Workday (WDAY) has just reported its much anticipated results.

We have the highlight of the report. The name should trade with a lot of volatility following these numbers.

Total revenues were $582.5 million, an increase of 32.5% from the fourth quarter of fiscal 2017. Subscription revenues were $490.0 million, an increase of 33.7% from the same period last year.

Operating loss was $81.3 million, or negative 14.0% of revenues, compared to an operating loss of $88.9 million, or negative 20.2% of revenues, in the same period last year. Non-GAAP operating profit for the fourth quarter was $55.5 million, or 9.5% of revenues, compared to a non-GAAP operating profit of $25.3 million, or 5.8% of revenues, in the same period last year.
Net loss per basic and diluted share was $0.42, compared to a net loss per basic and diluted share of $0.44 in the fourth quarter of fiscal 2017. Non-GAAP net income per diluted share was $0.28, compared to a non-GAAP net income per diluted share of $0.16 in the same period last year.

Fiscal Year 2018 Results

Total revenues were $2.1 billion, an increase of 36.1% from fiscal 2017. Subscription revenues were $1.8 billion, an increase of 38.5% from the prior year.
Operating loss was $303.2 million, or negative 14.1% of revenues, compared to an operating loss of $353.1 million, or negative 22.4% of revenues, in fiscal 2017. Non-GAAP operating profit was $215.6 million, or 10.1% of revenues, compared to a non-GAAP operating profit of $52.6 million, or 3.3% of revenues, in the same period last year.
Net loss per basic and diluted share was $1.55, compared to a net loss per basic and diluted share of $1.94 in fiscal 2017. Non-GAAP net income per diluted share was $1.03, compared to a non-GAAP net income per diluted share of $0.23 last year.

Operating cash flows were $465.7 million and free cash flows were $324.2 million.
Cash, cash equivalents, and marketable securities were $3.3 billion as of January 31, 2018. Unearned revenues were over $1.5 billion, a 25.8% increase from the same period last year.

MANAGEMENT COMMENTARY

“Q4 was a great close to a very successful year. We delivered the best quarter to date for Workday Financial Management that included two new Fortune 500 customers, and extended our leadership in HR – now having over 175 of the Fortune 500 as Workday HCM customers,” said Aneel Bhusri, co-founder and CEO, Workday. “Combining our happy base of referenceable customers with our unique vision bringing together planning, execution, and analysis, as well as opening our cloud platform, puts Workday in a strong position for continued growth for years to come.”

“Our fourth quarter capped a very strong year of growth where we continued to show momentum across our subscription revenue growth drivers, while also demonstrating the strength of our business model with record operating margins and cash flow,” said Robynne Sisco, co-president and chief financial officer, Workday. “As we look ahead, our market position continues to strengthen giving us increasing confidence in the durability of growth over time. For fiscal 2019, we estimate that subscription revenues will be $2.265 to $2.280 billion or growth of 27-28%, which would put Workday on pace to be one of the fastest SaaS companies to surpass $2 billion in subscription revenue.”

Recent Highlights

  • Workday held its annual Workday Rising Europe conference, bringing together more than 1,800 of the Workday community for education and collaboration in Barcelona, Spain.
  • Workday announced extended personalization capabilities and tools in Workday HCM with a new people experience. With new functionality on the homepage for Workday HCM, employees will be able to easily perform various workplace tasks across Workday applications and third-party systems without needing to access an HR portal.
  • Workday announced it acquired SkipFlag, a disruptor in the enterprise knowledge management space, marking another step in Workday’s efforts to invest in areas such as machine learning, advanced search, and natural language processing.
  • Workday announced a partnership with Duo Security, helping complement Workday’s already robust, built-in security with seamless integrations that enable customers to leverage Duo’s multi-factor authentication functionality right within Workday’s user interface.
  • With data privacy and the General Data Protection Regulation (GDPR) being top-of-mind, Workday announced it joined the General Assembly of the EU Cloud Code of Conduct, a group of cloud service providers working to demonstrate to companies and regulators their compliance with privacy laws in advance of GDPR.

Looking ahead, we are cautiously bullish on the name.

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