Software
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 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.
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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 Results
We 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.
Workiva may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
