PLEASANTON -- Shares of Workday rocketed 74 percent higher Friday in a red-hot trading debut for the cloud software company following its $637 million initial public offering, a successful launch for the biggest high-tech IPO since Facebook.
"It's a great validation of all the hard work that our employees have put in over the last seven years," Aneel Bhusri, Workday's co-founder and co-CEO, said in a telephone interview with this newspaper. "Everybody is excited about this."
Pleasanton-based Workday closed at $48.69, up 73.9 percent from the IPO price of $28. After the first day of trading, the company wound up with a market value of $7.8 billion.
The $28 IPO pricing was well above the price the company had indicated just days earlier. When Workday filed in August to go public, it said it hoped its IPO would raise $400 million, much less than the $637 million it ended up raising.
"The additional money from the IPO will help us grow and expand," Chief Financial Officer Mark Peek said in a phone interview with this paper. "We have been hiring on a fairly aggressive clip and we expect that to continue. We expect to hire about 400 to 500 people by the end of 2013."
Many of the new hires are expected to work in Pleasanton and San Francisco, as well as at a large Workday center in Ireland. The company has more than 1,500 employees now.
"We see a big opportunity for global
At the opening, Workday, trading on the New York Stock Exchange under the ticker symbol WDAY, hit $48.05.
"A spectacular pop" was how Daniel Sweet, a partner at IPO Boutique, described the market debut.
Workday commands an edge over more stodgy rivals such as Oracle (ORCL), IBM and SAP, some analysts assert, because it offers its human resources software through a Web-based system dubbed the cloud. The traditional approach obliges customers to buy expensive licenses and endure complex installs.
"Workday will continue to do well," said Rob Enderle, a San Jose-based tech market researcher. "There is not a lot of fluff there. Workday is solid."
Bhusri described his company's sizzling debut as "just a step along the way."
"This is just the start of the shift from the enterprise world to the cloud world," he said. "There is a lot more work to do. A lot more to accomplish."
The amount Workday raised makes its offering the largest IPO by a cloud computing firm -- and the largest market debut by a tech company of any kind since the IPO for Menlo Park-based Facebook, a social network, analysts said.
"In all, a winning day for Workday, its investors and employees," Sam Hamadeh of independent data analysis firm PrivCo said.
Facebook debuted in May, but the IPO was bungled, hobbling the IPO sector. But now some observers believe the IPO market has begun to heal, thanks to successful IPOs by Workday and other companies.
Bhusri and co-CEO David Duffield founded Workday in 2005 after leaving PeopleSoft, which Duffield founded, following its hostile takeover by Oracle.
"Workday has CEOs and leaders who have a successful track record," said Tim Bajarin, principal analyst with Campbell-based Creative Strategies. "Some of the gains is people betting on Dave Duffield. The market believes Workday's competitors will move much more slowly than a startup like Workday."
Workday got "a well deserved premium valuation as the market bets that lightning can strike twice for Dave Duffield," Hamadeh said in an email. Bhusri also gave a nod to his co-CEO. "I feel lucky to have crossed paths with Dave Duffield," he said.
Workday's revenues the past three fiscal years, respectively, were $25.2 million, $68.1 million and $134.4 million. In the first six months of fiscal 2012, Workday lost $47.3 million on sales of $119.5 million.
Bhusri said he and Duffield were nervous as they prepared to ring the bell to launch the trading for Workday.
"It was a relief to see the stock take off," Bhusri said. "We feel we priced it right for the investors."
Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos. Contact Jeremy C. Owens at 408-920-5876. Follow him at Twitter.com/mercbizbreak