Enterprise cloud applications provider for human resource and
reported fiscal third-quarter 2014 loss of 23 cents per share,
narrower than the Zacks Consensus Estimate of a loss of 26 cents
Revenues surged 76.1% from the year-ago quarter to $127.9
million, which surpassed the Zacks Consensus Estimate of $118.0
million. Subscription revenues (73.5% of revenues) soared 82.1%
year over year to $93.9 million in the quarter. Professional
revenues (26.5% of revenues) increased 61.3% year over year to
The subscription revenue of the company includes the service
provided to more than 550 customers. The professional services
business has been able to maximize its customer satisfaction and
is therefore a primary revenue growth driver.
The new contracts signed have a weighted average duration of
approximately 3.4 years. Moreover, the company's focus on
aggressively selling its products has paid rich dividends and is
reflected in the sales growth of the company. Additionally, the
high renewal rates as well as shorter term contracts are
beneficial for the company in the long run.
Operating expenses rose sharply to $119.7 million from $83.3
million reported in the year-ago quarter due to a 75.8% increase
in R&D expense and 65.9% rise in sales & marketing
expense, although General & Administrative expense declined
As a result of higher operating expenses, Workday reported an
operating loss (including share- based compensation) of $40.4
million, narrower than a loss of $40.9 million in the year-ago
quarter. Net loss (including stock-based compensation) was $40.9
million or 23 cents per share, up from a loss of $30.1million or
49 cents per share in the year ago period.
Cash & cash equivalents and marketable securities were
$1.28 billion compared with $1.29 billion in the previous
quarter. Cash provided by operating activity during the quarter
was $7.1 million.
For fiscal fourth quarter 2014, revenues are expected in the
range of $133.0 million to $138.0 million or growth of 63% to 69%
compared to the prior year. Subscription revenues are expected to
be in the range of $105 million to $108 million, resulting in a
year-over-year growth of 76% to 81%.
Workday reported narrower-than-expected loss in the third
quarter of 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
Automatic Data Processing, Inc.
) in both of its operational markets.
Currently, Workday has a Zacks Rank #3 (Hold).
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