Workday

  • Workday,   the human resources, finance, and cloud software company reported   better-than-expected second quarter revenue and earnings.

  • The   company recorded revenue of $1.06 billion, a 19.4% rise year-on-year.   Subscription services, which makes up the bulk (87%) of the company’s sales,   increased by 23% over the same period a year earlier, whilst the costs   associated with those services only increased 19.7% over the same period.   Revenue from professional services, which makes up the remianing 13% of the   company’s sales, was flat - but it’s related costs fell 4%. Product   development costs increased by 10.7% to $418.6 million, however total overall   costs and expenses were kept relatively tight, rising by 6.7% year-on-year.

  • The   company made an operating loss of $16.75 million, an improvement on the   $120.7 million loss it made in the same quareter a year ago. The net loss   came in at $28 million from a loss of $120 million previously.

  • Adjusted   earnings (non-GAAP) came in 84 cents per share, higher than the 66 cents the   market was expecting. That is after stripping out share-based compensation   expenses which amounts to $251.2 million.

  • The   company ended the period with total cash, cash equivalents of $1.25 billion   dollars and total laibilities of $4.67 billion (more than half of which is   short term debt).

  • Workday   increased its guidance for FY 2021, and said it’s seeing growth among   companies that need help keeping them engaged with employees who are working   remotely due to Covid-19. It has also partnered with IBM to assist companies   in preparing their post-Covid-19 workplaces.

  • The   company announced Chano Fernandez as co-CEO, returning to a dual leadership   structure it had at the time of its 2012 IPO, when co-founders Aneel Bhusri and   Dave Duffield shared the role. Dave Duffield stepped down to assume the role   of chairman. Fernandez, who worked at software giant SAP previously as VP,   will run Workday’s sales, marketing and customer support, whilst Bhusri will   focus on product and strategy.

  • Workday   has impressive demand for its Software-as-a-service (SaaS) products, and   invests back into the business, but it does not currently exhibit the   fundamental valuation characteristics we look for in companies in which we   invest.

Workday