Delaware | 001-35680 | 20-2480422 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I. R. S. Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
99.1 | Press release entitled “Workday Announces Fiscal 2017 First Quarter Financial Results” dated May 31, 2016 |
Workday, Inc. | |
/s/ Robynne D. Sisco | |
Robynne D. Sisco | |
Chief Financial Officer |
Exhibit Number | Exhibit Title | |
99.1 | Press release entitled “Workday Announces Fiscal 2017 First Quarter Financial Results” dated May 31, 2016 |
• | Total revenues were $345.4 million, an increase of 38% from the first quarter of fiscal 2016. Subscription revenues were $280.0 million, an increase of 39% from the same period last year. |
• | Operating loss was $73.6 million, or negative 21% of revenues, compared to an operating loss of $53.4 million, or negative 21% of revenues, in the same period last year. Non-GAAP operating profit for the first quarter was $11.1 million, or 3% of revenues, compared to a non-GAAP operating loss of $2.1 million last year, or negative 0.8% of revenues.1 |
• | Net loss per basic and diluted share was $0.41, compared to a net loss per basic and diluted share of $0.33 in the first quarter of fiscal 2016. Non-GAAP net income per diluted share was $0.05, compared to a non-GAAP net loss per basic and diluted share of $0.02 for the same period last year.1 |
• | Operating cash flows for the first quarter were $161.5 million and free cash flows were $127.0 million. For the trailing twelve months, operating cash flows were $327.9 million and free cash flows were $188.1 million.2 |
• | Cash, cash equivalents and marketable securities were approximately $2.1 billion as of April 30, 2016. Unearned revenues were $926.1 million, a 42% increase from last year. |
• | Workday announced the general availability of Workday Payroll for France as part of its latest feature release, Workday 26. The new application builds on the success of Workday Payroll for the U.S., Workday Payroll for Canada, and Workday Payroll for the UK by enabling organizations with employees in France to streamline the payroll process and address the full spectrum of enterprise payroll needs. |
• | Additionally in Workday 26, Workday announced the general availability of new finance-and workforce-related scorecards and dashboards to help customers harness the power of real-time transactional data and predictive analytics to make smarter decisions that will help them better manage their finances, people, and projects. |
• | To support continued customer demand globally, Workday announced it has expanded operations to support businesses headquartered in Spain, and has opened a new office in Madrid. |
• | Workday announced the appointment of Diana McKenzie as the company's chief information officer (CIO) as well as the promotion of Robynne Sisco to chief financial officer (CFO). Both Diana and Robynne report to Workday Co-President Mark Peek. |
April 30, 2016 | January 31, 2016 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 404,604 | $ | 300,087 | |||
Marketable securities | 1,675,486 | 1,669,372 | |||||
Accounts receivable, net | 193,100 | 293,407 | |||||
Deferred costs | 21,534 | 21,817 | |||||
Prepaid expenses and other current assets | 77,407 | 77,625 | |||||
Total current assets | 2,372,131 | 2,362,308 | |||||
Property and equipment, net | 254,697 | 214,158 | |||||
Deferred costs, noncurrent | 29,272 | 30,074 | |||||
Goodwill and acquisition-related intangible assets, net | 64,887 | 65,816 | |||||
Other assets | 55,166 | 57,738 | |||||
Total assets | $ | 2,776,153 | $ | 2,730,094 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 18,975 | $ | 19,605 | |||
Accrued expenses and other current liabilities | 66,372 | 43,122 | |||||
Accrued compensation | 86,819 | 91,211 | |||||
Unearned revenue | 798,086 | 768,741 | |||||
Total current liabilities | 970,252 | 922,679 | |||||
Convertible senior notes, net | 514,075 | 507,476 | |||||
Unearned revenue, noncurrent | 127,970 | 130,988 | |||||
Other liabilities | 35,700 | 32,794 | |||||
Total liabilities | 1,647,997 | 1,593,937 | |||||
Stockholders’ equity: | |||||||
Common stock | 195 | 193 | |||||
Additional paid-in capital | 2,329,904 | 2,247,454 | |||||
Accumulated other comprehensive income (loss) | (9,032 | ) | 799 | ||||
Accumulated deficit | (1,192,911 | ) | (1,112,289 | ) | |||
Total stockholders’ equity | 1,128,156 | 1,136,157 | |||||
Total liabilities and stockholders’ equity | $ | 2,776,153 | $ | 2,730,094 |
Three Months Ended April 30, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
Subscription services | $ | 280,003 | $ | 200,993 | |||
Professional services | 65,427 | 49,964 | |||||
Total revenues | 345,430 | 250,957 | |||||
Costs and expenses(1): | |||||||
Costs of subscription services | 49,200 | 31,782 | |||||
Costs of professional services | 59,427 | 46,132 | |||||
Product development | 141,778 | 99,335 | |||||
Sales and marketing | 127,491 | 94,895 | |||||
General and administrative | 41,183 | 32,217 | |||||
Total costs and expenses | 419,079 | 304,361 | |||||
Operating loss | (73,649 | ) | (53,404 | ) | |||
Other expense, net | (5,838 | ) | (7,236 | ) | |||
Loss before provision for income taxes | (79,487 | ) | (60,640 | ) | |||
Provision for income taxes | 1,135 | 918 | |||||
Net loss | $ | (80,622 | ) | $ | (61,558 | ) | |
Net loss per share, basic and diluted | $ | (0.41 | ) | $ | (0.33 | ) | |
Weighted-average shares used to compute net loss per share, basic and diluted | 194,529 | 187,390 |
(1) Costs and expenses include share-based compensation expenses as follows: | |||||||
Costs of subscription services | $ | 4,397 | $ | 2,048 | |||
Costs of professional services | 5,293 | 3,454 | |||||
Product development | 32,968 | 20,811 | |||||
Sales and marketing | 19,002 | 8,365 | |||||
General and administrative | 16,575 | 12,596 |
Three Months Ended April 30, | |||||||
2016 | 2015 | ||||||
Cash flows from operating activities | |||||||
Net loss | $ | (80,622 | ) | $ | (61,558 | ) | |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 26,124 | 18,569 | |||||
Share-based compensation expenses | 78,235 | 47,274 | |||||
Amortization of deferred costs | 5,873 | 4,625 | |||||
Amortization of debt discount and issuance costs | 6,599 | 6,250 | |||||
Other | (318 | ) | 737 | ||||
Changes in operating assets and liabilities, net of business combinations: | |||||||
Accounts receivable | 101,047 | 59,717 | |||||
Deferred costs | (4,788 | ) | (3,501 | ) | |||
Prepaid expenses and other assets | (776 | ) | (7,670 | ) | |||
Accounts payable | (1,722 | ) | 2,752 | ||||
Accrued expense and other liabilities | 5,545 | 4,325 | |||||
Unearned revenue | 26,269 | 20,679 | |||||
Net cash provided by (used in) operating activities | 161,466 | 92,199 | |||||
Cash flows from investing activities | |||||||
Purchases of marketable securities | (633,956 | ) | (385,575 | ) | |||
Maturities of marketable securities | 625,588 | 281,407 | |||||
Sales of available-for-sale securities | 200 | 10,000 | |||||
Owned real estate investments | (18,986 | ) | — | ||||
Capital expenditures, excluding owned real estate investments | (34,478 | ) | (28,320 | ) | |||
Purchases of cost method investments | (100 | ) | — | ||||
Other | 388 | — | |||||
Net cash provided by (used in) investing activities | (61,344 | ) | (122,488 | ) | |||
Cash flows from financing activities | |||||||
Proceeds from issuance of common stock from employee equity plans | 3,381 | 3,564 | |||||
Principal payments on capital lease obligations | — | (1,448 | ) | ||||
Other | 376 | 417 | |||||
Net cash provided by (used in) financing activities | 3,757 | 2,533 | |||||
Effect of exchange rate changes | 638 | 48 | |||||
Net increase (decrease) in cash and cash equivalents | 104,517 | (27,708 | ) | ||||
Cash and cash equivalents at the beginning of period | 300,087 | 298,192 | |||||
Cash and cash equivalents at the end of period | $ | 404,604 | $ | 270,484 | |||
Supplemental cash flow data | |||||||
Cash paid for interest | $ | 4 | $ | 33 | |||
Cash paid for taxes | 581 | 616 | |||||
Non-cash investing and financing activities: | |||||||
Vesting of early exercise stock options | $ | 460 | $ | 472 | |||
Property and equipment, accrued but not paid | 21,507 | 9,298 | |||||
Non-cash additions to property and equipment | 521 | 1,860 |
GAAP | Share-Based Compensation Expenses | Other Operating Expenses (2) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Costs of subscription services | $ | 49,200 | $ | (4,397 | ) | $ | (319 | ) | $ | — | $ | 44,484 | |||||||
Costs of professional services | 59,427 | (5,293 | ) | (490 | ) | — | 53,644 | ||||||||||||
Product development | 141,778 | (32,968 | ) | (3,794 | ) | — | 105,016 | ||||||||||||
Sales and marketing | 127,491 | (19,002 | ) | (1,090 | ) | — | 107,399 | ||||||||||||
General and administrative | 41,183 | (16,575 | ) | (812 | ) | — | 23,796 | ||||||||||||
Operating income (loss) | (73,649 | ) | 78,235 | 6,505 | — | 11,091 | |||||||||||||
Operating margin | (21.3 | )% | 22.6 | % | 1.9 | % | — | % | 3.2 | % | |||||||||
Other income (expense), net | (5,838 | ) | — | — | 6,599 | 761 | |||||||||||||
Income (loss) before provision for income taxes | (79,487 | ) | 78,235 | 6,505 | 6,599 | 11,852 | |||||||||||||
Provision for income taxes | 1,135 | — | — | — | 1,135 | ||||||||||||||
Net income (loss) | $ | (80,622 | ) | $ | 78,235 | $ | 6,505 | $ | 6,599 | $ | 10,717 | ||||||||
Net income (loss) per share (1) | $ | (0.41 | ) | $ | 0.38 | $ | 0.04 | $ | 0.04 | $ | 0.05 |
GAAP | Share-Based Compensation Expenses | Other Operating Expenses(2) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Costs of subscription services | $ | 31,782 | $ | (2,048 | ) | $ | (186 | ) | $ | — | $ | 29,548 | |||||||
Costs of professional services | 46,132 | (3,454 | ) | (354 | ) | — | 42,324 | ||||||||||||
Product development | 99,335 | (20,811 | ) | (2,313 | ) | — | 76,211 | ||||||||||||
Sales and marketing | 94,895 | (8,365 | ) | (631 | ) | — | 85,899 | ||||||||||||
General and administrative | 32,217 | (12,596 | ) | (587 | ) | — | 19,034 | ||||||||||||
Operating income (loss) | (53,404 | ) | 47,274 | 4,071 | — | (2,059 | ) | ||||||||||||
Operating margin | (21.3 | )% | 18.9 | % | 1.6 | % | — | % | -0.8% | ||||||||||
Other income (expense), net | (7,236 | ) | — | — | 6,250 | (986 | ) | ||||||||||||
Income (loss) before provision for income taxes | (60,640 | ) | 47,274 | 4,071 | 6,250 | (3,045 | ) | ||||||||||||
Provision for income taxes | 918 | — | — | — | 918 | ||||||||||||||
Net income (loss) | $ | (61,558 | ) | $ | 47,274 | $ | 4,071 | $ | 6,250 | $ | (3,963 | ) | |||||||
Net income (loss) per share, basic and diluted (1) | $ | (0.33 | ) | $ | 0.25 | $ | 0.02 | $ | 0.04 | $ | (0.02 | ) |
Three Months Ended April 30, | |||||||
2016 | 2015 | ||||||
Net cash provided by (used in) operating activities | $ | 161,466 | $ | 92,199 | |||
Capital expenditures, excluding owned real estate investments | (34,478 | ) | (28,320 | ) | |||
Free cash flows | $ | 126,988 | $ | 63,879 | |||
Trailing Twelve Months Ended April 30, | |||||||
2016 | 2015 | ||||||
Net cash provided by (used in) operating activities | $ | 327,904 | $ | 172,505 | |||
Capital expenditures, excluding owned real estate investments | (139,825 | ) | (122,093 | ) | |||
Free cash flows | $ | 188,079 | $ | 50,412 |
• | 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 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. For restricted stock unit awards, the amount of share-based compensation expenses is not reflective of the value ultimately received by the grant recipients. Moreover, 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. Unlike cash compensation, the value of stock options and shares offered under our Employee Stock Purchase Plan, which are elements of our ongoing share-based compensation expenses, is determined using a complex formula that incorporates factors, such as market volatility and forfeiture rates, that are beyond our control. |
• | 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 the 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. 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 the company’s operational performance. |