Enterprise cloud applications provider for human resource and
Workday Inc. (
reported first-quarter 2014 loss per share of 15 cents,
considerably narrower than loss per share of 57 cents reported in
the prior-year quarter.
Including share-based compensation of 5 cents, loss per share
came in at 20 cents per share and was better than the Zacks
Consensus Estimate of a loss of 23 cents per share.
Revenues surged 61.3% from the year-ago quarter to $91.6
million. Subscription revenues (74.7% of revenues) soared 85.3%
year over year to $68.4 million in the quarter. Professional
revenues (25.3% of revenues) increased 16.7% year over year to
Workday ended the first quarter with more than 450 customers
in total, of which 290 are live on Workday applications. Workday
added companies and institutions such as Bristol-Myers Squibb,
Levi Strauss and University of Miami as its clients during the
Most of the contracts signed during the quarter were of just
over three years in duration. Total unearned revenues at quarter
end increased 41.0% year over year to $285.0 million.
During the quarter, Workday applications were deployed for
customers such as
Johnson & Johnson (
, London Stock Exchange and Cornell University. Notably, in April
all customers moved to Workday 19, the company's latest update.
Workday also launched a mobile application for
Android operating system that is currently on Google Play.
Operating expenses rose sharply to $87.6 million from $51.7
million reported in the year-ago quarter due to a 113.2% increase
in general & administrative expense, 74.6% rise in research
& development expense and a 54.5% jump in sales &
As a result of higher operating expenses, Workday reported
operating loss (including share- based compensation) of $32.6
million, wider than a loss of $20.0 million in the year-ago
quarter. Net loss (including stock-based compensation) was $33.0
million compared with $20.0 million loss in the year-ago
Cash & cash equivalents and marketable securities were
$805.8 million compared with $790.3 million in the previous
quarter. Cash from operations during the quarter was $17.3
For second quarter 2014, total revenue is expected in the
range of $97.0 million to $101.0 million. Subscription revenues
are expected between $74.0 million and $76.0 million.
Workday expects macroeconomic challenges to remain and IT
spending to be muted in 2014. Workday expects the revenue mix to
shift toward subscriptions.
For fiscal 2014, Workday expects revenues to be in the range
of $425.0 million to $440.0 million. Professional revenues are
projected to be approximately in the range of $100.0 to $105.0
million. Annual billings are expected to be within $530.0 million
for fiscal 2014.
We believe that Workday's innovative product pipeline will
help it to gain significant footprint in the human resource and
finance markets. However, we believe that the company will face
serious competition from large established players such as
in both of its operational markets. This cut-throat competition
and increasing investments in product development and personnel
cost will hurt profitability going forward.
Currently, Workday has a Zacks Rank #3 (Hold).
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