What are the implications of Workday being an 'emerging growth company' for investors?

As an emerging growth company, Workday can take advantage of exemptions from certain reporting requirements, such as reduced disclosure obligations for executive compensation and exemptions from advisory votes on executive pay. While this can reduce compliance costs, investors should be aware that it may make the stock less attractive to some and could potentially lead to a less active trading market and increased stock price volatility.

What is the risk associated with Workday's net operating loss (NOL) and tax credit carryforwards?

Workday has substantial NOL and research tax credit carryforwards which could be used to offset future taxable income. However, there's a risk that these carryforwards may not be fully utilized due to expiration or limitations under Section 382 of the Internal Revenue Code (related to ownership changes). If these tax attributes expire or are limited, Workday's profitability could be adversely affected.

How does the dual-class stock structure affect shareholder influence?

Workday has a dual-class stock structure where Class B common stock (held primarily by co-founders and insiders) has ten votes per share, while publicly traded Class A common stock has one vote per share. As of April 30, 2013, Class B shareholders controlled over 94% of the voting power. This concentration of voting power means that holders of Class B stock can control all matters submitted to stockholders, significantly limiting or precluding the ability of non-affiliate Class A shareholders to influence corporate decisions.

What is Workday's policy on dividends?

Workday has stated that it currently intends to retain all future earnings to finance its operations and expansion. Therefore, the company does not expect to declare or pay any cash dividends on its capital stock in the foreseeable future. Investors seeking income should not rely on dividends from Workday stock.

WDAY 10-Q Quarterly Report Q1 FY2014 — Revenue, Net Income, EPS

Summary

This 10-Q filing for Workday, Inc. (WDAY) as of April 29, 2013, highlights the company's status as an emerging growth company, which allows for certain reduced reporting requirements. A key area of concern for investors is the potential inability to utilize significant net operating loss (NOL) and research tax credit carryforwards, which could impact future profitability. The company also warns of evolving tax laws and regulations concerning electronic services, which could increase costs and negatively affect results. Furthermore, Workday acknowledges that its stock price has been and may continue to be volatile due to various market and company-specific factors, and that the market for cloud application companies may be limited. Significant risks also revolve around the dual-class stock structure, where Class B shares held by co-founders and other insiders carry ten votes per share, concentrating control and limiting the influence of non-affiliate Class A shareholders. The company has no current intention to pay dividends, and investors must rely on stock price appreciation for returns. The proceeds from the October 2012 IPO, approximately $684.6 million net, are being invested in short-term, investment-grade securities pending their use for working capital, potential acquisitions, or other corporate purposes.

Financial Highlights

41 data points

Beta

Revenue

$91.64M

0.6% Gross Margin

Net Income

-$33.02M

-0.4% Net Margin

EPS (Diluted)

$-0.20

Total Assets

$981.25M

Cash & Equivalents

$219.26M

Free Cash Flow

$17.31M

Financial Statements

Beta

Revenue	$91.64M
Cost of Revenue	$36.70M
Gross Profit	$54.95M
R&D Expenses	$36.28M
Operating Expenses	$124.27M
Operating Income	-$32.62M
Interest Expense	$422K
Net Income	-$33.02M
EPS (Basic)	$-0.20
Shares Outstanding (Basic)	168.07M

Key Highlights

1Workday operates as an emerging growth company, leveraging exemptions from certain public company reporting requirements.
2Significant net operating loss (NOL) and research tax credit carryforwards may not be fully utilized, potentially impacting future profitability.
3Evolving tax laws and regulations related to electronic services pose a risk of increased costs and negative impacts on operating results.
4The company's Class A common stock has experienced and may continue to experience significant price volatility.
5A dual-class stock structure concentrates voting power with Class B shareholders (co-founders and insiders), limiting non-affiliate influence.
6Workday has no current plans to pay cash dividends, with future earnings intended for business operations and expansion.
7Net proceeds of approximately $684.6 million from the October 2012 IPO are held in short-term investments, pending use for general corporate purposes.

Workday, Inc. Quarterly Report for Q1 Ended Apr 30, 2013

Summary

Financial Highlights

Key Highlights

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