Wednesday, October 24, 2012
Workday Stock Price Soars to Stratosphere, For How Long?
With Workday (WDAY-$54.00) management admitting in regulatory filings that profitability is not yet within reach, investors seem fixated only on sales visibility. In the first six months of 2012, revenue grew 118% to $119.5 million. The amount of subscription contract backlog – a sign of future growth – increased $85 million to $325 million on July 31, 2012. The reported operating loss for the period, however, was $46.3 million, which management attributed to “growing pains” (higher headcount and infrastructure build-out costs).
To date, Workday has derived most of its subscription revenue from its proprietary suite of on-demand human resource applications. However, the company is looking beyond its own R&D to ensure its survival in a land of enterprise software behemoths like Oracle (ORCL) and SAP AG (SAP).
Continue Reading at YCharts: Workday IPO Shares Quickly Double: Overheating of Cloud-Computing Stocks?