Workday Posts Subscription Revenue of $434.5 M, a 42 Percent Increase

Last week Workday, Inc. (NYSE: WDAY), an enterprise cloud application provider for the finance and human resource sectors, reported its quarterly financials for the

Subscription News: Workday Posts Subscription Revenue of $434.5 M

Source: Workday

Last week Workday, Inc. (NYSE: WDAY), an enterprise cloud application provider for the finance and human resource sectors, reported its quarterly financials for the fiscal second quarter ended July 31, 2017. The company reported total revenue of $525.3 million, representing a 40.6 percent increase over the same period last year. Subscription revenue was $434.5 million, a 42 percent increase year-over-year. Total revenues were higher than an analyst’s revenue estimate of $506.8 million, reported by Benzinga. Subscription revenue also exceeded the analyst’s estimate of $421.8 million.  

Other financial highlights for the quarter include:

  • Subscription revenue represents 82.7 percent of total revenue. Professional services revenue represents the remaining 17.3 percent of revenue.
  • Costs of subscription services were $65.931 million, or 15.17 percent of subscription services revenue.
  • Costs of professional services were $92.264 million, or 101.62 percent of profession service revenue.
  • The company’s operating loss was $81.6 million, or 15.5 percent of revenue, compared to an operating loss of $86.7 million, or 23.2 percent of revenue, for the same period last year.
  • The company reported a net loss of $82.532 million, compared to a net loss of $107.813 for the same period last year.
  • The company reported a GAAP net loss of $0.40 per basic and diluted share, compared to $0.55 for Q2 2017.
  • Cash, cash equivalents and marketable securities were $2.1 billion as of July 31, 2017.
  • Unearned revenue was $1.2 million, a 26.2 percent increase year-over-year.

 a 42 Percent Increase

Source: Workday

‘Our second quarter results underscore our belief that Workday is the leading provider of finance and HR in the cloud. Not only did we see continued traction in finance, but now more than 30% of the Fortune 500 have selected Workday for core HR,’ said Aneel Bhusri, Workday co-founder and CEO, in an earnings press release.

‘Coupling this success with our increasing strength among medium enterprises and strong adoption of new products like Workday Planning gives us great confidence in our ability to continue growing market share globally while keeping customer satisfaction among the highest in the industry,’ added Bhusri.

Robynne Sisco, chief financial officer, noted that this was the fourth consecutive quarter in which Workday had subscription growth higher than 40 percent.

‘With the momentum from our second quarter results, we are raising our fiscal 2018 outlook and are now expecting subscription revenue of $1.750 to $1.757 billion, or growth of 36 percent. We expect our third quarter subscription revenue to be between $450 and $452 million, or growth of 33 percent to 34 percent,’ said Sisco. ‘We continue to focus our investments on areas of the business that drive long-term growth, while delivering strong operating margins and cash flow expansion over time.’

Operational highlights for the quarter include:

  • Workday announced the Workday Cloud Platform, a Platform-as-a-Service (PaaS) to build custom extensions and applications for customers.
  • Workday was named one of the Best Large Workplaces in Europe by the Great Place to Work Institute, ranking #3.
  • Workday was ranked #1 in the Bay Area News Group’s top workplaces list for the seventh time.

Two days after reporting its Q2 FY2018 financials, Workday announced that it is transferring its stock exchange listing to the New York Stock Exchange, effective with the opening of the market on September 20, 2017. The company will trade under the symbol WDAY.

Workday stock has inched up slightly since the Q2 FY2018 financials were reported on August 30, 2017. The day before financials were reported, Workday stock was valued at $104.41 per share. On August 30, 2017, it closed at $107.54. As of 7:03 PM Eastern on September 5, Workday stock was valued at $108.16. This time last year – September 6, 2016 – Workday stock was $90.10 per share.

Subscription News: Workday Posts Subscription Revenue of $434.5 M

Source: Google Finance – Yahoo Finance – MSN Money

Insider Take:

In a column on Seeking Alpha on Tuesday, Gary Alexander said that Workday has been an investor favorite for the last several years. He also said that investors by Workday stock like they buy Bitcoin – ‘without thinking, without understanding, because they think it can only go one direction: up.’ With Workday raising its guidance for the third quarter and fiscal year 2018, it looks like Workday is anticipating continued growth with improved margins, similar to its second quarter results and consistent with its growth over the last four quarters. We’re curious to see what, if any, impact the company’s switch from NASDAQ to the New York Stock Exchange will be.

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