Workday, Inc. revenue growth decelerated to 28.5% in FY2020 vs. 31.7% a year earliner
02/27/2020 • About Workday, Inc. (
$WDAY) • By InTwits
Workday, Inc. reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- Workday, Inc. is a fast growth stock: FY2020 revenue growth was 28.5%, 5 year revenue CAGR was 35.7% at FY2020 ROIC -13.6%
- The company operates at negative EBITDA Margin: -1.4%
- Workday, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 was 9.7% while average EBITDA Margin was -5.9% for the sames years
- Workday, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 7.9%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: $44m in 2020, $54m in 2019, $153m in 2018, $78m in 2017, $53m in 2016
- The company has unprofitable business model: ROIC is -13.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Workday, Inc.'s Revenue jumped on 28.5%. Revenue growth showed slowdown in FY20Q4 - it was 23.8% YoY. Revenue decline was accelerating on average at -4.1 pp per annum in the last 5 years. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 2.6 pp from 35.7% to 33.1% in 2020. EBITDA Margin grew at 2.5 pp per annum in the last 5 years.
Gross Margin showed almost no change in FY2020. Gross Margin stuck to a growing trend at 0.71 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 2.1 pp from 43.9% to 41.7% in FY2020. SG&A as a % of Revenue stuck to a declining trend at -1.8 pp per annum in FY2016-FY2020.
Net Income margin increased slightly on 1.6 pp from -14.8% to -13.3% in FY2020. Net Income margin stuck to a growing trend at 3.1 pp per annum in FY2016-FY2020.
Investments (CAPEX, working capital and M&A)
Workday, Inc.'s CAPEX/Revenue was 6.7% in FY2020. CAPEX/Revenue decreased slightly on 0.95 pp from 7.7% in FY2017 to 6.7% in FY2020. It's average CAPEX/Revenue for the last three years was 6.8%.
Return on investment
The company operates at negative ROIC (-13.6%) and ROE (-21.6%). ROIC increased slightly on 1.2 pp from -14.8% to -13.6% in FY2020. ROE increased on 2.0 pp from -23.6% to -21.6% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.0x and Debt / EBITDA is . Net Debt / EBITDA didn't change in FY2020. Debt jumped on 30.3% while cash surged on 14.5%.
Workday, Inc. has no short term refinancing risk: cash is higher than short term debt (235.5%).
Management team
Robynne D Sisco is a the company's CFO. Robynne D Sisco has spent 4 years at the company.
Financial and operational results
FY ended 01/31/2020
Workday, Inc. ($WDAY) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,157 | 1,574 | 2,143 | 2,822 | 3,627 | 28.5% |
| Gross Profit | 782 | 1,091 | 1,514 | 1,987 | 2,562 | 28.9% |
| SG&A | 562 | 763 | 906 | 1,239 | 1,514 | 22.2% |
| EBITDA | -128 | -192 | -109 | -194 | -50 | |
| EBIT | -250 | -353 | -303 | | | |
| Interest expence | 32 | 30 | 45 | | | |
| Tax | 1 | -1 | 6 | | | |
| Net Income | -275 | -385 | -321 | -418 | -481 | |
| Stock Based Compensation | 250 | 372 | 478 | | | |
Balance Sheet
|
|---|
| Cash | 300 | 540 | 1,134 | 639 | 731 | 14.5% |
| Accounts Receivable | 316 | 410 | 528 | | | |
| Accounts Payable | 20 | 27 | 21 | | | |
| Short Term Debt | 0 | 0 | 342 | 233 | 310 | 33.5% |
| Long Term Debt | 507 | 534 | 1,150 | 972 | 1,259 | 29.5% |
Cash flow
|
|---|
| Capex | 134 | 121 | 142 | 203 | 244 | 20.3% |
| Acquisitions | 31 | 148 | 6 | | | |
Ratios
|
|---|
| Revenue growth | 46.8% | 36.1% | 36.1% | 31.7% | 28.5% | |
| EBITDA growth | -6.8% | 50.1% | -43.3% | 78.4% | -74.1% | |
|
|---|
| Gross Margin | 67.6% | 69.3% | 70.6% | 70.4% | 70.6% | 0.2% |
| EBITDA Margin | -11.1% | -12.2% | -5.1% | -6.9% | -1.4% | 5.5% |
| EBIT Margin | -21.6% | -22.4% | -14.1% | | |
| SG&A, % of revenue | 48.6% | 48.5% | 42.3% | 43.9% | 41.7% | -2.1% |
| SBC, % of revenue | 21.6% | 23.6% | 22.3% | | |
| Net Income Margin | -23.8% | -24.4% | -15.0% | -14.8% | -13.3% | 1.6% |
| CAPEX, % of revenue | 11.6% | 7.7% | 6.6% | 7.2% | 6.7% | -0.5% |
|
|---|
| ROIC | -14.9% | -19.9% | -12.4% | -14.8% | -13.6% | 1.2% |
| ROE | -23.4% | -30.7% | -22.5% | -23.6% | -21.6% | 2.0% |
| Interest expence / Average debt | 6.3% | 5.8% | 4.4% | | | |
People
|
|---|
| Insider ownership | 1.7% | 1.7% | 1.7% | | | |
| Employees | 5,200 | 6,600 | 8,200 | | | |
| Revenue/Employee, th. $ | 222 | 239 | 261 | | | |
Workday, Inc. ($WDAY) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 825 | 888 | 938 | 976 | | 33.4% | 32.2% | 26.2% | 23.8% |
| EBITDA | -23 | -14 | 5 | -18 | | - | - | - | - |
| Net Income | -116 | -121 | -116 | -128 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 782 | 620 | 913 | 731 | | -24.5% | -63.4% | 68.9% | 14.5% |
| Short Term Debt | 300 | 1,299 | 309 | 310 | | -47.5% | 472.4% | 34.4% | 33.5% |
| Long Term Debt | 1,230 | 244 | 1,244 | 1,259 | | 30.9% | -74.3% | 29.4% | 29.5% |
Ratios
|
|---|
| Gross Margin | 70.5% | 70.0% | 71.1% | 70.8% | | -0.7% | -0.2% | 1.1% | 0.5% |
| EBITDA Margin | -2.8% | -1.6% | 0.5% | -1.9% | | -0.1% | 2.9% | 14.9% | 3.3% |
| Net Income Margin | -14.1% | -13.6% | -12.3% | -13.1% | | -2.1% | -0.8% | 8.3% | 0.1% |
Peers in Application Software
Below we provide Workday, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.8% | 15.1% | 19.4% | 14.5% |
|---|
| Workday, Inc. ($WDAY) | - | 36.1% | 36.1% | 31.7% | 28.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| Workday, Inc. ($WDAY) | 67.6% | 69.3% | 70.6% | 70.4% | 70.6% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -4.7% | -3.3% | -3.3% | 4.5% | 7.7% |
|---|
| Workday, Inc. ($WDAY) | -11.1% | -12.2% | -5.1% | -6.9% | -1.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| Workday, Inc. ($WDAY) | 11.6% | 7.7% | 6.6% | 7.2% | 6.7% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -9.8% | -4.2% | -1.8% |
|---|
| Workday, Inc. ($WDAY) | -14.9% | -19.9% | -12.4% | -14.8% | -13.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (54 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.2x |
|---|
