Workiva (WK) Fell Despite Reporting Strong Results

Conestoga Capital Advisors, an asset management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets started the year with a rally due to optimism about a strong economy and expectations of moderating inflation and lower interest rates. However, concerns over slowing earnings from major Technology companies, geopolitical tensions, and an upcoming announcement on tariffs led to a sharp decline in equities by the end of the first quarter. Investors sought safety, driving U.S. Treasury yields down. The Conestoga Small Cap Composite returned -11.35% (net) in the first quarter compared to the Russell 2000 Growth Index’s -11.12% return. The Conestoga SMid Cap Composite returned -5.73% compared to the Russell 2500 Growth Index’s -10.80% return. The Conestoga Micro-Cap Composite returned -8.24% vs the Russell Microcap Growth Index’s return of -17.75%. Finally, the Conestoga Mid Cap Composite returned 0.96% (net), compared to the Russell Midcap Growth Index’s -7.12% return. Please check the top 5 holdings of the fund for a better understanding of their best picks for 2025.

In its first-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks such as Workiva Inc. (NYSE:WK). Workiva Inc. (NYSE:WK) is a software services company that offers cloud-based reporting solutions. The one-month return of The Workiva Inc. (NYSE:WK) was -3.44%, and its shares lost 6.80% of their value over the last 52 weeks. On April 28, 2025, The Workiva Inc. (NYSE:WK) stock closed at $73.44 per share with a market capitalization of $4.095 billion.

Conestoga Capital Advisors stated the following regarding The Workiva Inc. (NYSE:WK) in its Q1 2025 investor letter:

"The Workiva Inc. (NYSE:WK) is a global software services company that provides a cloud-based platform for financial reporting, ESG, audit, risk, and compliance. WK was a leader in the fourth quarter, but shares were pressured in January as the European Union limited the scope of their Corporate Sustainability Reporting Directive. This was essentially a mandated reporting framework for ESG, which has been one of WK’s top booking solutions for the past two-plus years. It turns out the change in scope will not affect the enterprise-sized business targets, however, shares remained weak. WK did report strong fourth quarter results."

The Workiva Inc. (NYSE:WK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held The Workiva Inc. (NYSE:WK) at the end of the fourth quarter, compared to 20 in the third quarter. he Workiva Inc. (NYSE:WK) generated subscription revenue growth of 22% and total revenue growth of 20% in Q4 2024 compared to Q4 2023. While we acknowledge the potential of The Workiva Inc. (NYSE:WK) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered The Workiva Inc. (NYSE:WK) and shared the list of best small cap AI stocks to buy. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.