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Workday Rides New Customer Additions to Another Strong Quarter

By Steve Symington - Feb 28, 2018 at 9:00AM

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The human capital management solutions company now has over 2,100 customers, including 175 of the Fortune 500.

Workday Inc. (WDAY 1.98%) announced better-than-expected fiscal fourth-quarter 2018 results on Tuesday after the market closed, detailing the continued adoption of its human capital management (HCM) platform with many of the world's largest companies. The HCM software-as-a-service specialist also offered an optimistic view of the year ahead.

With shares down modestly in after-hours trading -- but still up more than 50% over the past year -- let's take a closer look at what Workday had to say.

Office building with Workday logo on the side


Workday results: The raw numbers


Fiscal Q4 2018*

Fiscal Q4 2017

Year-Over-Year Growth


$582.5 million

$439.6 million


GAAP net income (loss)

($89.1 million)

($88.3 million)


GAAP earnings (loss) per share





What happened with Workday this quarter?

  • Revenue arrived above the high end of Workday's most recent guidance, which called for a range of $571 million to $573 million.
  • Subscription revenue increased 33.7% to $490 million -- above guidance for $482 million to $484 million.
  • Professional services revenue went up 26.7% to $92.5 million.
  • On an adjusted non- GAAP basis, which excludes items like stock-based compensation, Workday's net income was $65.7 million, or $0.28 per share -- above investors' expectations for adjusted earnings of $0.20 per share.
  • Generated operating cash flow of $126.5 million and free cash flow of $90.5 million.
  • Workday added nine new Fortune 500 customers for its HCM product, including five of the Fortune 50.
  • Workday added 58 new core Financial Management application customers during the quarter -- bringing its total over 450 -- including two new Fortune 500 customers.
  • The company now has more than 2,100 customers and maintained its customer satisfaction rate of 98%.
  • Workday acquired SkipFlag, an enterprise knowledge management solutions leader that utilizes machine learning, advanced search, and natural language processing.
  • Launched a partnership with Duo Security to supplement Workday's existing security capabilities with Duo's multifactor authentication.

What management had to say

Workday co-founder and CEO Aneel Bhusri said:

Q4 was a great close to a very successful year. We delivered the best quarter to date for Workday Financial Management that included two new Fortune 500 customers, and extended our leadership in HR-now having over 175 of the Fortune 500 as Workday HCM customers. Combining our happy base of referenceable customers with our unique vision bringing together planning, execution, and analysis, as well as opening our cloud platform, puts Workday in a strong position for continued growth for years to come.

"Our fourth quarter capped a very strong year of growth where we continued to show momentum across our subscription revenue growth drivers, while also demonstrating the strength of our business model with record operating margins and cash flow," added CFO Robynne Sisco. "As we look ahead, our market position continues to strengthen giving us increasing confidence in the durability of growth over time."

Looking forward

More specifically, for the first quarter of fiscal 2019, Workday expects revenue in the range of $607 million to $609 million -- or roughly $8 million above investors' expectations at the midpoint -- including a roughly 29% jump in subscription revenue to a range of $514 million to $516 million.

For the full fiscal-year 2019, Workday anticipates revenue of $2.670 billion to $2.685 billion, including subscription revenue in the range of $2.265 billion to $2.280 billion. That's up from total revenue of $2.143 billion in fiscal 2018 and again well above estimates for fiscal 2018 revenue of $2.66 billion.

In the end -- contrary to what the market's initial reaction might indicate, with shares up so much over the past year -- there was little not to like about this exceptional performance from Workday. I think the company and its shareholders are right to be excited as it operates from a position of strength going forward.

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