Workday chops up to $85m off subscription forecast for fiscal 2021 in response to pandemic

Workday, purveyor of in-memory cloud-native HR and finance tools, has lowered its subscription revenue estimates by up to $85m for fiscal 2021 in response to the COVID-19 crisis.

The company is now forecasting subscription turnover in the range of $3.67bn to $3.69bn for the year, down from the $3.755bn to $3.770bn predicted in February.

The recalculation came as Workday reported a 23 per cent year-on-year hike in Q1 revenue to $1.02bn for the three months ended 30 April, and went public on partnerships with Salesforce and Microsoft.

Workday co-president Chano Fernandez told analysts: “We saw higher than normal deal push-out, particularly in industries most affected, including travel, hospitality, and healthcare.

“There are companies that are prolonging the [buying] decision process as they focus first on assessing and responding to the immediate impact [of COVID-19] in their business.”

Robynne Sisco, co-president and chief financial officer, said the revised guidance reflects the expectation of a relatively slow recovery, with “Q2 and Q3 being the most challenging and followed by a reasonable improvement in Q4”.

In addition to the top line, Workday reported a widening of operating loss to $144.5m from $123m in the corresponding quarter a year ago.

Unperturbed by the cloud application vendor’s losses, the market reacted by giving Workday a 6 per cent share price boost in late trading on Wednesday.

In its partnership with Salesforce, Workday is selling “integrated solutions” designed to help organisations back to work following COVID-19 lockdowns and workforce redeployment. They will work alongside the Saleforce back-to-work tools which were released under the banner of Work.com on 4 May.

Meanwhile, Microsoft will include Workday’s Adaptive Planning financial tool for sales on its Azure cloud platform. Microsoft collaboration tool Teams will be integrated with Workday Financial Management and Workday Human Capital Management, and Microsoft Azure Active Directory integrations with Workday will provide a single sign-on.

Workday has also confirmed the general availability of Extend, the renamed Workday Cloud Platform first announced in 2017 when CEO Aneel Bhusri said that PaaS would “become a significant revenue stream” and represents Workday’s switch “from an apps company to more of a platform company”.

But the firm backtracked on its promise to open the platform to third-party vendors, and as reported in The Register, it is only available to service partners and customers. ®

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