According to a market research report by MarketsandMarkets published earlier this year, the global Human Capital Management (HCM) market size is expected to grow 9.2% annually over the next five-year period. The industry is expected to grow from $14.50 billion in 2017 to $22.51 billion by 2022.
Workday’s Financials
Recently, SaaS-based HCM services provider Workday (NYSE: WDAY) announced its second quarter results that surpassed all market expectations. Revenues grew 40.6% over the year to $523 million, significantly ahead of the Street’s forecast of $507 million. EPS of $0.24 was also ahead of the market’s forecast of $0.15.
By segment, subscription revenues grew 42% to $434.5 million and professional services revenues grew 34% to $90.8 million.
During the quarter, Gartner announced that Workday was in the Leaders quadrant of the first-ever Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large, and Global Enterprises.
For the full year, Workday raised its outlook for subscription revenue to $1.75-$1.757 billion, compared with the earlier forecast of $1.705-$1.72 billion. The market was looking for subscription revenues of $1.717 billion for the year. For the current quarter, Workday forecast subscription revenues of $450-$452 million, versus the consensus of $435 million. Overall, for the year, Workday forecast revenues of $2.093-$2.1 billion, compared with the market forecast of $2.05 billion.
Workday’s Product Expansion
Last quarter, Workday made two important product enhancements. First, it announced a fixed fee, pre-configured application package for US-based medium enterprises. The move is in line with Workday’s focus on the medium-sized businesses. The application package will be delivered by Workday services and its deployment partners. The packages are based on the success of Workday’s existing deployments in the medium enterprise market. Workday believes that these will be a preferred offering as most companies prefer a single business partner for finance, payroll, and human resources. The packages will be made available to international markets soon.
