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Workday's (WDAY) Earnings & Revenues Beat Estimates in Q4
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Workday Inc. (WDAY - Free Report) delivered fourth-quarter fiscal 2018 non-GAAP earnings of 28 cents per share, which beat the Zacks Consensus Estimate of 21 cents. The figure also improved on a year-over-year basis.
Strong growth can primarily be attributed to 33% jump in revenues, which totaled $582.5 million. The figure surpassed the guidance of $538-$540 million and surpassed the Zacks Consensus Estimate for revenues of $574 million. The robust top-line performance was driven by solid growth in subscription and professional revenues.
Subscription revenues (84.1% of total revenues) surged 33.7% year over year to $490 million, driven by expanding customer base. The figure surpassed the guidance of $482-$484 million. Annual customer satisfaction rating was 98%.
Professional services revenues (15.9% of total revenues) grew 26.7% from the year-ago quarter to $92.5 million and were better than the guidance of $89 million.
Revenues outside the United States soared 53% to $131 million, representing a record 22% of total revenues in the quarter.
Workday’s shares have gained 53.1% year over year, substantially outperforming the industry’s 31.7% rally.
During the quarter, Workday extended capabilities and tools in Workday HCM with new customer experience.
Workday added 58 financial management customers, up 45% from the year-ago quarter. The clientele now includes two Fortune 500 customers, one of which is a Fortune 100 company. Some other new financial management customers include American Family Mutual Insurance and Quicken Loans.
Further, the company won 60 planning customers. Total planning customers on Workday’s platform totals more than 250 our total number of financial management customers totaled more than 450.
Workday announced the availability of Workday Prism Analytics and Workday Cloud Platform, the first offering delivered on Workday Data-as-a-Service, during the quarter.
Workday was placed in the Leaders quadrant of “Magic Quadrant for Cloud Human Capital Management Suites for Midmarket and Large Enterprises” by Gartner.
Buyouts
Workday announced partnership with Duo Security to integrate the latter’s multi-factor authentication (“MFA”) technology. This will enhance security and improve functionality of Workday’s user interface.
Workday also acquired SkipFlag during the quarter, marking another step in its efforts to invest in areas such as machine learning, advanced search and natural language processing.
Operating Results
Gross margin expanded 30 basis points (bps) from the year-ago quarter to 70.7%, primarily owing to favorable mix toward higher-margin subscription revenues.
Product development expenses jumped 32.3% to $253.5 million. Sales and marketing expenses increased 17.2% to $179.6 million. General and administrative expenses climbed 11.8% to $59.8 million.
The company reported non-GAAP operating profit of $55.5 million compared with $25.3 million in the year-ago quarter. Non-GAAP operating margin came in at 9.5% during the quarter as compared with 5.8% reported in the year-ago quarter.
Balance Sheet
Cash, cash equivalents and marketable securities were $3.27 billion as of Jan 31, 2018.
Operating cash flows were $126.5 million and free cash flows were $90.5 million.
Unearned revenues were more than $1.5 billion, up 25.8% from the year-ago quarter. Current unearned revenues (that will be recognized over the next 12 months) were more than $1.4 billion, representing annual growth of 31.3%.
Non-current unearned revenues declined 18% year over year as fewer customers opted for paying more than one year of subscription fees upfront.
Subscription revenue backlog, which represents all future revenues from existing customer subscription contracts, both on and off-balance sheet was $5.2 billion, up 34.4% year over year.
Guidance
For first-quarter fiscal 2019, Workday expects subscription revenues in the range of $514-$516 million (up 29%), while professional services revenue expectation is $93 million (up 16%).
Workday anticipates non-GAAP operating margin of 10-11%.
For fiscal 2019, Workday expects subscription revenues in the range of $2.265 billion to $2.280 billion (up 27-28%), while professional services revenue expectation is $405 million (up 14%).
The company now expects non-GAAP operating margin to be almost 12%.
The company expects operating cash flow growth for fiscal 2019 to be roughly 30%, resulting in an operating cash flow margin of more than 22%.
Zacks Rank & Key Picks
Workday carries a Zacks Rank #3 (Hold).
Paycom Software (PAYC - Free Report) , Facebook and The Trade Desk (TTD - Free Report) are some better-ranked stocks worth considering in the broader technology sector. While Paycom sports a Zacks Rank #1 (Strong Buy), Facebook and The Trade Desk, both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Paycom, Facebook and The Trade Desk are currently pegged at 25.75%, 26.51% and 25%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Workday's (WDAY) Earnings & Revenues Beat Estimates in Q4
Workday Inc. (WDAY - Free Report) delivered fourth-quarter fiscal 2018 non-GAAP earnings of 28 cents per share, which beat the Zacks Consensus Estimate of 21 cents. The figure also improved on a year-over-year basis.
Strong growth can primarily be attributed to 33% jump in revenues, which totaled $582.5 million. The figure surpassed the guidance of $538-$540 million and surpassed the Zacks Consensus Estimate for revenues of $574 million. The robust top-line performance was driven by solid growth in subscription and professional revenues.
Subscription revenues (84.1% of total revenues) surged 33.7% year over year to $490 million, driven by expanding customer base. The figure surpassed the guidance of $482-$484 million. Annual customer satisfaction rating was 98%.
Professional services revenues (15.9% of total revenues) grew 26.7% from the year-ago quarter to $92.5 million and were better than the guidance of $89 million.
Revenues outside the United States soared 53% to $131 million, representing a record 22% of total revenues in the quarter.
Workday’s shares have gained 53.1% year over year, substantially outperforming the industry’s 31.7% rally.
Customer Addition & Product Launches: Key Catalyst
During the quarter, Workday extended capabilities and tools in Workday HCM with new customer experience.
Workday added 58 financial management customers, up 45% from the year-ago quarter. The clientele now includes two Fortune 500 customers, one of which is a Fortune 100 company. Some other new financial management customers include American Family Mutual Insurance and Quicken Loans.
Further, the company won 60 planning customers. Total planning customers on Workday’s platform totals more than 250 our total number of financial management customers totaled more than 450.
Workday announced the availability of Workday Prism Analytics and Workday Cloud Platform, the first offering delivered on Workday Data-as-a-Service, during the quarter.
Workday was placed in the Leaders quadrant of “Magic Quadrant for Cloud Human Capital Management Suites for Midmarket and Large Enterprises” by Gartner.
Buyouts
Workday announced partnership with Duo Security to integrate the latter’s multi-factor authentication (“MFA”) technology. This will enhance security and improve functionality of Workday’s user interface.
Workday also acquired SkipFlag during the quarter, marking another step in its efforts to invest in areas such as machine learning, advanced search and natural language processing.
Operating Results
Gross margin expanded 30 basis points (bps) from the year-ago quarter to 70.7%, primarily owing to favorable mix toward higher-margin subscription revenues.
Product development expenses jumped 32.3% to $253.5 million. Sales and marketing expenses increased 17.2% to $179.6 million. General and administrative expenses climbed 11.8% to $59.8 million.
The company reported non-GAAP operating profit of $55.5 million compared with $25.3 million in the year-ago quarter. Non-GAAP operating margin came in at 9.5% during the quarter as compared with 5.8% reported in the year-ago quarter.
Balance Sheet
Cash, cash equivalents and marketable securities were $3.27 billion as of Jan 31, 2018.
Operating cash flows were $126.5 million and free cash flows were $90.5 million.
Unearned revenues were more than $1.5 billion, up 25.8% from the year-ago quarter. Current unearned revenues (that will be recognized over the next 12 months) were more than $1.4 billion, representing annual growth of 31.3%.
Non-current unearned revenues declined 18% year over year as fewer customers opted for paying more than one year of subscription fees upfront.
Subscription revenue backlog, which represents all future revenues from existing customer subscription contracts, both on and off-balance sheet was $5.2 billion, up 34.4% year over year.
Guidance
For first-quarter fiscal 2019, Workday expects subscription revenues in the range of $514-$516 million (up 29%), while professional services revenue expectation is $93 million (up 16%).
Workday anticipates non-GAAP operating margin of 10-11%.
For fiscal 2019, Workday expects subscription revenues in the range of $2.265 billion to $2.280 billion (up 27-28%), while professional services revenue expectation is $405 million (up 14%).
The company now expects non-GAAP operating margin to be almost 12%.
The company expects operating cash flow growth for fiscal 2019 to be roughly 30%, resulting in an operating cash flow margin of more than 22%.
Zacks Rank & Key Picks
Workday carries a Zacks Rank #3 (Hold).
Paycom Software (PAYC - Free Report) , Facebook and The Trade Desk (TTD - Free Report) are some better-ranked stocks worth considering in the broader technology sector. While Paycom sports a Zacks Rank #1 (Strong Buy), Facebook and The Trade Desk, both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
Long-term earnings growth rate for Paycom, Facebook and The Trade Desk are currently pegged at 25.75%, 26.51% and 25%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>