Why the seismic shift in ’34 Act reporting technology matters to the future of IPO deals

Seismic Shift

By Kevin Hachey, Capital Markets Regional Director
Workiva Inc. (NYSE: WK)

The year was 2010, and I was dug in pretty deep at one of the world’s largest software companies. Fresh off an enterprise team Innovator of the Year award, I had an active territory with budget, the benefits and 401k match were outstanding, and I was being groomed by my boss to assume leadership of his team, as he was moving into a new role later that year. Aside from a challenging commute, things were good. Stable. There was no reason to throw a monkey wrench into the mix — no pressing need to change anything.

Or so I thought.

Late spring that same year, I received a call from a close, trusted friend, who also doubled as a long-time colleague at a couple different companies that we had worked at together over the years. I’m paraphrasing, but the call went something like this…

HIM: Dude, I just hooked on with a pretty cool startup. Amazing culture, incredible product, just geniuses everywhere. Oh, and the founders have already taken a previous company public. They’ve got one more open patch in the northeast and I talked you up. You want it?

ME: What’s the tech?

HIM: Financial reporting platform for public companies, first of its kind. Cloud-based.

ME: Cloud. Hmm. When did they launch?

HIM: Two months ago.

ME: Market share?

HIM: Almost zero.

ME: Based where?

HIM: Iowa.

ME: IOWA?!?! Dude. Iowa?

HIM: Silicon Prairie, bro, whatever. I’m telling you, the tech is ridiculous and there’s nothing like it out there. This is the one.

ME: I’m in.

If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.”

-Eric Schmidt, CEO of Google

So, those were the early days of a little tech start-up based in Ames, Iowa that was originally called WebFilings. Along with 20 other new-hires for that inaugural sales team, my buddy and I set out to help disrupt a market that had seen little technological or procedural improvements in decades. It wasn’t going to be easy, but it made tons of sense, and it was right there in front of us: an enormous greenfield opportunity without any real competition who could offer what we could offer.

My friend was not speaking in hyperbole that day he called me, either — the tech truly was ridiculous. Our biggest challenge would simply be a complacent body of prospects who were likely of the mind that they had been doing things the same way for so long, why change now?

To that we boldly offered: CHALLENGE ACCEPTED.

Did we have any customers back then? A handful.

Had anyone heard of WebFilings? Not really.

Was it risky? Heck yes, it was risky, start-ups generally are.

But as Eric Schmidt, former CEO of Google, famously once said: “If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.”

That was our rocket ship moment.

By the time 2014 rolled around, we were firing on all cylinders. We had captured more than 25% of the entire public market for ’34 Act reporting, and roughly 70% of the 500 largest companies in the United States.

Make no mistake — that growth trajectory was a pretty big deal. It still is. In fact, for industry professionals who haven’t really been paying attention to this vendor market over the last decade, it is perhaps what’s most eye-opening, even to folks I’m meeting with to this day.

Most importantly, though, it’s validation of what we’re doing here at Workiva, and how even finicky accountants and executives can identify and react to a clear and present technological shift. Despite them needing to prioritize new systems and tools against a mountain of other projects; despite them making the tough leap from the comfort of legacy software and systems that they’d been using for years; and despite other vendor relationships they had established over decades of doing business — time and time again they realized process, risk, cost, and employee quality-of-life justifications worthy of making a change.

What we had done in just four years time was nothing short of stunning and, better yet, by then our unique cloud-based productivity platform, Wdesk, had expanded well beyond just 10-Q and 10-K filings. Our customers were now using Wdesk for hundreds of different use cases, from compliance to performance to regulatory reporting, and much more. Consider that, outside of companies still exclusively using native desktop software for SOX and Dodd-Frank compliance, Workiva was now the market leader for those two imperatives too. We had become a major player in the GRC space and offered a board reporting app for mobile devices with functionality never before seen in any other product that had been around for years.

We’re talking serious blue sky here.

That same year WebFilings also made a name change to what is now called Workiva, filed for an IPO, and today trades on the New York Stock Exchange under the ticker symbol WK.

Wow, that was quite a year.

workiva ipo

Fast-forward to 2017, and the shift to Workiva remained at a fever pitch. Market share for Wdesk usage had ballooned to more than 70% of the largest 1,000 public organizations in the United States, and also included 80% of the companies who comprise the Dow Jones Index.

For perspective, by that same year there were more public companies now using Wdesk to file their quarterly and annual reports with the SEC than 2x the number of companies who still used the two largest financial printers. Combined.

Folks, these were our two primary competitors, we had doubled up the number of their collective ’34 Act customers, and our foot was still firmly on the gas.

Globally, hundreds of thousands of users were now working in Wdesk on a daily basis, which by 2017 was also a platform with an unprecedented 96% user retention rate over a seven-year period. In software, you can’t overstate the importance of being “sticky,” and we were experiencing an entire new generation of financial reporting professionals who were adopting Wdesk as a best-practice and vowing to never go back.

To wit, the leap into the IPO arena for Workiva became a no-brainer. In fact, it was initially organic, with former and current users of Wdesk now finding themselves involved in an IPO and asking the logical, expected questions like:

“Why would we go back to Word and Excel and email when we can run an S-1 process so much more efficiently in Wdesk?”

“Why would anyone still use a financial printer when you can do all of this, and at a lower cost too?”

Um, exactly.

As we near the second half of 2018, a world-class Workiva IPO/Capital Markets team has been guiding our customers through successful IPO projects for over two years now – industry veterans laser-locked on smashing the status quo around IPO deals in the same way that we previously did with ’34 Act reporting: by providing better technology, a better process, less risk, better support, happier participants, and a better price-point.

Indeed, for an entire working group involved in any Workiva-assisted IPO — corporate users, advisors, bankers, and auditors alike — Wdesk is their rocket ship too.

So, don’t ask which seat.

Just get on.

The ride is 8+ years in the making, and gets better every day.

Contact me today for more details.