Workiva Financial Results Reinforce ESG Software Momentum, Despite U.S. Political Debate

The ESG (environmental, social, and governance) movement has its share of critics and skeptics. But the latest Workiva financial results -- coupled with upbeat statements from CEO Julie Iskow (pictured above) -- suggest that partner and customer demand for ESG software remains strong.

Workiva develops a cloud-based application platform that helps customers to manage regulatory, financial and environmental, social and governance (ESG) reporting. Among the company's recent financial disclosures:

• Total revenue was $150.2 million in Q1 of 2023, up 16% from Q1 of 2022, the company said.
• GAAP net loss was $46.2 million in Q1 of 2023, compared to a net loss of $18.5 million in Q1 of 2022.

The financial results generally beat Wall Street's expectations, according to SeekingAlpha.

During Workiva's earnings call with Wall Street analysts on May 2, 2023, CEO Julie Iskow pointed to partner momentum: "Our partner-first strategy is driving results. The vast majority of our ESG opportunities continue to be either sourced or a co-sell with a Workiva advisory or technology partner."

Despite the challenging economic market, CEO Julie Iskow sounds upbeat about the business. In a prepared statement, she said: "We continued to see healthy market demand for our platform and best-of-breed solutions, even in an uncertain macro environment. We believe this is a result of the rapidly evolving market trend of increased stakeholder scrutiny of both financial data and non-financial data, which has made our product offerings more relevant than ever."

ESG Software: Workiva Customer Adoption and Retention KPIs

Meanwhile, Workiva CFO Jill Klindt noted that customer contracts are increasing in value, while customer retention also remains strong. Among the Q1 of 2023 financial anecdotes she shared.

• Contracts valued at over $100K, $150K, and $300K per year were up 21%, 24%, and 33%, respectively from the first quarter of 2022.
• Subscription and support revenue retention rate remained best-in-class at 98%, Klindt asserted.

As of March 2023, Workiva had 5,754 customers -- a net increase of 1,346 customers from March 2022. For the full year, Workiva expects total revenue to reach $626 million to $628 million.

Meanwhile: ESG Political Debate, Potential SEC Legislation

Workiva's financial results surfaced amid continued ESG pushback in some portions of the United States. For instance, Florida governor Ron DeSantis on May 2, 2023, signed a bill barring state officials from investing public money to promote environmental, social and governance goals, and prohibiting ESG bond sales, Reuters reported.

Meanwhile, proponents and skeptics continue to closely watch pending SEC climate disclosure regulations -- though Workiva expects to maintain its momentum regardless of the SEC's potential regulatory moves or non-moves.

Noted Iskow: "Yes, there's ongoing political debate in the U.S., and there is an extended evaluation period for the proposed SEC climate disclosure regulation. But we continue to see strong demand for the Workiva ESG solution. This observation is supported by a joint PwC-Workiva survey published in March. 70% of business leaders report their companies will proceed with ESG compliance regardless of when the SEC climate disclosure rule becomes law."