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Workiva (WK) to Report Q1 Earnings: What's in the Cards?

Workiva Inc. WK is set to release first-quarter 2017 earnings on May 4. We note that the company has delivered positive earnings surprises in the trailing four quarters resulting in average surprise of 29.28%.

In the last quarter, the company reported a positive earnings surprise of 40.00%. Loss of 18 cents per share was narrower than the year-ago quarter loss figure of 26 cents. The narrower loss was owing to 16.3% growth in revenues, which totaled $46.4 million and was better than the Zacks Consensus Estimate of $45 million.

For first-quarter 2017, total revenue is expected to be in the range of $50.3–$50.7 million. Non-GAAP loss from operations is anticipated to be in the range of $5.8–$6.2 million. Non-GAAP net loss is anticipated to be in the range of 14–15 cents per share.

Workiva Inc. Price and EPS Surprise


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


We note that the positive results along with favorable guidance helped the stock to outperform the Zacks Internet Software industry on a year-to-date basis. While the industry gained 11%, the stock returned 24.5%.

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

Factors to Consider   

We note that the Wdesk platform continues to witness a strong adoption trend, which is the key growth catalyst. In the fourth quarter, Workiva’s subscription and support (S&S) revenues (82.7% of total revenue) increased 19.4% to $38.3 million. Almost 50.7% of the S&S revenues growth came from new customers, who were added in the last 12 months.

While this is encouraging for the company, competition is intensifying in the cloud-based enterprise management and auditing software-as-a-service (SaaS) space with the likes of Oracle ORCL, SAP Business One, Adaptive Planning and OIKOS Treasury Suite.

Earnings Whispers

Our proven model does not conclusively show that Workiva is likely to beat earnings 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. That 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 25 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 carries a Zacks Rank #3, which when combined with a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are some companies that, as per our model, that have the right combination of elements to post an earnings beat this quarter:

Identiv Inc INVE with an Earnings ESP of +6.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DragonWave DRWI with an Earnings ESP of +8.82% and a Zacks Rank #2.

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Workiva Inc. (WK): Free Stock Analysis Report
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