--Workday files terms for its IPO, which could raise as much as
$589 million
--Company's shares are scheduled to start trading Oct. 12
--Workday will join recently hot series of IPOs tied to
"cloud"-based computing
(Updates throughout with context.)
By Chris Dieterich and Saabira Chaudhuri
NEW YORK--Enterprise-software company Workday Inc. has plans to
launch the biggest technology initial public offering since the
debut of Facebook Inc. (FB).
Workday aims to sell 22.75 million Class A shares in its IPO,
expected to price at between $21 and $24 each, according to a
Monday filing with the Securities and Exchange Commission. The IPO
could raise as much as $589 million, including an overallotment
option, which would make Workday the largest tech offering since
Facebook's $16 billion May IPO, according to Dealogic. Workday's
market valuation would be $3.6 billion if it priced at the midpoint
of its expected range.
The focus of Workday, based in Pleasanton, Calif., is
human-resources software, and it competes directly with the likes
of Oracle Corp.'s (ORCL) PeopleSoft and German software company SAP
AG (SAP, SAP.XE).
"It's certainly one of the most widely anticipated 'cloud'
services," said Scott Sweet, senior managing partner at IPO
Boutique.
"Cloud computing" is a catch-all term that refers broadly to
making use of the Internet to store and process data remotely.
Workday derives a majority of its subscription revenue from its
program that provides cloud-based software for payrolls, financial
management, time tracking and employee expense management.
Workday was co-founded by David Duffield and Aneel Bhusri, who
ran PeopleSoft before Oracle's takeover of the company was
completed in 2005.
The two-class share structure--which grants class-B shareholders
the right to 10 votes, compared with one for each class-A
share--will allow Mr. Duffield and Mr. Bhusri, with their
affiliates, to retain approximately 67% voting power after the
offering, according to the filing.
The company said in its filing that it will list on the New York
Stock Exchange under the symbol WDAY. Shares are expected to begin
trading on Oct. 12, according to market-intelligence firm
Ipreo.
Workday is the latest and biggest offering from the
cloud-technology niche.
Three third-quarter "cloud" deals have notched post-IPO gains.
Friday, network-security provider Qualys Inc. (QLYS) climbed 18% in
its public debut, extending early gains Monday with a rise of 1.6%
to $14.38. Palo Alto Networks Inc. (PANW), which also provides
network security, has climbed nearly 50% since its July IPO. Eloqua
Inc. (ELOQ), which uses the cloud for marketing data, is up 75%
since its early-August IPO.
Workday's offering aims to be larger than these three
combined.
Revenue more than doubled to $119 million in the six months
ended July 31. But the company has never turned a profit amid
rising costs for research and development, sales and marketing.
"This is in the Palo Alto Networks arena--very high demand,
long-awaited," IPO Boutique's Mr. Sweet said. "They have
exponential top-line numbers, their growth is just off the
charts--but they are losing a lot of money, mainly due to [research
and development]. But you're going to see that in many IPOs."
In late June, Workday filed papers confidentially with the SEC,
using a new rule that allows companies to keep paperwork out of
view until 21 days before the company launches its "road show" to
market its IPO. In late August, investors got their first look at
Workday's plans when the company filed to raise as much as $400
million for working capital and other general corporate purposes,
less than the amount stated in Monday's filing.
Morgan Stanley (MS), Goldman Sachs Group Inc. (GS), Allen &
Co. and J.P. Morgan Chase & Co. (JPM) will serve as lead
underwriters.
Write to Chris Dieterich at christopher.dieterich@dowjones.com
and Saabira Chaudhuri at saabira.chaudhuri@dowjones.com
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