10-KPeriod: FY2020

Workday, Inc. Annual Report, Year Ended Jan 31, 2020

Filed March 3, 2020For Securities:WDAY

Summary

Workday, Inc. (WDAY) filed its 10-K for the period ending January 31, 2020, showcasing robust revenue growth driven by its cloud-based Human Capital Management (HCM) and Financial Management applications. The company demonstrated a significant increase in total revenues, reaching $3.6 billion, up 29% year-over-year, with subscription services representing the vast majority of this growth. Despite strong revenue expansion, Workday continues to invest heavily in product development and sales & marketing to fuel future growth, resulting in an operating loss of $502 million. Key financial highlights include a 30% increase in subscription services revenue, reaching $3.1 billion, and a substantial increase in cash flow from operations, up to $865 million. The company also completed the acquisition of Scout RFP in fiscal 2020, further enhancing its source-to-pay capabilities. While Workday maintains a strong liquidity position with $1.9 billion in cash and marketable securities, investors should note the company's ongoing net losses and significant convertible debt obligations, with $250 million due in July 2020 and $1.15 billion due in October 2022, though the company has strategies in place for these maturities.

Financial Highlights

50 data points
Beta

Revenue

$3.63B

Net Income

-$480.67M

-13.3% Net Margin

EPS (Diluted)

$-2.12

Total Assets

$6.82B

Cash & Equivalents

$734.72M

Free Cash Flow

$864.60M

Financial Statements
Beta
Revenue$3.63B
R&D Expenses$1.55B
Operating Expenses$4.13B
Operating Income-$502.23M
Interest Expense$64.16M
Net Income-$480.67M
EPS (Basic)$-2.12
EPS (Diluted)$-2.12
Shares Outstanding (Basic)227.19M
Shares Outstanding (Diluted)227.19M

Key Highlights

  • 1Total revenues grew by 29% year-over-year to $3.6 billion for the fiscal year ended January 31, 2020.
  • 2Subscription services revenue increased by 30% to $3.1 billion, indicating strong customer adoption and retention.
  • 3The company generated $865 million in cash from operating activities, demonstrating improving operational cash generation.
  • 4Workday incurred an operating loss of $502 million, reflecting continued significant investment in product development and sales & marketing.
  • 5The company acquired Scout RFP in fiscal 2020, expanding its suite of financial and HR solutions.
  • 6Workday ended the fiscal year with $1.9 billion in cash, cash equivalents, and marketable securities, indicating a healthy liquidity position.
  • 7Significant convertible senior note obligations are noted, with maturities in July 2020 ($250 million) and October 2022 ($1.15 billion).

Frequently Asked Questions

Workday's primary business is providing cloud-based enterprise applications for finance and human capital management (HCM). Its revenue model is primarily subscription-based, where customers pay recurring fees for access to its software and related support. Professional services for deployment, optimization, and training also contribute to revenue.

Workday experienced strong revenue growth, with total revenues increasing by 29% to $3.6 billion. Subscription services revenue, the company's core offering, grew by 30% to $3.1 billion. However, the company continued to operate at a loss, reporting an operating loss of $502 million and a net loss of $481 million, due to significant investments in growth initiatives, including product development and sales and marketing.

Key growth drivers include the ongoing adoption of its cloud HCM and Financial Management applications by large enterprises, expansion into new markets, and product innovation. Strategic initiatives highlighted in this filing include continued investment in product development to enhance features and introduce new applications (e.g., AI-powered Skills Cloud, People Experience applications), expansion of its global sales and marketing efforts, and strategic acquisitions like Scout RFP to broaden its product portfolio and deliver a comprehensive source-to-pay solution.

Investors should be aware of Workday's ongoing GAAP net losses, which are expected to continue as the company invests for growth. Significant convertible senior note obligations are also a point of attention, with substantial maturities approaching in 2020 and 2022. Additionally, the company faces intense competition, potential cybersecurity risks, and reliance on third-party data center infrastructure, all of which are detailed in the risk factors section.