News Column

Workday Announces Fourth Quarter and Full Year Fiscal 2013 Financial Results

Page 6 of 1

LogoTracker

PLEASANTON, CA -- (Marketwire) -- 03/07/13 -- Workday, Inc. (NYSE: WDAY), a leader in enterprise cloud applications for human resources and finance, today announced financial results for the fourth quarter and full year fiscal ended January 31, 2013.

Fiscal Fourth Quarter Results:

•Total revenues for the fourth quarter were $81.5 million, an increase of 89% from the fourth quarter of 2012. Subscription revenues were $59.6 million, an increase of 105% from same period last year.

•Operating loss for the fourth quarter was $30.7 million, compared to an operating loss of $23.1 million in the same period last year. Non-GAAP operating loss for the fourth quarter was $25.2 million, compared to a non-GAAP operating loss of $21.7 million last year.(1)

•Net loss per basic and diluted share for the fourth quarter was $0.19, compared to a net loss per basic and diluted share of $0.77 in the fourth quarter of fiscal 2012. The fourth quarter non-GAAP net loss per basic and diluted share was $0.16, compared to a non-GAAP net loss per basic and diluted share of $0.73 during the same period last year.(1)

•Operating cash flows were $5.9 million in the fourth quarter. Free cash flows were a negative $4.0 million in the fourth quarter.(2)



Fiscal Year 2013 Results:

•Total revenues were $273.7 million, an increase of 104% from 2012. Subscription revenues for the full year were $190.3 million, up 115% year over year.

•Operating loss was $117.9 million, compared to an operating loss of $78.4 million last year. Non-GAAP operating loss was $91.3 million, compared to a non-GAAP operating loss of $74.3 million last year.(1)

•Net loss per basic and diluted share was $1.62, compared to a net loss per basic and diluted share of $2.71 last year. The non-GAAP net loss per basic and diluted share was $1.26, compared to a non-GAAP net loss per basic and diluted share of $2.57 last year.(1)

•Workday generated operating cash flows of $11.2 million in 2013. Free cash flows were a negative $23.4 million.(2)

•Cash, cash equivalents, and marketable securities were $790.3 million as of January 31, 2013. Unearned revenue was $285.3 million, a 52% increase from last year.



"Our fourth quarter ended a remarkable year for us with significant expansion in our customer base, suite of applications, and our global workforce," said Aneel Bhusri, chairman, co-founder, and co-CEO, Workday. "Heading into fiscal 2014, we are focused on growth across Europe and APAC as enterprises everywhere look to move HR and Finance operations to the cloud. We remain committed to delivering the highest levels of customer satisfaction and product innovation, while extending our unique employee-centric culture to Workday offices worldwide."

"Workday finished an outstanding fiscal 2013 with a very strong fourth quarter," said Mark Peek, chief financial officer, Workday. "Total revenues for the year were $274 million, and we generated positive operating cash flows. Looking ahead to our fiscal 2014, first quarter revenues are expected to be in the range of $83 and $87 million or growth of 46-53% as compared to the prior year. Total revenues for the year are anticipated to be in the range of $420 and $435 million or growth of 53-59%."

Recent Highlights

•In the fourth quarter, Workday added significant customers globally, including Del Monte Corporation, Nissan Motor Company, Ltd., Primark, SunTrust Banks, Thiess Pty, Ltd., and Travelex.

•In December 2012, all customers moved to Workday 18. This was the third update during fiscal 2013, and it delivered substantial global capabilities to Workday Financial Management. Workday 18 also included new performance management features for Workday Human Capital Management as well as advancements in collaboration and mobile.



Workday plans to host a conference call today to review its fourth quarter and full year fiscal 2013 financial results and to discuss its financial outlook. The call is scheduled to begin at 2:00 p.m. PT/5:00 p.m. ET and can be accessed via webcast or through the company's Investor Relations website at www.workday.com/investorrelations. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 45 days.

(1) Non-GAAP operating loss, net loss, and net loss per share for the fiscal fourth quarters of 2012 and 2013 and fiscal years 2012 and 2013 exclude share-based compensation, and for fiscal year 2013, also exclude a one-time charge related to our contribution of 500,000 shares to the Workday Foundation. See the section titled "About Non-GAAP Financial Measures" in the accompanying financial tables for further details.

(2) Free cash flows are defined as operating cash flows minus capital expenditures and property and equipment acquired under capital lease. See the section titled "About Non-GAAP Financial Measures" in the accompanying financial tables for further details.

About Workday
Workday is a leading provider of enterprise cloud applications for human resources and finance. Founded in 2005, Workday delivers Human Capital Management, Financial Management, and analytics applications designed for the world's largest organizations. Hundreds of companies, ranging from medium-sized businesses to Fortune 50 enterprises, have selected Workday.

Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to Workday's financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "About Non-GAAP Financial Measures."

Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's first quarter and full year fiscal 2014 revenue projections, and our expectations for future applications. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and assumptions. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Risks include, but are not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in information technology spending; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors and new applications and marketing initiatives by our competitors; (iv) our ability to manage our growth effectively; (v) our limited operating history, which makes it difficult to predict future results; (vi) the development of the market for enterprise cloud services; (vii) acceptance of our applications and services by customers; (viii) breaches in our security measures or unauthorized access to our customers' data; and (ix) changes in sales may not be immediately reflected in our results due to our subscription model. Further information on risks that could affect Workday's results is included in our filings with the Securities and Exchange Commission, including our Form 10-Q for the quarter ended October 31, 2012, that we may file from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.

Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday, Inc. services should make their purchase decisions based upon services, features and functions that are currently available.

© 2013. Workday, Inc. All rights reserved. Workday and the Workday logo are registered trademarks of Workday, Inc. All other brand and product names are trademarks or registered trademarks of their respective holders.


Workday, Inc. Condensed Consolidated Balance Sheets (in thousands, except share and per share data) January 31, January 31, 2013 2012 ------------- ------------- (unaudited)AssetsCurrent assets: Cash and cash equivalents $ 84,158 $ 57,529 Marketable securities 706,181 53,634 Accounts receivable, net of allowance for doubtful accounts of $613 and $261 at January 31, 2013 and 2012, respectively 67,437 54,467 Deferred costs 9,816 9,450 Prepaid expenses and other current assets 16,710 8,092 ------------- -------------Total current assets 884,302 183,172Property and equipment, net 44,585 25,861Deferred costs, noncurrent 18,575 13,156Goodwill and intangible assets, net 8,488 8,578Other assets 3,130 1,871 ------------- -------------Total assets $ 959,080 $ 232,638 ============= =============Liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)Current liabilities: Accounts payable $ 2,665 $ 2,730 Accrued expenses and other current liabilities 13,558 6,808 Accrued compensation 27,203 13,891 Capital leases 12,008 7,075 Unearned revenue 199,340 114,734 ------------- -------------Total current liabilities 254,774 145,238Capital leases, noncurrent 12,972 8,641Unearned revenue, noncurrent 85,920 73,363Other liabilities 13,131 10,051 ------------- -------------Total liabilities 366,797 237,293Commitments and contingenciesRedeemable convertible preferred stock, $0.001 par value; no shares and 31 million shares authorized as of January 31, 2013 and January 31, 2012; no shares and 30 million shares issued and outstanding as of January 31, 2013 and January 31, 2012 - 170,906Stockholders' equity (deficit): Convertible preferred stock, $0.001 par value; no shares and 68 million shares authorized as of January 31, 2013 and January 31, 2012; no shares and 68 million shares issued and outstanding as of January 31, 2013 and January 31, 2012 - 68 Class A common stock, $0.001 par value; 750 million shares authorized as of January 31, 2013 and 26 million shares issued and outstanding as of January 31, 2013 26 - Class B common stock $0.001 par value; 240 million shares authorized as of January 31, 2013 and 140 million shares issued and outstanding as of January 31, 2013 (including 3 million shares, subject to repurchase, legally issued and outstanding as of January 31, 2013) 136 - Common stock, $0.001 par value; no shares and 200 million shares authorized as of January 31, 2013 and January 31, 2012; no shares and 36 million shares issued and outstanding as of January 31, 2013 and January 31, 2012 (including 3 million shares, subject to repurchase, legally issued and outstanding as of January 31, 2012) - 33 Additional paid-in capital 993,933 106,457 Accumulated other comprehensive income 68 3 Accumulated deficit (401,880) (282,122) ------------- -------------Total stockholders' equity (deficit) 592,283 (175,561) ------------- -------------Total liabilities, redeemable preferred stock and stockholders' equity (deficit) $ 959,080 $ 232,638 ============= ============= Workday, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Year Ended January 31, January 31, -------------------- -------------------- 2013 2012 2013 2012 --------- --------- --------- ---------Revenues $ 81,519 $ 43,158 $ 273,657 $ 134,427Costs and expenses(1): Costs of revenues 32,986 20,330 116,535 65,368 Research and development 30,252 18,287 102,665 62,014 Sales and marketing 36,389 22,582 123,440 70,356 General and administrative 12,570 5,050 48,880 15,133 --------- --------- --------- ---------Total costs and expenses 112,197 66,249 391,520 212,871 --------- --------- --------- ---------Operating loss (30,678) (23,091) (117,863) (78,444)Other expense, net (167) (444) (1,203) (1,018) --------- --------- --------- ---------Loss before provision for income taxes (30,845) (23,535) (119,066) (79,462)Provision for income taxes 99 51 124 167 --------- --------- --------- ---------Net loss (30,944) (23,586) (119,190) (79,629) --------- --------- --------- ---------Accretion of redeemable convertible preferred stock - (257) (568) (342) --------- --------- --------- ---------Net loss attributable to Class A and Class B common stockholders $ (30,944) $ (23,843) $(119,758) $ (79,971) ========= ========= ========= =========Net loss per share attributable to Class A and Class B common stockholders, basic and diluted $ (0.19) $ (0.77) $ (1.62) $ (2.71) ========= ========= ========= =========Weighted-average shares used to compute net loss per share attributable to Class A and Class B common stockholders 161,916 30,818 74,011 29,478 ========= ========= ========= =========(1) Costs and expenses include share-based compensation as follows: Costs of revenues $ (812) $ (212) $ (1,913) $ (628) Research and development (1,301) (373) (3,528) (1,124) Sales and marketing (879) (306) (2,717) (839) General and administrative (2,456) (535) (7,170) (1,591) Workday, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Three Months Ended Year Ended January 31, January 31, -------------------- -------------------- 2013 2012 2013 2012 --------- --------- --------- ---------Cash flows from operating activitiesNet loss $ (30,944) $ (23,586) $(119,190) $ (79,629)Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization 5,784 3,069 17,722 9,319Share-based compensation 5,448 1,427 15,328 4,182Donation of common stock to Workday Foundation - - 11,250 -Amortization of deferred costs 3,032 2,004 11,368 7,099Other 15 15 56 60Changes in operating assets and liabilities: Accounts receivable (6,338) (22,144) (12,970) (39,025) Deferred costs (5,727) (4,894) (17,153) (12,036) Prepaid expenses and other assets (2,133) (388) (9,877) (4,909) Accounts payable (138) 1,804 (65) 2,195 Accrued and other liabilities 3,844 1,822 17,582 9,260 Unearned revenue 33,097 34,228 97,163 89,710 --------- --------- --------- ---------Net cash provided by (used in) operating activities 5,940 (6,643) 11,214 (13,774)Cash flows from investing activitiesPurchases of marketable securities (391,198) (51,358) (765,797) (63,282)Maturities of marketable securities 38,792 4,480 111,577 13,086Purchase of cost method investment - - - (1,000)Purchases of property and equipment (9,095) (1,257) (15,898) (4,999) --------- --------- --------- ---------Net cash used in investing activities (361,501) (48,135) (670,118) (56,195)Cash flows from financing activitiesProceeds of initial public offering, net of issuance costs - - 684,620 -Proceeds from exercise of stock options 285 2,067 10,370 6,265Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs - 13,536 - 95,009Principal payments on capital lease obligations (3,541) (1,348) (9,453) (4,296) --------- --------- --------- ---------Net cash provided by financing activities (3,256) 14,255 685,537 96,978Effect of exchange rate changes (5) 1 (4) 8 --------- --------- --------- ---------Net increase in cash and cash equivalents (358,822) (40,522) 26,629 27,017Cash and cash equivalents at the beginning of period 442,980 98,051 57,529 30,512 --------- --------- --------- ---------Cash and cash equivalents at the end of period $ 84,158 $ 57,529 $ 84,158 $ 57,529 ========= ========= ========= ========= Workday, Inc. Reconciliation of GAAP to Non-GAAP Data For the Three Months Ended January 31, 2013 (in thousands, except per share data) (unaudited) Non-GAAP Share-Based as GAAP Compensation adjusted ---------- ------------ ----------Costs and expenses: Costs of revenues: Subscription services $ 12,484 $ (200) $ 12,284 Professional services 20,502 (612) 19,890 Total costs of revenues 32,986 (812) 32,174 Research and development 30,252 (1,301) 28,951 Sales and marketing 36,389 (879) 35,510 General and administrative 12,570 (2,456) 10,114Operating loss (30,678) 5,448 (25, 230)Operating margin (37.6%) 6.7% (30.9%)Loss before provision for income taxes (30,845) 5,448 (25,397)Provision for income taxes 99 - 99Net loss $ (30,944) $ 5,448 $ (25,496)Net loss per share attributable to common stockholders, for Class A and Class B, basic and diluted (1) $ (0.19) $ 0.03 $ (0.16)




(1) Calculated based upon 161,916 basic and diluted weighted-average shares of Class A and Class B common stock


Workday, Inc. Reconciliation of GAAP to Non-GAAP Data For the Three Months Ended January 31, 2012 (in thousands, except per share data) (unaudited) Non-GAAP Share-Based as GAAP Compensation adjusted ---------- ------------ ----------Costs and expenses: Costs of revenues: Subscription services $ 6,711 $ (81) $ 6,630 Professional services 13,619 (131) 13,488 Total costs of revenues 20,330 (212) 20,118 Research and development 18,287 (373) 17,914 Sales and marketing 22,582 (306) 22,276 General and administrative 5,050 (535) 4,515Operating loss (23,091) 1,426 (21,665)Operating margin (53.5%) 3.3% (50.2%)Loss before provision for income taxes (23,535) 1,426 (22,109)Provision for income taxes 51 - 51Net loss $ (23,586) $ 1,426 $ (22,160)Net loss per share attributable to common stockholders, for Class A and Class B, basic and diluted (1) $ (0.77) $ 0.04 $ (0.73)




(1) Calculated based upon 30,818 basic and diluted weighted-average shares of Class A and Class B common stock


Workday, Inc. Reconciliation of GAAP to Non-GAAP Data For the Year Ended January 31, 2013 (in thousands, except per share data) (unaudited) Equity Grant to Non-GAAP Share-Based Workday as GAAP Compensation Foundation adjusted --------- ------------ ---------- ---------Costs and expenses: Costs of revenues: Subscription services $ 39,251 $ (601) $ - $ 38,650 Professional services 77,284 (1,312) - 75,972 Total costs of revenues 116,535 (1,913) - 114,622 Research and development 102,665 (3,528) - 99,137 Sales and marketing 123,440 (2,717) - 120,723 General and administrative 48,880 (7,170) (11,250) 30,460Operating loss (117,863) 15,328 11,250 (91,285)Operating margin (43.1%) 5.6% 4.1% (33.4%)Loss before provision for income taxes (119,066) 15,328 11,250 (92,488)Provision for income taxes 124 - - 124Net loss $(119,190) $ 15,328 $ 11,250 $ (92,612)Net loss per share attributable to common stockholders, for Class A and Class B, basic and diluted (1) $ (1.62) $ 0.21 $ 0.15 $ (1.26)




(1) Calculated based upon 74,011 basic and diluted weighted-average shares for Class A and Class B common stock


Workday, Inc. Reconciliation of GAAP to Non-GAAP Data For Year Ended January 31, 2012 (in thousands, except per share data) (unaudited) Non-GAAP Share-Based as GAAP Compensation adjusted --------- ------------ ---------Costs and expenses: Costs of revenues: Subscription services $ 22,342 $ (230) $ 22,112 Professional services 43,026 (398) 42,628 Total costs of revenues 65,368 (628) 64,740 Research and development 62,014 (1,124) 60,890 Sales and marketing 70,356 (839) 69,517 General and administrative 15,133 (1,591) 13,542Operating loss (78,444) 4,182 (74,262)Operating margin (58.3%) 3.1% (55.2%)Loss before provision for income taxes (79,462) 4,182 (75,280)Provision for income taxes 167 - 167Net loss $ (79,629) $ 4,182 $ (75,447)Net loss per share attributable to common stockholders, for Class A and Class B, basic and diluted (1) $ (2.71) $ 0.14 $ (2.57)




(1) Calculated based upon 29,478 basic and diluted weighted-average shares for Class A and Class B common stock


Workday, Inc. Revenue by Type (in thousands) (unaudited) Three Months Ended Year Ended January 31, January 31, -------------------- -------------------- 2013 2012 2013 2012 --------- --------- --------- ---------Revenues:Subscription services $ 59,622 $ 29,031 $ 190,320 $ 88,634Professional services 21,897 14,127 83,337 45,793 --------- --------- --------- --------- Total revenues $ 81,519 $ 43,158 $ 273,657 $ 134,427 ========= ========= ========= =========Revenues:Subscription services 73.1% 67.3% 69.5% 65.9%Professional services 26.9% 32.7% 30.5% 34.1% --------- --------- --------- --------- Total revenues 100.0% 100.0% 100.0% 100.0% ========= ========= ========= ========= Workday, Inc. Reconciliation of GAAP Cash Flows from Operations to Free Cash Flows (A Non-GAAP Financial Measure) (in thousands) (unaudited) Three Months Ended Year Ended January 31, January 31, -------------------- --------------------- 2013 2012 2013 2012 --------- --------- --------- ----------GAAP cash flows from operating activities $ 5,940 $ (6,643) $ 11,214 $ (13,774)Capital expenditures (9,095) (1,257) (15,898) (4,999)Property and equipment acquired under capital lease (830) (4,841) (18,717) (15,983) --------- --------- --------- ---------- Free cash flows $ (3,985) $ (12,741) $ (23,401) $ (34,756) ========= ========= ========= ==========




About Non-GAAP Financial Measures

To provide investors and others with additional information regarding Workday's results, we have disclosed the following non-GAAP financial measures: non-GAAP expenses, non-GAAP operating loss, non-GAAP operating margin, non-GAAP net loss, non-GAAP net loss per share, and free cash flows. Workday has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. These non-GAAP financial measures, other than free cash flows, differ from GAAP in that they exclude share-based compensation and, for the year ended January 31, 2013, a one-time charge related to the contribution of 500,000 shares of common stock to the Workday Foundation. Free cash flows differ from GAAP cash flows from operating activities in that it treats capital expenditures and assets acquired under a capital lease as a reduction to cash flows.

Workday's management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate Workday's financial performance and the ability of operations to generate cash. Management believes these non-GAAP financial measures reflect Workday's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in Workday's business, as they exclude expenses that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Workday's operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Additionally, management believes information regarding free cash flows provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to fund ongoing operations and to fund other capital expenditures.

Management believes these non-GAAP financial measures are useful to investors and others in assessing Workday's operating performance due to the following factors:

•Share-based compensation. Although share-based compensation is an important aspect of the compensation of Workday's employees and executives, determining the fair value of certain of the share-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards. Furthermore, unlike cash compensation, the value of stock options, which is an element of our ongoing share-based compensation expense, is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Management believes it is useful to exclude share-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. •Equity Grant to Workday Foundation. During the third quarter of fiscal 2013, Workday granted 500,000 shares of common stock to the Workday Foundation. The Workday Foundation is a non-profit organization established to provide grants, humanitarian relief and employee matching contributions and support volunteerism and social development projects. This grant resulted in a one-time charge of $11.3 million, which was recorded to the General and administrative expenses line of the income statement. Management does not expect to make future grants of shares to the Foundation and therefore considers this charge non-recurring. As such, Management believes it is useful to exclude this one-time charge in order to better understand the ongoing expenses of our core business and to facilitate comparison of our results across periods.

Additionally, we believe that the non-GAAP financial measure, free cash flows, is meaningful to investors because we review cash flows generated from operations after deducting capital expenditures, whether purchased or leased, due to the fact that these expenditures are considered to be an ongoing operational component of our business.

The use of non-GAAP financial measures has certain limitations as they do not reflect all items of income and expense that affect Workday's operations. Workday compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review Workday's financial information in its entirety and not rely on a single financial measure.



Investor Relations Contact:
Michael Haase
(925) 951-9005
Michael.Haase@Workday.com

Media Contact:
Eric Glass
(415) 432-3056
Eric.Glass@Workday.com



Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters