Workday closes fiscal 2022 with strong revenue growth and its stock rises

Enterprise resource planning software giant Workday Inc. beat expectations as it delivered its fourth quarter financial results today, sending its stock up 7% in extended trading.

The company reported a net loss of $73.2 million in the quarter, with earnings before certain costs such as stock compensation coming to 78 cents per share. Revenue rose 21.6% to a record $1.38 billion, with subscription revenue coming to $1.23 billion, up 22.2% from a year ago. That was better than expected, with Wall Street having modeled earnings of just 71 cents per share on revenue of $1.36 billion.

Workday also delivered its fiscal 2022 results, saying its revenue rose 19% to $5.14 billion for the year. Annual subscription revenue came to $4.55 billion, up 20%.

Workday co-Chief Executive Aneel Bhusri said the company closed the year out with another strong quarter that was marked by the ongoing acceleration of its key businesses and a growing global workforce.

“We continue to see increasing demand for our broad suite of finance and HR solutions, as we help some of the world’s largest organizations – and more than 60 million users – navigate the changing world of work,” Bhusri said. “This momentum, along with our employees’ continued commitment, gives me great confidence in the opportunity ahead.”

Workday sells software for human capital management, such as payroll tools. Also, it has expanded into financial software. During the quarter, it closed on its $510 million acquisition of a company called VNDLY Inc., a cloud contractor and vendor management startup that sells software used by companies to manage external workforce personnel. With that move, Workday wants to meld optimization tools for internal and external salaried, hourly, contingent and outsourced workers, it said. The idea is to provide more comprehensive tools for its customers to take a more holistic approach to talent management, costs, planning and compliance.

The acquisition of VNDLY may explain how Workday was able to increase its workforce by more than 20% in fiscal 2022. It said it now has more than 15,200 global employees.

Holger Mueller of Constellation Research Inc. told SiliconANGLE Workday had a great year, more than halving its loss thanks to some good cost control.

“Spending $100 million less than what it made in revenue does nice things to the balance sheet,” Mueller said. “It also meant Workday was able to invest into what makes software companies perform – its people. With a 20% larger headcount, Workday is set for its next growth phase in the coming year, and the VNDLY acquisition will allow it to expand its footprint and upsell options beyond HCM and finance.”

Indeed, Workday is quietly optimistic it will show good growth over the next year. Barbara Larson, chief financial officer at Workday, said the company is raising its fiscal 2023 subscription revenue guidance to a range of $5.53 billion to $5.5 billion, representing growth of around 22%.

“Looking ahead, the pipeline for fiscal 2023 is strong, as we look to continue investing in our people and go-to-market strategies to deliver on our customers’ future needs,” said Workday’s other co-CEO, Chano Fernandez.

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