Federal Mandates Drive Workiva: Buy, Sell or Hold the Stock?

Workiva WK is set to play a key role in the U.S. federal government’s financial modernization efforts. The company is the only financial reporting and Governance, Risk, and Compliance platform sanctioned by the United States.

Under a new executive order, all federal agencies are required to consolidate their core financial systems within 180 days of March 25, 2025. The directive aims to boost transparency, reduce fraud and enhance reporting efficiency using solutions approved by the FM QSMO. To comply with the executive order, federal CFOs must adopt FM Marketplace-approved platforms like Workiva, which is a leading provider of cloud-based reporting and compliance solutions, to consolidate and modernize their financial systems successfully.

The order comes amid widespread financial reporting issues, wherein 25% of CFO Act agencies received problematic audit opinions in 2024. Workiva’s platform offers agencies a complete digital transformation solution, helping meet compliance goals while restoring public trust in federal financial oversight. WK’s platform features integration with more than 100 source systems, real-time data updates, automated workflows and FedRAMP-certified audit trails.

Workiva's FedRAMP authorization at the moderate security impact level ensures that its platform meets stringent federal security standards, facilitating its adoption across various government agencies. This compliance, combined with the company's focus on integrating financial and sustainability reporting, positions WK to support agencies in meeting evolving regulatory requirements and advancing their digital transformation goals.

Workiva Inc. Price and Consensus

 

Workiva Inc. price-consensus-chart | Workiva Inc. Quote

Workiva Shares Lag Sector & Industry YTD

WK’s shares have lost 36.7% year to date, underperforming the broader Zacks Computer and Technology sector’s 14% decline and the Zacks Internet - Software industry’s fall of 11.1%.

It has also lagged its industry peer Affirm AFRM, Dayforce, Inc. DAY and StoneCo STNE. Over the same time frame, Affirm and Dayforce shares have lost 31.7% and 23.2%, while StoneCo shares have gained 49.9%.

The decline in Workiva’s share price is largely led by a cautious outlook for operating margins in the first quarter of 2025. GAAP operating margin is -14.3%, and the non-GAAP margin is close to break-even, indicating profitability challenges. Intensifying competition within the cloud-based reporting and compliance market adds to investor concerns.

However, Workiva’s integrated reporting platform, along with consistent subscription revenue growth, signals strong long-term potential, supported by its projected 16-17% year-over-year growth for the first quarter of 2025. The company’s ability to attract and retain clients reinforces the platform’s sustained relevance and value.

WK Provides Positive 2025 Guidance

For 2025, Workiva projects total revenues of $864-$868 million, implying year-over-year growth of 17-17.5%. 

The Zacks Consensus Estimate for 2025 revenues is pegged at $865.12 million, suggesting a 17.12% increase from the prior-year quarter’s actual.

Non-GAAP earnings are expected to be $1.02-$1.09 per share.

The Zacks Consensus Estimate for earnings is pegged at $1.05 per share. The estimate indicates an 11.7% year-over-year increase.

Zacks Rank

WK currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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