Fri, Nov. 20, 3:56 PM
- "We think it’s reasonable to surmise that Oracle’s (NYSE:ORCL) push to blunt Workday’s (WDAY -1.4%) momentum in its PeopleSoft base is having some impact, or at least lengthening Workday’s sales cycles as per our integrator checks," writes Wedbush's Steve Koenig, downgrading the cloud HR/financials software leader to Neutral after it offered light FQ4 guidance to go with an FQ3 beat. His target has been cut by $15 to $84.
- Koenig, whose remarks come six months after Jefferies reported Oracle is pricing aggressively against Workday, also calls FQ3 revenue (though above consensus) "somewhat disappointing," and notes subscription revenue growth has dropped to 48% Y/Y from Q1's 63%. He adds Workday has been offering more flexible payment terms to counter Oracle, and that this is expected to "result in a three-point headwind to fourth-quarter subscription revenue and five points next year," before normalizing in FY18 (ends Jan. '18).
- William Blair's Justin Furby (Outperform) is less troubled by Workday's FQ4 outlook, noting the subscription shortfall is solely the result of payment term changes and that management often guides conservatively. He adds Workday originally guided for "no more than 40%" FY16 sales growth, and is now on track to post 47%+ growth.
- On its earnings call (transcript), Workday said it's "building our investment and hiring models assuming total revenue growth of above 30% for fiscal 2017." Consensus is for 37.2% growth.
- Drexel Hamilton's Brian White (Buy) is pleased with growing financials software traction, as well as the recent unveiling of several other apps (Learning, Planning, Payroll, Insight Applications). Wunderlich's Rob Breza (Hold) isn't as impressed. "Conf.call highlights focused on the Financials offering, with ~90 customers live vs. 80 in the prior quarter, which is likely to leave investors feeling uninspired. Investors are left waiting for meaningful Financials acceleration to offset the HCM deceleration as new HCM products reach [general availability] in 2H16."
Thu, Nov. 19, 4:08 PM| Thu, Nov. 19, 4:08 PM | 6 Comments
Wed, Nov. 18, 5:35 PM
Fri, Nov. 6, 12:22 PM
- In addition to beating FQ1 estimates, Paylocity (NASDAQ:PCTY) is guiding for FQ2 revenue of $48M-$49M and EPS of -$0.04 to -$0.02, above a consensus of $45.4M and -$0.08. The company also now expects FY16 (ends June '16) revenue of $210M-$214M and EPS of $0.04-$0.07, above a consensus of $201.6M and -$0.05.
- Cloud HR/HCM software leader Workday (WDAY +2.5%) is following Paylocity higher. Cornerstone OnDemand's strong 2016 outlook might also be helping. Two days ago, Paylocity rallied in response to Paycom's Q3 beat and strong Q4 guidance. Workday's FQ3 report is expected later this month.
- Paylocity CEO Steve Beauchamp: "We continue to see strong demand for our unified payroll and HCM platform and are encouraged by the response to our ACA Enhanced product offering," Adjusted gross margin rose 450 bps Y/Y to 58.8%. GAAP operating expenses rose 37% Y/Y to $28.3M.
- Paylocity's Q3 beat, PR
Wed, Aug. 26, 5:24 PM
- After briefly rising, Workday (NYSE:WDAY) is now down 0.7% after hours after posting an FQ2 beat and guiding in-line. Shares rose 3.5% in regular trading as markets surged.
- Though Workday didn't provide a non-GAAP EPS number in its FQ2 report, it did state non-GAAP net income was $3.8M. That implies EPS of $0.02, above a -$0.06 consensus.
- The cloud HCM/financials leader says it topped 1K customers during FQ2; it ended FQ1 with 925+. Subscription revenue rose 56% Y/Y to $223.7M, and professional services revenue 37% to $58.9M. On the earnings call, Workday states billings rose 51% Y/Y (even with revenue growth), and that FQ2 win rates were above FQ1 levels. The unearned revenue balance rose 42% Y/Y to $683.1M.
- Free cash flow was -$10.3M, but totals $77.6M for the trailing 12 months. GAAP costs/expenses rose 41% Y/Y to $350.4M - sales/marketing spend totaled $106.4M, and R&D $115.3M. Workday ended FQ2 with $1.9B in cash/investments, and $502M in convertible debt.
- Workday Planning, a budgeting/forecasting app that pushes the company deeper into the traditional ERP software market (SAP's historical stronghold), will become generally available next year.
- FQ2 results/FQ3 guidance, PR
- Update (5:30PM ET): Workday has guided on its call for FY16 (ends Jan. '16) revenue of $1.15B-$1.158B, above a $1.14B consensus. Shares now -3.3% AH.
Wed, Aug. 26, 4:07 PM
- Workday (NYSE:WDAY): FQ2 GAAP EPS of -$0.37 not comparable with -$0.06 non-GAAP consensus.
- Revenue of $282.7M (+51.4% Y/Y) beats by $8.63M.
- Expects FQ3 revenue of $300M-$303M (+39%-41% Y/Y) vs. a $302.1M consensus.
- Shares nearly flat after hours.
- Press Release
- Update (4:23PM ET): Workday is now up 5.4%.
- Update 2 (5:25PM ET): Workday has given back its gains: Shares are now down 0.7%. More details on the FQ2 report here.
- Update 3 (5:38PM ET): Shares are now down 4.8%.
Tue, Aug. 25, 5:35 PM
Fri, May 29, 6:29 PM
- After tumbling on Wednesday in the wake of its FQ1 beat and in-line guidance, Workday (NYSE:WDAY) has continued trending lower. Shares fell 1.5% in regular trading today, hitting their lowest levels since Feb. 2.
- Though no downgrades have arrived, several sell-side firms have suggested tougher competition is hurting growth, with Oracle's (NYSE:ORCL) cloud HR/HCM software the biggest culprit. Jefferies' John DiFucci: "We believe Oracle (and to a lesser degree, SAP) has been behaving irrationally in the market for almost a year ... while it was likely aggressive prior to this, we believe it became even more aggressive doing almost anything to win deals from Workday."
- DiFucci sees a method to Oracle's madness. "This irrational behavior may not be so irrational since a loss to Workday is not only a loss of an HCM opportunity, but also a loss of Oracle infrastructure given Workday’s proprietary infrastructure architecture." However, he admits Oracle/SAP's HCM offerings (though improving) "still trail Workday by a meaningful margin."
- Likewise, Brean's Sarah Hindlian asserts HCM is "becoming incrementally more competitive, with material new pricing pressure from incumbents, while SaaS penetration of the market is maturing." She also thinks Workday's cloud financials software growth is slower than investors were expecting.
- Cowen's Jesse Hulsing is more positive, even if FQ1 billings were lighter than he forecast. "We are ... encouraged by the trend toward larger, blue chip HCM custs (Coca Cola, etc.) and a more bullish tone regarding the financials pipeline. PT to $101 and view the low $80s as attractive entry point, as we expect growth to improve moving forward."
- During Oracle's March FQ3 CC (transcript), Mark Hurd didn't pass up the chance to trash-talk Workday. "In the context of HCM, I think ... we have simply engineered now a better product than Workday ... we now win more than half the deals in the United States. Outside the United States, our win rate goes up actually exponentially because of the breadth of our distribution in those markets." Workday might beg to differ with those claims.
Tue, May 26, 5:33 PM
- With the company having provided above-consensus guidance more often than not since its IPO, Workday (NYSE:WDAY) has sold off after providing an in-line FQ2 outlook (affected by forex headwinds) to go with an FQ1 beat.
- Also: The cloud HR/financials software leader's unearned revenue balance rose 41% Y/Y in FQ1 to $653.4M, a slower clip than FQ3's 53% and trailing revenue growth of 57%. Subscription revenue rose 63% Y/Y to $201M, and professional services 38% to $50M.
- Financials: GAAP costs/expenses rose 44% Y/Y to $304.4M - sales/marketing spend totaled $94.9M, R&D $99.3M, G&A $32.2M, and cost of services $77.8M. Workday ended FQ1 with $1.9B in cash/marketable securities, and $496M in convertible debt. Free cash flow for the trailing 12 months is $50.4M.
- Shares have fallen to $85.12 AH.
- FQ1 results, PR
Tue, May 26, 4:05 PM
Mon, May 25, 5:35 PM
Wed, Feb. 25, 5:09 PM
- In addition to beating FQ4 revenue estimates (while posting in-line EPS), Workday (NYSE:WDAY) is guiding for FQ1 revenue of $242M-$245M, above a $239.5M consensus. With forex a headwind and the company prone to guiding conservatively, FY16 (ends Jan. '16) guidance is for revenue of $1.115B-$1.14B (+42%-45% Y/Y) vs. a $1.13B consensus.
- The cloud HR/financials software vendor's unearned revenue balance rose 53% Y/Y in FQ4 to $632.7M. That helped it post free cash flow of $10.6M in spite of an $11.5M net loss.
- Subscription revenue rose 64% Y/Y to $181.9M, and professional services revenue 42% to $44.4M. GAAP costs/expenses rose 46% Y/Y to $276.7M - sales/marketing spend totaled $88.5M, and R&D $89M.
- WDAY +1.9% AH to $95.75. Fellow cloud software giant Salesforce is soaring following its FQ4 report.
- FQ4 results, PR
Wed, Feb. 25, 4:04 PM
Nov. 25, 2014, 2:51 PM
- "While investors’ first reaction was negative, we believe the initial FY16 'guidance' is very preliminary and conservative. The initial mgmt. view for the current FY15 called for rev growth of ~50%, and we are now modelling 68%," writes UBS, reiterating a Buy on Workday (NYSE:WDAY) post-earnings.
- The firm also thinks Workday's FQ4 outlook is conservative, and is forecasting FQ4 revenue $2M above the high end of Workday's guidance range. "FY16 looks to be a strong year for Fin’l Mgmt pdts, helped by Insight analytic apps [becoming generally available]. Europe has been a bit slow due to (1) entrenched competitors and (2) sales org. changes early in the yr, but should improve next yr."
- Canaccord (Buy) also isn't worried about the FY16 commentary ... for now. "If you dig into the numbers, the fact that WDAY intends to run its OpEx based on 40% revenue growth seems more like a conservative way to manage expectations than a statement of concern about the pace of business."
- Summit Research (Hold) is more cautious, noting Y/Y deferred revenue growth slowed to 8.3% in FQ3 from FQ2's 15.7% and FQ1's 19.7%. "We would expect deferred growth to at least match or exceed revenue growth in a SaaS business model like Workday’s."
- Wedbush (Outperform) thinks large deal activity was "more muted" in FQ3. But it's "optimistic about the [FQ4] contracting and large deal outlook, as our checks indicate that WDAY integrators are heavily loaded with projects and prospects, and Y/Y billings comparisons don't look overly difficult."
- Several targets have been cut, but that might have as much to do with Workday's YTD performance as anything else.
Nov. 24, 2014, 4:32 PM
- Workday (NYSE:WDAY) is guiding for FQ4 revenue of $219M-$222M, +54%-56% Y/Y and in-line with a $220.5M consensus. That isn't being received well, given Workday's history of providing above-consensus guidance.
- Subscription revenue rose 75% Y/Y in FQ3 to $164.4M, exceeding total revenue growth of 68%. Workday's unearned revenue balance rose 44% Y/Y to $508.1M.
- Though Workday had a net loss of $5.3M, unearned revenue growth led free cash flow to total $13.3M. GAAP costs/expenses rose 58% Y/Y to $266.5M - sales/marketing spend amounted to $80.7M, R&D $85.3M, and G&A $28.8M.
- FQ3 results, PR
Nov. 24, 2014, 4:07 PM
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