Workday, Inc. revenue surged on 36.1% and EBITDA Margin increased on 7.1 pp from -12.2% to -5.1%
02/27/2018 • About Workday, Inc. (
$WDAY) • By InTwits
Workday, Inc. reported FY2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Workday, Inc. is a fast growth stock: FY2018 revenue growth was 36.1%, 5 year revenue CAGR was 50.9% at FY2018 ROIC -12.4%
- The company operates at negative EBITDA Margin: -5.1%
- Workday, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2014-FY2018 was 21.5% while average EBITDA Margin was -11.0% for the sames years. In FY2018 SBC/Revenue was even higher: 22.3%
- Workday, Inc. has high CAPEX intensity: 5 year average CAPEX/Revenue was 10.4%. At the same time it's in pair with industry average of 13.2%
- CAPEX is quite volatile: $305m in 2018, $111m in 2017, $118m in 2016, $85m in 2015, $103m in 2014
- The company has unprofitable business model: ROIC is -12.4%
- It operates with high leverage: Net Debt/EBITDA is 5.4x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 36.1%. Revenue growth showed small slowdown in FY18Q4 - it was 32.5% YoY. Revenue decline was accelerating on average at -10.2 pp per annum in FY2014-FY2018. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 15.7 pp from 20.9% to 36.5% in 2018. EBITDA Margin followed a growing trend at 4.0 pp per annum in the last 5 years.
Gross Margin increased slightly on 1.3 pp from 69.3% to 70.6% in FY2018. Gross Margin grew at 2.0 pp per annum in FY2014-FY2018. SG&A as a % of Revenue decreased on 6.2 pp from 48.5% to 42.3% in FY2018. SG&A as a % of Revenue declined at -3.3 pp per annum in FY2014-FY2018. Stock Based Compensation (SBC) as a % of Revenue decreased slightly on 1.3 pp from 23.6% to 22.3% in FY2018. During the last 5 years SBC as a % of Revenue topped in FY2017 at 23.6%.
Net Income margin increased on 9.4 pp from -24.4% to -15.0% in FY2018. Net Income margin followed a growing trend at 5.1 pp per annum in FY2014-FY2018.
Investments (CAPEX, working capital and M&A)
In FY2018 the company had CAPEX/Revenue of 6.6%. Workday, Inc.'s CAPEX/Revenue decreased on 6.6 pp from 13.2% in FY2015 to 6.6% in FY2018. For the last three years the average CAPEX/Revenue was 8.6%. CAPEX as a % of Revenue stuck to a declining trend at -1.8 pp per annum in FY2014-FY2018.
Accounts receivable as a % of Revenue decreased slightly on 1.4 pp from 26.0% to 24.6% in FY2018. Accounts payable as a % of Revenue decreased on 2.2 pp from 5.5% to 3.3% in FY2018.
Workday, Inc. has spent
$6m on M&A in FY2018 which accounts for 0.27% of revenue.
Return on investment
The company operates at negative ROIC (-12.4%) and ROE (-22.5%). ROIC increased on 7.5 pp from -19.9% to -12.4% in FY2018. ROE increased on 8.3 pp from -30.7% to -22.5% in FY2018. During FY2014-FY2018 ROE bottomed in FY2017 at -30.7%.
Leverage (Debt)
Debt level is 5.4x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA didn't change in FY2018. Debt jumped on 179% while cash surged on 110%.
Workday, Inc. has no short term refinancing risk: cash is higher than short term debt (332.2%).
Average interest expence charged on company's debt was 3.0% in FY2018.
Management team
Workday, Inc.'s CEO is Aneel Bhusri. Aneel Bhusri is a founder and has 7 years tenure with the company. CEO total compensation was
$9,145,119 in FY2018 which included
$65,250 salary. The company's CFO Robynne D Sisco has spent 1 year with the company.
Insider ownership is 1.7%. Insider ownership didn't change in 2018.
At the end of financial year the company had 8,200 employees. The number of employees jumped on 24.2%. Average revenue per employee in FY2018 was
$261,348 and it increased on 9.6%.
Financial and operational results
FY ended 01/31/2018
Workday, Inc. ($WDAY) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 469 | 788 | 1,157 | 1,574 | 2,143 | 36.1% |
| Gross Profit | 292 | 523 | 782 | 1,091 | 1,514 | 38.8% |
| SG&A | 263 | 422 | 562 | 763 | 906 | 18.7% |
| EBITDA | -106 | -137 | -128 | -192 | -109 | |
| EBIT | -153 | -216 | -250 | -353 | -303 | |
| Interest expence | 20 | 31 | 32 | 30 | 45 | 48.0% |
| Tax | 2 | 2 | 1 | -1 | 6 | |
| Net Income | -173 | -248 | -275 | -385 | -321 | |
| Stock Based Compensation | 62 | 156 | 250 | 372 | 478 | 28.5% |
Balance Sheet
|
|---|
| Cash | 581 | 298 | 300 | 540 | 1,134 | 110.1% |
| Accounts Receivable | 92 | 188 | 316 | 410 | 528 | 28.9% |
| Accounts Payable | 6 | 11 | 20 | 27 | 21 | -21.7% |
| Short Term Debt | 9 | 3 | 0 | 0 | 342 | |
| Long Term Debt | 472 | 482 | 507 | 534 | 1,150 | 115.2% |
Cash flow
|
|---|
| Capex | 61 | 104 | 134 | 121 | 142 | 17.2% |
| Acquisitions | | 26 | 31 | 148 | 6 | -96.1% |
Ratios
|
|---|
| Revenue growth | 71.4% | 68.0% | 46.8% | 36.1% | 36.1% | |
| EBITDA growth | 19.8% | 29.0% | -6.8% | 50.1% | -43.3% | |
|
|---|
| Gross Margin | 62.3% | 66.4% | 67.6% | 69.3% | 70.6% | 1.3% |
| EBITDA Margin | -22.7% | -17.4% | -11.1% | -12.2% | -5.1% | 7.1% |
| EBIT Margin | -32.7% | -27.4% | -21.6% | -22.4% | -14.1% | 8.3% |
| SG&A, % of revenue | 56.1% | 53.5% | 48.6% | 48.5% | 42.3% | -6.2% |
| SBC, % of revenue | 13.2% | 19.8% | 21.6% | 23.6% | 22.3% | -1.3% |
| Net Income Margin | -36.8% | -31.5% | -23.8% | -24.4% | -15.0% | 9.4% |
| CAPEX, % of revenue | 12.9% | 13.2% | 11.6% | 7.7% | 6.6% | -1.1% |
|
|---|
| ROIC | -13.4% | -13.1% | -14.9% | -19.9% | -12.4% | 7.5% |
| ROE | -19.4% | -21.4% | -23.4% | -30.7% | -22.5% | 8.3% |
| Interest expence / Average debt | 4.1% | 6.4% | 6.4% | 5.8% | 3.0% | -2.8% |
People
|
|---|
| Insider ownership | 1.7% | 1.7% | 1.7% | 1.7% | 1.7% | 0.0% |
| Employees | 2,600 | 3,750 | 5,200 | 6,600 | 8,200 | 24.2% |
| Revenue/Employee, th. $ | 180 | 210 | 222 | 239 | 261 | 9.6% |
Workday, Inc. ($WDAY) key quoterly financial indicators
| mln. $ | FY18Q1 | FY18Q2 | FY18Q3 | FY18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 480 | 525 | 555 | 582 | | 38.0% | 40.6% | 34.3% | 32.5% |
| EBITDA | -13 | -34 | -31 | -31 | | | | | |
| Net Income | -64 | -83 | -86 | -89 | | | | | |
Balance Sheet
|
|---|
| Cash | 499 | 749 | 1,337 | 1,134 | | 23.3% | 84.6% | 245.9% | 110.1% |
| Short Term Debt | 0 | 332 | 337 | 342 | | | | | |
| Long Term Debt | 541 | 216 | 1,136 | 1,150 | | 5.3% | -58.5% | 115.4% | 115.2% |
Ratios
|
|---|
| Gross Margin | 71.5% | 69.9% | 70.6% | 70.7% | | 2.8% | 1.4% | 1.2% | 0.3% |
| EBITDA Margin | -2.7% | -6.4% | -5.5% | -5.4% | | 7.3% | 6.7% | 10.0% | 4.6% |
| Net Income Margin | -13.3% | -15.7% | -15.4% | -15.3% | | 9.2% | 13.1% | 11.2% | 4.8% |
Peers in Application Software
Below you can find Workday, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (150 companies) | 27.9% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| Workday, Inc. ($WDAY) | | 68.0% | 46.8% | 36.1% | 36.1% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (149 companies) | 63.4% | 61.7% | 63.8% | 64.4% | 65.3% |
|---|
| Workday, Inc. ($WDAY) | 62.3% | 66.4% | 67.6% | 69.3% | 70.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (151 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.1% |
|---|
| Workday, Inc. ($WDAY) | -22.7% | -17.4% | -11.1% | -12.2% | -5.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (152 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Workday, Inc. ($WDAY) | 12.9% | 13.2% | 11.6% | 7.7% | 6.6% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (178 companies) | -14.4% | -11.2% | -9.2% | -10.2% | -9.1% |
|---|
| Workday, Inc. ($WDAY) | -13.4% | -13.1% | -14.9% | -19.9% | -12.4% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
