Workday Trading at $11 Billion Market Cap

According to a PricewaterhouseCoopers report, SaaS accounts for more than 40% of the revenues of 10 of the top 100 software companies globally. PwC’s report projects SaaS to be a high-growth industry within the software market. The increased adoption of cloud technology is ensuring that while revenues from on-premise software reduce for software companies, SaaS revenues will continue to grow. In fact, SaaS revenues are projected to grow 17% annually. In 2011, SaaS sales accounted for 4.9% of software sales worldwide, but that share is projected to increase to 24% by 2016. In another report, Gartner estimates the SaaS market to grow to $22.1 billion by the year 2015 from $14.5 billion last year.

Workday’s Financials
The increasing SaaS market performance also helped recently listed Workday (Nasdaq:WDAY) display strong quarterly results. Q1 revenues grew 61% over the year to $91.6 million compared with the Street’s projections of $86.9 million. The company ended the quarter with a net loss of $0.20 per share compared with a loss of $0.23 per share expected by the market.

Subscription revenues grew 75% to $59.6 million and revenues from Services grew 25% to $23.2 million. Workday ended the quarter with more than 450 customers in total, of which 290 were live on Workday applications. Some of the new customers added this quarter included names like Bristol-Myers Squibb, Levi Strauss, and the University of Miami.

For the current quarter, Workday expects revenues of $97 million-$101 million. They expect to end the current fiscal with revenues of $425 million-$440 million. The market was looking for revenues of $99 million for the quarter and $433 million for the year.

Workday’s International Expansion
During the recent quarter, Workday announced plans to extend its offerings to European nations, expanding beyond the U.S. and Canada. It will release Workday Payroll for UK by 2015 and Workday Payroll for France by 2016. Through these offerings, customers in Europe will be able to control their payroll processes by using configurable pay rules and ensuring better reporting and meeting of audit requirements.

Workday’s Product Upgrade
Recently Workday also upgraded to a new version adding several new features to its product. Workday 19 enables customers to customize the HR and Finance applications to its businesses. Customers are now able to manage intangible assets, plan headcount, and also make use of the new Android app. Most customized legacy software systems involve either costly upgrades or entire re-implementations. However, Workday 19 has simplified customization for upgrades. Workday 19 ensures that customized fields and labels throughout the application, devices and reports will exist through every future update without any additional cost or effort. The new upgrade also offers additional features such as automation of complex financial processes, enhanced support for prepaid expenses, and shared services model for centralized customer and expense payments. The upgrade comes with enhanced analytics to better manage expenses. Workday 19 is available to customers through their standard subscriptions.

Workday’s stock is trading at $64.37 with a market capitalization of $11.01 billion. It touched a 52-week high of $69.75 earlier last month.