Cloud Stocks: Workday And Anaplan Executing Well Amid Pandemic

Enterprise services provider Workday (NASDAQ: WDAY) and planning software provider Anaplan (NYSE: PLAN) recently reported strong results for the third quarter that beat analyst estimates. Both Workday and Anaplan compete in the Enterprise Performance Management (EPM) market, which is expected to grow at a CAGR of 8.5% to $4.4 billion by 2024 from $3.9 billion in 2019.

Workday’s Financials

Workday’s third-quarter revenues grew 17.9% to $1.11 billion, beating analyst estimates of $1.09 billion. Non-GAAP EPS was $0.86, also ahead of the market’s forecast of $0.67. GAAP net loss narrowed to $24.3 million compared to loss of $115.7 million a year ago.

By segment, Subscription services revenues grew 21.3% to $968.5 million, ahead of the market’s forecast of $951.5 million. Professional services revenues declined 1.5% to $137.4 million.

Cash, cash equivalents, and marketable securities were $2.95 billion as of October 31, 2020.

For the fourth quarter, Workday expects revenue growth of 14%-16% versus analyst estimates of 17%. It guided for 18% growth in subscription revenue to $991-$993 million, while analysts had been expecting $976 million. Workday raised its FY21 subscription revenue guidance to $3.773 – $3.775 billion or a 22% growth, ahead of market estimates of $3.74 billion or 21% growth.

During the earnings call, Workday’s CFO Robynne Sisco cautioned that the effects of the COVID-19 pandemic will weigh on growth in the coming year, but did not disclose a full forecast for next year.

Workday’s Acquisitions

Workday, in the last two years, acquired Adaptive Insights in 2018 for $1.6 billion to compete in the planning space and Scout RFP in 2019 for $540 million to gain great talent, expand its product capabilities, and accelerate business transformations for its customers.

Scout RFP is now Workday Strategic Sourcing, reflecting Workday’s commitment to elevate and help transform the office of procurement.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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