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Workday's S-1 Filing: Details From Inside

Highlights from the leading software-as-a-service HCM vendor's proposed initial public stock offering.

September 20, 2012

David Duffield and Aneel Bhusri have salaries of $33,000 a year. But don't feel too sorry for them. The Workday Inc. co-founders own 73.5 million and 27.4 million shares of Class B stock, respectively, close to three-quarters of the company's voting rights before its expected initial public offering.

Duffield and Bhusri built controls into the stock sale—which could take place before the end of September—to ensure they stay in power, and to thwart the kind of hostile takeover they lived through when Oracle Corp. bought PeopleSoft Inc. for $10.3 billion in 2005.

The co-founders will maintain majority control of the company after the IPO, and should one die or become incapacitated, the other will receive voting rights to the other founder's shares, according to documents Workday filed with the Securities and Exchange Commission for the offering.

Here are some other highlights gleaned from the filing:

Proceeds: Workday hopes to raise $400 million to add to $36.7 million in cash and cash equivalents it had as of July 31. The company says it will use the funds for working capital and general corporate purposes. Workday could use funds to buy "complementary businesses, technologies or other assets," although no deals of material size are in the works.

Revenue and losses: Sales of software-as-a-service subscriptions accounted for 66 percent of Workday's total revenue for the fiscal year ended Jan. 31, 2012. Sales of professional services—consulting with clients on software installations—made up the balance. As of July 31, Workday had accumulated losses of $329.5 million since its inception, including a net loss of close to $50 million halfway through fiscal 2012.

Expenses: As Workday builds its technology and customer bases, the company is spending an amount equal to its annual revenue on research and development, and sales and marketing, or roughly $132.3 million in fiscal 2012. To date, Workday has received four patents and has 22 patent applications pending.

Employees: Workday's workforce has more than quadrupled in the past six years, from 321 employees in December 2008 to 1,452 as of July 31, 2012.

Data centers: The "cloud" based services that Workday offers have a very real home in data centers the company operates in Ashburn, Virginia; Lithia Springs, Georgia; and Portland, Oregon; as well as in Dublin and Amsterdam.

Michelle V. Rafter is a Workforce contributing editor. Comment below or email editors@workforce.com.