Workday: Solidifying the Return of the Enterprise IPO

Workday listed its IPO on the NYSE on October 12th; the company went public at an approx $7.7bn market cap (based on its opening price of $48). Workday is a provider of enterprise cloud applications for human resources and finance, and its leadership team includes co-Founders Aneel Bhusri & Dave Duffield, the former leadership team of PeopleSoft.

I was fortunate enough to be with the WDAY team on the NYSE Floor during the opening price discovery process on the morning of the IPO;  the frenzied activity level, crowds, media swarm, and overall high energy level were all amazingly similar to LinkedIn’s IPO from last year.

In 2012, we’ve seen a shift in focus in the tech IPO markets from social media / web-enabled consumer businesses back to the “enterprise.” Many point to trends like “big data”, “cloud”, “SAAS”;  in any case, it seems obvious the markets have a renewed interest in enterprise businesses after the ignominious performances of former social media / consumer oriented darlings such as Facebook, Zynga, and Groupon. By the way, Workday was the largest VC-backed IPO since Facebook.

Why are investors now more interested in enterprise IPOs? Let’s take a quick look at some recent data. Here’s a list of selected enterprise company IPOs from 2012 – since going public, each of these companies has had positive price performance and on average this group is up +95%, offer to current (10/15/12). For comparison, in this same metric (offer to current), Facebook is down (49%), Zynga is down (76%), and Groupon is down (74%) – quite a contrast.

Selected Recent Enterprise IPOs

(source: Dealogic, current date as of 10/15/12)

Name

Ticker

Exchange

Pricing Date

Size ($)

In Range?

% Change Price, Offer /Current

Workday

WDAY

NYSE

11-Oct-12

$637mm

above

+86%

Palo Alto Networks

PANW

NYSE

19-Jul-12

$260mm

above

+56%

ServiceNow

NOW

NYSE

28-Jun-12

$210mm

above

+92%

Splunk

SPLK

Nasdaq

18-Apr-12

$230mm

above

+90%

Demandware

DWRE

NYSE

14-Mar-12

$88mm

above

+109%

Guidewire Software

GWRE

NYSE

24-Jan-12

$115mm

above

+138%

 

What will the rest of 2012 and 2013 bring?   It’s hard to say for sure, but the current trend in tech IPOs is definitely more focused on the enterprise.