Workday: On-Demand Enterprise IPOs Continue To Command Investor Interest

| About: Workday (WDAY)
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Workday's (NYSE:WDAY) strong debut on Friday marked the 16th on-demand enterprise software IPO this year. The group has performed exceptionally well, posting an average first day gain of 34% (vs. 14% average for all IPOs YTD) and an average total return of 47% (vs. 20%), a reflection of investors' ongoing interest in growth and high revenue visibility.

E2open (NASDAQ:EOPN), the only on-demand enterprise software IPO that has traded down on its first day, saw redemption this week after reporting slightly better-than-expected results on Monday after the close. Since its earnings announcement, E2open has jumped 29%, bringing it back above its offer price and at a post-IPO high.

Workday lived up to its hype on Friday and closed its first day of trading up 75%, solidifying its spot as the fifth largest first day gain this year, behind big data software provider Splunk (NASDAQ:SPLK), mobile ad platform Millennial Media (NYSE:MM), organic food maker Annie's (NYSE:BNNY) and quick-turn protoype manufacturer Proto Labs (NYSE:PRLB).

Workday now commands the highest valuation of this year's on-demand IPOs with a fully diluted market value of $9.4 billion (44x trailing 12 month sales). IT automation software provider ServiceNow (NYSE:NOW) follows with a market value of $5.4 billion (29x trailnig sales). Guidewire (NYSE:GWRE), ExactTarget, (NYSE:ET) Demandware (NYSE:DWRE) and Bazaarvoice (NASDAQ:BV) each have market values in excess of $1 billion.

Largest 2012 On-demand Enterprise Software IPOs by Market Value

Company (Ticker) IPO Date Market Value EV/LTM Sales First Day Pop Return from IPO
Workday (WDAY) 10/11/12 $9.4 billion 44x 75% 75%
ServiceNow (NOW) 6/28/12 $5.4 billion 29x 37% 85%
Guidewire (GWRE) 1/24/12 $1.8 billion 7x 32% 132%
ExactTarget (ET) 3/21/12 $1.7 billion 6x 32% 21%
Demandware (DWRE) 3/14/12 $1.2 billion 16x 47% 109%
Bazaarvoice (BV) 2/23/12 $1.0 billion 8x 38% 25%