We estimate that our net proceeds from the sale of the Class A common stock
that we are offering will be approximately $595.5 million, or approximately
$685.3 million if the underwriters exercise in full their right to purchase
additional shares to cover over-allotments, based on the initial public
offering price of $28.00 per share, and after deducting underwriting discounts
and commissions and estimated offering expenses payable by us.
The principal purposes of this offering are to increase our financial
flexibility, increase our visibility in the marketplace and create a public
market for our Class A common stock. We intend to use the net proceeds to us
from our initial public offering for working capital and other general
corporate purposes. We have no specific planned uses of the proceeds;
however, we may use a portion of the proceeds to fund the expansion of our
business. In addition, as of January 31, 2012, we had commitments under
operating and capital leases and contractual commitments of approximately
$36.2 million. We may also use a portion of the proceeds for these purposes.
The amount of proceeds we use for these purposes, if any, will depend on the
level of cash generated from our operations. Additionally, we may choose to
expand our current business through acquisitions of or investments in other
complementary businesses, technologies, or other assets, using cash or shares
of our Class A common stock. However, we currently have no agreements or
commitments with respect to any such acquisitions or investments at this
time.
Pending other uses, we intend to invest the proceeds in interest-bearing,
investment-grade instruments, certificates of deposit or direct or guaranteed
obligations of the U.S. government, or hold as cash. We cannot predict whether
the proceeds invested will yield a favorable return. Our management will have
broad discretion in the application of the net proceeds we receive from our
initial public offering, and investors will be relying on the judgment of our
management regarding the application of the net proceeds.
The overall market for enterprise application software is rapidly evolving
and highly competitive, and subject to changing technology, shifting customer
needs and frequent introductions of new applications. We currently compete
with large, well-established, enterprise application software vendors, such
as Oracle Corporation and SAP AG. These two companies are expanding their
traditional on-premise enterprise applications with cloud-based applications,
either through acquisition or in-house development. Oracle
Corporation and SAP AG are established enterprise software companies that
have greater name recognition, larger customer bases, much longer operating
histories and significantly greater financial, technical, sales, marketing
and other resources than we have and are able to provide comprehensive
business applications that are broader in scope than our current suite of
applications. We also face competition from other enterprise software
vendors and from vendors of specific applications, some of which offer
cloud-based solutions. These vendors include Lawson, which was acquired
by an affiliate of Infor, The Ultimate Software Group, Inc. and Automated
Data Processing. We also face competition from cloud-based vendors including:
providers of applications for HCM and payroll services, such as Ceridian;
providers of cloud-based expense management applications such as Concur
Technologies, Inc.; and providers of financial management applications such
as NetSuite, Inc. We may also face competition from a variety of vendors of
cloud-based and on-premise software applications that address only a portion
of one of our applications. In addition, other cloud companies that provide
services in different markets may develop solutions in our target markets,
and some potential customers may elect to develop their own internal
solutions. However, the domain expertise that is required for a successful
solution in the areas of HCM, payroll and financial management may inhibit
new entrants that are unable to invest the necessary capital to accurately
reflect global requirements and regulations. We expect continued
consolidation in our industry that could lead to significantly increased
competition.
We believe the principal competitive factors in our market include the
following:
• level of customer satisfaction;
• ease of deployment and use of applications;
• breadth and depth of application functionality;
• total cost of ownership;
• brand awareness and reputation;
• modern and adaptive technology platform;
• capability for customization, configurability, integration, security,
scalability and reliability of applications;
• ability to innovate and respond to customer needs rapidly;
• domain expertise on HR, payroll and financial regulations;
• size of customer base and level of user adoption; and
• ability to integrate with legacy enterprise infrastructures and third-party
applications.
We believe that we compete favorably on the basis of these factors. Our
ability to remain competitive will largely depend on our ongoing performance
in the areas of application development and customer support.
consumer Internet experience and cloud delivery model. Further, we believe
we are the only company to provide this complete set of unified cloud-based
applications to enterprises. Our applications are designed for global
enterprises to manage complex and dynamic operating environments. We provide
our customers highly adaptable, accessible and reliable applications to manage
critical business functions that enable them to optimize their financial and
human capital resources.
Organizations today operate in environments that are highly complex and that
are changing at an increasing rate. Managers and employees must quickly
synthesize vast amounts of information and react to rapid changes in global
business and regulatory environments. To be successful, they need highly
functional and flexible software that enables informed decision-making about
the enterprise-wide allocation of their resources. Additionally, given the
increasing prominence of consumer-oriented Internet applications, managers
and employees expect to interact with enterprise systems in an open,
intuitive and collaborative way, including real-time access through a wide
range of mobile and computing devices. We believe that legacy, on-premise
enterprise systems make these interactions difficult, as their user interfaces
are not intuitive and were not originally designed for mobility. Furthermore,
legacy applications are often expensive to implement, maintain and upgrade.
In the last few years, new technologies and approaches to deliver software
have emerged to address these issues.
In response to these changes, Workday is leading the way in helping
organizations to better manage their core enterprise resources, specifically
their financial and human capital resources. We enable organizations to
embrace changes in their operating environments through our rapid innovation
cycle of frequent updates, which generally contain new functionality, support
for new regulatory requirements, performance requirements and enhancements of
the user experience. Our latest update is Workday 17, which provided more
than 100 new features, and we currently provide a new update three times per
year. By delivering our software as a cloud-based service, our customers
operate on our latest version without the burden of large upgrade costs,
while having the flexibility to configure our applications to meet their own
requirements.
Our customers can operate with a more complete picture of their organization
because our applications and embedded analytics capture the content and
context of everyday business events, facilitating fast and informed
decision-making from wherever they are working. Our applications are designed
for the way people work today, in collaboration with each other from a wide
variety of devices, empowering workers to make business decisions using
real-time data. By providing an intuitive user experience, we enable effective
management of resources by all members of an organization, minimizing reliance
on specialist information technology (IT), human resources (HR) or finance
employees. These professionals are therefore freed to focus on other strategic
activities.
We deliver our cloud-based applications using an innovative technology
foundation that leverages the most recent advances in cloud computing and
data management. Our use of a multi-tenant architecture, object-oriented
technology framework, in-memory data management and a mobile-centric approach
allows us to deliver applications that are highly functional, flexible and
fast. Our customers benefit from moving beyond the limitations associated
with traditional on-premise software to highly configurable applications
delivered over the Internet. This shift in approach substantially reduces the
need for our customers to buy and support a broad range of IT infrastructure,
and significantly reduces the cost and complexity relative to implementations
and upgrades of on-premise software.
We have achieved significant growth and global scale in a relatively short
period of time. Currently, we have more than 350 customers, including large,
global companies such as Aviva International Holdings Inc., AIG, Inc.,
Flextronics International, Four Seasons Hotels, Georgetown University,
Kimberly-Clark Corporation and Lenovo. Our largest deployment to date is to
an organization with a global workforce of over 200,000 people, and our
applications are available in 21 different languages.
Our company was founded in 2005, and currently we have more than 1,550
employees. We recently changed our fiscal year end from December 31 to
January 31. For our fiscal years ended December 31, 2009, December 31, 2010
and January 31, 2012, our revenues were $25.2 million, $68.1 million, and
$134.4 million, respectively, representing year-over-year growth in revenues
of 170% and 98% for our two most recent fiscal years. We incurred net losses
of $49.9 million, $56.2 million and $79.6 million for the fiscal years ended
December 31, 2009, December 31, 2010 and January 31, 2012, respectively.
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We were incorporated in March 2005 as North Tahoe Power Tools, Inc., a Nevada
corporation. In July 2005, we changed our name to Workday, Inc. and in June
2012 we reincorporated in Delaware.
Our principal executive offices are located at 6230 Stoneridge Mall Road,
Pleasanton, California 94588, and our telephone number is (877) WORKDAY.
Our website address is www.workday.com.