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Quality Concerns For XBRL Leader? – Workiva (NYSE:WK)

Workiva is the unquestionable leader when it comes to providing XBRL services to public companies. With their solution Wdesk, the company has seen revenue grow over the past year. In Q2 2017 revenue increased roughly 15% ($49.4 million), in part thanks to Q2 subscription and support revenue growing 17.2% ($41 million) compared to prior year.

The company also has an impressive revenue retention rate which was 96.1% (excluding add-on revenue), and the revenue retention rate including add-on revenue was 106.0%. Add-on revenue includes the change in both seats purchased and seat pricing for existing customers.

Workiva has the largest number of clients of any XBRL service provider. In the first quarter of 2017, Wdesk was responsible for over 50% of filings relating to XBRL facts. Workiva finished the second quarter with over 2,908 customers, including new client, Walmart (WMT). Workiva saw an increase of 286 clients from Q2 2016.

Workiva specializes in compliance services but as management mentioned on the Q2 conference call, non-SEC sales are gaining traction as more clients are purchasing add-on services.

Workiva’s revenue growth is impressive, especially their subscription and support revenue. However, I have concerns regarding their XBRL professional services and the quality of their XBRL.

What is XBRL?

XBRL (eXensible Business Reporting Language) is the underlying code associated with financial statement filings. It was created to provide an approach for which financial data can be easily sorted and compared. For all public companies, XBRL must be “built” and “tagged.” Using elements from approved SEC taxonomies, a company will select elements or tags to include in their taxonomy. From this custom taxonomy, the elements will be “tagged” meaning the elements become associated with values within the financial statements and footnotes. For Workiva, these types of services would be classified as Professional Services, which only grew 4.6% compared to…

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