Rightworks expanding into regional firm market

Accounting-focused cloud service provider Rightworks plans to expand beyond the smaller practices it has traditionally served and into the larger regional firm market in response to changing dynamics brought on in part by the growing influence of private equity. 

Joel Hughes, until recently CEO of Rightworks before becoming executive chairman, said that over the past few years the company has seen existing customers grow rapidly from private equity investments, some going from 50 to 800 users in just a year; meanwhile, there have also been new customers from larger firms already flush with investment capital. In either case, the company is facing a changing firm landscape, one that Hughes believes Rightworks is well positioned to serve. 

“We’re expanding our addressable market to [serve] larger firms because we’ve recognized that our value as a secure cloud platform matches the needs of much larger firms as well as the small firms we’ve historically thought about,” he said in an interview. 

When asked to clarify what he means by larger firms, he said not the massive international mega firms, but the “more-than-500-user super regional firms.” He added that Rightworks already has a few major firm customers as well. 

The influence of private equity is especially relevant, as many PE firms have been on a buying spree lately, bringing more and more accounting firms under their umbrella. With this has come the realization that they now have dozens of firms with their own unique tech stacks, as well as the ongoing cost of maintaining them. To address this, many are looking to optimize and standardize tech across their portfolio to achieve better efficiencies. 

“[PE would] like to standardize. They’d like to make it easier to train, easier to benchmark across their firms. If they have acquired 35 firms, they’re trying to say, ‘Hey, what are the best practices in these different firms?’ They can learn from each other, and they can all be the rising tide that lifts all boats,” he said. 

Hughes added that this move is further supported by the “sprawling” adoption of AI solutions in the accounting profession. Nearly every application now has at least some AI component, he said, and it can be difficult to manage them all without some sort of centralization, the kind that he says Rightworks could offer. 

“The sprawl continues. Historically, larger firms have some capability to have their own CIO and have their own IT departments, but they still need the support of an organization like us and the platform that we’ve built,” he said. 

Ian Williams, the new CEO, said in the interview that the key is data, which he said was the “great enabler” of such solutions. If firms want to make the best use of data, they can’t just squirrel it away on some server but should leverage it via back-end infrastructure. Firms don’t always have the resources, or the wherewithal, to manage it themselves, so Rightworks can provide that expertise. He compared the company to sherpas on a mission to identify the right opportunities, leverage the right tech stack and help demystify and deploy their technology quickly. He said that Rightworks’ past experience with smaller firms will help.

“We’ve had in our DNA servicing those small independents and growing with them. And as the industry changes again, we think we’re really uniquely positioned to bring that technology expertise across and really help them with scale,” he said.

As Williams takes on the day-to-day operations as CEO, Hughes said he has been spending more time with larger, newer customers and prospects to explain how Rightworks could meet their needs.