Seeking Alpha

Workday soars as Street praises FQ3 numbers; peers tick higher

  • Workday (WDAY +12.8%) has caught an upgrade to Outperform from Baird, as well as a few PT hikes, after beating FQ3 estimates, issuing strong FQ4 guidance, and reporting an acceleration in unearned revenue growth.
  • Shares are close to their all-time high of $84.42. Several other enterprise cloud software names are also moving higher: NOW +4.2. IL +3.3%. N +1.5%. TXTR +2%. JIVE +1.8%.
  • Workday mentioned on its CC (transcript) it added over 50 customers in FQ3, including eight Global 2000 clients and ten buyers of its Financials software (still a much smaller part of Workday's business than its HR software). Total customers are now above 550.
  • The weighted average duration of new contracts was 3.4 years. Workday typically collects a little over a year of the contract value up-front, and then recognizes it as revenue a quarter at a time (the rest goes into unearned revenue)
  • Also: 1) Subscription and professional services gross margins rose 122 bps and 432 bps Q/Q, respectively. 2) Headcount rose to nearly 2,400 from 2,120 at the end of FQ2. 3) Billings are expected to be down Q/Q in seasonally weak FQ1.
  • Jefferies has raised its PT to $92. The firm praises Workday's customer adds and Financials momentum, and declares the company "has amongst the most attractive share gain potential in software."

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Comments (1)
  • Pedro de Almeida
    , contributor
    Comments (239) | Send Message
     
    Jefferies, the ultimate pumper...
    27 Nov 2013, 05:09 AM Reply Like
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