Workiva Stock Climbs as Activist Investor Irenic Pushes for Sale
Irenic Capital reveals a 2% stake, urging the software firm to overhaul its board and explore strategic options after a period of underperformance.
Shares of Workiva (WK) gained 1.8% after activist investor Irenic Capital Management disclosed it has built a stake in the software company and is pushing for a potential sale. Irenic, which holds approximately 2% of Workiva, is advocating for significant changes, including a full strategic review and an overhaul of the company's board of directors.
The activist pressure comes after a difficult year for the cloud-based reporting software provider, whose shares had fallen 22% year-to-date. In a letter to the board, , arguing that the company has underperformed its peers due to an imbalance between growth and profitability. The firm is also pushing Workiva to dismantle its dual-class share structure, a move aimed at increasing accountability to common shareholders.
Irenic Capital stated it has engaged in numerous discussions with Workiva's management and has indicated a willingness to launch a proxy battle if its concerns are not addressed. The activist believes that by adopting a "Rule of 40" operating model—where a software company's combined revenue growth rate and profit margin should exceed 40%—Workiva could unlock significant shareholder value. While Workiva boasts a strong three-year revenue growth rate of 15.5%, it has been hampered by .
Despite the activist pressure, some Wall Street analysts see upside. Following the news, . Stifel raised its price target to $92, and Wolfe Research increased its target to $95, with both firms citing potential improvements in efficiency and reiterating 'Buy' or 'Outperform' ratings. This sentiment follows Workiva's recent user conference, where the company reaffirmed its long-term revenue goals and updated its fiscal 2027 operating margin target to 18%.
Investors will now be closely watching how Workiva's board responds to the pressure from . The company faces the challenge of satisfying the activist's demands for improved profitability while pursuing its own long-term growth strategy.