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Workiva (WK) to Report Q4 Earnings: What's in the Cards?

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Workiva Inc. (WK - Free Report) is set to report fourth-quarter 2017 results on Feb 22.

Although the company reported loss in each of the trailing four quarters, it surpassed the Zack Consensus Estimate, delivering an average positive earnings surprise of 45.29%.

Last quarter, the company reported a loss of 23 cents per share, narrower than the Zacks Consensus Estimate of a loss of 29 cents.

Revenues increased 16.5% year over year to $52.1 million and beat the Zacks Consensus Estimate of $51 million.

The company’s intuitive cloud platform, Wdesk, which is used for collecting, integrating, managing and analyzing business data, continues to gain traction and is expected to aid top-line growth in the soon-to-be reported quarter.

Workiva continues to expand its existing customer base with its accounting, SOX and compliance software. Moreover, continued investment in Wdesk platform and a widening partner ecosystem are expected to drive growth.

Workiva stock has gained 94% in the past year, substantially outperforming the 26.5% rally of the industry it belongs to.



Let's see how things are shaping up for this announcement.

Guidance & Estimates

For fourth-quarter 2017, total revenues are anticipated between $53 million and $53.4 million. The Zacks Consensus Estimate is pegged at $53.3 million. Non-GAAP operating loss is expected in the range of $8.8-$9.2 million.

Workiva expects negative operating cash flow in the fourth quarter due to the timing of the payment of certain annual cash bonuses.

Non-GAAP net loss is expected in the range of 22-23 cents per share.

Factors at Play

Workiva enjoys steady demand for its products from many foreign private Issuers. During the quarter, the company announced the adoption of Wdesk by ArcelorMittal Belgium for the purpose of tagging data with XBRL for filing with the Securities Exchange Commission (SEC). This will help the business to enhance its foothold in the data reporting business.

Workiva has a strong customer base with its SOX related applications being adopted by the likes of Fastpath, Hi-Crush Partners, Dr Pepper Snapple and 2U among others in 2017. The partnership with EisnerAmper will further boost the company’s top line and provide it with a competitive edge against peers like Xero, Vivid Reports and Intacct. It will also help in the smooth implementation of financial controls related to Sarbanes-Oxley Act (SOX).

Research firm Gartner mentioned in one of its reports that the cloud application infrastructure services market is expected to rise from $8.8 billion in 2017 to $14.8 billion in 2020. Thus, Workiva’s cloud platform is anticipated to benefit from growth of the segment.

Workiva also entered into a strategic partnership with Business Wire, a globally recognized name in press release distribution and regulatory disclosure. The partnership intends to streamline the process of submission of earnings releases and other financial disclosures by companies directly to Business Wire.

However, intensifying competition from peers like Oracle (ORCL - Free Report) , SAP Business One, Adaptive Planning and OIKOS Treasury Suite is a concern for the company.

Workiva Inc. Price and EPS Surprise

Workiva Inc. Price and EPS Surprise | Workiva Inc. Quote

Earnings Whispers

Our proven model does not conclusively show that Workiva is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:

Zacks ESP: Workiva’s Earnings ESP is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 22 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Workiva’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks you may want to consider as our proven model shows that these have the right combination of elements to post an earnings beat this quarter.

Castlight Health (CSLT - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.

SCIENCE APPLICATIONS (SAIC - Free Report) has an Earnings ESP of +1.24% and a Zacks Rank #3.

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