Workday closes first day up 74%, after raising offering price again

Tom Paine


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Enterprise Cloud software vendor Workday closed its first day of trading at $48.69, up 74% from its offering price of $28, which was raised from its previous range of $24 to $26, after already being increased from $21 to $24 per share earlier this week. That gives the company a market value of $7.3 billion.

Not to obsess about the numbers, but Pleasanton, CA-based Workday's valuation is big. Workday's 2011 revenue was $134 million, with a net loss of about $80 million. Workday is now valued at an amazing 39 times the last 12 month's revenue, although revenue in its most recently ended quarter doubled to $62.7 million.

Workday's importance is that its a completely cloud-based alternative to traditional on-premise enterprise software vendors, in particular SAP and Oracle. Workday is different from Saleforce.com, both in aspects of its technology and in terms of applications. While Salesforce.com is trying to branch out from its traditional Customer Relationship Management (CRM) emphasis (and is in fact partnering with Workday in Human Capital Management), Workday's strength is in the HCM space although it has already moved into financials and potentially could expand into a broader range of ERP applications. Major customer wins include Kimberly-Clark, HP and Google.

Workday's founders, Dave Duffield and Aneel Bhusri, worked together to build PeopleSoft into a company that was acquired by Oracle in a bitter takeover fight for $10 billion. Workday is also trying to move into one of PeopleSoft's old markets,
Higher Ed, taking on Oracle and Ellucian (the result of the Datatel/SunGard Higher Ed merger). SAP acquired SuccessFactors, and Oracle acquired Taleo and others in response to the Workday threat.



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