Workday's Q2 stronger than expected, outlook raised

Summary:Workday said it expects third quarter sales to be $115 million to $118 million. Total revenue for the fiscal year will be $436 million to $446 million.

Workday's second quarter results were better than expected and the company said it was expanding its global footprint.

The company reported a second quarter net loss of $35.98 million, or 21 cents a share, on revenue of $107.55 million, up from $62.7 million for the same quarter a year ago. Workday's non-GAAP loss for the second quarter was 13 cents a share.

Wall Street was expecting Workday to report a loss of 18 cents a share on revenue of $100.5 million.

During the quarter (statement, preview ), Workday floated a convertible bond offering and ended up with cash, cash equivalents and marketable securities of $1.3 billion. That cash pile will be needed to expand distribution to better compete with Oracle and SAP.

In a statement, Aneel Bhusri, co-CEO of Workday, said the company continues to "to execute well as we expand our global operations and new product initiatives."

As for the outlook, Workday said it expects third quarter sales to be $115 million to $118 million. Total revenue for the fiscal year will be $436 million to $446 million. Wall Street was expecting Workday to report third quarter sales of $115.3 million and $439.4 million for the year.

Speaking on a conference call with analysts, Bhusri and CFO Mark Peek made the following points:

  • Development for big data analytics and recruiting modules are on track.
  • The company is investing heavily in data centers, new products and facilities.
  • Workday's weighted average contract is 3.5 years, up from the previous two quarters and increased by a couple of large deals with five-year terms.
  • Peek, however, noted that Workday favors three year deals. The company is replacing Oracle, SAP and Ultimate Software generally. In the midmarket, Workday is replacing Microsoft Dynamics for financials.
  • "Although long-term profitability and cash flow generation are important goals, we believe our focus today needs to be on market expansion , continued product innovation and growth," said Peek.
  • Despite raising capital, Workday's strategy doesn't revolve around acquisitions.
  • The company's Rising conference will feature more on the product roadmap and financials.
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Topics: Enterprise Software, Cloud

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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