Is Workiva's Valuation Reset and Strategic Overhaul Creating a Buy Opportunity for Long-Term Investors?

The recent turbulence in Workiva's (NYSE: WK) stock price and corporate governance has sparked a critical debate among investors: Is the company's valuation reset and strategic overhaul under activist pressure creating a compelling buy opportunity for long-term investors? With institutional conviction shifting and profitability showing incremental progress, the answer hinges on a nuanced assessment of financial fundamentals, governance reforms, and market positioning.

Valuation Reset: A Discount Amid Growth

Workiva's stock currently trades at a 27% discount to application software peers like Workday and ServiceNow, a gap that activist investor Irenic Capital Management attributes to the company's poor balance between growth and profitability. Despite this, Workiva's financials reveal a mixed but improving picture. For Q2 2025, the company reported $215 million in revenue, a 21% year-over-year increase, driven by 23% growth in subscription and support revenue. While GAAP operating margin remains negative at (10.2)%, non-GAAP operating margin improved to 3.8%, signaling progress toward profitability.

Valuation metrics further highlight the stock's potential. Workiva's price-to-sales (P/S) ratio stands at 6x, above its peer average of 4.1x but slightly below its estimated fair P/S of 6.3x. This suggests the stock is reasonably valued relative to its revenue growth, which outperformed competitors by 9 percentage points in Q2 2025 (21.2% year-on-year vs. 11.99% average). Additionally, the company's robust liquidity-$814 million in cash, cash equivalents, and marketable securities as of June 30, 2025-provides a buffer for strategic investments or debt reduction.

Institutional Conviction: Activist Pressure and New Entrants

Institutional ownership has shifted notably in 2025. Praesidium Investment Management Company initiated a new stake in Workiva, acquiring 87,921 shares valued at $7.6 million, representing 1.5% of the fund's U.S. equity assets. This move, coupled with Irenic's 2% stake, underscores growing institutional confidence in the company's long-term potential despite its profitability challenges.

Irenic's activism has been particularly influential. The firm advocates for collapsing Workiva's dual-class share structure, refreshing the board, and exploring strategic alternatives-including a potential sale-to unlock value. Its push for operational efficiency has already spurred leadership changes, such as the appointment of Michael Pinto as Chief Revenue Officer, a move aimed at streamlining go-to-market strategies. While Irenic's target price of $106.50 implies significant upside, skeptics argue that macroeconomic uncertainties and high SG&A expenses could hinder execution.

Strategic Overhaul: Governance and Operational Efficiency

Workiva's strategic overhaul, driven by activist pressure, is beginning to take shape. The company's Q3 2025 results, which included $224 million in revenue and a 23% growth in subscription and support revenue, demonstrate the early impact of these changes. Leadership transitions, such as Michael Hawkins' departure as Chief Sales Officer after 15 years, signal a shift toward modernizing the sales and marketing apparatus.

However, challenges persist. Workiva's operating margin of (10.3)% in Q2 2025, though improved from (13)% in the prior year, remains a drag on profitability. Irenic has highlighted inefficiencies in the company's go-to-market strategy and high SG&A expenses as key areas for reform. The activist's call for a strategic review -including a potential sale-reflects a belief that Workiva's intrinsic value is underappreciated in the current market.

The Path Forward: Buy Opportunity or Caution?

For long-term investors, Workiva presents a paradox: a high-growth, cash-rich business with a discounted valuation, yet plagued by governance and profitability issues. The company's net revenue retention rate of 114% and strong free cash flow ($49.32 million in Q2 2025) suggest a durable business model. Meanwhile, activist-driven governance reforms and institutional interest could catalyze a turnaround.

Yet, the path to profitability is not without risks. Workiva's ability to execute on cost-cutting initiatives, improve operational efficiency, and align with peer valuations will determine whether the current discount is justified or a warning sign. As Irenic Capital's $106.50 price target indicates, the stock could rise if the company successfully navigates these challenges. However, investors must weigh the potential against the likelihood of continued underperformance in a competitive market.

In conclusion, Workiva's valuation reset and strategic overhaul create a compelling case for cautious optimism. While institutional conviction and activist pressure are reshaping the company's trajectory, long-term investors should monitor progress on profitability, governance reforms, and market share gains before committing.