On Tuesday, September 17, 2024, Workday announced a definitive agreement to acquire Evisort, an AI-centric CLM and document intelligence firm. Founded in 2016 by legal technologists, San Francisco, CA-based Evisort was one of the early pioneers of systemic applications of AI/ML to extracting intelligence from documents and contracts.
Evisort recently featured in MGI Research’s CLM Top 35 Buyer’s Guide, where the company received an MGI 360 Rating™ of 46 and a Neutral Analyst Outlook. We estimate Evisort’s revenue run rate to be of approximately $30 million on a 25% growth trajectory with a negative EBITDA margin. Workday has not disclosed the amount of the total consideration; however, MGI estimates the deal value at about $250-$300 million. We expect this transaction to close.
With Gen AI entering industry mainstream, Evisort faced critical choices related to investment and growth strategy. Since its founding, the company has raised more than $150 million in venture capital but remained unprofitable with growth moderating and capital availability tightening. The shift in focus on Gen AI necessitated a significant new round of R&D investment. To address these challenges, Evisort signed several technology partnerships (e.g., Icertis, et al). Evisort retains a rich mix of capabilities in CLM and document management with a broad spectrum of potential use cases.
For many Evisort customers, the acquisition by Workday removes some of the uncertainty and anxiety surrounding the future of Evisort.
The acquisition was announced at Workday’s annual user conference, Workday Rising 2024, held in Las Vegas this year. The announcement focused almost exclusively on Workday’s intent on leveraging Evisort’s AI-based document data extraction capabilities and the potential synergies with Workday’s broad suite of financial and HCM solutions. While this is a practical approach for Workday, there are a number of important questions outstanding:
Is Workday going to go beyond document automation and enter the CLM market in earnest?
The CLM market is growing much more rapidly than most other enterprise software categories and has potential to one day equal or surpass many classic ERP disciplines. Document management markets exhibit modest growth and are significantly more fragmented. Workday seems to acknowledge this broader, faster-growing opportunity in CLM, but we believe it will take the company a few months to really formulate its approach and strategy in CLM. Document data extraction will allow Workday to at least gain parity with capabilities of many CLM vendors and a few of its direct financials/HCM competitors. Applying this technology across Workday’s entire platform will open new opportunities and justifies the acquisition. Going into CLM would materially expand Workday’s TAM (see MGI Research’s CLM Market Forecast for market sizing estimates).
If Workday does, as was indicated to MGI in a follow-up briefing, enter the CLM market in earnest, what is going to be the level of commitment and where will it focus?
Indications are that any CLM entry by Workday would initially be concentrated on the procurement use case. Historically, Workday has been a committed and benevolent acquirer, in many cases able to retain customers and top talent. Evisort is the latest AI-related acquisition made by Workday. Other examples include HR analytics firm Identified (2014), AI knowledge base builder SkipFlag (2018), and AI-powered talent orchestration solution HiredScore (2024). As a serial acquirer of software vendors – non-AI as well as AI – Workday has a good reputation for effectively incorporating vendor tech and products.
What should existing Evisort CLM customers expect?
Will the support continue and for how long, especially in use cases that may be outside the area of interest to Workday?
What should Evisort CLM prospects do?
This is especially relevant to organizations with active contract discussions under way or those managing a contract renewal.
How will this acquisition impact existing partnerships?
Evisort has a number of partnerships, including with Icertis and Workday. Icertis already has an established partnership of its own.
Recommendations for Evisort CLM customers & prospects
- Evisort customers and prospects should aim to get precise clarification on questions above from both Evisort and, most notably, from Workday. This many take some weeks or months to fully clarify – at the very least until the transaction closes later this year.
- Evisort’s key competitors – notably Agiloft, Conga, Ironclad, Linksquares, and Sirion may see this as an opportunity to offer Evisort customers an alternative path forward with their CLM solutions. However, migrations may not be that simple.
MGI Research predicts additional consolidation of the CLM market to continue, especially as interest rates continue to moderate. MGI clients who are customers or prospects of Evisort are encouraged to schedule an inquiry with an analyst to dig deeper into the implications of this acquisition on their current or future deployment of the CLM application. Request an inquiry by sending an email to support@mgiresearch.com or visiting our contact page.
Not a client? Interested in learning about how to access MGI insights about this acquisition or other Agile Monetization Platform developments? Contact info@mgiresearch.com or +1 888 801 3644.
