Here's How KeyBanc Rates WalkMe Post Q1 Results

  • KeyBanc analyst Michael Turits downgraded WalkMe Ltd WKME to Sector Weight from Overweight without a price target.
  • The re-rating followed a modest first-quarter revenue beat, but an ARR miss, decline in quarterly enterprise DBNRR, slowing RPO growth, and -3% second-quarter revenue guide miss on slipped large deals in Q1.
  • WalkMe maintained the 2022 revenue guide despite the Q2 miss.
  • Encouragingly, the management indicated pushouts were expansions with existing 7-figure customers, delayed by the need to work with procurement and by pricing discussion as they move up the market, with some already closed in a solid Q2 start. 
  • While Turits view WKME's DAP as providing attractive enterprise ROI, the pushouts underscore DAP's still evangelical sale and steeper risks than for core front/back office software given inflation/potential recession. 
  • Turits was also more cautious on CF losses.
  • Turits looked for sustained operating leverage and stabilization of ample deal visibility to return to a more constructive stance on the stock and look to analyst day for more details. 
  • Price Action: WKME shares traded lower by 27.8% at $8.81 on the last check Tuesday.
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