Financial and compliance reporting software company Workiva (NYSE: WK) announced better-than-expected revenue in Q1 CY2025, with sales up 17.4% year on year to $206.3 million. The company expects next quarter’s revenue to be around $209 million, close to analysts’ estimates. Its non-GAAP profit of $0.14 per share was 99.2% above analysts’ consensus estimates.
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Workiva (WK) Q1 CY2025 Highlights:
- Revenue: $206.3 million vs analyst estimates of $204.1 million (17.4% year-on-year growth, 1.1% beat)
- Adjusted EPS: $0.14 vs analyst estimates of $0.07 (99.2% beat)
- Adjusted Operating Income: $4.99 million vs analyst estimates of $241,200 (2.4% margin, significant beat)
- The company reconfirmed its revenue guidance for the full year of $866 million at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $1.06 at the midpoint
- Operating Margin: -12%, down from -10.4% in the same quarter last year
- Free Cash Flow was -$8.12 million, down from $43.16 million in the previous quarter
- Customers: 6,385, up from 6,305 in the previous quarter
- Net Revenue Retention Rate: 110%, down from 112% in the previous quarter
- Annual Recurring Revenue: $742 million at quarter end, up 19.7% year on year
- Billings: $190.6 million at quarter end, up 21.6% year on year
- Market Capitalization: $4 billion
StockStory’s Take
Workiva’s Q1 results were driven by continued broad-based demand for its portfolio of solutions across governance, risk and compliance, financial reporting, and sustainability management. CEO Julie Iskow pointed to a notable increase in large contract wins and multi-solution deals, highlighting the company’s ability to serve evolving customer needs. She stated that, despite a more cautious buying environment towards the end of the quarter, "CFOs trust Workiva to be the platform that drives performance and productivity for their current requirements and prepares them for their next digital, financial and operational transformations."
Looking ahead, management reconfirmed its full-year guidance, emphasizing a measured approach due to persistent macroeconomic and regulatory uncertainty. CFO Jill Klindt explained, "We remain confident in our long-term market opportunity and growth strategy," but acknowledged that slower bookings and more thoughtful customer spending could impact free cash flow for the remainder of the year. Management indicated continued investment in platform innovation and go-to-market capabilities, aiming to sustain growth despite the evolving environment.
Key Insights from Management’s Remarks
Workiva reported broad-based performance in Q1, with key wins across solution categories and geographies. Management focused on the company’s ability to adapt to regulatory changes and drive value through its unified platform strategy.
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Large contract expansion: Workiva saw a notable rise in large contract deals, with contracts over $100,000, $300,000, and $500,000 each growing over 23% year-over-year. This trend was attributed to both expanded sales within existing accounts and new customer acquisitions seeking multiple solutions.
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Sustainability and regulatory drivers: The company pointed to ongoing demand for sustainability reporting driven by both regulatory requirements, such as the EU’s Corporate Sustainability Reporting Directive (CSRD), and voluntary corporate initiatives. Management highlighted that customers are investing in sustainability solutions not just for compliance, but to enhance business performance and stakeholder trust.
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Geographic demand balance: Growth was described as broad-based across the U.S., Europe, and Asia-Pacific regions. Management noted particular momentum in Europe among large companies facing near-term CSRD deadlines, while in the U.S., buying behavior was described as more cautious due to changing regulatory priorities.
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Product innovation and platform readiness: Workiva launched new capabilities for SEC Reporting and introduced a Fund Reporting Solution aimed at public funds, including those managing ETFs. The company emphasized its readiness to support regulatory changes, such as the SEC’s EDGAR NEXT rollout.
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Go-to-market evolution: Leadership described ongoing investment in salesforce maturity, including expanded major account teams and refined sales focus. This was presented as a way to drive deeper penetration in both new and existing markets, despite macroeconomic uncertainty.
Drivers of Future Performance
Management’s outlook for the upcoming quarters centers on persistent demand for compliance and reporting solutions, tempered by macroeconomic and regulatory caution. The company is prioritizing product innovation and sales execution to support its revenue and profitability targets.
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Sustained compliance demand: Ongoing changes in global and regional regulations, particularly in sustainability and financial reporting, are expected to drive continued customer adoption of multiple platform solutions.
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Sales execution and customer expansion: Management is focusing on deeper engagement in existing accounts and targeted new customer acquisition, leveraging product breadth and unified platform value.
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Macroeconomic headwinds: Leadership acknowledged that a more cautious buying environment and delayed customer decision-making may affect deal timing and free cash flow, and is adopting a balanced approach to guidance as a result.
Top Analyst Questions
- Patrick Schulz (Baird): Asked why management maintained full-year guidance despite a more cautious buying environment; CFO Jill Klindt explained that broad-based Q1 performance and confidence in the company’s large addressable market supported this decision.
- Adam Hotchkiss (Goldman Sachs): Questioned the impact and quantification of the ‘soft buying environment’; CEO Julie Iskow clarified that deal cycles are lengthening, but growth expectations remain supported by a large unaddressed market.
- Steven Enders (Citi): Inquired whether the slowdown was isolated to certain solutions or regions; Iskow replied that demand was broad-based, with no specific area disproportionately affected.
- Jacob Roberge (William Blair): Sought detail on the sustainability business’s adoption cadence after EU regulatory changes; Iskow indicated ongoing opportunity among large European companies still adapting to new CSRD requirements.
- Andrew DeGasperi (BNP Paribas): Asked about the Fund Reporting Solution’s market potential; Iskow described the public funds segment as a sizable adjacent opportunity, citing over 12,000 eligible global funds.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will monitor (1) the pace of large contract growth and multi-solution adoption across geographies, (2) Workiva’s ability to drive incremental sales in sustainability and fund reporting amid evolving regulations, and (3) the impact of macroeconomic caution on deal cycles and free cash flow. Execution on go-to-market initiatives and product rollouts will also be important markers for sustained growth.
Workiva currently trades at a forward price-to-sales ratio of 4.5×. Is the company at an inflection point that warrants a buy or sell? Find out in our free research report.
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