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Workiva (WK) Q4 Loss Narrower than Expected, Revenues Beat
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Workiva Inc. (WK - Free Report) reported fourth-quarter fiscal 2016 loss of 18 cents per share, which was narrower than the Zacks Consensus Estimate of loss 30 cents and year-ago quarter loss figure of 26 cents.
The narrower loss was owing to 16.3% (68% at constant currency) growth in revenues, which totaled $46.4 million and was better than the Zacks Consensus Estimate of $45 million.
Revenues increased 23% to $178.6 million in full-year 2016. Loss narrowed down to $1.08 per share compared with loss of $1.09 reported in 2015. Workiva had 2,772 customers as of Dec 31, 2016, a net increase of 248 customers from Dec 31, 2015.
Moreover, Workiva's revenue retention rate (excluding add-on revenue) was 95.4%. Including add-on revenues, revenue retention rate was 107.4% at the end of the year.
However, improving results have failed to drive shares. We note that Workiva has underperformed the Zacks Internet Software industry in the last one year. While the stock gained 9.5%, the industry witnessed an increase of 17.1%.
Segment Revenue Details
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 revenues growth came from new customers, added in the last 12 months. The remaining 49.3% of the increase came from deeper penetration of the company’s products into existing customer base.
S&S revenue retention rate excluding add-ons was 95.4% at the end of the reported quarter, as compared with 95.8% at the end of the year-ago quarter.
Professional services (17.3% of total revenue) revenues were up 3.4% to $8 million. The Higher customer count and services for non-SEC use cases accounted for most of the growth in services revenue.
Operating Details
Gross margin contracted 90 basis points (bps) from the year-ago quarter to 71.5%. This was primarily due to an increase in employee compensation as well as higher server costs.
Operating expense remained almost flat at $40.6 million. While research and development (R&D) expense increased 7.7% from the year-ago quarter, sales and marketing (S&M) & general and administrative (G&A) expenses declined 2.3% and 8.1%, respectively.
Workiva’s focus on developing the Wdesk platform drove R&D expense in the quarter. S&M declined due to lower consulting and recruiting fees, travel and advertising expenses. G&A fell due to improved operating efficiencies and reduction in accrual for incentive compensation expense.
Consequently, operating loss narrowed down to $7.4 million from year-ago figure of $11.8 million.
Balance Sheet & Cash Flow
Workiva exited the quarter with cash and cash equivalents of $51.3 million. The company generated cash from operations of almost $10 million.
Guidance
For first-quarter 2017, total revenue is expected to be in the range of $50.3–$50.7 million. Non-GAAP loss from operations is expected to be in the range of $5.8–$6.2 million. Non-GAAP net loss is anticipated to be in the range of 14–15 cents per share.
The Zacks Consensus Estimate is currently pegged at a loss of 23 cents per share on revenues of $50.7 million.
For full-year 2017, total revenue is expected to be in the range of $203–$206 million. Non-GAAP loss from operations is expected to be in the range of $29–$32 million. Non-GAAP net loss is anticipated to be in the range of 72–80 cents per share.
The Zacks Consensus Estimate is currently pegged at a loss of $1.02 per share on revenues of $206.9 million.
Management expects operating cash flow to be a breakeven or better for full-year 2017 and annually thereafter.
Zacks Rank & Key Picks
Workiva carries a Zacks Rank #3 (Hold). Alibaba (BABA - Free Report) , Attunity and Zendesk are better-ranked stocks worth looking in the broader sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Alibaba, Attunity, and Zendesk are pegged at 26.1%, 20% and 25%, respectively.
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Workiva (WK) Q4 Loss Narrower than Expected, Revenues Beat
Workiva Inc. (WK - Free Report) reported fourth-quarter fiscal 2016 loss of 18 cents per share, which was narrower than the Zacks Consensus Estimate of loss 30 cents and year-ago quarter loss figure of 26 cents.
The narrower loss was owing to 16.3% (68% at constant currency) growth in revenues, which totaled $46.4 million and was better than the Zacks Consensus Estimate of $45 million.
Revenues increased 23% to $178.6 million in full-year 2016. Loss narrowed down to $1.08 per share compared with loss of $1.09 reported in 2015. Workiva had 2,772 customers as of Dec 31, 2016, a net increase of 248 customers from Dec 31, 2015.
Moreover, Workiva's revenue retention rate (excluding add-on revenue) was 95.4%. Including add-on revenues, revenue retention rate was 107.4% at the end of the year.
Workiva Inc. Price, Consensus and EPS Surprise
Workiva Inc. Price, Consensus and EPS Surprise | Workiva Inc. Quote
However, improving results have failed to drive shares. We note that Workiva has underperformed the Zacks Internet Software industry in the last one year. While the stock gained 9.5%, the industry witnessed an increase of 17.1%.
Segment Revenue Details
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 revenues growth came from new customers, added in the last 12 months. The remaining 49.3% of the increase came from deeper penetration of the company’s products into existing customer base.
S&S revenue retention rate excluding add-ons was 95.4% at the end of the reported quarter, as compared with 95.8% at the end of the year-ago quarter.
Professional services (17.3% of total revenue) revenues were up 3.4% to $8 million. The Higher customer count and services for non-SEC use cases accounted for most of the growth in services revenue.
Operating Details
Gross margin contracted 90 basis points (bps) from the year-ago quarter to 71.5%. This was primarily due to an increase in employee compensation as well as higher server costs.
Operating expense remained almost flat at $40.6 million. While research and development (R&D) expense increased 7.7% from the year-ago quarter, sales and marketing (S&M) & general and administrative (G&A) expenses declined 2.3% and 8.1%, respectively.
Workiva’s focus on developing the Wdesk platform drove R&D expense in the quarter. S&M declined due to lower consulting and recruiting fees, travel and advertising expenses. G&A fell due to improved operating efficiencies and reduction in accrual for incentive compensation expense.
Consequently, operating loss narrowed down to $7.4 million from year-ago figure of $11.8 million.
Balance Sheet & Cash Flow
Workiva exited the quarter with cash and cash equivalents of $51.3 million. The company generated cash from operations of almost $10 million.
Guidance
For first-quarter 2017, total revenue is expected to be in the range of $50.3–$50.7 million. Non-GAAP loss from operations is expected to be in the range of $5.8–$6.2 million.
Non-GAAP net loss is anticipated to be in the range of 14–15 cents per share.
The Zacks Consensus Estimate is currently pegged at a loss of 23 cents per share on revenues of $50.7 million.
For full-year 2017, total revenue is expected to be in the range of $203–$206 million. Non-GAAP loss from operations is expected to be in the range of $29–$32 million. Non-GAAP net loss is anticipated to be in the range of 72–80 cents per share.
The Zacks Consensus Estimate is currently pegged at a loss of $1.02 per share on revenues of $206.9 million.
Management expects operating cash flow to be a breakeven or better for full-year 2017 and annually thereafter.
Zacks Rank & Key Picks
Workiva carries a Zacks Rank #3 (Hold). Alibaba (BABA - Free Report) , Attunity and Zendesk are better-ranked stocks worth looking in the broader sector. All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Alibaba, Attunity, and Zendesk are pegged at 26.1%, 20% and 25%, respectively.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>