Workday (WDAY 2.13%) announced strong fiscal fourth-quarter 2019 results on Thursday after the market closed. The human capital management software specialist detailed its continued success in winning the business of an ever-growing number of enormous enterprise customers, boosting its subscription revenue guidance for the coming year in the process.
With Workday stock up modestly in pre-market trading as of this writing, let's clock in for a closer look at how the company ended the year, as well as what shareholders can expect looking forward.
Click here for the latest earnings call transcript for Workday.
IMAGE SOURCE: WORKDAY.
Workday results: The raw numbers
| Metric |
Fiscal Q4 2019* |
Fiscal Q4 2018 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$788.6 million |
$582.5 million |
35.4% |
|
GAAP net income (loss) |
($104.4 million) |
($89.1 million) |
N/A |
|
GAAP earnings (loss) per share |
($0.47) |
($0.42) |
N/A |
DATA SOURCE: WORKDAY. *FOR THE QUARTER ENDED JAN. 31, 2019. GAAP = GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
What happened with Workday this quarter?
- These results were above Workday's guidance provided in November for revenue in the range of $775 million to $777 million.
- Subscription revenue increased 35.4 million to $673.5 million, while professional services revenue climbed 24.4% to $115.1 million.
- Adjusted for items like stock-based compensation and acquisition expenses, Workday generated (non-GAAP) net income of $99.5 million, or $0.41 per share, up from $0.28 per share in the same year-ago period.
- Workday generated quarterly operating cash flow of $250.5 million.
- Recent new Workday Human Capital Management (HCM) customers include Caterpillar, Sumitomo Chemical, and Wyndham Destinations.
- Recent new Workday Financial Management customers include Allina Health, Banner Heath, and Ryder Truck.
What management had to say
Workday co-founder and CEO Aneel Bhusri stated:
This was a strong close to fiscal 2019. It was not only a record quarter for Workday Financial Management, but we now have half of the Fortune 50 and approximately 40 percent of the Fortune 500 as Workday customers. As we look ahead, we hope to extend our long-term position as an industry leader by staying focused on our vision of a unified approach to planning, execution, and analysis, and on our ongoing commitment to our core values including employees, customer success, and innovation.
Looking forward
During the subsequent conference call, CFO Robynne Sisco told investors the company expects fiscal first-quarter 2020 revenue of between $812 million and $814 million, including 33% growth in subscription revenue to between $692 million and $694 million.
In that vein, Workday increased its previous full fiscal-year 2020 guidance to call for revenue of $3.53 billion to $3.545 billion, including a 27% to 28% boost in subscription revenue to a range of $3.093 billion to $3.045 billion (up from $3 billion to $3.01 billion before).
It's hard to argue with this beat-and-raise performance as Workday's solid product portfolio and loyal, steadily increasing customer base continues to drive sustained growth. Assuming Workday can maintain its focus and industry leadership, I suspect the stock will inevitably continue to respond in kind.
