NEW YORK (
) --Cloud computing company
continues to show impressive growth, as the company is now on a $400 million annual revenue run rate.
The Pleasanton, Calif.-based company reported an adjusted net loss of 13 cents a share on $107.6 million in revenue. Analysts polled by
were looking for a loss of 18 cents a share on $100.6 million in sales.
The company noted that subscription revenues, where cloud computing companies generate the majority of their revenues, rose 92% year over year to $81.1 million.
Wall Street analysts were largely bullish on the company after earnings, with several of them raising their price target. Here's what a few of them had to say.
analyst Walter Pritchard (Neutral, $76 PT)
"At ~60% normalized growth, WDAY remains in rare company, and its multiple (23x 2014 revenue) clearly reflects that as the market continues to put a significant premium on hyper-growth. At the same time, growth is decelerating (from ~80% in FY13). The question is if the multiple can hold if deceleration continues into the 40s over a two-year horizon as we model. We don't see growth slowing dramatically this year. Our PT goes to $76 as we embed somewhat higher med/long-term growth rates. We continue to suggest investors "chase" NOW instead, where valuation is more palatable on a relative basis, growth prospects just as bright and the TAM likely under-estimated."
analyst Brent Thill (Neutral, $78 PT)
"WDAY delivered another strong beat & raise, with subs rev growing 92% y/y. Co. added 50+ new customers for a total of 500+, incl. two 5-yr deals, 1 of which was an 8-figure HR-only deal. There could be multiple years of outperformance ahead, based on low penetration (500 out of 23K enterprises), annual rev run rate >$400M vs. TAM $50Bn and salesforce.com run rate near $4Bn, and incremental pdts yet to fully kick in (Fin'l Mgmt, Analytics, Recruiting). However, valuation (EV/S 26x NTM, 22x CY14 off our raised forecast) keeps us at a Neutral."
analyst Richard Davis (Buy, $85 PT)
"Workday reported another excellent quarter as once again virtually everymetric bettered forecast. It remains our opinion that for at least the next halfdecade,Workday is well positioned to be one of the largest beneficiaries of the massive enterprise upgrade cycle to cloud-based applications. This standing does not come cheap, and at more than 18x C2014 revenues, WDAY is the most expensive stock in all of software. That acknowledged, we continue to believe that rapid revenue growth (63% in F2013) and the likelihood of continued upward estimate revisions will keep potential (and likely gradual) multiple compression at bay so that investors can logically expect at least 15%+ annual returns. WDAY should be a core growth holding; reiterate BUY."
analyst Brian Schwartz (Outperform, $85 PT)
"Workday reported another excellent quarter, highlighted by reaccelerating subscription revenue, total revenue and billings growth. Subscription revenue grew 92% y/y, or 4x faster than its SaaS peer group average with a similar run rate. Management also indicated the Financials product "is ready for primetime in the midmarket," which aligns with our field work. Bottom Line: We remain bullish on WDAY and view the following company-specific trends as catalysts to fuel growth over the next 12-24 months: 1) the upcoming Workday Rising conference (with a record number of attendees/prospects); 2) release of Workday 20 with the big data product; 3) recruiting product release in 1H:FY15; 4) increasing Financials upmarket traction; and 5) International expansion. Reiterate Outperform; raise PT to $85 from $80."
Shares of Workday were little changed in pre-market trading, recently changing hands at $76.02.
Written by Chris Ciaccia in New York