Last Wednesday in an 8-K filing with the Securities and Exchange Commission, SaaS provider Workday, Inc. (NYSE: WDAY) revealed that Walmart, one of the world’s largest private employers, had signed a subscription deal for Workday’s Human Capital Management, Recruiting, Learning and Planning products. In the filing, Workday said it was not updating its financial guidance for the fourth quarter of its fiscal year ending January 31, 2017 or the fiscal year ending January 31, 2018.

According to Drexel Hamilton analyst Brian White, depending on how many of Walmart’s 2.2 million employees get access to the subscription, the deal could be worth $100 million to $200 million, reports Investors.com.  

Investors reacted with an uptick in Workday stock.

On January 13, stock closed at $80.89. This is up $10.39 from its stock price of $70.50 on January 14, 2016, but up even higher over its stock price of $66.09 per share in December.

On December 1, 2016, Workday released its latest financials for the fiscal third quarter ended October 31, 2016. At that time, Workday reported total revenue of $406.9 million, a 34.2 percent increase year-over-year. Of that total, $335.7 million in revenue was generated from subscriptions, a 38.3 percent increase year-over-year. In spite of those impressive revenue figures, Workday reported a net loss of $109.9 million

“We had a strong third quarter and saw healthy demand across all major geographies and industries,” said Aneel Bhusri, co-founder and CEO, Workday. “We continue to lead with product differentiation, technology innovation, and real customer success, and believe these are significant differentiators for Workday in the market.”

“We are very pleased with our third quarter results,” said Robynne Sisco, chief financial officer, Workday. “Looking ahead, we anticipate fiscal 2017 subscription revenues to be within a range of $1.282 to $1.285 billion and fiscal 2017 total revenues to be within a range of $1.560 to $1.563 billion.”

Workday Learning and Workday Planning were released during the third quarter of 2016.

Insider Take:

While this is, indeed, a big win for Workday, the company’s reluctance to update its guidance tells us that the impact of the Walmart deal will not be immediate. As analyst Brian White indicates, it will take time to roll out the products and to determine how they will be used and by whom. As that process unfolds, Workday always has the option to update its guidance if needed. If Workday’s HCM and Recruiting, Planning and Learning tools are deployed successfully, this deal could be worth hundreds of millions of dollars, but that will not happen overnight.