Workday has reported another quarter that beat revenue expectations. While remaining inline with EPS, the company offered firm guidance for 2016 with revenue that will exceed $1 billion in fiscal 2016, running ahead of previous forecasts of $1.13 billion to a range of $1.115-$1.145 billion. Given that Workday has an established pattern of conservative guidance, the market was pleased. The shares popped 1.9% in after hours trading. Now to the abridged details from the statement:
- Total revenues were $226.3 million, an increase of 59% from Q4 2014. Subscription revenues were $181.9 million, an increase of 64% from the same period last year.
- Operating loss was $50.4 million, or negative 22.3% of revenues, compared to an operating loss of $48.0 million, or negative 33.8% of revenues, in the same period last year.
- Operating cash flows were $48.3 million and free cash flows were $10.6 million.
Total revenue for the year came in at $787.9 million, an increase of 68% over 2014. Operating cash flows were $102.0 million and free cash flows were a negative $1.6 million. Cash and near cash assets were around $1.9 billion as of January 31, 2015. Total deferred revenue was $632.7 million, a 53% increase from last year. Of that amount $85 million represents unearned revenue more than one year out.
In prepared remarks, Aneel Bhusri, CEO Workday once again talked up the company's financial solution along with analytics. It won't have gone un-noticed that Bhusri specifically mentioned Germany and Japan as geographies where the company is concentrating its non-US expansion efforts. These are strong territories for SAP and Oracle respectively.
The real surprise was the announcement that Workday has 170 customers - or about 20% of the total customer count per Albert Pang - in Germany alone. While that is a tiny fraction of those SAP can reel off, it represents a substantial achievement when you consider the many market and regulatory obstacles Workday has to overcome in order to maintain and grow a presence in that territory. Workday stopped short of naming names but was less coy when it came to Japan, citing Sony, Nissan and Fast Retailing in its customer portfolio.
I'll update this post once I've digested the earnings call. In the meantime, it is clear we are settling into a pattern where the earnings call is not just about delivering the good news the market craves but sending not so subtle signals to the competition. As if they can't see the smile signals already from the ranks of defecting customers.
Disclosure: Workday, SAP and Oracle are premier partners at time of writing