HR Software Workday saw its shares rocket nearly 72% on Friday morning, opening at $48.05 per share, from its initial pricing of $28.
Workday priced its shares late Thursday. With 22.75 million Class A shares being offered, the deal raises $637 million. Workday’s valuation, at its IPO, stands at $4.5 billion.
Morgan Stanley and Goldman Sachs are leading the offering, with addition underwriters Allen & Company, J.P. Morgan, Cowen and Company, JMP Securities, Pacific Crest Securities, Wells Fargo Securities and Canaccord Genuity. The company underwriters have the right to purchase up to an additional 3,412,500 shares of Class A common stock to cover over-allotments.
The company has both Class A and Class B stock. While Class B shares generally come with more voting rights than those that are Class A, this is not always the case. A Class B shareholder will commonly receive extra votes to approve changes within the company. It can be five, 10, or even 100 votes, depending on the company. In the case of Workday, its class B stock entitles owners to 10 votes, while class A holds only one vote.
Essentially, Class B shares are generally those who have an interest in running the company, while those who have Class A stock are in to buy and sell for profit.
The holders of Workday’s Class B stock would hold around 98% of the voting power of its outstanding capital stock following the offering, it says in the SEC document. Co-founders and co-Chief Executive Officers, David Duffield and Aneel Bhusri, together with their affiliates, will hold approximately 67% of the voting power.
The company has 137,540,031 outstanding Class B shares, and total 160,290,031 shares outstanding.
This is the third time this month the company has set its share prices: first at $21-24 at the beginning of the month, then at $24-26 a week later. The company is expected to begin trading today on the New York Stock Exchange under the symbol WDA.
Pleasanton, California-based Workday, which was founded in 2005 by Duffield and Bhusri, offers solutions to running a company, helping with payroll; financial management, including billing, accounting, cash management, time tracking; and human capital management, which encompasses absences, benefits and organization. The solutions are a cloud-based alternative to in-house legacy enterprise applications.
While the company has seen revenue grow the last three years, it has also seen increased losses.
The company reported revenues of $134.4 million in 2011, up from $68.1 million in 2010 and $25.2 million in 2009. It also suffered a net loss of $79.6 million, up from $56.2 million in 2010 and $49.9 million in 2009.
In the six months ending July 2012, Workday’s total revenue was $119.5 million, up 118% from $54.8 million at the same time last year.
Workday has applications in 21 different languages, and serves 325 customers including Aviva International Holdings, AIG, Georgetown University, Four Seasons Hotels, Lenovo, and Kimberly-Clark Corporation, among others. Its largest deployment to date was for an organization with a global workforce of more than 200,000 employees.
Last fall, the company raised $85 million, bringing its total financing to $250 million, which had some experts estimating the company’s valuation to be $2 billion. Financial backers include Amazon CEO Jeff Bezos’s Bezos Expeditions, Janus Capital Group, Morgan Stanley Investment Management, and T. Rowe Price, among others.
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