Workday Inc., a provider of cloud-computing software that helps companies manage office operations online, boosted the price range for its initial public offering, seeking to raise as much as $591.5 million.
Workday is offering 22.75 million shares at $24 to $26 apiece, up from a prior range of $21 to $24, according to a filing today. At the midpoint of the increased range, the company would have a market value of $4 billion.
The company, based in Pleasanton, California, offers payroll and human resources services software online and counts Google Inc. among its customers, according to people familiar with that deal. Stock surges for cloud-related companies ServiceNow Inc. and Palo Alto Networks Inc. after IPOs earlier this year are bolstering demand for Workday, said Scott Sweet, senior managing partner at IPO Boutique.
“It will be the biggest cloud-based tech IPO this year,” Sweet said in an interview today. “The institutions are coming in with monstrous orders and are willing to pay more than the prevailing price range. They want the deal very badly.”
ServiceNow, which provides software and services to help companies manage human resources and financial information over the Internet, has more than doubled since an IPO in June. Palo Alto Networks, which makes data-center security technology, through yesterday had gained 48 percent since its debut in July.
Guidewire Software Inc., a provider of Web-based insurance claims software, and Demandware Inc., which sells e-commerce software and services, have doubled since IPOs this year.
Workday was founded in 2005 by co-Chief Executive Officers Dave Duffield and Aneel Bhusri, who both previously worked at human-resources software pioneer PeopleSoft Inc.
The company is offering 14 percent of shares in the IPO. If underwriters exercise an option to sell an additional 3.4 million shares, that would increase the float to 16 percent.
Morgan Stanley and Goldman Sachs Group Inc. are managing the sale. Workday plans to list on the New York Stock Exchange under the symbol WDAY.
Greylock Partners, a Menlo Park, California-based venture firm, is the top outside investor in Workday with an 11 percent stake and isn’t selling shares in the IPO, according to the filing. New Enterprise Associates will retain its 10 percent stake after the IPO.