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 Fourth Quarter and Full Year Fiscal 2016 Financial Results” dated February 29, 2016 |
Workday, Inc. | |
/s/ Mark S. Peek | |
Mark S. Peek Co-President and Chief Financial Officer |
Exhibit Number | Exhibit Title | ||
99.1 | Press Release entitled “Workday Announces Fourth Quarter and Full Year Fiscal 2016 Financial Results” dated February 29, 2016 |
• | Total revenues were $323.4 million, an increase of 43% from the fourth quarter of fiscal 2015. Subscription revenue was $261.8 million, an increase of 44% from the same period last year. |
• | Operating loss was $73.4 million, or negative 22.7% of revenues, compared to an operating loss of $50.4 million, or negative 22.3% of revenues, in the same period last year. Non-GAAP operating loss for the fourth quarter was $0.8 million, or negative 0.2% of revenues, compared to a non-GAAP operating loss of $8.6 million last year, or negative 3.8% of revenues.1 |
• | Net loss per basic and diluted share was $0.42, compared to a net loss per basic and diluted share of $0.32 in the fourth quarter of fiscal 2015. Non-GAAP net loss per basic and diluted share was $0.01, compared to a non-GAAP net loss per basic and diluted share of $0.06 for the same period last year.1 |
• | Total revenues were $1.16 billion, an increase of 48% from fiscal 2015. Subscription revenue was $929.2 million, an increase of 52% from the prior year. |
• | Operating loss was $264.7 million, or negative 22.8% of revenues, compared to an operating loss of $215.7 million, or negative 27.4% of revenues, in fiscal 2015. Non-GAAP operating loss was $2.7 million, or negative 0.2% of revenues, compared to a non-GAAP operating loss of $53.2 million, or negative 6.7% of revenues, last year.1 |
• | Net loss per basic and diluted share was $1.53, compared to a net loss per basic and diluted share of $1.35 in fiscal 2015. Non-GAAP net loss per basic and diluted share was $0.01, compared to a non-GAAP net loss per basic and diluted share of $0.33 last year.1 |
• | Operating cash flows were $258.6 million and free cash flows were $125.0 million.2 |
• | Cash, cash equivalents and marketable securities were approximately $1.97 billion as of January 31, 2016. Unearned revenues were $899.7 million, a 42% increase from last year. |
• | Workday accelerated momentum for Workday Financial Management with 45 customers joining in the fourth quarter of fiscal 2016, bringing the total customer count for this application to more than 200. Workday has over 100 financial management customers in production and live customers in 35 countries. |
• | Workday ranked #2 on Fortune magazine’s list of the 10 Best Large Workplaces in Tech and #6 on its list of the 50 Best Workplaces for Diversity. |
• | Workday announced plans to expand its partnership with ADP to provide multinational organizations with a seamless and unified global payroll experience, uniting Workday Human Capital Management (HCM) and ADP Global Payroll in a single user experience within Workday. |
January 31, | ||||||||
2016 | 2015 (1) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 300,087 | $ | 298,192 | ||||
Marketable securities | 1,669,372 | 1,559,517 | ||||||
Accounts receivable, net | 293,407 | 188,357 | ||||||
Deferred costs | 21,817 | 20,471 | ||||||
Prepaid expenses and other current assets | 77,625 | 41,850 | ||||||
Total current assets | 2,362,308 | 2,108,387 | ||||||
Property and equipment, net | 214,158 | 140,136 | ||||||
Deferred costs, noncurrent | 30,074 | 20,998 | ||||||
Goodwill and acquisition-related intangible assets, net | 65,816 | 34,779 | ||||||
Other assets | 57,738 | 45,790 | ||||||
Total assets | $ | 2,730,094 | $ | 2,350,090 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 19,605 | $ | 10,623 | ||||
Accrued expenses and other current liabilities | 43,122 | 24,132 | ||||||
Accrued compensation | 91,211 | 56,152 | ||||||
Capital leases | — | 3,207 | ||||||
Unearned revenue | 768,741 | 547,151 | ||||||
Total current liabilities | 922,679 | 641,265 | ||||||
Convertible senior notes, net | 507,476 | 481,958 | ||||||
Unearned revenue, noncurrent | 130,988 | 85,593 | ||||||
Other liabilities | 32,794 | 15,299 | ||||||
Total liabilities | 1,593,937 | 1,224,115 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 193 | 186 | ||||||
Additional paid-in capital | 2,247,454 | 1,948,300 | ||||||
Accumulated other comprehensive income (loss) | 799 | (140 | ) | |||||
Accumulated deficit | (1,112,289 | ) | (822,371 | ) | ||||
Total stockholders’ equity | 1,136,157 | 1,125,975 | ||||||
Total liabilities and stockholders’ equity | $ | 2,730,094 | $ | 2,350,090 |
(1) | Amounts as of January 31, 2015 were derived from the January 31, 2015 audited financial statements. |
Three Months Ended January 31, | Year Ended January 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenues: | ||||||||||||||||
Subscription services | $ | 261,799 | $ | 181,866 | $ | 929,234 | $ | 613,328 | ||||||||
Professional services | 61,628 | 44,407 | 233,112 | 174,532 | ||||||||||||
Total revenues | 323,427 | 226,273 | 1,162,346 | 787,860 | ||||||||||||
Costs and expenses(1): | ||||||||||||||||
Costs of subscription services | 43,009 | 29,218 | 149,869 | 102,476 | ||||||||||||
Costs of professional services | 59,671 | 40,737 | 224,558 | 162,327 | ||||||||||||
Product development | 131,244 | 88,963 | 469,944 | 316,868 | ||||||||||||
Sales and marketing | 121,073 | 88,469 | 434,056 | 315,840 | ||||||||||||
General and administrative | 41,871 | 29,270 | 148,578 | 106,051 | ||||||||||||
Total costs and expenses | 396,868 | 276,657 | 1,427,005 | 1,003,562 | ||||||||||||
Operating loss | (73,441 | ) | (50,384 | ) | (264,659 | ) | (215,702 | ) | ||||||||
Other expense, net | (6,505 | ) | (8,271 | ) | (24,242 | ) | (30,270 | ) | ||||||||
Loss before provision for income taxes | (79,946 | ) | (58,655 | ) | (288,901 | ) | (245,972 | ) | ||||||||
Provision for income taxes | 1,182 | 811 | 1,017 | 2,010 | ||||||||||||
Net loss | $ | (81,128 | ) | $ | (59,466 | ) | $ | (289,918 | ) | $ | (247,982 | ) | ||||
Net loss per share, basic and diluted | $ | (0.42 | ) | $ | (0.32 | ) | $ | (1.53 | ) | $ | (1.35 | ) | ||||
Weighted-average shares used to compute net loss per share, basic and diluted | 192,485 | 185,696 | 190,016 | 183,702 | ||||||||||||
(1) Costs and expenses include share-based compensation as follows: | ||||||||||||||||
Costs of subscription services | $ | 3,636 | $ | 1,431 | $ | 12,060 | $ | 6,053 | ||||||||
Costs of professional services | 5,504 | 2,959 | 19,526 | 12,890 | ||||||||||||
Product development | 30,372 | 17,142 | 109,362 | 63,938 | ||||||||||||
Sales and marketing | 14,709 | 7,068 | 51,617 | 29,875 | ||||||||||||
General and administrative | 15,052 | 10,784 | 57,405 | 43,292 |
Three Months Ended January 31, | Year Ended January 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net loss | $ | (81,128 | ) | $ | (59,466 | ) | $ | (289,918 | ) | $ | (247,982 | ) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||||||||
Depreciation and amortization | 25,222 | 16,526 | 85,939 | 59,205 | ||||||||||||
Share-based compensation expenses | 69,273 | 39,384 | 249,970 | 156,048 | ||||||||||||
Amortization of deferred costs | 5,728 | 5,175 | 23,477 | 19,288 | ||||||||||||
Amortization of debt discount and issuance costs | 6,510 | 6,166 | 25,518 | 24,171 | ||||||||||||
Gain on sale of cost method investment | — | — | (3,220 | ) | — | |||||||||||
Other | 2,381 | 269 | 1,047 | 2,924 | ||||||||||||
Changes in operating assets and liabilities, net of business combinations: | ||||||||||||||||
Accounts receivable | (122,684 | ) | (69,824 | ) | (105,264 | ) | (96,876 | ) | ||||||||
Deferred costs | (14,572 | ) | (9,278 | ) | (33,899 | ) | (23,514 | ) | ||||||||
Prepaid expenses and other assets | (3,368 | ) | (7,011 | ) | (28,366 | ) | (15,524 | ) | ||||||||
Accounts payable | 6,363 | (483 | ) | 6,824 | 1,120 | |||||||||||
Accrued expense and other liabilities | 23,024 | 2,204 | 59,724 | 3,964 | ||||||||||||
Unearned revenue | 181,742 | 124,613 | 266,805 | 219,179 | ||||||||||||
Net cash provided by (used in) operating activities | 98,491 | 48,275 | 258,637 | 102,003 | ||||||||||||
Cash flows from investing activities | ||||||||||||||||
Purchases of marketable securities | (640,419 | ) | (247,436 | ) | (2,125,841 | ) | (1,737,840 | ) | ||||||||
Maturities of marketable securities | 639,995 | 282,998 | 1,901,858 | 1,419,454 | ||||||||||||
Sales of available-for-sale securities | 4,000 | 45,044 | 102,711 | 53,182 | ||||||||||||
Business combinations, net of cash acquired | — | — | (31,436 | ) | (26,317 | ) | ||||||||||
Purchases of property and equipment | (41,985 | ) | (37,665 | ) | (133,667 | ) | (103,646 | ) | ||||||||
Purchases of cost method investments | (100 | ) | — | (16,550 | ) | (10,000 | ) | |||||||||
Sale of cost method investment | — | — | 3,538 | — | ||||||||||||
Other | (760 | ) | — | (760 | ) | 1,000 | ||||||||||
Net cash provided by (used in) investing activities | (39,269 | ) | 42,941 | (300,147 | ) | (404,167 | ) | |||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from issuance of common stock from employee equity plans | 20,560 | 15,459 | 45,656 | 36,239 | ||||||||||||
Principal payments on capital lease obligations | (66 | ) | (1,474 | ) | (3,193 | ) | (9,759 | ) | ||||||||
Shares repurchased for tax withholdings on vesting of restricted stock | — | — | — | (8,291 | ) | |||||||||||
Other | 621 | 1,115 | 1,646 | 1,266 | ||||||||||||
Net cash provided by (used in) financing activities | 21,115 | 15,100 | 44,109 | 19,455 | ||||||||||||
Effect of exchange rate changes | (143 | ) | (266 | ) | (704 | ) | (425 | ) | ||||||||
Net increase (decrease) in cash and cash equivalents | 80,194 | 106,050 | 1,895 | (283,134 | ) | |||||||||||
Cash and cash equivalents at the beginning of period | 219,893 | 192,142 | 298,192 | 581,326 | ||||||||||||
Cash and cash equivalents at the end of period | $ | 300,087 | $ | 298,192 | $ | 300,087 | $ | 298,192 | ||||||||
Supplemental cash flow data | ||||||||||||||||
Cash paid for interest | $ | 3,204 | $ | 3,255 | $ | 6,456 | $ | 6,869 | ||||||||
Cash paid for taxes | 472 | 777 | 2,124 | 943 | ||||||||||||
Non-cash investing and financing activities: | ||||||||||||||||
Vesting of early exercise stock options | $ | 472 | $ | 471 | $ | 1,888 | $ | 1,887 | ||||||||
Purchases of property and equipment, accrued but not paid | 14,052 | 8,776 | 14,052 | 8,776 | ||||||||||||
Non-cash additions to property and equipment | 764 | — | 7,256 | — |
GAAP | Share-Based Compensation | Other Operating Expenses (1) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Costs of subscription services | $ | 43,009 | $ | (3,636 | ) | $ | (88 | ) | $ | — | $ | 39,285 | ||||||||
Costs of professional services | 59,671 | (5,504 | ) | (137 | ) | — | 54,030 | |||||||||||||
Product development | 131,244 | (30,372 | ) | (2,226 | ) | — | 98,646 | |||||||||||||
Sales and marketing | 121,073 | (14,709 | ) | (328 | ) | — | 106,036 | |||||||||||||
General and administrative | 41,871 | (15,052 | ) | (596 | ) | — | 26,223 | |||||||||||||
Operating loss | (73,441 | ) | 69,273 | 3,375 | — | (793 | ) | |||||||||||||
Operating margin | (22.7 | )% | 21.5 | % | 1.0 | % | — | (0.2 | )% | |||||||||||
Other income (expense), net | (6,505 | ) | — | — | 6,510 | 5 | ||||||||||||||
Loss before provision for income taxes | (79,946 | ) | 69,273 | 3,375 | 6,510 | (788 | ) | |||||||||||||
Provision for income taxes | 1,182 | — | — | — | 1,182 | |||||||||||||||
Net loss | $ | (81,128 | ) | $ | 69,273 | $ | 3,375 | $ | 6,510 | $ | (1,970 | ) | ||||||||
Net loss per share, basic and diluted (2) | $ | (0.42 | ) | $ | 0.36 | $ | 0.02 | $ | 0.03 | $ | (0.01 | ) |
GAAP | Share-Based Compensation | Other Operating Expenses (1) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Costs of subscription services | $ | 29,218 | $ | (1,431 | ) | $ | (103 | ) | $ | — | $ | 27,684 | ||||||||
Costs of professional services | 40,737 | (2,959 | ) | (247 | ) | — | 37,531 | |||||||||||||
Product development | 88,963 | (17,142 | ) | (1,123 | ) | — | 70,698 | |||||||||||||
Sales and marketing | 88,469 | (7,068 | ) | (424 | ) | — | 80,977 | |||||||||||||
General and administrative | 29,270 | (10,784 | ) | (514 | ) | — | 17,972 | |||||||||||||
Operating loss | (50,384 | ) | 39,384 | 2,411 | — | (8,589 | ) | |||||||||||||
Operating margin | (22.3 | )% | 17.4 | % | 1.1 | % | — | (3.8 | )% | |||||||||||
Other income (expense), net | (8,271 | ) | — | — | 6,166 | (2,105 | ) | |||||||||||||
Loss before provision for income taxes | (58,655 | ) | 39,384 | 2,411 | 6,166 | (10,694 | ) | |||||||||||||
Provision for income taxes | 811 | — | — | — | 811 | |||||||||||||||
Net loss | $ | (59,466 | ) | $ | 39,384 | $ | 2,411 | $ | 6,166 | $ | (11,505 | ) | ||||||||
Net loss per share, basic and diluted (2) | $ | (0.32 | ) | $ | 0.21 | $ | 0.01 | $ | 0.04 | $ | (0.06 | ) |
GAAP | Share-Based Compensation | Other Operating Expenses (1) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Costs of subscription services | $ | 149,869 | $ | (12,060 | ) | $ | (414 | ) | $ | — | $ | 137,395 | ||||||||
Costs of professional services | 224,558 | (19,526 | ) | (768 | ) | — | 204,264 | |||||||||||||
Product development | 469,944 | (109,362 | ) | (7,201 | ) | — | 353,381 | |||||||||||||
Sales and marketing | 434,056 | (51,617 | ) | (1,482 | ) | — | 380,957 | |||||||||||||
General and administrative | 148,578 | (57,405 | ) | (2,095 | ) | — | 89,078 | |||||||||||||
Operating loss | (264,659 | ) | 249,970 | 11,960 | — | (2,729 | ) | |||||||||||||
Operating margin | (22.8 | )% | 21.6 | % | 1.0 | % | — | (0.2 | )% | |||||||||||
Other income (expense), net | (24,242 | ) | — | — | 25,518 | 1,276 | ||||||||||||||
Loss before provision for income taxes | (288,901 | ) | 249,970 | 11,960 | 25,518 | (1,453 | ) | |||||||||||||
Provision for income taxes | 1,017 | — | — | — | 1,017 | |||||||||||||||
Net loss | $ | (289,918 | ) | $ | 249,970 | $ | 11,960 | $ | 25,518 | $ | (2,470 | ) | ||||||||
Net loss per share, basic and diluted (2) | $ | (1.53 | ) | $ | 1.32 | $ | 0.06 | $ | 0.14 | $ | (0.01 | ) |
GAAP | Share-Based Compensation | Other Operating Expenses (1) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | ||||||||||||||||
Costs and expenses: | ||||||||||||||||||||
Costs of subscription services | $ | 102,476 | $ | (6,053 | ) | $ | (204 | ) | $ | — | $ | 96,219 | ||||||||
Costs of professional services | 162,327 | (12,890 | ) | (451 | ) | — | 148,986 | |||||||||||||
Product development | 316,868 | (63,938 | ) | (3,221 | ) | — | 249,709 | |||||||||||||
Sales and marketing | 315,840 | (29,875 | ) | (1,420 | ) | — | 284,545 | |||||||||||||
General and administrative | 106,051 | (43,292 | ) | (1,202 | ) | — | 61,557 | |||||||||||||
Operating loss | (215,702 | ) | 156,048 | 6,498 | — | (53,156 | ) | |||||||||||||
Operating margin | (27.4 | )% | 19.8 | % | 0.9 | % | — | (6.7 | )% | |||||||||||
Other income (expense), net | (30,270 | ) | — | — | 24,171 | (6,099 | ) | |||||||||||||
Loss before provision for income taxes | (245,972 | ) | 156,048 | 6,498 | 24,171 | (59,255 | ) | |||||||||||||
Provision for income taxes | 2,010 | — | — | — | 2,010 | |||||||||||||||
Net loss | $ | (247,982 | ) | $ | 156,048 | $ | 6,498 | $ | 24,171 | $ | (61,265 | ) | ||||||||
Net loss per share, basic and diluted (2) | $ | (1.35 | ) | $ | 0.85 | $ | 0.04 | $ | 0.13 | $ | (0.33 | ) |
Three Months Ended January 31, | Year Ended January 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net cash provided by (used in) operating activities | $ | 98,491 | $ | 48,275 | $ | 258,637 | $ | 102,003 | ||||||||
Purchases of property and equipment | (41,985 | ) | (37,665 | ) | (133,667 | ) | (103,646 | ) | ||||||||
Free cash flows | $ | 56,506 | $ | 10,610 | $ | 124,970 | $ | (1,643 | ) |
• | 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. |