Enterprise cloud applications provider for human resource and
) reported fiscal second-quarter 2014 loss per share of 19 cents,
narrower than the Zacks Consensus Estimate of a loss of 24 cents
Revenues surged 71.5% from the year-ago quarter to $107.6
million, which comfortably surpassed the Zacks Consensus Estimate
of $101.0 million. Subscription revenues (75.4% of revenues)
soared 92.2% year over year to $81.1 million in the quarter.
Professional revenues (24.6% of revenues) increased 29.0% year
over year to $26.4 million.
Workday ended the second quarter with more than 500 customers
in total. This apart, the company announced plans to deliver
Workday Payroll for UK and Workday Payroll for France, which are
targeted toward meeting the full spectrum of payroll needs. The
applications are expected to be available in 2015 and 2016,
Most of the contracts signed during the quarter were of just
over 3.5 years in duration. This is an increase from the prior
two quarters, mostly on the back of a couple of large deals with
five year terms. The company focuses its selling efforts
primarily on such short-term contracts. Management believes the
higher renewal rates and economics of these contracts are
favorable for the company in the long term.
Operating expenses rose sharply to $99.1 million from $60.8
million reported in the year-ago quarter due to an 80.8% increase
in general & administrative expense, 74.8% rise in research
& development expense and a 49.0% jump in sales &
As a result of higher operating expenses, Workday reported
operating loss (including share- based compensation) of $32.3
million, wider than a loss of $26.4 million in the year-ago
quarter. Net loss (including stock-based compensation) was $33.2
million or 19 cents per share.
Cash & cash equivalents and marketable securities were
$1.29 billion compared with $805.8 million in the previous
quarter. Cash used in operations during the quarter was $12.9
For fiscal third quarter 2014, total revenue is expected in
the range of $115 million to $118 million, up 58% to 62% compared
to the prior year. Subscription revenues are anticipated to be
within a range of $88 million to $91 million, reflecting
year-over-year growth of 71% to 76%.
For fiscal 2014, Workday expects revenues to be in the range
of $436.0 million to $444.0 million. Professional Services
revenues are projected to decrease seasonally in fiscal fourth
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
Automatic Data Processing, Inc.
) in both of its operational markets.
Currently, Workday has a Zacks Rank #3 (Hold).
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