Workiva Leads the Business Reporting Market

John Barrett: We recently initiated coverage of narrow-moat Workiva and currently have a fair value estimate of $52. We believe that Workiva has carved out a defensible niche in regulatory reporting and that shares are attractively priced at current levels.

Workiva’s platform, named Wdesk, is a best-of-breed software solution that helps companies collect, manage, and prepare structured and unstructured data from disparate sources for reporting business data. Some examples of typical use cases are for reporting to regulatory entities like the SEC and various tax authorities. In many instances, Wdesk is replacing workflows that involve lots of human intervention, which can be error-prone and time-consuming.

Workiva believes that penetration of its current market opportunity is low and will allow it to grow revenue 14% on average over the next five years, crossing the $500 million threshold in 2023. Impressively, Workiva already has over 75% of Fortune 500 companies, so expansion into new markets will be key for future growth. Expansion into Europe and adoption of additional use cases, such as Sarbanes-Oxley reporting, are important drivers in our view.

In summary, we think that Workiva has been able to create a moat for itself due to high customer switching costs, and the market is not fully appreciating how little competition Workiva is facing in this underpenetrated market.