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E-commerce was already on the rise in the years leading up to 2020, and the pandemic supercharged that growth. Out of necessity, consumers grew accustomed to shopping online for home delivery or curbside pickup, and there’s no turning back.

Companies discovered that they can still make strong connections through video conferencing, and the expense of video conferencing platforms is a fraction of what they once paid out for face-to-face events.

Along the same lines, remote work turned out to be a big hit with employees, and managers discovered that their fears – lost productivity and disengagement – were unfounded. In fact, studies show that virtual workers are more engaged and productive from home than they ever were at the office – so much so that many companies are making the remote or hybrid workplace model permanent.

As an added bonus, businesses can realize substantial savings when they don’t have to lease, purchase, and maintain commercial properties to provide a workspace for every staff member.

Workiva Has Transformed Compliance

Of course, not every virtual team is successful. It takes specialized technology and skilled management to create a productive and engaged workforce from afar.

Fortunately, companies like Zoom, Skype, Slack, Cisco Webex, Google Drive, Google Docs, Dropbox, and Trello have created communication and collaboration platforms that offer the benefits of an in-person office experience without any actual need to step foot in an office.

Communication and collaboration are crucial to the success of remote teams, but there is another component to organizational health: compliance. Whether staff is on-site or at home, data must be collected, analyzed, and reported accurately to avoid running amok of the SEC and other domestic and international regulatory agencies.

Workiva has transformed compliance from a complex manual process to one that practically runs itself. Remote teams can continue to manage critical compliance functions remotely, thanks to Workiva’s cloud-based SaaS (software-as-a-service) solutions.

The platform pulls in connected data and automates reporting functions for sensitive areas of the organization, such as risk, finance, accounting, and compliance. This sort of data unification once required an on-site workforce that devoted hundreds of hours to manual data entry. Now it just takes the click of a button, and the information can be accessed from anywhere by any authorized user.

Workiva stock is down more than 30 percent in the last six months. Is that a sign that the company is in decline, or will Workiva stock recover? In short, is Workiva stock a buy?

Why Did Workiva Stock Drop?

The fourth quarter of 2021 was a stunning one for tech companies. Most of the big names and lots of smaller tech companies saw impressive highs. Then, concerns about inflation and increasing interest rates prompted investors to take their profits and move on to safer assets.

The transition away from tech stocks created a widespread drop in prices, though most of the companies involved had no bad news to report. Workiva was caught up in the anti-tech sentiment, which resulted in the 30+ percent decline in share prices.

There is nothing to suggest that Workiva stock’s decline is a reflection of the company’s prospects. In fact, the business is growing at a rapid rate, though it is not yet turning a profit. So, does that mean Workiva stock will go up?

Will Workiva Stock Recover?

Workiva is not yet profitable, and that’s okay with investors if the company is showing rapid, sustained growth. Many tech companies go years before they are profitable, so it isn’t a cause for alarm. As long as revenues are going up and operating costs are properly managed, profitability is likely to follow.

The biggest advantage Workiva has is its customer growth trends. Overall, there are healthy increases across the board, and the growth among big spenders is particularly interesting. In 2021, those figures looked like this:

  • Total Customers – 15 percent growth
  • Customer Spend Over $100,000 – 32 percent growth
  • Customer Spend Over $150,000 – 38 percent growth
  • Customer Spend Over $300,000 – 54 percent growth

This trend in customer growth indicates that large organizations with complex needs are finding value in Workiva’s compliance solutions. That bodes well for Workiva’s future.

Other results of note from Workiva’s full-year 2021 financial report include the following:

  • Total Revenue – $443.3 million (year-over-year increase of 26.1 percent)
  • Revenue from Subscription and Support – $379.3 million (year-over-year increase of 28.2 percent)
  • Revenue from Professional Services – $63.9 million (year-over-year increase of 14.8 percent)
  • GAAP Gross Profit for 2021 – $339.5 million (as compared to 2020’s $261.4 million)
  • GAAP Gross Margin – 76.6 percent (as compared to 2020’s 74.4 percent)
  • Non-GAAP Gross Profit – $344.0 million (year-over-year increase of 30 percent)
  • Non-GAAP Gross Margin – 77.6 percent (as compared to 2020’s 75.2 percent)
  • GAAP Loss from Operations 2021 – ($29.4) million (as compared to 2020’s loss of ($37.8) million)
  • Non-GAAP Income from Operations – $20.0 million (as compared to 2020’s $8 million)
  • GAAP Net Loss – ($37.7) million (as compared to 2020’s net loss of ($48.4) million)
  • GAAP Net Loss per Basic and Diluted Share – ($0.74) (as compared to 2020’s net loss per basic and diluted share of ($1.00))
  • Non-GAAP Net Income – $20.8 million (as compared with 2020’s $6.3 million)
  • Non-GAAP Net Income per Basic and Diluted Share – $0.41 and $0.37, respectively (as compared with 2020s net income per basic and diluted share of $0.13 and $0.12, respectively)
  • Cash Flow – net cash provided by operating activities, $49.8 million (as compared to 2020’s cash provided by operating activities of $33.2 million)

Workiva’s management provided the following guidance for full-year 2022 in the most recent earnings call:

  • Total Revenue – $532.0 million to $534.0 million
  • GAAP Loss from Operations – ($104.9) million to ($102.9) million
  • Non-GAAP Loss from Operations – ($37) million to ($35) million
  • GAAP Net Loss per Basic and Diluted Share – ($2.08) to ($2.04)
  • Non-GAAP Net Loss per Basic and Diluted Share – ($0.80) to ($0.76)

Clearly, the company is not expected to attain profitability this year, but continued growth appears almost certain.

Is Workiva Stock A Buy?

A majority of analysts covering the company rate Workiva stock a buy. The median 12-month target is $132.50 per share, and the full range is from $110 to $155 per share.

If Workiva stock hits the median target, it will represent an increase of more than 37 percent over share prices as of early May. That’s a win for investors who choose to buy Workiva stock today at its current discounted price.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.