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Workday nearly doubles losses as waves of deals pushed back

Figures disappoint analysts as SaaSy HR and finance application vendor navigates economic uncertainty

HR and finance application vendor Workday's CEO, Aneel Bhusri, confirmed deal wins expected for the three-month period ending April 30 were being pushed back until later in 2022.

The SaaS company boss was speaking as Workday recorded an operating loss of $72.8 million in its first quarter [PDF] of fiscal '23, nearly double the $38.3 million loss recorded for the same period a year earlier. Workday also saw revenue increase to $1.43 billion in the period, up 22 percent year-on-year.

However, the company increased its revenue guidance for the full financial year. It said revenues would be between $5.537 billion and $5.557 billion, an increase of 22 percent on earlier estimates.

Speaking to investors on an earnings call, Bhusri noted: "Several key opportunities that we had expected to close in Q1 were pushed to later in the year, impacting backlog performance… [We] continue to see strong demand for our products and are optimistic about the year, we're mindful, however of the current macroeconomic and geopolitical environments and the impact these conditions could have on businesses globally."

He told investors: "This is not our first rodeo through a downturn," adding: "We weathered the storm in '08-'09, which is about the worst economic environment I've ever seen. And while demand was somewhat suppressed during the first period of COVID, we weathered that storm, too. And so we'll just figure out a way. Our products are not choices."

The CEO highlighted plans to expand its European headquarters in Dublin, Ireland, and create 1,000 new jobs over two years.

Chano Fernandez, Workday's joint CEO, said that deal pushbacks were not down to trends in product category or region, but maybe the size of the customer.

"It includes some of our larger opportunities. Each of these pushes were for different reasons, not necessarily macro [economic] related, and we are focused on closing them later in the year. We are definitely mindful that the environment, particularly in Europe remains uncertain and we could continue to monitor it, but we have solid results across regions in Q1, including several international markets," he said.

CFO Barbara Larson said the company had begun to move back to its office space as well as resuming travel and in-person events. The push is in line with the company's pro-office stance — and at odds with others in Silicon Valley.

Speaking on a Goldman Sachs call in January 2021, Bhusri said he was "a big believer that we're going to be back in the office ... maybe five days is too much family time. One or two days is a good amount."

TechMarketView analyst Angela Eager noted Workday's difficulties but said "there is still a lot of business to play for despite the uncertainty and Workday remains well-positioned." ®

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