01—Abstract
Summary
Summary of the 10-K filed March 18, 2019. Cited figures are marked; the original filing is the authoritative source.
Workday, Inc.'s 2019 10-K report highlights a year of significant revenue growth, driven primarily by its subscription services for Human Capital Management (HCM) and Financial Management applications.
Total revenues increased by 32% year-over-year to $2.8 billiona, with subscription services comprising 85% of this total. Despite robust revenue expansion, the company continues to invest heavily in product development and sales & marketing, resulting in an operating loss of $463 million for fiscal year 2019. The acquisition of Adaptive Insights in August 2018 for $1.5 billion bolstered Workday's financial planning capabilities and contributed to a substantial increase in goodwill and acquisition-related intangible assets.
Financially, Workday ended fiscal year 2019 with $1.8 billionb in cash, cash equivalents, and marketable securities, providing ample liquidity. The company's balance sheet reflects increased investments in property and equipment, along with a significant increase in goodwill due to the Adaptive Insights acquisition. Workday's cloud-based, subscription-revenue model provides strong recurring revenue, although the company emphasizes its ongoing commitment to reinvesting in growth rather than prioritizing short-term profitability.
02—Key points
Key Highlights
- Total revenues grew by 32% to $2.8 billion in fiscal year 2019, with subscription services accounting for the majority (85%).
- The company experienced an operating loss of $463 million, reflecting continued significant investment in product development and sales & marketing to fuel growth.
- Workday completed the acquisition of Adaptive Insights for $1.5 billion, enhancing its financial planning and analytics capabilities.
- The company maintained a strong liquidity position, with $1.8 billion in cash, cash equivalents, and marketable securities as of January 31, 2019.
- Operating expenses, including share-based compensation, increased significantly, driven by higher headcount and investments in infrastructure.
- Workday continues to focus on its cloud-based, subscription-revenue model, with a substantial backlog of $6.7 billion in remaining performance obligations for subscription contracts.
- The dual-class stock structure gives significant voting control to key executives, potentially limiting influence for other shareholders.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2019filed March 18, 2019Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $2.82B$2.14B | +31.7% |
| R&D Expenses | $1.21B$910.58M | +33.1% |
| Operating Expenses | $3.29B$2.45B | +34.3% |
| Operating Income | -$463.28M-$303.22M | −52.8% |
| Interest Expense | $60.21M$44.55M | +35.2% |
| Net Income | -$418.26M-$321.22M | −30.2% |
| EPS (Basic) | $-1.93$-1.55 | −24.5% |
| Shares Outstanding (Basic) | 216.79M207.77M | +4.3% |
05—Questions
Frequently Asked Questions
What was Workday's primary revenue driver in fiscal year 2019?
Workday's primary revenue driver was its subscription services, which accounted for 85% of total revenues, totaling $2.4 billion. This revenue is derived from customers subscribing to its cloud-based applications for financial management and human capital management.
How did the acquisition of Adaptive Insights impact Workday's financial statements?
The acquisition of Adaptive Insights in August 2018 for $1.5 billion significantly impacted Workday's financials. It led to an increase in goodwill and acquisition-related intangible assets on the balance sheet. Financially, it contributed to higher revenues but also increased operating expenses, including transaction and integration costs, and amortisation expenses.
Is Workday profitable on a GAAP basis?
No, Workday reported a net loss of $418 million for fiscal year 2019. The company continues to invest heavily in product development, sales, and marketing to drive growth, which results in operating expenses exceeding revenues. Management expects losses to continue for the foreseeable future on a GAAP basis.
What is Workday's liquidity and debt situation?
Workday maintained a strong liquidity position with $1.8 billion in cash, cash equivalents, and marketable securities as of January 31, 2019. The company has outstanding convertible senior notes totaling $1.15 billion (due 2022) and $250 million (due 2020), which are discussed in the context of its debt obligations and potential future dilution.
06—Continue