Workday beats Q2 estimates, raises subscription revenue outlook
Workday published its second quarter financial results on Thursday, beating market estimates and raising its FY 2020 subscription revenue outlook.
The cloud human capital management and financial software provider reported a non-GAAP net income per diluted share of 44 cents, compared with an EPS of 31 cents a year prior. Q2 revenues came to $887.8 million, a year-over-year increase of 32 percent.
Analysts were looking for earnings of 35 cents per share on revenue of $872.31 million.
Subscription revenue for the quarter was $757.2 million, an increase of 33.9 percent from the same period last year.
"It was a strong quarter, with continued global customer momentum across the Fortune 500 and Global 2,000, as more organizations look to Workday for the ability to plan, execute, and analyze in one system powered by machine learning," co-founder and CEO Aneel Bhusri said in a statement.
More specifically, more than 40 percent of the Fortune 500 and approximately 50 percent of the Fortune 100 have selected Workday for their core HCM platform. Additionally, 17 percent of the Global 2000 have also selected Workday for their core HR system.
In the second quarter, some of the new customers Workday added included The Gap, Stanley Black & Decker, and Rockwell Automation in North America, and Stores Limited in Europe, and Buntings Group Limited in the Asia Pacific-Japan region.
Within cloud Financial Management, Workday saw approximately 50 percent revenue growth. In Q2, the company added a Fortune 100 insurance company, as well as the city of Baltimore, bringing its total customer base for this product line to over 725.
Bhusri also noted that the quarter marked one year since Workday's Adaptive Insights acquisition. In Q2, Adaptive Insights added over 200 new Planning-first customers and over 45 new platform and upsell deals to new and existing Workday customers.
"As we move into the second half of the year, we are continuing to invest in areas that leverage our strengths and open new opportunities," Bhusri said.
On a conference call, Bhusri had this to say about Workday's product innovation:
First, for HR, we continue to hear from our customers that addressing today's skills gap is critical as they look to better develop and reskill their workers and prepare their workforce for the future. We continue to leverage machine learning built into the core of Workday to broaden our skills cloud offering with two new features, skills minor and skills insights, to help customers better understand and manage skills and process organizations. In Financial Management, we're using machine learning to detect anomalies. Anomalies will be flagged as they occur, affording users an opportunity to detect and correct potential reconciliation issues when they happen rather than during the high-pressure month end close. And on the analytics front, we're making data insights available to all for both finance and HR with data discovery boards for Workday Financial Management and Workday HCM, allowing users to quickly visualize data, detect patterns and discover insights all within Workday.
Based on Q2 results, Workday now expects FY 2020 subscription revenue to be between $3.06 billion and $3.07 billion. Q3 subscription revenue is expected to be between $783 million and $785 million.