Workday — Trip to 10B Annual Revenues— 10X opportunity

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6 min readMar 1, 2019

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Great earnings, voted one of the best companies to work for, and all time highs. Whats the story?

Main Megatrend for the Industry: Cloud-based HCM shows clear growth

Read further: (https://searchhrsoftware.techtarget.com/feature/Cloud-based-HCM-options-now-plentiful)

Key Trend: Increasingly, organizations are looking to move their human capital management (HCM) systems to the cloud to enable better talent management, more advanced workforce analytics, enhanced employee experiences and lower operational costs. (- Linda Rosencrance)

SaaS, the purest form of cloud software, is seeing rapid growth in HR. Between 2013 and 2017, vendor revenue from the SaaS portion of HR systems grew from 36% percent to 56%, said Paul Hamerman, an analyst at Forrester Research Inc., based in Cambridge, Mass.

WDAY — 3X since Oct 2012 IPO

Took 2 years to go from 45 to 116 (2012–2014)

2 years to drop 50% from 116 back to 45 (2014–2016)

another 2 years to go from 45 to 116 (2016–2018)

but when the momentum kicked in year 2018, the next double or 116 to 200 took only 1 year.

Let’s discuss what Workday has achieved in the last 7 years and what it will continue to do in the next 3–7 years.

Workday Company Profile

Workday, Inc provides enterprise cloud applications for finance and human resources worldwide. It provides applications for customers to manage critical business functions to optimize their financial and human capital resources. The company offers Workday Financial Management application that provides functions of general ledger, accounting, accounts payable and receivable, cash and asset management, employee expense and revenue management, projects, procurement, inventory, and grants management.

A Day in History — Company IPO was October 2012. Below was their revenue on FY13. Imagine 2013 revenues 72M dollars. 2019 FY revenues = 2.92 Billion dollars.

Even with higher bases revenue continues to go up strongly. Note 2014–2018 FY Revenues went from 470M dollars to 2.1B. FY19 is approx 3B dollars.

Workday makes applications that help companies with mundane tasks like keeping payroll, plotting expenses, tracking employee absences and managing job candidates. It sounds unglamorous, but as in many of Silicon Valley’s business-focused software fields, there’s fierce drama behind the scenes. Workday co-founders Bhusri and David Duffield once had a human resources software company, PeopleSoft, that was taken over by Oracle Corp. in a famously hostile acquisition. Now they’re back with a familiar rival: Oracle.
Most large companies still run older financial tools made by Oracle, the world’s second-largest software maker, or the German giant SAP SE. Workday has persuaded big corporate clients like Bank of America and Amazon.com Inc. to use its software, but the key to reaching that magical $10 billion number is getting more companies to switch their cloud-based accounting tools as well.
“The biggest challenge for Workday is inertia,” Anurag Rana, an analyst at Bloomberg Intelligence, said. Accounting systems are “the heart and lungs of your operation and people are reluctant to change that. It is very difficult to get rid of your SAP and Oracle systems and move to the cloud.” Workday’s customer service record may be its most valuable tool in growing its client list, he added.

Institutional Ownership -67.90% of the stock is currently owned by institutional investors and hedge funds.

A number of institutional investors and hedge funds have recently made changes to their positions in the stock. Capital Research Global Investors boosted its stake in Workday by 977.4% during the third quarter. Capital Research Global Investors now owns 3,150,040 shares of the software maker’s stock worth $459,843,000 after buying an additional 2,857,657 shares during the last quarter. 1832 Asset Management L.P. lifted its stake in shares of Workday by 1,817.2% in the 4th quarter. 1832 Asset Management L.P. now owns 912,600 shares of the software maker’s stock valued at $143,537,000 after purchasing an additional 865,000 shares during the last quarter. Jennison Associates LLC lifted its stake in shares of Workday by 6.0% in the 4th quarter. Jennison Associates LLC now owns 8,164,202 shares of the software maker’s stock valued at $1,303,660,000 after purchasing an additional 462,730 shares during the last quarter. Frontier Capital Management Co. LLC acquired a new position in shares of Workday in the 3rd quarter valued at $62,598,000. Finally, The Manufacturers Life Insurance Company lifted its stake in shares of Workday by 9.4% in the 3rd quarter. The Manufacturers Life Insurance Company now owns 3,083,669 shares of the software maker’s stock valued at $450,154,000 after purchasing an additional 264,048 shares during the last quarter.