Stock to Keep Your Eyes on: Workday, Inc. (WDAY)

Workday, Inc. (WDAY) reported earnings for the three months ended April 2016 on May 31, 2016. The company earned $0.05 per share on revenue of $345.43M. Analysts had been modeling earning per share of $-0.02 with $338.68M in revenue.

Workday, Inc. (NYSE: WDAY), a leader in enterprise cloud applications for finance and human resources, announced results for the fiscal first quarter ended April 30, 2016.

  • Total revenues were $345.4 million, an increase of 38% from the first quarter of fiscal 2016. Subscription revenues were $280.0 million, an increase of 39% from the same period last year.
  • Operating loss was $73.6 million, or negative 21% of revenues, compared to an operating loss of $53.4 million, or negative 21% of revenues, in the same period last year. Non-GAAP operating profit for the first quarter was $11.1 million, or 3% of revenues, compared to a non-GAAP operating loss of $2.1 million last year, or negative 0.8% of revenues.1
  • Net loss per basic and diluted share was $0.41, compared to a net loss per basic and diluted share of $0.33 in the first quarter of fiscal 2016. Non-GAAP net income per diluted share was $0.05, compared to a non-GAAP net loss per basic and diluted share of $0.02 for the same period last year.1
  • Operating cash flows for the first quarter were $161.5 million and free cash flows were $127.0 million. For the trailing twelve months, operating cash flows were $327.9 million and free cash flows were $188.1 million.2
  • Cash, cash equivalents and marketable securities were approximately $2.1 billion as of April 30, 2016. Unearned revenues were $926.1 million, a 42% increase from last year.

“We delivered great results and growth across all of our products in the first quarter,” said Aneel Bhusri, co-founder and CEO, Workday. “We continue to see increased customer adoption of Workday Financial Management as well as strong demand in EMEA and APJ as more organizations take finance and HR to the cloud. We are on track to deliver innovative new products — Workday Planning, Workday Learning, and Workday Student — later this year, which we believe will accelerate our momentum based on extremely positive customer feedback and interest.”

“We started fiscal 2017 with strong first quarter results,” said Robynne Sisco, chief financial officer, Workday. “We generated record quarterly revenues as well as strong billings growth and trailing twelve month operating cash flows. Looking ahead, we anticipate second quarter total revenues to be within a range of $371 to $373 million or growth of 31% to 32% as compared to the prior year.”

Recent Highlights

  • Workday announced the general availability of Workday Payroll for France as part of its latest feature release, Workday 26. The new application builds on the success of Workday Payroll for the U.S., Workday Payroll for Canada, and Workday Payroll for the UK by enabling organizations with employees in France to streamline the payroll process and address the full spectrum of enterprise payroll needs.
  • Additionally in Workday 26, Workday announced the general availability of new finance- and workforce-related scorecards and dashboards to help customers harness the power of real-time transactional data and predictive analytics to make smarter decisions that will help them better manage their finances, people, and projects.
  • To support continued customer demand globally, Workday announced it has expanded operations to support businesses headquartered in Spain, and has opened a new office in Madrid.
  • Workday announced the appointment of Diana McKenzie as the company’s chief information officer (CIO) as well as the promotion of Robynne Sisco to chief financial officer (CFO). Both Diana and Robynne report to Workday Co-President Mark Peek.

Workday, Inc. earnings per share showed a decreasing trend of -13% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 30%.Analysts project EPS growth over the next 5 years at 38.33%. It has EPS annual decline over the past 5 fiscal years of -50.6% when sales grew 175.8. It reported 37.6% sales growth, and -26.2% EPS decline in the last quarter.

The stock is trading at $80.33, up 69.76% from 52-week low of $47.32. The stock trades down -6.23% from its peak of $85.67 and % below the consensus price target of $79.4. Its volume clocked up at 1.02 million shares which is lower than the average volume of 1.63 million shares. Its market capitalization currently stands at $15.41B.

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