Workday acquires Adaptive Insights for $1.55 billion, bolsters business planning efforts

Workday's acquisition of Adaptive Insights will enable it to build out its business planning cloud faster.

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Workday said it will acquire Adaptive Insights, a cloud-based business planning software company, for $1.55 million.

With the move, Workday is planning to add Adaptive Insights to its finance and human resources wares as well as its efforts to offer planning.

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According to the company, Workday's Planning Cloud and Adaptive Insights will be combined. Adaptive Insights CEO Tom Bogan will report to Workday CEO Aneel Bhusri. Workday has started a bit of a buying spree. Last week, Workday acquired Rallyteam.

On a conference call, Bhusri said the acquisition of Adaptive Insights will accelerate Workday's roadmap for business planning. "We will accelerate our financial planning roadmap by two to three years," he said. Bhusri added that Workday's existing roadmap will revolve around workforce planning and HR and Adaptive Insights will be focused on financials.

Workday will outline a roadmap to bring data models and user experience together over time.

Bogan said Workday will give Adaptive Insights more sales throughput. The two clouds are already integrated and have many joint customers. Adaptive Insights has trailing 12-month revenue of $114 million -- with 23 percent of the customer break enterprise, 42 percent mid-market, and the rest small businesses.

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The $1.55 billion price tag includes $150 million in unvested equity issued to Adaptive Insights employees. Workday said the deal will close in its fiscal third quarter. The addition of Adaptive Insights will hurt non-GAAP margins and cash flow. Workday will update its outlook when it reports second quarter earnings.

Adaptive Insights had filed for an initial public offering. Here's a look at the financial picture for Adaptive Insights.

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To date, Workday hasn't sold Planning as a stand-alone product, but the acquisition of Adaptive Insights could change that equation.

On Workday's most recent earnings conference call, Bhusri said:

We will sell a subset of financials with Planning that would include consolidation and reporting. But really, the predominant model is Planning, either with HR or Planning either with financials.

And frankly, it's a compelling application in both cases. In the HR side, we've had very significant uptake and interests on the workforce Planning side. And on financials, I'd argue Planning is the strategic application now for the CFO's office, and it drives the executions. I'd say the 2 strategic pieces are Planning and the analysis piece with Prism Analytics. And those 2 together have definitely created a lot more interest in the Workday financial suite.

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