Employee-Software Company Workday Files for $400 Million IPO

Workday Inc., whose Web-based software helps companies manage employee operations, filed for a $400 million U.S. initial public offering.

The amount is a placeholder used to calculate registration fees and may change. The company, which plans to list under the symbol WDAY, didn’t disclose how many shares it will sell or at what price in a regulatory filing yesterday.

Workday’s programs, which handle tasks such as payroll and human resources, are delivered via the Internet. The company was founded in 2005 by co-Chief Executive Officers Dave Duffield and Aneel Bhusri, both veterans of human-resources software company PeopleSoft Inc.

Duffield holds majority voting control in Workday, while Bhusri has a 19 percent voting stake, the filing shows. Bhusri has also been a partner since 1999 at Greylock Partners, the venture-capital firm that owns an 11 percent stake in Workday, according to the filing. Investment firm New Enterprise Associates owns 10 percent of the company.

The filing didn’t disclose whether the founders or other owners plan to sell in the offering. Proceeds will be used for working capital and other general corporate purposes, according to the document, which didn’t provide further details.

Revenue in the six months through July 31 more than doubled to $119.5 million from a year earlier, while the net loss widened to $46.9 million, Workday’s filing shows. Spending on research and development rose 62 percent to $44.3 million, or 37 percent of revenue.

R&D Spending

That ratio is higher than the 22 percent spent in the most recent quarter by Splunk Inc. (SPLK), the maker of data-analysis software for businesses that went public in April. It’s also higher than the 13 percent spent on R&D by ServiceNow Inc., the provider of information-technology management software that conducted an IPO in June, according to data compiled by Bloomberg.

The market for software as a service, which lowers costs for businesses because it is accessed from the cloud rather than being installed and maintained onsite, is projected to grow 24 percent yearly to $67 billion in 2016, Workday said in its filing, citing research firm IDC.

Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) were hired to lead the offering.

To contact the reporter on this story: Lee Spears in New York at lspears3@bloomberg.net

To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; Tom Giles at tgiles5@bloomberg.net

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