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Workiva Partners with Armanino to Boost Wdesk Offerings

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Workiva Inc. (WK - Free Report) recently joined forces with leading independent accounting and business consulting firm in the U.S., Armanino LLP, to offer solutions to enterprises to address financial reporting and regulatory compliance issues more efficiently.

Notably, Armanino will make use of Workiva’s flagship product – Wdesk cloud platform – to collaborate with its clients in real-time. This should help to minimize the chances of errors and software version incompatibilities as well as enhance the overall compliance process.

Nonetheless, the shares of the company have outperformed the Zacks categorized Internet – Software industry in the last year. While the industry registered an increase of only 8.1%, the stock gained a 34.9% during the same time frame.

The outperformance of the stock may be attributed to growing adoptions of its cloud platform, Wdesk. We believe that the increasing popularity of this platform will help the company deliver a strong performance during the rest of 2017.

Wdesk Gathers Steam

As of the last reported quarter, Workiva’s subscription and support (S&S) revenues (82.7% of total revenue) increased 19.4% to $38.3 million. Almost 50.7% of the S&S revenue growth came from new customers, who were added in the last 12 months. The remaining 49.3% of the increase was driven by a deeper reach of the company’s products to the existing customer base.

S&S revenue retention rate, excluding add-ons, was 95.4% at the end of the reported quarter. The metric was 95.8% at the end of the year-ago quarter.

We note that the Wdesk platform continues to witness a strong adoption trend. Recently, Smithfield Foods adopted the platform to centralize its internal controls. Last month, the company teamed up with OpenGov to help state and local governments streamline their budgeting and financial reporting processes. 

While this is encouraging for the company, competition is intensifying in the cloud-based enterprise management and auditing software-as-a-service (SaaS) space with the likes of Oracle’s (ORCL - Free Report) Oracle Hyperion Planning, SAP SE’s (SAP - Free Report) SAP Business One, Adaptive Planning and OIKOS Treasury Suite.

Per an IDC report, the SaaS market is expected to be worth more than $112.8 billion by 2019. Notably, the market is currently growing at a CAGR of 18.3%. Given the huge growth prospects of the sector, Workiva’s growing trend of partnerships augurs well and is likely to have a positive impact on its top line going ahead.

Zacks Rank

At present, Workiva carries a Zacks Rank #3 (Hold).

A better-ranked stock in the broader technology space is Zendesk, Inc. , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Notably, the Zacks Consensus Estimate the current year has narrowed to a loss of 99 cents from a loss of $1.22 for Zendesk over the last 60 days.

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