Data is a natural byproduct of any organization with digital operations. The larger the company, the larger the workforce, and the more data that's being generated. This comes with challenges, particularly around how it's tracked and managed.
Platform technology company Workiva (WK -1.36%) offers solutions to those problems. The company reported its full-year 2021 earnings result on Feb. 22, and it generated robust growth, particularly among its highest-spending customers.
As trends like remote work become more prevalent, Workiva has an enormous opportunity ahead of it. Here's why it's an important addition to the toolbox of many companies, and could be to your portfolio, too.
Image source: Getty Images.
The ultimate data unification platform
Workiva's specialty is aggregating data across multiple applications and workflows so managers can easily compile critical information for regulatory and compliance reporting purposes. The company's technology can be the driving force behind internal audits, external submissions to the Securities and Exchange Commission (SEC), and even environmental, social, and governance (ESG) reporting.
"We simplify complex work" is Workiva's slogan, and it runs to the company's very core. Large organizations tend to use a portfolio of applications in the course of everyday business, for example Alphabet's Google Cloud, Microsoft Office, and Salesforce's Tableau, and Workiva plugs into them all, pulling data and displaying it in one central location. But that's just a sample -- Workiva's platform supports dozens of integrations.
This is a powerful tool for managing large teams of employees, particularly those working remotely, as visibility over workflows can otherwise be minimal. In addition, Workiva has built-in automation that turns data and reports into reusable assets, reducing time spent on repetitive inputs and limiting opportunities for errors.
Perhaps no reporting is more monotonous than SEC-related filings, and Workiva simplifies over 350 different types of forms for this purpose, which is why eight of the world's top-ten banks use it. But ESG reporting is quickly becoming a focus point, as organizations demand tools that help them track their sustainability efforts. Companies can use Workiva to build an ESG strategy from scratch, in addition to core data collection and reporting tools, making it a go-to platform.
Large organizations are driving growth
Workiva generated $443 million in revenue during 2021, which was a 26% increase from 2020. But there's a striking growth trend beneath the surface, with the number of customers falling into Workiva's top-spending categories soaring.
|
Metric |
2020 |
2021 |
Growth |
|---|---|---|---|
|
Total Customers |
3,723 |
4,315 |
15% |
|
Customers spending $150,000 or more |
419 |
578 |
38% |
|
Customers spending $300,000 or more |
119 |
183 |
54% |
Data source: Workiva.
That highlights the need for new tools among larger organizations to help manage segments of their workforce that might be remote, or even simply working across borders.
Workiva hasn't been profitable on a GAAP basis in the past, although it delivered adjusted earnings per share of $0.37 in 2021, representing growth of 208% from 2020. The company expects to revert back to non-GAAP losses in 2022 as it makes further investments in its environmental, social, and governance (ESG) data capabilities to meet demand from customers.
Workiva is a great long-term bet
Workiva has a high gross margin of 76.6%, which affords it plenty of flexibility when it comes to how it manages costs. In 2021, the company spent $178 million on sales and marketing, for example, which represented 40% of total revenue. That's an expense that can be pared back in the future once Workiva achieves scale, and that change alone could swing its net losses into the green.
Setting the pandemic aside, the number of employees working remotely was already trending higher. In 2015, approximately 3.9 million workers were remote, which climbed to 4.7 million by 2019. But of course, lockdowns triggered an explosion in these numbers, pushing over half of the U.S. workforce into remote work during the pandemic.
While this may partially reverse as society continues to reopen, a survey by Owl Labs suggests 85% of managers believe having remote workers will become the new normal, and 74% of workers say the ability to work remotely makes them less likely to leave their job.
That means large organizations are likely to continue offering hybrid work arrangements at a minimum to keep and attract talent, and that's a big win for companies like Workiva that offer the tools to make it all possible. Therefore, it's one stock investors should definitely consider owning over the long run.
