In 2011, the company posted $80 million in losses on $134 million in sales. In the filing, Workday says it does not “expect to be profitable for the foreseeable future,” since it had lost money every year since its establishment in 2005. They see this lack of profitability as one of its biggest business risks.
Workday also listed several considerations expected from companies in the highly competitive enterprise software-as-a-service market: security, lengthy sales cycles, and demand for third-party data centers.
Workday kept the news quiet until now; the company originally filed the SEC S-1 form in July. The 2012 Jumpstart Our Business Startups or JOBS Act has a provision for companies with less than $1 billion in revenue to apply confidentially for an IPO with the SEC; the forms are off the record up to 21 days before an investor roadshow.
This application follows a handful of summer IPOs for technology companies, most notably the social media giant Facebook. Two other high-profile IPO’s—Palo Alto Networks (PANW) and travel site Kayak (KYAK)—are currently trading slightly above their initial share price.
Facebook, one of the largest IPO’s in recent times, closed Thursday at nearly half its IPO price.
Morgan Stanley, the same company that headed Facebook’s troubled public offering in May and Goldman Sachs & Co. is named as the head underwriters for the Workday IPO. The company is not required to show the number of shares it plans to offer or a price range at this point in the IPO process. Workday announced it will trade under the ticker WDAY; which stock exchange will market WDAY shares has not yet been selected.
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