01—Abstract
Summary
Summary of the 10-K filed March 3, 2020. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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 billionb 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.
02—Key points
Key Highlights
- Total revenues grew by 29% year-over-year to $3.6 billion for the fiscal year ended January 31, 2020.
- Subscription services revenue increased by 30% to $3.1 billion, indicating strong customer adoption and retention.
- The company generated $865 million in cash from operating activities, demonstrating improving operational cash generation.
- Workday incurred an operating loss of $502 million, reflecting continued significant investment in product development and sales & marketing.
- The company acquired Scout RFP in fiscal 2020, expanding its suite of financial and HR solutions.
- Workday ended the fiscal year with $1.9 billion in cash, cash equivalents, and marketable securities, indicating a healthy liquidity position.
- Significant convertible senior note obligations are noted, with maturities in July 2020 ($250 million) and October 2022 ($1.15 billion).
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed March 3, 2020Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $3.63B$2.82B | +28.5% |
| R&D Expenses | $1.55B$1.21B | +27.9% |
| Operating Expenses | $4.13B$3.29B | +25.7% |
| Operating Income | -$502.23M-$463.28M | −8.4% |
| Interest Expense | $64.16M$60.21M | +6.6% |
| Net Income | -$480.67M-$418.26M | −14.9% |
| EPS (Basic) | $-2.12$-1.93 | −9.8% |
| EPS (Diluted) | $-2.12— | — |
| Shares Outstanding (Basic) | 227.19M216.79M | +4.8% |
| Shares Outstanding (Diluted) | 227.19M— | — |
05—Questions
Frequently Asked Questions
What is Workday's primary business and revenue model?
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.
How did Workday perform financially in the fiscal year ended January 31, 2020?
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.
What are Workday's key growth drivers and strategic initiatives?
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.
What are the significant financial risks or concerns for investors?
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.
06—Continue