Workiva sees three primary drivers for its new carbon accounting software platform, CEO Julie Iskow told Wall Street analysts during a Q2 2024 earnings call on August 1.
Among the ESG market trends to note, Iskow pointed to:
- More than 4,200 companies have committed to the Science Based Targets initiative (SBTi), and those companies therefore "need technology to support their carbon tracking and decarbonization efforts."
- Carbon accounting is a requirement for thousands of organizations in the global supply chain, she added.
- Carbon emissions disclosure is "the part of ESG that is the most consistently regulated worldwide," she asserted, while pointing to such regulations as the Corporate Sustainability Reporting Directive, the pending SEC Climate Disclosure Rule and California’s Climate Corporate Data Accountability Act and Climate-related Financial Risk Act.
Workiva Carbon: New Software, Recent Acquisition
With those opportunities in mind, the company launched the Workiva Carbon software platform in June 2024. The launch leverages Sustain.Life -- a $100 million acquisition from earlier in the year.
Admittedly, the carbon accounting software market is packed with competitors -- including venture-backed startups, and big SaaS business application providers that are introducing ESG capabilities. Two anecdotes to note for 2024: Hewlett Packard Enterprise invested in startup Greenly, while AWS and Sage partnered on carbon accounting software for SMBs.
Amid that backdrop, Workiva evaluated 40-plus companies before selecting and acquiring Sustain.Life as its carbon accounting software technology, Iskow said. The software "enables organizations to measure, manage, collaborate and report on emissions data to support their net zero supply chain and regulatory reporting requirements," she added.
Platform Strategy: ESG, GRC and Financial Reporting Software
While dozens of companies offer carbon accounting software, Workiva believes its total platform play -- spanning ESG (Environmental, Social and Governance), GRC (Governance, Risk and Compliance) and financial reporting capabilities -- is a market differentiator.
The carbon accounting software "advances our ESG and our sustainability platform to support organizations requirements for carbon accounting, the tracking and the disclosure of carbon emissions for Scopes 1, 2 and 3 and decarbonization," Iskow said.
Workiva did not say how much revenue the carbon software generated in Q2 of 2024. Still, we suspect the figure was negligible since Workiva Carbon is such a new product.
Workiva's overall revenue was $178 million in Q2 of 2024, up 15% from Q2 of 2023. GAAP net loss for the second quarter of 2024 was $18 million compared with a net loss of $21 million for the prior year's second quarter.
Wall Street appears to want even faster growth and/or stronger profit metrics. The company's stock (NYSE:WK) is down about 29% from January 2024 through August 5, 2024.
Workiva Amplify 2024 Partner and Customer Conference
So what's next? Keep an eye on Workiva Amplify 2024 -- a partner and customer conference scheduled for September 9-11 in Denver, Colorado. The software conference is designed for accounting, finance, ESG and GRC professionals. Scheduled keynote speakers include former First Lady Michelle Obama, actor and activist George Clooney and Ellevest CEO Sallie Krawcheck.
On the partner front, Workiva continues to shift lower margin setup and consulting services to advisory and consulting partners, Iskow said. The company's partners of the year for 2023 included:
- Global IT consulting firms such as Deloitte, KPMG, and PwC;
- alternative investment specialist Lionpoint Group;
- business consulting firm Protiviti;
- financial consulting firms Embark and VantagePoint;
- business software provider Workday; and
- corporate communications and reporting solutions provider Bastion Group.
We'll be watching to see if Workiva honors partners at the Amplify 2024 conference in September.
