Workiva Inc. ((WK)) has held its Q4 earnings call. Read on for the main highlights of the call.
Workiva Inc. recently held its earnings call, revealing a robust financial performance marked by significant revenue growth and strategic achievements. The sentiment during the call was largely positive, underscored by impressive strides in sustainability reporting and global expansion. However, the company expressed concerns over policy and geopolitical uncertainties, which are influencing their cautious approach to 2025 guidance.
Strong Revenue Growth
Workiva reported a remarkable increase in revenue, with Q4 subscription revenue growing by 22% and total revenue by 20% compared to Q4 2023. For the full year 2024, subscription revenue grew by 20%, and total revenue increased by 17%. This growth underscores the company’s successful strategies in expanding its market presence and enhancing its service offerings.
Increase in Large Contracts
The company saw a significant rise in large contracts, with those valued over $300,000 increasing by 34% and contracts over $500,000 growing by 32% compared to Q4 2023. This trend highlights Workiva’s ability to secure substantial deals and strengthen its client base, contributing to its overall financial health.
Global Expansion Success
Workiva’s global expansion efforts have paid off, with 17.5% of 2024’s total worldwide revenue coming from outside the Americas, marking an increase of 280 basis points from 2023. This growth reflects the company’s strategic focus on diversifying its revenue streams and tapping into international markets.
Sustainability Reporting Demand
Sustainability reporting continues to be a key driver for Workiva, maintaining its position as a top booking solution for ten consecutive quarters. This demand is fueled by increasing regulatory requirements and corporate commitments to sustainability, positioning Workiva as a leader in this critical area.
Improved Operating Margins
The company’s non-GAAP operating margin improved significantly to 4.3% in 2024, up from 1.6% in 2023. This improvement indicates Workiva’s effective cost management and operational efficiency, contributing positively to its bottom line.
Policy and Geopolitical Uncertainty
Despite the positive financial performance, Workiva expressed concerns over policy uncertainty due to a new U.S. administration, potential regulatory changes in Europe, and currency exchange rate impacts. These factors are creating a cautious outlook for the company as it navigates these external challenges.
Decline in Professional Services Revenue
Workiva experienced a slight decline in professional services revenue in 2024 compared to 2023. This decrease is attributed to the strategic shift of low-margin services to partners, allowing the company to focus on higher-margin opportunities.
Forward-Looking Guidance
Looking ahead, Workiva provided guidance for the first quarter and full year 2025, projecting total revenue between $203 million to $205 million for Q1 and $864 million to $868 million for the full year. Subscription revenue growth is expected to remain strong at 20% at the midpoint. The company anticipates a non-GAAP operating margin between 5% and 5.5%, with a free cash flow margin of approximately 12%. These projections reflect Workiva’s confidence in its growth strategies despite external uncertainties.
In conclusion, Workiva’s earnings call highlighted a strong financial performance with substantial revenue growth and strategic achievements in sustainability and global expansion. While the company remains optimistic about its future prospects, it is also mindful of policy and geopolitical uncertainties that could impact its operations. Investors and stakeholders will be keenly watching how Workiva navigates these challenges while continuing to deliver value.