As the cloud computing market matures, more and more organizations are now deploying their applications on cloud. Global cloud service market is anticipated to reach $14.71 billion for the human resource (HR) management segment by end of 2016. Market size was $10.21 in 2010 so it’s around 40% growth. Workday (WDAY) provides human capital management, financial management and analytics applications designed for the world’s largest organizations. Ever since the inception of the company in 2005, it has grown manifold in less than a decade and has won heart of many tech stock investor. The growth of the company was primarily due to its policy of constantly adding features to its services and staying upbeat with the market scenario. Hundreds of companies, ranging from medium-sized businesses to Fortune 50 enterprises, have selected Workday.
Strong first quarter
The company generates revenue from its SaaS (Software As A Service) application deployed on cloud. In recent months, it reported first quarter results of fiscal 2015, which were growth oriented. It posted total revenue of $159.7 million, up 74% year over year and also sequential gains over last quarter of fiscal 2014 which recorded $141.9 million.
The financial year began on a high note for the organization with solid client interest for its most recent application, Workday Recruiting, and twofold digit client gain for Workday Financial Management. The technology innovations, including its latest move to a single code line for development, empowered Workday to upgrade all clients on Workday 22 in less than six hours making more esteem for their clients and setting new goals for the business. The Workday 22 is featured with 347 new HR and finance features and 68 of these features were suggested by the customers. Workday takes all its customer feedback seriously and believes the real users can provide the best feedback.
Workday's profits still stay inaccessible as it keeps on putting resources into product enhancement with new features and extra on sales and advertising. In the last quarter, product expansion costs increased by 80% to $65 million and sales and promoting expenses were up 78% to $68 million.
WDAY: Continues to benefit from Cloud
The company has been more focused on the subscriptions as they provide recurring revenue for the company. In first quarter, 77% of the revenue was generated from cloud-enabled software license.It posted subscription revenue of $123.4 million, up 80% year over year.
Workday is expected to develop at a strong pace going ahead. Worday anticipates that second quarter revenues will be inside a scope of $173 and $178 million or growth of 61% to 65% as contrasted with the former year. Total revenues for the fiscal year are foreseen to be in the scope of $730 and $750 million or growth of 56% to 60%. Total billings in the first quarter were $208 million and profited from a few new expansive clients. The company further anticipates a sequential decline in total billings for the second quarter. Anyhow for full year guidance for the current financial year, it anticipates that total billings will be more or less $890 to $910 million.
Bigger names regularly added to client list
Over the past couple of quarters, Workday has done well securing expansive multimillion-dollar bargains. At the point when contrasted with bigger players like Oracle, Workday accepts it can offer somewhat better services at reduced price – to a tune of 50% less as contrasted with Oracle. Also, it can offer this service which additionally saves cost, as it comes without licenses and long haul support contracts. Organization globally, has reacted in a huge manner which enabled Workday to bag new clients. Acxiom and Travelex are two big player that is recently added ion the client list of Workday and its will influence the top and bottom line of the company.
The way we think about and deliver products and services is continuously evolving, and we needed a system that could easily adapt to the changing needs of our business, not just today or one year from now, but for whatever the future brings,” said AJ Bernstein, vice president, global strategic shared services, Acxiom.
Investors are all focused on the organization's second-quarter earnings to be released on Tuesday. Looking into the growth and market strength of Workday it won’t be surprising that Workday meets all the anticipated guidance for the second quarter. Workday has performed well in this division as billings have kept afloat for the past couple of quarters. Some of this has been the consequence of hostile discounting and various promotional activities. This can be the right time for investing into Workday, especially when second quarter earnings release is knocking at the door.