Workday Earnings 2020-07-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

wday-20200731

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 31, 2020


☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For transition period from to

Commission File Number: 001-35680

WORKDAY, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-2480422
(State or other jurisdiction of incorporation or organization)						(I.R.S Employer Identification No.)

6110 Stoneridge Mall Road

Pleasanton, California 94588

(Address of principal executive offices)

(925) 951-9000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.001	WDAY	The Nasdaq Stock Market LLC
			(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 26, 2020, there were approximately 177 million shares of the registrant’s Class A common stock, net of treasury stock, and 60 million shares of the registrant's Class B common stock outstanding.

Table of Contents

Workday, Inc.

Page No.

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements (unaudited):

Condensed Consolidated Balance Sheets as of July 3 1 , 2020, and January 31, 2020

Condensed Consolidated Statements of Operations for the Three and Six Months ended July 31 , 2020, and 2019

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months ended July 31 , 2020, and 2019

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months ended July 31 , 2020, and 2019

Condensed Consolidated Statements of Cash Flows for the Three and Six Months ended July 31 , 2020, and 2019

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Exhibits

Signatures

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Workday, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	July 31, 2020		January 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	1,239,696	$	731,141
Marketable securities	1,513,842		1,213,432
Trade and other receivables, net	694,289		877,578
Deferred costs	105,350		100,459
Prepaid expenses and other current assets	161,004		172,012
Total current assets	3,714,181		3,094,622
Property and equipment, net	957,434		936,179
Operating lease right-of-use assets	324,655		290,902
Deferred costs, noncurrent	223,996		222,395
Acquisition-related intangible assets, net	276,847		308,401
Goodwill	1,819,261		1,819,261
Other assets	185,077		144,605
Total assets	$	7,501,451	$	6,816,365
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	57,764	$	57,556
Accrued expenses and other current liabilities	125,784		130,050
Accrued compensation	252,814		248,154
Unearned revenue	2,003,455		2,223,178
Operating lease liabilities	75,798		66,147
Debt, current	37,500		244,319
Total current liabilities	2,553,115		2,969,404
Debt, noncurrent	1,752,004		1,017,967
Unearned revenue, noncurrent	64,465		86,025
Operating lease liabilities, noncurrent	271,607		241,425
Other liabilities	21,782		14,993
Total liabilities	4,662,973		4,329,814
Stockholders’ equity:
Common stock	238		231
Additional paid-in capital	5,954,738		5,090,187

Treasury stock	(303,201)		—
Accumulated other comprehensive income (loss)	646		23,492
Accumulated deficit	(2,813,943)		(2,627,359)
Total stockholders’ equity	2,838,478		2,486,551
Total liabilities and stockholders’ equity	$	7,501,451	$	6,816,365

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Workday, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Three Months Ended July 31,						Six Months Ended July 31,
	2020		2019		2020		2019
Revenues:
Subscription services	$	931,698	$	757,155	$	1,813,654	$	1,458,179
Professional services	130,269		130,597		266,698		254,628
Total revenues	1,061,967		887,752		2,080,352		1,712,807
Costs and expenses⁽¹⁾:
Costs of subscription services	145,007		121,161		290,270		233,630
Costs of professional services	139,270		145,173		299,637		275,923
Product development	418,681		378,122		862,165		725,953
Sales and marketing	276,497		280,200		595,054		553,136
General and administrative	99,266		85,593		194,437		170,048
Total costs and expenses	1,078,721		1,010,249		2,241,563		1,958,690
Operating income (loss)	(16,754)		(122,497)		(161,211)		(245,883)
Other income (expense), net	(11,453)		(106)		(22,426)		7,035
Loss before provision for (benefit from) income taxes	(28,207)		(122,603)		(183,637)		(238,848)
Provision for (benefit from) income taxes	(191)		(1,891)		2,747		(1,861)
Net loss	$	(28,016)	$	(120,712)	$	(186,384)	$	(236,987)
Net loss per share, basic and diluted	$	(0.12)	$	(0.53)	$	(0.79)	$	(1.05)
Weighted-average shares used to compute net loss per share, basic and diluted	236,002		226,392		234,483		224,857


(1) Costs and expenses include share-based compensation expenses as follows:
Costs of subscription services	$	14,825	$	12,001	$	28,717	$	22,416
Costs of professional services	24,552		18,991		47,118		35,141
Product development	128,505		105,758		250,527		196,995
Sales and marketing	49,854		42,690		96,804		81,544
General and administrative	33,500		29,781		64,742		58,360

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Workday, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


	Three Months Ended July 31,						Six Months Ended July 31,
	2020		2019		2020		2019
Net loss	$	(28,016)	$	(120,712)	$	(186,384)	$	(236,987)
Other comprehensive (loss) income, net of tax:
Net change in foreign currency translation adjustment	1,684		53		437		(593)
Net change in unrealized gains (losses) on available-for-sale debt securities, net of tax provision of $0, $212, $0, and $431, respectively	(728)		889		2,246		1,592
Net change in market value of effective foreign currency forward exchange contracts, net of tax provision of $0, $2,629, $0, and $4,610, respectively	(57,836)		18,403		(25,529)		32,268
Other comprehensive (loss) income, net of tax	(56,880)		19,345		(22,846)		33,267
Comprehensive loss	$	(84,896)	$	(101,367)	$	(209,230)	$	(203,720)

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Workday, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)


	Three Months Ended July 31,						Six Months Ended July 31,
	2020		2019		2020		2019
Common stock:
Balance, beginning of period	$	235	$	225	$	231	$	221
Issuance of common stock under employee equity plans	1		2		5		6
Settlement of convertible senior notes	2		—		2		—
Balance, end of period	238		227		238		227
Additional paid-in capital:
Balance, beginning of period	5,330,170		4,294,370		5,090,187		4,105,334
Issuance of common stock under employee equity plans	70,939		58,083		74,512		61,534
Share-based compensation	250,431		208,819		486,841		394,023


Exercise of convertible senior notes hedges	303,202		—		303,202		—
Settlement of convertible senior notes	(4)		—		(4)		—
Cumulative-effect of accounting changes	—		—		—		381
Balance, end of period	5,954,738		4,561,272		5,954,738		4,561,272
Treasury stock:
Balance, beginning of period	—		—		—		—


Exercise of convertible senior notes hedges	(303,201)		—		(303,201)		—


Balance, end of period	(303,201)		—		(303,201)		—
Accumulated other comprehensive income (loss):
Balance, beginning of period	57,526		13,113		23,492		(809)
Other comprehensive (loss) income	(56,880)		19,345		(22,846)		33,267
Balance, end of period	646		32,458		646		32,458
Accumulated deficit:
Balance, beginning of period	(2,785,927)		(2,262,960)		(2,627,359)		(2,146,304)
Net loss	(28,016)		(120,712)		(186,384)		(236,987)



Cumulative-effect of accounting changes	—		—		(200)		(381)
Balance, end of period	(2,813,943)		(2,383,672)		(2,813,943)		(2,383,672)
Total stockholders’ equity	$	2,838,478	$	2,210,285	$	2,838,478	$	2,210,285


	Three Months Ended July 31,			Six Months Ended July 31,
	2020	2019	2020	2019
Common stock (in shares):
Balance, beginning of period	235,170,073	225,436,994	231,708,391	222,052,063
Issuance of common stock under employee equity plans	1,991,097	2,170,403	5,452,773	5,555,334

Settlement of convertible senior notes	1,654,302	197	1,654,308	197
Purchase of treasury stock from the exercise of convertible senior notes hedges	(1,654,757)	—	(1,654,757)	—
Balance, end of period	237,160,715	227,607,594	237,160,715	227,607,594

See Notes to Condensed Consolidated Financial Statements

Table of Contents

Workday, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended July 31,						Six Months Ended July 31,
	2020		2019		2020		2019
Cash flows from operating activities:
Net loss	$	(28,016)	$	(120,712)	$	(186,384)	$	(236,987)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	73,178		67,754		144,692		128,919
Share-based compensation expenses	251,236		208,912		487,908		394,147
Amortization of deferred costs	27,349		22,002		53,409		42,882
Amortization of debt discount and issuance costs	14,528		14,301		29,368		25,888
Non-cash lease expense	19,879		16,252		38,248		32,074
Other	12,430		(4,851)		16,800		(11,697)
Changes in operating assets and liabilities, net of business combinations:
Trade and other receivables, net	(109,316)		(73,437)		181,586		83,942
Deferred costs	(41,841)		(28,207)		(59,901)		(46,692)
Prepaid expenses and other assets	(9,137)		(1,679)		10,840		(6,786)
Accounts payable	9,307		1,047		(13,075)		2,550
Accrued expenses and other liabilities	(39,837)		(56,524)		(41,341)		(35,121)
Unearned revenue	(22,550)		55,461		(241,257)		(63,637)
Net cash provided by (used in) operating activities	157,210		100,319		420,893		309,482
Cash flows from investing activities:
Purchases of marketable securities	(602,546)		(582,848)		(1,156,531)		(1,053,902)
Maturities of marketable securities	473,016		385,710		854,414		845,807
Sales of marketable securities	—		4,551		5,279		55,499
Owned real estate projects	(1,764)		(34,149)		(4,251)		(73,783)
Capital expenditures, excluding owned real estate projects	(66,555)		(75,576)		(126,495)		(141,111)
Business combinations, net of cash acquired	—		(12,885)		—		(12,885)

Purchases of non-marketable equity and other investments	(6,350)		(5,516)		(58,600)		(7,716)
Sales and maturities of non-marketable equity and other investments	1,561		—		6,199		—
Other	—		(32)		—		(9)
Net cash provided by (used in) investing activities	(202,638)		(320,745)		(479,985)		(388,100)
Cash flows from financing activities:



Proceeds from borrowings on term loan, net	250,000		—		747,795		—



Payments on convertible senior notes	(249,945)		(27)		(249,946)		(27)
Proceeds from issuance of common stock from employee equity plans	70,940		58,085		74,517		61,540
Other	(215)		(107)		(2,255)		(200)
Net cash provided by (used in) financing activities	70,780		57,951		570,111		61,313
Effect of exchange rate changes	771		75		506		(252)
Net increase (decrease) in cash, cash equivalents, and restricted cash	26,123		(162,400)		511,525		(17,557)
Cash, cash equivalents, and restricted cash at the beginning of period	1,220,123		787,046		734,721		642,203
Cash, cash equivalents, and restricted cash at the end of period	$	1,246,246	$	624,646	$	1,246,246	$	624,646

See Notes to Condensed Consolidated Financial Statements

Table of Contents


	Three Months Ended July 31,						Six Months Ended July 31,
	2020		2019		2020		2019
Supplemental cash flow data:
Cash paid for interest, net of amounts capitalized	$	4,939	$	469	$	6,377	$	472
Cash paid for income taxes	4,641		2,469		7,586		6,003
Non-cash investing and financing activities:
Purchases of property and equipment, accrued but not paid	49,987		46,910		49,987		46,910


	As of July 31,
	2020		2019
Reconciliation of cash, cash equivalents, and restricted cash as shown in the statements of cash flows:
Cash and cash equivalents	$	1,239,696	$	619,514
Restricted cash included in Prepaid expenses and other current assets	6,421		5,002
Restricted cash included in Other assets	129		130
Total cash, cash equivalents, and restricted cash	$	1,246,246

Price	174.44	EPS	-2
Shares	228	P/E	-87
MCap	39,853	P/FCF	70
Net Debt	-917	EBIT	-407
TEV	38,936	TEV/EBIT	-96
TTM 2019-10-31, in MM, except price, ratios

10-Q	2020-07-31	Filed 2020-08-28
10-Q	2020-04-30	Filed 2020-05-28
10-K	2020-01-31	Filed 2020-03-03
10-Q	2019-10-31	Filed 2019-12-04
10-Q	2019-07-31	Filed 2019-08-30
10-Q	2019-04-30	Filed 2019-05-30
10-K	2019-01-31	Filed 2019-03-18
10-Q	2018-10-31	Filed 2018-12-03
10-Q	2018-07-31	Filed 2018-09-05
10-Q	2018-04-30	Filed 2018-06-01
10-K	2018-01-31	Filed 2018-03-14
10-Q	2017-10-31	Filed 2017-11-30
10-Q	2017-07-31	Filed 2017-08-31
10-Q	2017-04-30	Filed 2017-06-02
10-K	2017-01-31	Filed 2017-03-20
10-Q	2016-10-31	Filed 2016-12-02
10-Q	2016-07-31	Filed 2016-09-02
10-Q	2016-04-30	Filed 2016-06-01
10-K	2016-01-31	Filed 2016-03-22
10-Q	2015-10-31	Filed 2015-12-04
10-Q	2015-07-31	Filed 2015-09-04
10-Q	2015-04-30	Filed 2015-06-05
10-K	2015-01-31	Filed 2015-03-25
10-Q	2014-10-31	Filed 2014-12-05
10-Q	2014-07-31	Filed 2014-09-02
10-Q	2014-04-30	Filed 2014-06-06
10-K	2014-01-31	Filed 2014-03-31
10-Q	2013-10-31	Filed 2013-12-02
10-Q	2013-04-30	Filed 2013-06-05
10-K	2013-01-31	Filed 2013-03-22
10-Q	2012-10-31	Filed 2012-12-07

8-K	2020-08-27	Earnings, Exhibits
8-K	2020-08-26	Officers, Amend Bylaw, Exhibits
8-K	2020-06-09
8-K	2020-05-27
8-K	2020-04-02
8-K	2020-03-14
8-K	2020-02-27
8-K	2019-12-04
8-K	2019-12-03
8-K	2019-11-04
8-K	2019-08-29
8-K	2019-06-18
8-K	2019-05-28
8-K	2019-03-30
8-K	2019-02-28
8-K	2018-11-29
8-K	2018-09-04
8-K	2018-08-01
8-K	2018-06-20
8-K	2018-06-11
8-K	2018-05-31
8-K	2018-02-27
8-K	2018-02-14
8-K	2018-02-01
8-K	2018-01-02

EX-10.1	wday-7312020x101.htm
EX-31.1	wday-7312020xex311.htm
EX-31.2	wday-7312020xex312.htm
EX-31.3	wday-7312020xex313.htm
EX-32.1	wday-7312020xex321.htm
EX-32.2	wday-7312020xex322.htm
EX-32.3	wday-7312020xex323.htm

WDAY 10Q Quarterly Report

Workday Earnings 2020-07-31