Financial and compliance reporting software company Workiva (NYSE:WK) reported Q4 CY2024 results exceeding the market’s revenue expectations , with sales up 19.9% year on year to $199.9 million. The company expects next quarter’s revenue to be around $204 million, close to analysts’ estimates. Its non-GAAP profit of $0.33 per share was in line with analysts’ consensus estimates.

Is now the time to buy Workiva? Find out in our full research report.

"Our Q4 results contributed to a year of accelerating growth as we executed on our strategy across financial, operational, and innovation initiatives," said Julie Iskow, President & Chief Executive Officer.

Company Overview

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

A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Over the last three years, Workiva grew its sales at a 18.6% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds. Luckily, there are other things to like about Workiva.

This quarter, Workiva reported year-on-year revenue growth of 19.9%, and its $199.9 million of revenue exceeded Wall Street’s estimates by 2.4%. Company management is currently guiding for a 16.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 15.2% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is noteworthy and indicates the market is baking in success for its products and services.

Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.

Billings

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Workiva’s billings punched in at $251.6 million in Q4, and over the last four quarters, its growth was solid as it averaged 17.3% year-on-year increases. This performance aligned with its total sales growth, indicating robust customer demand. The cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth.

Customer Retention

One of the best parts about the software-as-a-service business model (and a reason why they trade at high valuation multiples) is that customers typically spend more on a company’s products and services over time.

Workiva’s net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 111% in Q4. This means Workiva would’ve grown its revenue by 10.6% even if it didn’t win any new customers over the last 12 months.

Workiva has a good net retention rate, proving that customers are satisfied with its software and getting more value from it over time, which is always great to see.

Key Takeaways from Workiva’s Q4 Results

It was good to see Workiva expecting revenue growth to continue next year. We were also happy its billings outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance missed significantly and its EPS guidance for next quarter fell short of Wall Street’s estimates. The stock traded up 5.3% to $88.15 immediately following the results.

Big picture, is Workiva a buy here and now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.