Media-OutReach Newswire
Embracing smart citizenship in a digital age
1.
SecondQuarter Total Revenues of $887.8 Million, Up 32.2% Year Over Year
SubscriptionRevenue of $757.2 Million, Up 33.9% Year Over Year
SubscriptionRevenue Backlog of $7.03 Billion, Up 27.2% Year Over Year
SINGAPORE - Media OutReach - 5 September 2019 - Workday, Inc. (NASDAQ: WDAY), a leader in enterprise cloudapplications for finance and human resources, today announced results for the fiscal 2020second quarter ended July 31, 2019.
Fiscal 2020 SecondQuarter Results
- Total revenues were $887.8 million, an increase of 32.2% from the second quarter of fiscal 2019. Subscription revenue was $757.2 million, an increase of 33.9% from the same period last year.
- Operating loss was $122.5 million, or negative 13.8% of revenues, compared to an operating loss of $89.0 million, or negative 13.2% of revenues, in the same period last year. Non-GAAP operating income for the second quarter was $117.5 million, or 13.2% of revenues, compared to a non-GAAP operating income of $68.1 million, or 10.1% of revenues, in the same period last year.1
- Net loss per basic and diluted share was $0.53, compared to a net loss per basic and diluted share of $0.40 in the second quarter of fiscal 2019. Non-GAAP net income per diluted share was $0.44 compared to a non-GAAP net income per diluted share of $0.31 in the same period last year.2
- Operating cash flows were $100.3 million compared to $57.6 million in the same period last year.
- Cash, cash equivalents, and marketable securities were $1.93 billion as of July 31, 2019. Unearned revenues were $1.89 billion, a 27.1% increase from the same period last year.
Comments on theNews
"It was a strong quarter, with continued global customer momentum acrossthe Fortune 500 and Global 2,000, as more organizations look to Workday for theability to plan, execute, and analyze in one system powered by machinelearning. In addition, we celebrated one year with Adaptive Insights andcontinue to make great progress on our integration vision," said Aneel Bhusri, co-founder and CEO, Workday."As we move into the second half of the year, we are continuing to invest inareas that leverage our strengths and open new opportunities."
"We delivered strong Q2 results with subscription revenue up 34%, alongwith solid operating margins and cash flow," said Robynne Sisco, co-president and chief financial officer, Workday."Based on our second quarter results, we are raising our fiscal 2020subscription revenue outlook and now expect subscription revenue of $3.06 to$3.07 billion. We expect our third quarter subscription revenue to bebetween $783 and $785 million. We continue to prioritize investing in long-termgrowth initiatives, while delivering solid operating margins and cash flow overtime."
Recent Highlights
- Workday opened its new headquarters in Pleasanton, Calif. The new 410,000-square-foot, six-story building was designed to encourage collaboration and will accommodate 2,200 employees as well as Workday's new customer center.
- Workday celebrated the one-year anniversary of its acquisition of Adaptive Insights. In the last year, the two organizations have seen continued business planning momentum, including the addition of more than 800 new Adaptive Insights customers, machine learning advancements, the completion of the first phase of the Adaptive Insights integration with Workday as part of the Power of One, and record attendance at Adaptive Live, the company's annual customer conference.
- Workday published its commitments to ethical artificial intelligence (AI), which includes six principles that guide how it develops machine learning -- a subset of AI -- for the enterprise responsibly.
- Fast Company recognized Workday on its inaugural list of the 50 Best Workplaces For Innovators, which honors organizations that demonstrate a deep commitment to encouraging innovation at all levels.
- Workday became the first organization to adhere to the EU Cloud Code of Conduct (CoC) by SCOPE Europe, underscoring the company's continued commitment to global data protection.
- Workday appointed Carolyn Horne as president of the EMEA region and David Webster as president of the APJ region. In addition, Workday promoted Josh DeFigueiredo to chief security officer.
- Workday released its 2019 Global Impact Report, which provides an inside look into the company's efforts to make a positive impact on the world -- from implementing sustainable practices, to creating a better place to work, and empowering positive social impact.
AdditionalInformation
- Please visit the Workday blog for detailed results: WorkdayAnnounces Fiscal 2020 Second Quarter Financial Results
Workday, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
|
| July 31, 2019 |
| January 31, 2019 | ||||||
| Assets |
|
|
| ||||||
| Current assets: |
|
|
| ||||||
| Cash and cash equivalents | $ | 619,514 |
|
| $ | 638,554 |
| ||
| Marketable securities | 1,307,006 |
|
| 1,139,864 |
| ||||
| Trade and other receivables, net | 613,425 |
|
| 704,680 |
| ||||
| Deferred costs | 85,557 |
|
| 80,809 |
|
| |||
| Prepaid expenses and other current assets | 163,530 |
|
| 136,689 |
|
| |||
| Total current assets | 2,789,032 |
|
| 2,700,596 |
|
| |||
| Property and equipment, net | 919,523 |
|
| 796,907 |
|
| |||
| Operating lease right-of-use assets | 294,824 |
|
| -- |
|
| |||
| Deferred costs, noncurrent | 182,580 |
|
| 183,518 |
|
| |||
| Acquisition-related intangible assets, net | 277,953 |
|
| 313,240 |
|
| |||
| Goodwill | 1,389,349 |
|
| 1,379,125 |
|
| |||
| Other assets | 138,895 |
|
| 147,360 |
|
| |||
| Total assets | $ | 5,992,156 |
|
| $ | 5,520,746 |
|
| |
| Liabilities and stockholders' equity |
|
|
|
| |||||
| Current liabilities: |
|
|
|
| |||||
| Accounts payable | $ | 32,540 |
|
| $ | 29,093 |
|
| |
| Accrued expenses and other current liabilities | 114,494 |
|
| 123,542 |
|
| |||
| Accrued compensation | 192,064 |
|
| 207,924 |
|
| |||
| Unearned revenue | 1,796,423 |
|
| 1,837,618 |
|
| |||
| Operating lease liabilities | 65,554 |
|
| -- |
|
| |||
| Current portion of convertible senior notes, net | 1,233,189 |
|
| 232,514 |
|
| |||
| Total current liabilities | 3,434,264 |
|
| 2,430,691 |
|
| |||
| Convertible senior notes, net | -- |
|
| 972,264 |
|
| |||
| Unearned revenue, noncurrent | 89,219 |
|
| 111,652 |
|
| |||
| Operating lease liabilities, noncurrent | 243,863 |
|
| -- |
|
| |||
| Other liabilities | 14,525 |
|
| 47,697 |
|
| |||
| Total liabilities | 3,781,871 |
|
| 3,562,304 |
|
| |||
| Stockholders' equity: |
|
|
|
| |||||
| Common stock | 227 |
|
| 221 |
|
| |||
| Additional paid-in capital | 4,561,272 |
|
| 4,105,334 |
|
| |||
| Accumulated other comprehensive income (loss) | 32,458 |
|
| (809 | ) |
| |||
| Accumulated deficit | (2,383,672 | ) |
| (2,146,304 | ) |
| |||
| Total stockholders' equity | 2,210,285 |
|
| 1,958,442 |
|
| |||
| Total liabilities and stockholders' equity | $ | 5,992,156 |
|
| $ | 5,520,746 |
|
| |
Workday, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
|
| Three Months Ended July 31, |
| Six Months Ended July 31, | ||||||||||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 | ||||||||
| Revenues: |
|
|
|
|
|
|
| ||||||||
| Subscription services | $ | 757,155 |
|
| $ | 565,659 |
|
| $ | 1,458,179 |
|
| $ | 1,087,808 |
|
| Professional services | 130,597 |
|
| 106,061 |
|
| 254,628 |
|
| 202,555 |
| ||||
| Total revenues | 887,752 |
|
| 671,720 |
|
| 1,712,807 |
|
| 1,290,363 |
| ||||
| Costs and expenses (1): |
|
|
|
|
|
|
| ||||||||
| Costs of subscription services | 121,161 |
|
| 87,523 |
|
| 233,630 |
|
| 167,768 |
| ||||
| Costs of professional services | 145,173 |
|
| 112,707 |
|
| 275,923 |
|
| 210,433 |
| ||||
| Product development | 378,122 |
|
| 292,840 |
|
| 725,953 |
|
| 556,424 |
| ||||
| Sales and marketing | 280,200 |
|
| 202,464 |
|
| 553,136 |
|
| 395,235 |
| ||||
| General and administrative | 85,593 |
|
| 65,168 |
|
| 170,048 |
|
| 120,749 |
| ||||
| Total costs and expenses | 1,010,249 |
|
| 760,702 |
|
| 1,958,690 |
|
| 1,450,609 |
| ||||
| Operating loss | (122,497 | ) |
| (88,982 | ) |
| (245,883 | ) |
| (160,246 | ) | ||||
| Other income (expense), net | (106 | ) |
| 1,613 |
|
| 7,035 |
|
| (2,235 | ) | ||||
| Loss before provision for (benefit from) income taxes | (122,603 | ) |
| (87,369 | ) |
| (238,848 | ) |
| (162,481 | ) | ||||
| Provision for (benefit from) income taxes | (1,891 | ) |
| (1,213 | ) |
| (1,861 | ) |
| (1,915 | ) | ||||
| Net loss | $ | (120,712 | ) |
| $ | (86,156 | ) |
| $ | (236,987 | ) |
| $ | (160,566 | ) |
| Net loss per share, basic and diluted | $ | (0.53 | ) |
| $ | (0.40 | ) |
| $ | (1.05 | ) |
| $ | (0.75 | ) |
| Weighted-average shares used to compute net loss per share, basic and diluted | 226,392 |
|
| 215,932 |
|
| 224,857 |
|
| 214,517 |
| ||||
| (1) |
| Costs and expenses include share-based compensation expenses as follows: | ||||||||||||||||
|
|
|
|
|
|
| |||||||||||||
| Costs of subscription services | $ | 12,001 |
|
| $ | 8,521 |
|
| $ | 22,416 |
|
| $ | 16,398 |
|
| ||
| Costs of professional services | 18,991 |
|
| 12,518 |
|
| 35,141 |
|
| 23,310 |
|
| ||||||
| Product development | 105,758 |
|
| 75,354 |
|
| 196,995 |
|
| 143,865 |
|
| ||||||
| Sales and marketing | 42,690 |
|
| 29,367 |
|
| 81,544 |
|
| 54,979 |
|
| ||||||
| General and administrative | 29,781 |
|
| 21,303 |
|
| 58,360 |
|
| 41,170 |
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Workday, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
|
| Three Months Ended July 31, |
| Six Months Ended July 31, | ||||||||||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 | ||||||||
| Cash flows from operating activities |
|
|
|
|
|
|
| ||||||||
| Net loss | $ | (120,712 | ) |
| $ | (86,156 | ) |
| $ | (236,987 | ) |
| $ | (160,566 | ) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
| ||||||||
| Depreciation and amortization | 67,754 |
|
| 42,226 |
|
| 128,919 |
|
| 80,890 |
| ||||
| Share-based compensation expenses | 208,912 |
|
| 147,063 |
|
| 394,147 |
|
| 279,722 |
| ||||
| Amortization of deferred costs | 22,002 |
|
| 17,061 |
|
| 42,882 |
|
| 33,421 |
| ||||
| Amortization of debt discount and issuance costs | 14,301 |
|
| 17,490 |
|
| 25,888 |
|
| 35,629 |
| ||||
| Other | 11,401 |
|
| (4,894 | ) |
| 20,377 |
|
| (14,183 | ) | ||||
| Changes in operating assets and liabilities, net of business combinations: |
|
|
|
|
|
|
| ||||||||
| Trade and other receivables, net | (73,437 | ) |
| (104,758 | ) |
| 83,942 |
|
| 63,944 |
| ||||
| Deferred costs | (28,207 | ) |
| (23,943 | ) |
| (46,692 | ) |
| (36,549 | ) | ||||
| Prepaid expenses and other assets | (1,679 | ) |
| (5,446 | ) |
| (6,786 | ) |
| 3,042 |
| ||||
| Accounts payable | 1,047 |
|
| 5,987 |
|
| 2,550 |
|
| 13,941 |
| ||||
| Accrued expenses and other liabilities | (56,524 | ) |
| (15,182 | ) |
| (35,121 | ) |
| (3,555 | ) | ||||
| Unearned revenue | 55,461 |
|
| 68,168 |
|
| (63,637 | ) |
| (53,887 | ) | ||||
| Net cash provided by (used in) operating activities | 100,319 |
|
| 57,616 |
|
| 309,482 |
|
| 241,849 |
| ||||
| Cash flows from investing activities |
|
|
|
|
|
|
| ||||||||
| Purchases of marketable securities | (582,848 | ) |
| (526,216 | ) |
| (1,053,902 | ) |
| (1,434,342 | ) | ||||
| Maturities of marketable securities | 385,710 |
|
| 655,205 |
|
| 845,807 |
|
| 1,341,881 |
| ||||
| Sales of marketable securities | 4,551 |
|
| 914,938 |
|
| 55,499 |
|
| 942,297 |
| ||||
| Owned real estate projects | (34,149 | ) |
| (49,537 | ) |
| (73,783 | ) |
| (88,770 | ) | ||||
| Capital expenditures, excluding owned real estate projects | (75,576 | ) |
| (53,346 | ) |
| (141,111 | ) |
| (102,208 | ) | ||||
| Business combinations, net of cash acquired | (12,885 | ) |
| (26,737 | ) |
| (12,885 | ) |
| (26,737 | ) | ||||
| Purchase of other intangible assets | -- |
|
| (1,000 | ) |
| -- |
|
| (1,000 | ) | ||||
| Purchases of non-marketable equity and other investments | (5,516 | ) |
| (1,000 | ) |
| (7,716 | ) |
| (3,400 | ) | ||||
| Other | (32 | ) |
| -- |
|
| (9 | ) |
| -- |
| ||||
| Net cash provided by (used in) investing activities | (320,745 | ) |
| 912,307 |
|
| (388,100 | ) |
| 627,721 |
| ||||
| Cash flows from financing activities |
|
|
|
|
|
|
| ||||||||
| Payments on convertible senior notes | (27 | ) |
| (350,005 | ) |
| (27 | ) |
| (350,005 | ) | ||||
| Proceeds from issuance of common stock from employee equity plans | 58,085 |
|
| 38,686 |
|
| 61,540 |
|
| 41,297 |
| ||||
| Other | (107 | ) |
| (59 | ) |
| (200 | ) |
| (116 | ) | ||||
| Net cash provided by (used in) financing activities | 57,951 |
|
| (311,378 | ) |
| 61,313 |
|
| (308,824 | ) | ||||
| Effect of exchange rate changes | 75 |
|
| (162 | ) |
| (252 | ) |
| (582 | ) | ||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | (162,400 | ) |
| 658,383 |
|
| (17,557 | ) |
| 560,164 |
| ||||
| Cash, cash equivalents, and restricted cash at the beginning of period | 787,046 |
|
| 1,037,435 |
|
| 642,203 |
|
| 1,135,654 |
| ||||
| Cash, cash equivalents, and restricted cash at the end of period | $ | 624,646 |
|
| $ | 1,695,818 |
|
| $ | 624,646 |
|
| $ | 1,695,818 |
|
Workday, Inc.
Reconciliation of GAAP to Non-GAAP Data
Three Months Ended July 31, 2019
(in thousands, except percentages and per share data)
(unaudited)
|
| GAAP |
| Share-Based |
| Other |
| Amortization |
| Income Tax |
| Non-GAAP | ||||||||||||
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Costs of subscription services | $ | 121,161 |
|
| $ | (12,001 | ) |
| $ | (11,739 | ) |
| $ | -- |
|
| $ | -- |
|
| $ | 97,421 |
|
| Costs of professional services | 145,173 |
|
| (18,991 | ) |
| (1,233 | ) |
| -- |
|
| -- |
|
| 124,949 |
| ||||||
| Product development | 378,122 |
|
| (105,758 | ) |
| (5,380 | ) |
| -- |
|
| -- |
|
| 266,984 |
| ||||||
| Sales and marketing | 280,200 |
|
| (42,690 | ) |
| (10,449 | ) |
| -- |
|
| -- |
|
| 227,061 |
| ||||||
| General and administrative | 85,593 |
|
| (29,781 | ) |
| (2,021 | ) |
| -- |
|
| -- |
|
| 53,791 |
| ||||||
| Operating income (loss) | (122,497 | ) |
| 209,221 |
|
| 30,822 |
|
| -- |
|
| -- |
|
| 117,546 |
| ||||||
| Operating margin | (13.8 | )% |
| 23.6 | % |
| 3.4 | % |
| -- | % |
| -- | % |
| 13.2 | % | ||||||
| Other income (expense), net | (106 | ) |
| -- |
|
| -- |
|
| 14,301 |
|
| -- |
|
| 14,195 |
| ||||||
| Income (loss) before provision for (benefit from) income taxes | (122,603 | ) |
| 209,221 |
|
| 30,822 |
|
| 14,301 |
|
| -- |
|
| 131,741 |
| ||||||
| Provision for (benefit from) income taxes | (1,891 | ) |
| -- |
|
| -- |
|
| -- |
|
| 24,287 |
|
| 22,396 |
| ||||||
| Net income (loss) | $ | (120,712 | ) |
| $ | 209,221 |
|
| $ | 30,822 |
|
| $ | 14,301 |
|
| $ | (24,287 | ) |
| $ | 109,345 |
|
| Net income (loss) per share (1) | $ | (0.53 | ) |
| $ | 0.92 |
|
| $ | 0.14 |
|
| $ | 0.06 |
|
| $ | (0.15 | ) |
| $ | 0.44 |
|
| (1) |
| GAAP net loss per share is calculated based upon 226,392 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 247,748 diluted weighted-average shares of common stock. |
| (2) |
| Other operating expenses include amortization of acquisition-related intangible assets of $19.5 million and total employer payroll tax-related items on employee stock transactions of $11.3 million. |
| (3) |
| We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the interim reporting periods. For fiscal 2020, the projected non-GAAP tax rate is 17%. |
Workday, Inc.
Reconciliation of GAAP to Non-GAAP Data
Three Months Ended July 31, 2018
(in thousands, except percentages and per share data)
(unaudited)
|
| GAAP |
| Share-Based |
| Other |
| Amortization |
| Income Tax |
| Non-GAAP |
| ||||||||||||||||||||||||||||
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||
| Costs of subscription services | $ | 87,523 |
|
| $ | (8,521 | ) |
| $ | (3,787 | ) |
| $ | -- |
|
| $ | -- |
|
| $ | 75,215 |
| |||||||||||||||||
| Costs of professional services | 112,707 |
|
| (12,518 | ) |
| (519 | ) |
| -- |
|
| -- |
|
| 99,670 |
|
| ||||||||||||||||||||||
| Product development | 292,840 |
|
| (75,354 | ) |
| (3,960 | ) |
| -- |
|
| -- |
|
| 213,526 |
|
| ||||||||||||||||||||||
| Sales and marketing | 202,464 |
|
| (29,367 | ) |
| (1,039 | ) |
| -- |
|
| -- |
|
| 172,058 |
|
| ||||||||||||||||||||||
| General and administrative | 65,168 |
|
| (21,303 | ) |
| (731 | ) |
| -- |
|
| -- |
|
| 43,134 |
|
| ||||||||||||||||||||||
| Operating income (loss) | (88,982 | ) |
| 147,063 |
|
| 10,036 |
|
| -- |
|
| -- |
|
| 68,117 |
|
| ||||||||||||||||||||||
| Operating margin | (13.2 | )% |
| 21.9 | % |
| 1.4 | % |
| -- | % |
| -- | % |
| 10.1 | % |
| ||||||||||||||||||||||
| Other income (expense), net | 1,613 |
|
| -- |
|
| -- |
|
| 17,490 |
|
| -- |
|
| 19,103 |
|
| ||||||||||||||||||||||
| Income (loss) before provision for (benefit from) income taxes | (87,369 | ) |
| 147,063 |
|
| 10,036 |
|
| 17,490 |
|
| -- |
|
| 87,220 |
|
| ||||||||||||||||||||||
| Provision for (benefit from) income taxes | (1,213 | ) |
| -- |
|
| -- |
|
| -- |
|
| 16,004 |
|
| 14,791 |
|
| ||||||||||||||||||||||
| Net income (loss) | $ | (86,156 | ) |
| $ | 147,063 |
|
| $ | 10,036 |
|
| $ | 17,490 |
|
| $ | (16,004 | ) |
| $ | 72,429 |
| |||||||||||||||||
| Net income (loss) per share (1) | $ | (0.40 | ) |
| $ | 0.68 |
|
| $ | 0.05 |
|
| $ | 0.08 |
|
| $ | (0.10 | ) |
| $ | 0.31 |
| |||||||||||||||||
| (1) |
| GAAP net loss per share is calculated based upon 215,932 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 237,404 diluted weighted-average shares of common stock. |
| (2) |
| Other operating expenses include amortization of acquisition-related intangible assets of $5.3 million and total employer payroll tax-related items on employee stock transactions of $4.7 million. |
| (3) |
| We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the interim reporting periods. For fiscal 2019, the projected non-GAAP tax rate was 17%. |
Workday, Inc.
Reconciliation of GAAP to Non-GAAP Data
Six Months Ended July 31, 2019
(in thousands, except percentages and per share data)
(unaudited)
|
| GAAP |
| Share-Based |
| Other |
| Amortization |
| Income Tax |
| Non-GAAP | ||||||||||||
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Costs of subscription services | $ | 233,630 |
|
| $ | (22,416 | ) |
| $ | (24,399 | ) |
| $ | -- |
|
| $ | -- |
|
| $ | 186,815 |
|
| Costs of professional services | 275,923 |
|
| (35,141 | ) |
| (4,692 | ) |
| -- |
|
| -- |
|
| 236,090 |
| ||||||
| Product development | 725,953 |
|
| (196,995 | ) |
| (19,011 | ) |
| -- |
|
| -- |
|
| 509,947 |
| ||||||
| Sales and marketing | 553,136 |
|
| (81,544 | ) |
| (23,283 | ) |
| -- |
|
| -- |
|
| 448,309 |
| ||||||
| General and administrative | 170,048 |
|
| (58,360 | ) |
| (5,319 | ) |
| -- |
|
| -- |
|
| 106,369 |
| ||||||
| Operating income (loss) | (245,883 | ) |
| 394,456 |
|
| 76,704 |
|
| -- |
|
| -- |
|
| 225,277 |
| ||||||
| Operating margin | (14.4 | )% |
| 23.0 | % |
| 4.6 | % |
| -- | % |
| -- | % |
| 13.2 | % | ||||||
| Other income (expense), net | 7,035 |
|
| -- |
|
| -- |
|
| 25,888 |
|
| -- |
|
| 32,923 |
| ||||||
| Income (loss) before provision for (benefit from) income taxes | (238,848 | ) |
| 394,456 |
|
| 76,704 |
|
| 25,888 |
|
| -- |
|
| 258,200 |
| ||||||
| Provision for (benefit from) income taxes | (1,861 | ) |
| -- |
|
| -- |
|
| -- |
|
| 45,755 |
|
| 43,894 |
| ||||||
| Net income (loss) | $ | (236,987 | ) |
| $ | 394,456 |
|
| $ | 76,704 |
|
| $ | 25,888 |
|
| $ | (45,755 | ) |
| $ | 214,306 |
|
| Net income (loss) per share (1) | $ | (1.05 | ) |
| $ | 1.75 |
|
| $ | 0.34 |
|
| $ | 0.12 |
|
| $ | (0.29 | ) |
| $ | 0.87 |
|
| (1) |
| GAAP net loss per share is calculated based upon 224,857 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 246,610 diluted weighted-average shares of common stock. |
| (2) |
| Other operating expenses include amortization of acquisition-related intangible assets of $38.9 million and total employer payroll tax-related items on employee stock transactions of $37.8 million. |
| (3) |
| We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the interim reporting periods. For fiscal 2020, the projected non-GAAP tax rate is 17%. |
Workday, Inc.
Reconciliation of GAAP to Non-GAAP Data
Six Months Ended July 31, 2018
(in thousands, except percentages and per share data)
(unaudited)
|
| GAAP |
| Share-Based |
| Other |
| Amortization |
| Income Tax |
| Non-GAAP | ||||||||||||
| Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
| Costs of subscription services | $ | 167,768 |
|
| $ | (16,398 | ) |
| $ | (8,239 | ) |
| $ | -- |
|
| $ | -- |
|
| $ | 143,131 |
|
| Costs of professional services | 210,433 |
|
| (23,310 | ) |
| (2,220 | ) |
| -- |
|
| -- |
|
| 184,903 |
| ||||||
| Product development | 556,424 |
|
| (143,865 | ) |
| (12,757 | ) |
| -- |
|
| -- |
|
| 399,802 |
| ||||||
| Sales and marketing | 395,235 |
|
| (54,979 | ) |
| (3,619 | ) |
| -- |
|
| -- |
|
| 336,637 |
| ||||||
| General and administrative | 120,749 |
|
| (41,170 | ) |
| (2,598 | ) |
| -- |
|
| -- |
|
| 76,981 |
| ||||||
| Operating income (loss) | (160,246 | ) |
| 279,722 |
|
| 29,433 |
|
| -- |
|
| -- |
|
| 148,909 |
| ||||||
| Operating margin | (12.4 | )% |
| 21.7 | % |
| 2.2 | % |
| -- | % |
| -- | % |
| 11.5 | % | ||||||
| Other income (expense), net | (2,235 | ) |
| -- |
|
| -- |
|
| 35,629 |
|
| -- |
|
| 33,394 |
| ||||||
| Income (loss) before provision for (benefit from) income taxes | (162,481 | ) |
| 279,722 |
|
| 29,433 |
|
| 35,629 |
|
| -- |
|
| 182,303 |
| ||||||
| Provision for (benefit from) income taxes | (1,915 | ) |
| -- |
|
| -- |
|
| -- |
|
| 32,870 |
|
| 30,955 |
| ||||||
| Net income (loss) | $ | (160,566 | ) |
| $ | 279,722 |
|
| $ | 29,433 |
|
| $ | 35,629 |
|
| $ | (32,870 | ) |
| $ | 151,348 |
|
| Net income (loss) per share (1) | $ | (0.75 | ) |
| $ | 1.30 |
|
| $ | 0.14 |
|
| $ | 0.17 |
|
| $ | (0.22 | ) |
| $ | 0.64 |
|
| (1) |
| GAAP net loss per share is calculated based upon 214,517 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share is calculated based upon 236,706 diluted weighted-average shares of common stock. |
| (2) |
| Other operating expenses include total employer payroll tax-related items on employee stock transactions of $19.0 million and amortization of acquisition-related intangible assets of $10.4 million. |
| (3) |
| We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the interim reporting periods. For fiscal 2019, the projected non-GAAP tax rate was 17%. |
About Workday
Workday is a leadingprovider of enterprise cloud applications for finance and humanresources. Foundedin 2005, Workday delivers financial management, human capital management,planning, and analytics applications designed for the world's largest companies, educational institutions, and governmentagencies. Organizations ranging from medium-sized businesses to Fortune 50 enterprises have selectedWorkday.
© 2019.Workday, Inc. All rights reserved. Workday and the Workday logo are registeredtrademarks of Workday, Inc. All other brand and product names are trademarks orregistered trademarks of their respective holders.
About Non-GAAP Financial Measures
To provideinvestors and others with additional information regarding Workday's results,we have disclosed the following non-GAAP financial measures: non-GAAP operatingincome (loss) and non-GAAP net income (loss) per share. Workday has provided areconciliation of each non-GAAP financial measure used in this earnings releaseto the most directly comparable GAAP financial measure. Non-GAAP operatingincome (loss) differs from GAAP in that it excludes share-based compensationexpenses, employer payroll tax-related items on employee stock transactions,and amortization of acquisition-related intangible assets. Non-GAAP net income(loss) per share differs from GAAP in that it excludes share-based compensationexpenses, employer payroll tax-related items on employee stock transactions,amortization of acquisition-related intangible assets, non-cash interestexpense related to our convertible senior notes, and income tax effects.
Workday'smanagement uses these non-GAAP financial measures to understand and compareoperating results across accounting periods, for internal budgeting andforecasting purposes, for short- and long-term operating plans, and to evaluateWorkday's financial performance. Management believes these non-GAAP financialmeasures reflect Workday's ongoing business in a manner that allows formeaningful period-to-period comparisons and analysis of trends in Workday'sbusiness as they exclude expenses that are not reflective of ongoing operatingresults. Management also believes that these non-GAAP financial measuresprovide useful information to investors and others in understanding andevaluating Workday's operating results and prospects in the same manner asmanagement and in comparing financial results across accounting periods and tothose of peer companies.
Managementbelieves excluding the following items from the GAAP Condensed ConsolidatedStatements of Operations is useful to investors and others in assessing Workday'soperating performance due to the following factors:
- Share-based compensation expenses. Although share-based compensation is an important aspect of the compensation of our employees and executives, management believes it is useful to exclude share-based compensation expenses to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. Share-based compensation expenses are determined using a number of factors, including our stock price, volatility, and forfeiture rates that are beyond our control and generally unrelated to operational decisions and performance in any particular period. Further, share-based compensation expenses are not reflective of the value ultimately received by the grant recipients.
- Other operating expenses. Other operating expenses includes employer payroll tax-related items on employee stock transactions and amortization of acquisition-related intangible assets. The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business. For business combinations, we generally allocate a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition, and thus we do not believe it is reflective of ongoing operations.
- Amortization of debt discount and issuance costs. Under GAAP, we are required to separately account for liability (debt) and equity (conversion option) components of the convertible senior notes that were issued in private placements in June 2013 and September 2017. Accordingly, for GAAP purposes we are required to recognize the effective interest expense on our convertible senior notes and amortize the issuance costs over the term of the notes. The difference between the effective interest expense and the contractual interest expense and the amortization expense of issuance costs are excluded from management's assessment of our operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of Workday's operational performance.
- Income tax effects. We utilize a fixed long-term projected tax rate in our computation of the non-GAAP income tax provision to provide better consistency across the interim reporting periods. In projecting this long-term non-GAAP tax rate, we utilize a three-year financial projection that excludes the direct impact of share-based compensation and related employer payroll taxes, amortization of acquisition-related intangible assets, and amortization of debt discount and issuance costs. The projected rate considers other factors such as our current operating structure, existing tax positions in various jurisdictions, and key legislation in major jurisdictions where we operate. For fiscal 2020 and 2019, we determined the projected non-GAAP tax rate to be 17%. We will periodically re-evaluate this tax rate, as necessary, for significant events, based on our ongoing analysis of the 2017 U.S. Tax Cuts and Jobs Act, relevant tax law changes, material changes in the forecasted geographic earnings mix, and any significant acquisitions.
The use of non-GAAP operating income(loss) and non-GAAP net income (loss) per share measures have certainlimitations as they do not reflect all items of income and expense that affectWorkday's operations. Workday compensates for these limitations by reconcilingthe non-GAAP financial measures to the most comparable GAAP financial measures.These non-GAAP financial measures should be considered in addition to, not as asubstitute for or in isolation from, measures prepared in accordance with GAAP.Further, these non-GAAP measures may differ from the non-GAAP information usedby other companies, including peer companies, and therefore comparability maybe limited. Management encourages investors and others to review Workday'sfinancial information in its entirety and not rely on a single financialmeasure.
Forward-LookingStatements
This pressrelease contains forward-looking statements including, among other things,statements regarding the expected performance and benefits of Workday'sofferings. The words "believe," "may," "will," "estimate," "continue,""anticipate," "intend," "expect," "seek," "plan," "project," and similarexpressions are intended to identify forward-looking statements. Theseforward-looking statements are subject to risks, uncertainties, andassumptions. If the risks materialize or assumptions prove incorrect, actualresults could differ materially from the results implied by theseforward-looking statements. Risks include, but are not limited to, risks describedin our filings with the Securities and Exchange Commission (SEC), including ourForm 10-K for the fiscal year ended January 31, 2019 and our future reportsthat we may file with the SEC from time to time, which could cause actualresults to vary from expectations. Workday assumes no obligation to, and doesnot currently intend to, update any such forward-looking statements after thedate of this release.
Anyunreleased services, features, or functions referenced in this document, ourwebsite, or other press releases or public statements that are not currentlyavailable are subject to change at Workday's discretion and may not bedelivered as planned or at all. Customers who purchase Workday, Inc. servicesshould make their purchase decisions based upon services, features, andfunctions that are currently available.
© 2019.Workday, Inc. All rights reserved. Workday and the Workday logo are registeredtrademarks of Workday, Inc.
