Enterprise software company Workiva (NYSE:WK) announced its fourth-quarter results after market close on Feb. 23. Revenue growth slowed down, and the company expects that pattern to continue into 2017 as it goes after enterprisewide deployments for its Wdesk solution. Costs were kept in check, leading to a meaningful improvement in profitability, and all-important retention rates remained high, both good signs for the company. Here's what investors need to know about Workiva's fourth-quarter results.

Workiva results: The raw numbers


Q4 2016

Q4 2015

Year-Over-Year Change


$46.4 million

$39.9 million


Net income

($7.5 million)

($10.3 million)






Data source: Workiva.

The Workiva logo.

Image source: Workiva.

What happened with Workiva this quarter?

Workiva continues to gain new customers for its Wdesk solution.

  • Workiva had 2,772 total customers at the end of 2016, up by 248 since the end of 2015.
  • Subscription and support revenue rose 19.4% year over year to $38.3 million. Professional services revenue jumped 3.4% to $8 million.
  • Workiva's revenue retention rate, excluding add-on revenue, was 95.4% at the end of 2016. Including add-on revenue, the retention rate was 107.4%.
  • Operating expenses were roughly flat year over year, which allowed the higher revenue to drive improvements in the bottom line.
  • Operating cash flow was $10 million during the fourth quarter, up from a loss of $5 million during the prior-year period.

Workiva expects further revenue growth and losses during the first quarter and the full year.

  • For the first quarter: Revenue between $50.3 million and $50.7 million, and non-GAAP EPS loss between $0.14 and $0.15. Revenue was $45 million during the first quarter of 2016.
  • For the full year: Revenue between $203 million and $206 million, and non-GAAP EPS loss between $0.72 and $0.80.

What management had to say

Workiva CEO Matt Rizai discussed the evolution of the company's business model: "Customer demand for a broader-based, enterprisewide Wdesk solution continues to grow. In response, we have been evolving our business model, enhancing user management and improving our technology to capitalize on these enterprisewide opportunities."

Rizai also talked about partnership opportunities for the company: "Our brand recognition and market penetration are also generating partnership opportunities with technology companies, consultants, service providers and accounting firms. We expect that our partners will support our sales efforts through referrals and co-selling arrangements, as well as expand Wdesk use through integrated technology offerings."

Looking forward

Sales growth has slowed down at Workiva, with revenue growing by just 23% in 2016, down from 28% growth in 2015 and 33% growth in 2014. The company's guidance calls for revenue growth of just 14.5% in 2017, another significant slowdown.

Workiva is working to add various capabilities to its Wdesk product in order to win more enterprisewide deployments. The company warned late last year that this would lead to bigger and more complex deals, which would lengthen the sales cycle and have a negative impact on revenue. We're seeing that play out in Workiva's fourth-quarter results and guidance.

Workiva will eventually need to ramp up its growth, but the company is still small, and its business model is still evolving. Profitability improvements in the fourth quarter were encouraging, and the company's plan to win bigger deals, if successful, could eventually provide a nice jolt to sales.