WORKIVA INC (WK) stock intrinsic value fair value estimate & owner earnings analysis

Workiva sells a cloud platform (Wdesk) that companies use to prepare SEC filings, sustainability and ESG reports, audit and risk documents, with more than 35% of revenue tied to SEC filings. About 92% of 2025 revenue ($884.6M, up 19.7%) is subscription; gross retention is 97.2% with 6,624 customers. That retention is the structural feature that makes the revenue durable. How we measure earnings. We start from operating cash flow and remove the cash that came from working-capital movements (mainly customers paying annual subscriptions up front, which grows only while the business grows), then subtract stock compensation as a real cost, and deduct capital spending (tiny, about $2M a year). On that basis owner earnings per share were about -$0.94 (2019), -$0.76, -$0.58, -$1.53 (2022), -$1.45, -$1.00 (2024) and -$0.37 (2025). Stock compensation ($123M in 2025) consumes nearly all of reported operating cash flow ($140M); this is the main reason the business does not yet earn a surplus for owners. Losses have narrowed for three straight years, and in the first half of 2026 net income turned positive ($32.4M versus a $40.8M loss a year earlier) and operating cash flow was $104.8M versus $43.0M. In FY2025 the improvement was $0.63 per share (from -$1.00 to -$0.37); we assume year 1 of the base case improves by about $0.37 to roughly breakeven, which is below the trailing improvement and supported by the 2026 first-half results in the filings. We anchor the starting level at the latest year rather than a multi-year median, because the 2022-2023 years reflect a heavier spending period the business has since moved past; we did not lift it further on the strength of two quarters. Balance sheet. About $702M of 1.25% convertible notes fall due in 2028 (conversion price $133.89) and about $85M of 1.125% notes are due in August 2026. Cash and marketable securities were roughly $770M at the end of 2025, so the maturities appear covered, but repaying them from cash is a cost to owners. Debt is not deducted separately; it is reflected only in the bear case. Bear case (about -$1.50 per share). Owner earnings stay near -$0.37 for another couple of years because stock compensation keeps pace with cash generation, and the 2028 notes are settled or refinanced at market rates, costing the interest income on the cash used or a much higher coupon than today's 1.25%. Nothing evidenced produces a surplus, so operations are worth roughly zero and the financing cost leaves the equity slightly below zero: on this path the company owes somewhat more than the business is worth, by about $1.50 per share. Base case (about $8 per share). Owner earnings reach roughly breakeven in 2026 and improve by about $0.30 per year for four more years to about $1.20, then hold for fifteen years and are not extended further. We credit this because cash flow after stock compensation has improved every year since 2023 while gross retention held at 97%, and because the 2026 quarters corroborate it. We left out share gains, new products, and any growth in the customer base beyond what has already occurred. Bull case (about $22 per share). The same demonstrated pace of improvement (about $0.60 per share a year, as achieved in 2025) continues for four years to about $2.40, then holds for fifteen years. This requires stock compensation growth to stay below cash generation growth, which it has done only recently. Margin-of-safety price. Given a negative bear case, only recently positive cash trends, and large stock compensation, the margin-of-safety price is set with a wide margin (about 60% below base) and assumes a full year of positive owner earnings. What would make this wrong: stock compensation growing as fast as revenue again (it rose 20% in 2025), or renewal rates falling from 97%.