The highly anticipated debut of Workday did not disappoint. Shares of the enterprise software provider opened at $48.05 Friday — well above the $28 per share opening price set earlier in the week. At the time of this post, the company, had sold 22.75 million shares raising $637 million.
Workday provides human resources Software as a Service (SaaS) and is the brainchild of PeopleSoft founder Dave Duffield and Aneel Bhusri, another respected former PeopleSoft executive. The two decided to take what PeopleSoft did best — tasks like handling employee records, reviews, payroll etc. — and move the whole kit-and-kaboodle to Software as a Service a la Salesforce.com. The company launched in 2005 about a year after Oracle completed its highly contentious battle to acquire PeopleSoft.
By most accounts Workday has done very well winning customers like Brown University, Guardian Life, and Morgan Stanley. And it replaced Oracle and SAP applications in accounts like Flextronics International, Kimberly-Clark, Sun Life Financial Inc. and Lenovo, according to Bloomberg Businessweek. Unlike old-line enterprise software rivals like Oracle and SAP, Workday does not have to worry about its SaaS offerings cannibalizing the sales of pricey on-premises software.
All of that customer traction has been reflected in the company’s valuation. Documents filed with the SEC on October 1, pegged the company’s valuation at $3.6 billion, but when the company re-set the expected opening day share price, raising it from the $22-to-$24 per share range to $28 per share, that valuation soared to $4.5 billion.
Stock chart courtesy of Bloomberg.com