Workday Executes With Confidence

According to a report released by TechNavio earlier this year, the global SaaS-based ERP market is projected to grow 13.8% annually over the period 2013 through 2018. Within the ERP market, IDC estimates that the human capital management (HCM) solutions market will grow 8.2% annually over the period 2013 through 2018 to $15.4 billion in 2018 . The HCM market is expected to have grown 9% over the year to $10.4 billion in 2013.

Workday’s Financials
Workday’s (Nasdaq: WDAY) second quarter revenues grew 74% over the year to $186.8 million, compared with the Street’s estimates of $177.3 million. By segment, subscription revenues grew 77.1% over the year to $143.7 million and professional revenues improved 63% to $43.1 million. During the quarter, billings grew 56% to $206 million, ahead of the market’s expected $185 million.

Adjusted loss per share reduced from $0.13 a year ago to $0.11 and was also ahead of the market’s forecasted loss of $0.14 per share for the quarter. Net loss for the second quarter continued to increase from $0.21 per share a year ago to $0.38 per share. The increased losses were attributed to continued investments in product development and sales and marketing efforts. Workday saw product development costs increase 88% over the year to $77.5 million and sales and marketing expenses increased 78% to $78.5 million.

For the current quarter, Workday projected revenues of $200 million-$205 million, compared with the market’s forecast of $195.6 million. Workday expects to end the year with revenues of $760 million-$770 million, significantly ahead of the Street’s target of $749 million.

Workday’s Product Upgrade
Workday continued upgrading their products and recently released Workday Student Recruiting, the first app in their Workday Student platform. The mobile-first application is aimed at streamlining the process of finding and reaching out to prospective students by higher education institutions to meet admission objectives. The application has also been seamlessly integrated with their other applications including Workday Financial Management, Workday Human Capital Management, Workday Payroll, and Workday Grants Management. The app includes features like analytics to measure and define recruiting goals, empower recruiters by defining recruiting territories, and manage recruiter assignments besides managing recruiting campaigns and prospect records.

They have also upgraded their financial reporting offering by releasing Composite Reporting, a new tool that will help deliver more comprehensive reporting for larger organizations. The solution has been developed in close partnership with their customers. It aims to transform the way finance teams build, communicate, and deploy financial and operational reporting by successfully integrating spreadsheets with their app to deliver ready-to-publish reports.

Their stock is trading at $80.52 with a market capitalization of $14.98 billion. It touched a 52-week high of $116.47 in March this year.