Pleasanton, Calif.-based Workday filed for an IPO with the Securities and Exchange Commission (SEC), it was revealed late Thursday. Founded in 2005, the maker of cloud-based human capital management (HCM) software hopes to raise up to $400 million.
Given the heated competition in the HCM space, Workday is going to need every last cent to hold its own against its moneyed rivals.
In the SEC filing, Workday revealed the company is struggling to achieve profitability despite strong sales growth. For the six months ending July 31, 2012, Workday booked $119.5 million in revenues, more than double the $54 million the company took in during the same period in 2011.
Net losses amounted to $46.9 million for the six months ending July 31, 2012 vs. $36.2 million for the same year-ago period. In detailing the risk factors affecting the company to the SEC, Workday informs, "We expect our operating expenses to increase in the future due to anticipated increases in sales and marketing expenses, research and development expenses, operations costs and general and administrative costs, and therefore we expect our losses to continue for the foreseeable future."
Stiff HCM competition
Competing against Oracle, SAP, Salesforce and IBM -- companies that have dug deep into their coffers to expand into the HCM space -- may turn out to be a bruising battle.
In December, SAP acquired SuccessFactors for a staggering $3.4 billion. Salesforce followed suit later that same month by buying Rypple, another cloud-based HCM company, for an undisclosed amount.
It's a competitive landscape that evidently weighs on Workday.
"The markets for HCM and financial management applications are highly competitive, with relatively low barriers to entry for some applications or services," explains Workday. "Oracle and SAP are larger and have greater name recognition, much longer operating histories, larger marketing budgets and significantly greater resources than we do."
One thing Workday has working for it is a unified, frequently refreshed and tightly integrated platform. Earlier this year, Leighanne Levensaler, vice president of Product Strategy for Workday, told Enterprise Apps Today's Ann All, "It's the power of one. Our customers are all on the same version, so all of our developers are working on the next version and not on five different versions we have to support."
Workday also reportedly just signed a big deal with Google. Citing unnamed sources, Bloomberg reported that Google would replace its homegrown HR software with Workday.