Shares of Workiva (NYSE: WK) plummeted 7.68% in pre-market trading on Friday, following the company's Q1 2025 earnings call and subsequent analyst downgrades. The sharp decline comes as the cloud-based compliance and regulatory reporting platform faces headwinds from a cautious buying environment and lowered price targets from major analysts.

During Thursday's earnings call, Workiva's management highlighted signs of a more cautious buying environment towards the end of Q1, despite reaffirming their 20% subscription revenue growth guidance for 2025. CEO Julie Iskow noted, "We're looking at what's happening today with market uncertainty, with turbulence in the market, but it's really broad-based demand across our portfolio." The company also revised its 2025 free cash flow margin target to 10%, down from previous expectations, reflecting pressure on bookings for the rest of the year given the macro uncertainty.

Adding to the pressure on Workiva's stock, both Raymond James and Stifel cut their price targets following the earnings release. Raymond James lowered its target from $125 to $105, while Stifel reduced its target from $120 to $100. These downgrades likely contributed to the significant sell-off in Workiva shares, as investors reassessed the company's near-term growth prospects in light of the challenging macroeconomic environment.

Despite the stock's plunge, Workiva management remains confident in the company's long-term market opportunity and growth strategy. The firm continues to see strong demand for its broad portfolio of solutions, including sustainability reporting and financial compliance tools. However, investors appear to be taking a more cautious stance, weighing the company's growth potential against the backdrop of economic uncertainty and potential delays in customer decision-making processes.