Executive Summary / Key Takeaways

• Workiva's core investment thesis centers on its differentiated, unified cloud platform for Assured Integrated Reporting, consolidating financial reporting, GRC, and sustainability management to address increasing complexity and regulatory demands.
• The platform's technological edge, including data linking, audit trails, and recent additions like Workiva Carbon and AI capabilities, provides quantifiable benefits in efficiency and control, positioning it uniquely against point solutions and broader enterprise software competitors.
• Recent performance shows solid subscription revenue growth (19.7% YoY in Q1 2025), driven by multi-solution adoption and large customer expansion, demonstrating the platform's value despite a cautious buying environment emerging late in Q1 2025.
• Management maintained its full-year 2025 revenue guidance, reflecting a balanced view acknowledging potential persistent macro and regulatory uncertainties, while revising down the free cash flow margin target to 10% due to anticipated bookings pressure.
• Workiva is strategically investing in its go-to-market teams, international expansion (particularly in Europe), and partner ecosystem to capitalize on the large, unaddressed market opportunity, balancing these growth initiatives with a commitment to improving operating leverage towards long-term profitability targets.

The Platform for Trust in a Complex World

Workiva Inc. operates at the intersection of increasing business complexity and the urgent demand for transparency, accountability, and trust. At its core, Workiva provides a unified, cloud-based platform designed to streamline and control critical business reporting processes. This isn't merely about automating tasks; it's about transforming how finance, accounting, sustainability, risk, and audit teams connect disparate data, unify workflows, and collaborate securely to produce mission-critical disclosures and reports. The company's strategic focus is on what it terms "Assured Integrated Reporting," bringing together financial reporting, governance, risk, and compliance (GRC), and sustainability management onto a single, audit-ready platform. This integrated approach is a direct response to the evolving regulatory landscape and stakeholder expectations that increasingly demand interconnected financial and non-financial data with robust controls and assurance.

Workiva's journey, marked by its corporate conversion in 2014 and subsequent expansion, reflects a strategic evolution from its roots in financial reporting, particularly SEC filings, to a broader platform addressing a multitude of reporting challenges. Key to this evolution has been the development and enhancement of its core technology. The Workiva platform is built to connect and transform data from hundreds of enterprise resource planning (ERP), human capital management (HCM), customer relationship management (CRM), and other third-party systems. This data linking capability is a fundamental differentiator, ensuring consistency, accuracy, and auditability across documents, presentations, and reports. The platform's collaborative features empower distributed teams, while its flexibility allows customers to adapt processes in real-time.

A significant recent technological advancement is the integration of Workiva Carbon, following the strategic acquisition of Sustain.Life in June 2024. This addition enhances Workiva's sustainability offering by providing capabilities for carbon accounting, tracking, and disclosure of Scope 1, 2, and 3 emissions, and decarbonization efforts. This is particularly strategic as carbon accounting is often the most consistently regulated aspect of sustainability and many companies prefer a single vendor for both carbon and broader ESG reporting. Workiva Carbon is viewed as a "platform play," designed to make the overall ESG solution and the Assured Integrated Reporting platform even more relevant and marketable, helping to win new sustainability deals.

Furthermore, Workiva is prioritizing AI innovation, viewing it as a "reinvention of work." The platform is incorporating AI capabilities to help customers create, modify, and improve content and streamline workflows. This includes solution-specific use cases like drafting and editing SEC documents, creating policies and controls for GRC, and leveraging large language models (LLMs) across Workiva documents. The focus is on delivering usable and useful AI features within a secure environment, aiming to drive additional value for customers.

These technological differentiators provide Workiva with a competitive moat. In a market populated by point solutions and broader enterprise software providers like BlackLine (BL), Coupa (COUP), Workday (WDAY), and Oracle (ORCL), Workiva's unified platform stands out. While competitors may offer strong capabilities in specific areas (e.g., BlackLine in financial close, Workday in HCM/Finance, Oracle in broad enterprise suites, Coupa in spend management), Workiva's strength lies in its specialized focus on complex, controlled reporting and its ability to integrate diverse data streams for compliance and disclosure. This allows Workiva to compete effectively, particularly in highly regulated industries and for use cases requiring integrated financial and non-financial reporting, such as CSRD compliance. The company's strategic positioning leverages its platform's agility and customer-focused innovation against the scale and potentially slower adaptation of larger, more generalist competitors like Oracle. While Workiva's R&D investments are significant, contributing to its innovation speed, they also contribute to a lag in profitability compared to more mature, efficient peers like BlackLine and Oracle. However, the focus on a large, relatively unaddressed total addressable market (TAM) with a differentiated platform is central to Workiva's growth strategy.

Performance Amidst Shifting Sands

Workiva's recent financial performance reflects a business executing on its growth strategy while navigating a dynamic market. For the three months ended March 31, 2025, total revenue reached $206.280 million, a 17.4% increase compared to $175.667 million in the same period of 2024. This growth was primarily fueled by subscription and support revenue, which rose 19.7% year-over-year to $185.512 million, constituting 89.9% of total revenue. This strong subscription growth was attributed mainly to robust demand and continued solution expansion within the customer base. Professional services revenue remained relatively flat at $20.768 million, aligning with the company's strategy to transition lower-margin services to partners, expecting subscription growth to outpace services growth annually.

Operational metrics underscore the company's progress in expanding its footprint within existing customers and attracting larger deals. As of March 31, 2025, the number of customers with annual contract values (ACV) over $100,000 increased by 23% year-over-year, those over $300,000 increased by 32%, and those over $500,000 also increased by 32%. The percentage of subscription revenue from customers using multiple solutions grew to 69% in Q1 2025 from 66% in Q1 2024, indicating successful cross-selling and platform adoption. The gross retention rate remained strong at 97.3%, exceeding the internal target despite a slight dip from 97.8% in the prior year, with attrition primarily linked to customer mergers, acquisitions, or financial distress. The net retention rate, a key indicator of expansion within the existing base, was 110.1%, slightly down from 110.6%, experiencing pressure from foreign exchange headwinds and the Leap Year calculation impact.

Profitability metrics show ongoing investment alongside efforts for leverage. Gross profit for Q1 2025 was $157.938 million, resulting in a gross margin of 76.6%, a slight improvement from 76.4% in Q1 2024. This was supported by efficiency gains in scaling customer and partner teams and managing cloud costs. Operating expenses saw increases across the board, with research and development at $53.780 million (up 18.2%), sales and marketing at $101.671 million (up 23.0%), and general and administrative at $27.237 million (up 12.1%).

These increases were largely driven by higher compensation costs due to increased headcount and investments in go-to-market activities and platform support. The operating loss for Q1 2025 widened to $24.750 million from $18.283 million in Q1 2024, resulting in an operating margin of -12.0% compared to -10.3%. The net loss for the quarter was $21.371 million, or $0.38 per share, compared to a net loss of $11.687 million, or $0.21 per share, in the prior year period.

Liquidity remains solid, with cash, cash equivalents, and marketable securities totaling $767 million as of March 31, 2025. While cash used in operating activities for Q1 2025 was $7.358 million (compared to cash provided of $24.844 million in Q1 2024), this was influenced by timing shifts in receivables, deferred revenue, and accrued expenses like commissions. Investing activities primarily involved managing marketable securities. Financing activities in Q1 2025 included $40.1 million in share repurchases under the $100 million program authorized in July 2024, alongside taxes paid on stock settlements, partially offset by proceeds from employee stock plans.

Outlook and Strategic Balancing Act

Workiva's outlook for the remainder of 2025 reflects a strategic balancing act between capitalizing on significant market opportunities and acknowledging prevailing uncertainties. Despite exceeding the high end of its Q1 2025 revenue guidance, management maintained its full-year 2025 total revenue outlook, projecting a range of $864 million to $868 million. This decision was framed by the observation of a "more cautious buying environment toward the end of Q1" and the expectation that this environment, influenced by regulatory and political uncertainties, "may persist until customers see clarity."

The full-year guidance anticipates subscription revenue growth of approximately 20% at the midpoint, indicating continued confidence in the core platform's ability to attract and expand customer relationships. Total services revenue is expected to decline year-over-year, with setup and consulting services seeing a steeper decline than in 2024, while XBRL services are projected for low single-digit growth.

On the profitability front, Workiva continues to target improved operating leverage. The full-year 2025 non-GAAP operating margin is expected to range from 5% to 5.5%, an improvement over 2024. Management anticipates operating margin to be stronger in the back half of the year, following typical Q1 seasonality driven by front-loaded expenses. However, the target for 2025 free cash flow margin was revised down to 10% (from 12% previously), explicitly linked to "pressure on bookings expectations for the rest of the year given the macro uncertainty."

This guidance underscores Workiva's commitment to investing in its long-term growth strategy, particularly in its go-to-market teams, international expansion (especially in Europe and APAC), and partner ecosystem. These investments are aimed at capturing the large, unaddressed TAM and capitalizing on timely opportunities presented by regulatory changes like CSRD and the increasing demand for integrated reporting. The company operates with its 2027 and 2030 targets in mind, aiming for continued, albeit non-linear, progress in margin expansion.

Key risks to this outlook include the potential for the cautious buying environment to deepen or persist longer than anticipated, further impacting bookings. Regulatory uncertainty, particularly around the scope and timing of sustainability mandates like CSRD and U.S. state-level rules, could slow market adoption. Volatility in the IPO and SPAC markets continues to pose a risk to related solution sales. Geopolitical instability and broader macroeconomic factors like interest rates and inflation could also influence customer spending behavior.

Conclusion

Workiva's investment thesis is firmly rooted in its position as the leading provider of a unified platform for Assured Integrated Reporting. By bringing together financial reporting, GRC, and sustainability management, the company addresses the complex and growing demands for transparency and compliance in a secure, controlled environment. The platform's technological foundation, enhanced by recent innovations like Workiva Carbon and AI capabilities, provides a distinct competitive advantage in a market facing increasing regulatory pressure and stakeholder scrutiny.

While the company demonstrated solid subscription revenue growth and operational execution in Q1 2025, the emergence of a more cautious buying environment and ongoing regulatory uncertainties present near-term headwinds. Management's decision to maintain the full-year guidance reflects a prudent approach, balancing optimism about the long-term opportunity with acknowledgment of current market dynamics. Strategic investments in go-to-market capabilities, international expansion, and the partner ecosystem are critical to capitalizing on the large addressable market and driving future growth. For investors, the focus remains on Workiva's ability to execute on its strategy, leverage its technological differentiation, and demonstrate continued progress towards its long-term targets for both growth and improved operating leverage, even as it navigates a period of market turbulence and policy flux.