On Wednesday, KeyBanc initiated coverage on WalkMe Ltd. (NASDAQ: WKME) with a Sector Weight rating. The firm noted WalkMe's pioneering role in the Digital Adoption Platform space but expressed concerns about the impact of next-generation competition on the company's market position.
WalkMe has recently adjusted its pricing and packaging strategies in response to feedback about high costs and lengthy implementation times. The firm also highlighted the potential challenges posed by generative AI offerings within native applications, which could threaten WalkMe's advantage of operating across various application stacks.
Despite these concerns, KeyBanc acknowledged WalkMe's significant improvements in profitability. The company reduced its non-GAAP operating loss from $58.3 million in FY22 to $4.7 million in FY23. While these strides are notable, the analyst suggested that investor focus in FY24 might shift towards top-line growth. The analyst cautioned that reacceleration in this area might be prolonged due to the previous year's spending reductions or could pressure the margin improvements achieved by WalkMe.
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