Updated from 9:55 a.m. EST to provide analyst comments regarding IPO performance in the sixth and eighth paragraphs.
NEW YORK ( TheStreet) -- Cloud computing company Workday is seeing such strong demand for its initial public offering that the offering price of its shares has been raises, according to a company filing.
The company intends to sell 22.75 million Class A shares in the offering, raising as much as $591.5 million. The IPO will price Thursday after the close of trading, and shares will trade on the New York Stock Exchange Friday under the ticker "WDAY."Workday describes itself in the filing as a "leading provider of enterprise cloud-based applications for human capital management (HCM), payroll, financial management, time tracking, procurement and employee expense management." Workday has commanded exceptionally strong interest on the back of strong performances from other cloud computing stocks, including Salesforce.com. One hedge fund analyst, who declined to be named, said it had "clearly the best prospects of the upcoming IPOs, but at 12 times revenue, it's priced for that." "Demand is many times multiple oversubscribed. This company is Oracle's and Salesforce's greatest nightmare," said Daniel Sweet, partner at IPO Boutique. "It's a potential acquisition target down the line." For the six months ended July 31, Workday had sales of $119.5 million, up 118% ($54.8 million) from the year-earlier period. Though revenue is growing exceptionally fast, losses are also growing. Losses in the same period widened to $1.40 share from $1.27. Workday said its in filing that it doesn't expect to be profitable for the foreseeable future. Still, Wall Street is expected to show strong demand for this IPO. "The cloud keyword is the driver here," Sweet said. "As far as valuation is concerned, there's still some room for this IPO to work higher, given recent cloud IPOs." "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," the filing noted. Interested in more on Salesforce? See TheStreet Ratings' report card for this stock. -- Written by Chris Ciaccia in New York >Contact by Email. Follow @Commodity_Bull
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