Workday fiscal Q1 better than expected as it increases subscription revenue target for 2020

CEO Aneel Bhusri said that the company saw customers -- Fortune 50 and Fortune 500 companies -- expand their spending with Workday.

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Workday delivered better-than-expected first quarter results and raised its outlook as its subscription backlog was up 30% from a year ago.

The cloud human capital management and financial software provider reported a fiscal first quarter net loss of 52 cents a share on revenue of $825.1 million, up 33.4% from a year ago. Non-GAAP first quarter earnings were 43 cents a share.

Wall Street was expecting Workday to report first quarter non-GAAP earnings of 41 cents a share on revenue of $814.3 million.

Workday added that its subscription revenue for the fiscal first quarter was $701 million, up 34.3% from a year ago.

As for the outlook, Workday projected fiscal 2020 subscription revenue of $3.04 billion to $3.06 billion. The company projected second quarter subscription revenue of $746 million to $748 million.

CEO Aneel Bhusri said that the company saw customers--Fortune 50 and Fortune 500 companies--expand their spending with Workday.

On a conference call, Bhusri said that the company saw strength in HCM. "Momentum for this application suite remained strong as organizations continue their transitions to the cloud. In Q1, we added Carl Zeiss AG, Cisco Systems, Daimler Trucks North America, Old Mutual Limited and Procter & Gamble among the many new HCM customers in the quarter," he said.

As for financials, which is Workday's other core pillar, Bhusri said Workday continued to add customers. He said:

Turning to Workday Financial Management, we saw continued momentum in Q1 with over 50% customer in net new ACV growth. New customers included Advocate Aurora Health Systems and E*TRADE Financial Corporation. In addition, during the quarter, many existing customers expanded the relationship with Workday. Legg Mason, for example, a leading investment management firm expanded the use of Workday Financial Management to include all of their affiliates. Lastly, we also had a large Fortune 500 scale insurance company add Financial Management to become a full platform customer.

Bhusri said that Workday Financials was seeing an adoption pattern among Fortune 500 firms that rhymed with what the company saw five or six years ago. "I do think that the cloud is now viewed as the preferred deployment option versus on-premise even for CFOs and whether that's through Planning or through core accounting," he added.

On the Adaptive Insights unit, Bhusri said that there were about 150 customer additions for the business planning software. "A lot of the traction we saw with Adaptive in the suite market was in large companies, and I mentioned several of them that were either add-ons or part of platform deals.

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