10-QPeriod: Q3 FY2015

Workday, Inc. Quarterly Report for Q3 Ended Oct 31, 2014

Filed December 5, 2014For Securities:WDAY

Summary

Workday, Inc. (WDAY) reported its third-quarter fiscal year 2015 results for the period ending October 31, 2014. The company demonstrated significant revenue growth, with total revenues increasing by 68% year-over-year to $215.1 million, driven primarily by a 75% surge in subscription services revenue. Despite this top-line growth, Workday continued to operate at a net loss, reporting a net loss of $59.9 million for the quarter, compared to $47.5 million in the prior year period. This widening loss reflects substantial investments in product development and sales and marketing to fuel future growth. Key financial metrics show continued investment in growth initiatives, with operating expenses rising significantly. The company's balance sheet remains strong, with cash and cash equivalents and marketable securities totaling $1.8 billion. Management is focused on expanding the customer base and investing in application development and sales infrastructure, anticipating continued revenue growth while managing expenses for long-term profitability. Investors should note the significant share-based compensation expenses and the ongoing investments in growth, which contribute to the current net losses.

Financial Highlights

40 data points
Beta

Revenue

$215.07M

Net Income

-$59.91M

-27.9% Net Margin

EPS (Diluted)

$-0.33

Total Assets

$2.23B

Cash & Equivalents

$192.14M

Free Cash Flow

$41.04M

Financial Statements
Beta
Revenue$215.07M
R&D Expenses$85.27M
Operating Expenses$266.54M
Operating Income-$51.47M
Interest Expense$7.78M
Net Income-$59.91M
EPS (Basic)$-0.33
Shares Outstanding (Basic)184.31M

Key Highlights

  • 1Total revenues grew 68% year-over-year to $215.1 million for the three months ended October 31, 2014.
  • 2Subscription services revenue increased by 75% to $164.4 million, indicating strong demand for Workday's core offerings.
  • 3Professional services revenue grew 49% to $50.7 million, supporting the expansion of new customers.
  • 4The company reported a net loss of $59.9 million ($0.33 per share) for the quarter, an increase from the $47.5 million loss in the prior year period.
  • 5Operating expenses increased significantly, with Product Development expenses up 56% and Sales and Marketing expenses up 45%, reflecting continued investment in growth.
  • 6Share-based compensation expenses more than doubled to $47.0 million for the quarter, a key factor in the increased net loss.
  • 7Workday maintained a strong liquidity position with $1.8 billion in cash, cash equivalents, and marketable securities as of October 31, 2014.

Frequently Asked Questions

Workday reported total revenues of $215.1 million for the three months ended October 31, 2014, a significant increase of 68% compared to $127.9 million in the same period last year. Subscription services revenue was the primary driver, growing 75% to $164.4 million, while professional services revenue increased by 49% to $50.7 million.

No, Workday incurred a net loss of $59.9 million ($0.33 per share) for the quarter ended October 31, 2014. This represents an increase in net loss compared to the $47.5 million loss in the prior year's quarter. The company is heavily investing in growth initiatives, which is impacting short-term profitability.

Workday's investments are primarily focused on product development and sales and marketing. Product development expenses increased by 56% year-over-year to $85.3 million, and sales and marketing expenses grew by 45% to $80.7 million, reflecting the company's strategy to expand its application offerings and customer base.

Workday maintains a strong liquidity position. As of October 31, 2014, the company had $1.8 billion in cash, cash equivalents, and marketable securities. This provides ample resources to fund its operations and growth strategies.