Prices for HR software company Workday Inc. stock soared Oct. 12, the first day shares in the upstart cloud-based human resources software-maker were public.
Pleasanton, California-based Workday shares finished the regular trading session at $48.69, 74 percent above their opening price of $28. The increase came despite the fact that Workday raised its initial offering price twice in recent days, initially to a range of $21 to $24 and earlier this week to $24 to $26. The company's stock is listed on the New York Stock Exchange under the symbol WDAY.
Workday netted $637 million from selling 22.75 million Class A shares, or about 14 percent of the company. The IPO values the company at just under $4.6 billion.
It's the biggest tech stock offering since Facebook Inc. went public last spring, and the biggest IPO yet of a vendor of cloud-based software, a term used to describe software that's delivered over the Internet. Workday's initial public offering has been closely monitored since late August, when the company first signaled its intent to go public.
Workday has become an HR software leader on the strength of its workforce management suite, which unlike some key rivals, was cloud-based from the beginning. Workday software covers everything from time and attendance to workforce planning and payroll, and gives employees as well as HR staff access to key HR data.
More than 325 customers are on Workday's client roster since the company launched seven years ago, including Chiquita Brands International Inc., Four Seasons Hotels Inc., Kimberly-Clark Corp. and Salesforce.com Inc.
Workday's success is challenging the two biggest players in the business: Oracle Corp. and SAP. In the past year, both have acquired companies to preserve their market share and better meet demand for cloud-based HR software.
The initial success of Workday's IPO is reminiscent of the dot-com era, when it was common for Internet startups with little or no profit—or revenue—to go public.
But dot-com era comparisons end there. While Workday is still operating in the red, the company's revenue is based on continued strong sales to a cadre of A-list customers. In the first half of 2012, Workday's revenue doubled to $119 million from the same period the previous year, according to a filing with the Securities and Exchange Commission.
Workday would not make officials available for comment. However, the company previously indicated it would use proceeds from the IPO for working capital and general corporate purposes. The company also said it could use the money for acquisitions, according to regulatory filings.
The IPO is sweet revenge for Workday co-founder David Duffield, who previously started and ran PeopleSoft before losing control of the company to Oracle's Larry Ellison in a hostile takeover in 2005. After the IPO, Duffield's stake in Workday is estimated to stand at about $2 billion, according to the company's Securities and Exchange Commission filings.
Michelle V. Rafter is a Workforce contributing editor. Comment below or email editors@workforce.com.
