Activist Irenic builds a stake in Workiva, hoping to gain two board seats
Company: Workiva (WK)
Business: Business It is a cloud -based reporting solutions provider designed to solve financial and non -financial challenges in data, process and intersection of people. As a merged service, the company offers the SAAS platform that brings software or financial reports of customers; Environmental, Social and Governance (ESG); and controlled, secure, ready -to -audit platform governance, risk and harmony (GRC). Workiva platform is a very tenant cloud software distributed in multiple regions around the world for reliable integrated reporting. The company’s platform is primarily built in Amazon web services and consists of both registered and open source technologies. The Workiva Platform helps customers by connecting and converting data from other third -party cloud and internal applications as well as hundreds of corporate resource planning, human capital management and customer relations management systems.
Stock market value: 4.92 billion dollars ($ 87.46 per share)
Activist: IRENIC CAPITAL MANAGEMENT
Ownership: ~ 2.0%
Average Cost: N/A
Activist Comment: In October 2021, Irenic Capital was founded by Adam Katz, a former portfolio manager of Elliott Investment Management, and a former investment partner of Indaba Capital Management, Andy Dodge. Irenic invests in public companies and works in cooperation with the company leadership. Their activisms have focused on strategic activism so far, proposed sales of Spinoffs and businesses.
What’s going on
On September 29, Irenic announced that they received a 2% position in Workiva and called on to increase the company’s business efficiency, to review the strategic alternatives with the new board of directors, including the company’s potential sales, and to develop corporate governance practices, including double -class stock structure. Irenic also invited the company to add two new board members to the board of directors, including Irerenic manager Krishna Korupolu, and said that they did not refuse to nominate if the two sides could not reach an agreement.
Behind the curtain
Workiva is the leading provider of cloud -based reporting solutions that integrate financial reporting, sustainability management and management, risk and compatibility, integrated into an integrated and ready -to -control environment with data. More than 40% of the company’s income has been derived from the SEC filing service that simplifies regulatory files and other explanations for public companies. This is a great task that serves some of the world’s largest businesses, which are supported by 95% of Fortune 100, 89% of Fortune 500 and 85% of Fortune 1000, with a customer holding a customer holding rate.
However, the problem for Workiva lies in the lack of profitability, not in the quality of your work. Although more than 1 billion dollars of revenue until 2026 and scaled over 10 years operating in public markets, Workiva has not yet made profit. As a result, Workiva stocks are currently trade software to competitive competitors with a 25% discount Working day And Servicenow.
These discounts and operational challenges attracted the attention of Irenic capital, which explained a position of approximately 2% in the company and called the Business Administration Developments, Operational Changes and Strategic Alternatives to review strategic alternatives.
The governance is a real issue in Workiva and is a obvious reason for the discounted stock price. Workiva is running like a private company by controlling the three founder companies through the binary stock structure. This has led to five of the seven directors serving since the 2014 public offering with a less relevant experience.
Irenic wants to see that the bilateral class share structure has collapsed and that the board of directors is imitated and re -created with qualified managers, including the Irenic ruler Krishna Korupol. In the world of shareholder activism, this is often equivalent to asking for a country to become a democracy from a country like North Korea, but Irenic’s expectations are not desperate here (later).
Operatingly, you get what you expect from a founding-controlled company-Most of a SG & A. margins of the margin, sales and marketing, can be attributed to inefficiency in the company’s business model, especially in sales power, as sales and marketing is currently occupying 43% of income. Although this has 80% gross profit margins, it produced an estimated business margin for the 2025 calendar year. The Saas companies in this caliber should be able to meet the “40” target (an increase of 40 “targets, which will be extremely sensitive to shareholders that Irenic can be provided by 2027 FY.
Workiva currently has an income growth rate of 18%, but it spends excessive amounts of money to achieve the last few points. With much less sales power expenses, it should be able to increase double -digit revenue, which can significantly change the company’s margin profile. Combining this with the company’s extremely strong pricing power proposes a place for significant profitability improvements.
If Workiva cannot be carried out as a public company that focused on improved corporate governance, the Board (preferably renewed) should continue to sell the best -setting way for shareholders.
Workiva is a large blue chip customer when it comes to the SEC filing service and a market leader with a secular growing job with a real number. The quality of Workiva’s work should not mean a special and strategic interest shortage. In fact, in 2022, PE companies Thoma Bravo and TPG He was interested in a potential purchase. Those who acquire logical strategic include similar financial management platforms IntuitionStock Exchange Operators (NasdaqLSEG, Deutsche Börse) and also software giants Salesforce– Prophecy And IBMThey can all make meaningful synergies.
Comparative transactions – Clever/Vista Equality (7X income), Coupa/Thoma Bravo (8x), Aspentech/Emerson Electric (14x) and Altairengineering/Siemens (14X) – For those who earn 1 billion dollars for 2026, it income is 7 to 8 times the income, considering the potential of significant synergies, it will reversed 40% to 60% with the potential to be higher premiums in a strategic process.
Although Irenic’s public presence in Workiva probably attracted the attention of those who have the potential, the result here is nothing without the consent of the three -founding control sides that control 44% of the voting power through a double -class structure.
While such factors can usually suppress an activist campaign, there are several reasons why this is different. First, this is not a founding family, but three different founders that are not aligned and separated from each other.
In June 2018, Matthew Rizai resigned as President and CEO with a beautiful severance pay package. This and its place is replaced by CEO, the founding Martin Vanderploeg shows that it is not even on the board, it may not be as mutual as the company’s press release. Jeffrey Trom reduced his duties in the company in 2022, resigned in 2023, and in 2024 a consulting relationship ended. In addition, all three founders are over 65 years of age and slowly sell shares. Only Vanderploeg, one of the three founders, is actively involved in the company as a non -executive president and has 10.6% of the total voting power for Rizai and 9.2% for Trom. It is difficult to believe that Irenic will not get the support of Rizai and/or Trrom at the price where this company thinks that this company can bring on a sale.
In addition, Irenic will not assume that the three founders are aligned if the two sides cannot reach an agreement and if it comes to it.
Ken Squire is the founder and president of the 13D Monitor, a corporate research service on shareholder activism and is the founder and portfolio manager of the 13D Activist Fund, an investment fund investing in the investment portfolio of the activist 13D.
