As with virtually all SaaS pure-plays, Workday did not disappoint when it came to top line growth for Q4 and FY13, nor did it deliver any surprises on the bottom line which saw increased losses.
Q4 revenue (to January 31 2013) was up 89% yoy to $81.5m but operating losses rose from $23.1m to $30.7m. For the full year, revenue saw an impressive 104% yoy increase to $273m, accompanied by a rise in operating losses of $117.9m vs $78.4m. Shares dropped 3% in after hours trading - not on past performance, but on Q1 outlook. With market expectations of $86.4m, there was disappointment that Workday was forecasting just $83m - $87m.
Following its IPO in October 2012 (see here), costs would be expected to increase significantly because it is in growth mode, and they did not disappoint. Research & Development costs were up 248%, Sales & Marketing saw a 187% increase, while General & Admin rose an eye watering 369%. These would not be alarming if we could see a pattern of reduced losses among the more mature SaaS pure-plays. But if you have been reading our Salesforce.com coverage, you’ll know that’s not the case (see here and work back). Those costs will only get higher as Workday expands in Europe and APAC during fiscal 2014.
Nevertheless, it is good to see another SaaS pure-play operating in the back office space, which is one of the areas that needs to be cracked in order to for SaaS to transition to the next stage of development, as outlined in Cloud UK 2013.