According to an IDC research report, public cloud spending is projected to grow 25% this year to be worth $21 billion and the private cloud IT spending is estimated to grow 16% this year to be worth more than $12 billion. Enterprise services provider Workday is benefiting from this projected growth and interest in the market.
For the April ended quarter, Workday (NYSE: WDAY) saw revenues grow 57% over the year to $251 million with subscription revenues growing 63% to $201 million. Professional services increased from $36.3 million a year ago to $50 million for the quarter. Net loss per share increased marginally from $0.32 a year ago to $0.33 per share. Adjusted loss per share came in at $0.02 for the quarter. The market was looking for revenues of $244.7 million with a loss of $0.08 per share.
For the current quarter, Workday forecast revenues of $270 million-$274 million. They expect to end the year with revenues of $1.13 billion-$1.15 billion. The Street was modeling revenues of $272.3 million for the current quarter and $1.14 billion for the year.
Workday’s Expanded Offerings
Workday has been delivering strong results on the basis of the continued product innovation. During the recent quarter, they announced their latest feature release Workday 24. Workday 24 will feature capabilities such as the general availability of Workday Professional Services Automation that will help organizations manage client-facing billable projects.
They also announced the general availability of Workday Talent Insights that will help their customers manage talent-related challenges. Using this platform, organizations will be able to identify resources that are more likely to leave the organization and thus help in retaining them. They will also be able to identify issues with hiring initiatives that are hurting business performance and help to improve the hiring engine of the organization.
The IDC research report expects increased investment in cloud opportunities to come from the European markets. Workday is gearing toward addressing this market and recently announced the general availability of Workday Payroll for the UK markets. Additionally, they also invested in enterprise performance management software Tidemark. Last month, Tidemark announced an investment of $25 million in a round led by Workday. The move is expected to help Workday expand their presence in Europe.
Meanwhile, Workday continues to grow their presence within the financial management segment. Earlier last week, they announced plans to sell their financial planning solution starting March 2016. Till recently, Workday has been offering these capabilities through tie-ups with other companies. But given the market demand for a financial planning tool, Workday is about to invest in creating their own offering. The first version of the tool is expected to offer collaborative budgeting features that will help planners go beyond the standard spreadsheet-based plan models. By fall next year, they are hoping to release a more advanced version that could substitute other financial planning products available in the market. The product should be appealing especially to customers who already use Workday’s financial software system as their system of record.
Their stock is trading at $77.65 with a market capitalization of $14.7 billion. It touched a 52-week high of $97.40 in October last year. The stock took a tumble on account of the result announcement. But its recent moves on product expansion should help drive the stock up.
This segment is a part in the series : Carnival in the Cloud