The Cloud

Medium-Enterprise Business Boosts Workday

The software-as-a-service provider delivered a fourth straight quarter of more than 40% growth in subscription revenue.
Matthew HellerAugust 31, 2017

Workday reported second-quarter results that easily beat analysts’ estimates as the software-as-a-service provider delivered a fourth straight quarter of more than 40% growth in subscription revenue.

Workday posted a net loss of $82.5 million, or 40 cents a share, compared with a loss of $107.8 million, or 55 cents a share, in the year-ago period. But adjusted for one-time items, it earned 24 cents a share in the quarter, versus a loss of 4 cents a share a year ago.

Total revenues rose 41% to $525.3 million, with subscription revenue increasing 42% to $434.5 million.

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Analysts polled by FactSet had expected adjusted earnings of 15 cents a share on sales of $507 million.

“Our second-quarter results underscore our belief that Workday is the leading provider of finance and HR in the cloud,” Workday CEO Aneel Bhusri said in a news release. “Not only did we see continued traction in finance, but now more than 30% of the Fortune 500 have selected Workday for core HR.”

Workday’s large-enterprise customers include Netflix, Hewlett Packard Enterprise, Nissan, Target, and Bank of America. But it is also building momentum among medium-sized companies, including Aberdeen Asset Management, Bill Gosling Outsourcing, Patagonia, CustomInk, WeWork, Skandia, Ensono, and ALK.

Workday’s “increasing strength among medium enterprises and strong adoption of new products like Workday Planning gives us great confidence in our ability to continue growing market share globally,” Bhusri said.

The company is also launching the Workday Cloud Platform, a Platform-as-a-Service offering to build custom extensions and applications for customers’ business needs.

For the full year, Workday raised its guidance, predicting subscription revenue of $1.750 to $1.757 billion, or 36% growth. For the third quarter, it sees subscription revenue between $450 million and $452 million, or growth of 33% to 34%, topping analysts’ estimates of around $435 million.

“We continue to focus our investments on areas of the business that drive long-term growth, while delivering strong operating margins and cash flow expansion over time,” CFO Robynne Sisco said.