Is this the second coming of Facebook (NASDAQ:FB)? It sort of depends on whether you think you can trust its founders.
Co-CEOs Aneel Bhusri and Dave Duffield, who ran Peoplesoft before Oracle (NASDAQ:ORCL) bought it in a 2005 hostile takeover, control about two-thirds of the common stock in the new company. Venture capitalists Greylock and New Enterprise Associates also hold over 10% each. But the IPO itself will sell under one-seventh of the company, for $512 million, valuing the whole at $3.6 billion.
So whether this turns into Facebook depends in part on whether the founders and VCs stick around, or dump shares as soon as they can. It's sort of all about the float.
Another big number to keep in mind - $247 million. That's the amount of money the company expects to book in revenues over the next year, based on present subscriptions. Workday sells the same kind of HR and finance software Peoplesoft sold back in the day - they just sell it as a service, meaning (supposedly) that they sell it "in the cloud."
Many folks call Workday "Peoplesoft in the cloud" but it's more like Salesforce.com (NYSE:CRM), in that it's a vertically-integrated cloud stack, including applications, to which customers can write add-in modules. (The difference is that Workday's applications are focused on internal functions while Salesforce is focused on marketing, on customer management.)
Speaking of which, Workday and Salesforce.com are partners (sort of) - Salesforce bought an outfit called Rypple, renamed it Work.Com, but insisted at its latest Dreamforce event that's just a tiny niche within the HR space, and that its links with Workday remain secure.
If you want another negative take, Oracle is going after both Salesforce and Workday with its new 12c database software, which should be cloudier. They're spreading as much FUD over the combination as they can. One more negative take - SAP (NYSE:SAP) bought SuccessFactors specifically to get into this market.
So, is this the second coming of Facebook? It depends on what you think the value of $247 million, and climbing, sales may be. We're looking at a full valuation of 12x sales, but that figure has been doubling (or better) every year since its founding, and while that growth has slowed as the numbers have gotten bigger and the company has yet to make money, here are the key numbers for bulls. The total cost of its $119 million in revenue booked for the first half of 2012 came to $53 million. From the first half of 2011 to the first half of 2012, revenues grew at 118%, while costs grew 95%.
So, no, this is not the next Facebook. But it could be the next Peoplesoft, which brought $10 billion from Oracle seven years ago.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.