Workday (WDAY) Q1 2017 Earnings Call

Workday (WDAY) CEO Aneel Bhusri said the senior leadership team has a plan to get to profitability

“I wanted to address the topic of profitability as many of you know profitability has been a core value of the company since Dave and I started Workday back in 2005. For the past several years we have been primarily focused on growth but have always kept our eye on our path to profitability.  To that end, the senior management team spent a few days offsite earlier in the quarter planning our path towards profitability over the next few years both from an operating margin and cash flow generation perspective. We came out of that session with a clear strategy that has since been shared with the whole company.”

Workday (WDAY) CEO Aneel Bhusri said they’re starting to get momentum for their software in international markets

“We are particularly pleased with the progress we’ve made in Europe and are beginning to see similar levels of success in the APJ region.  During this past quarter, I personally spent a week in Australia and New Zealand and came away very excited and with a belief that we can be a leading player in that region.”

Workday (WDAY) CEO Aneel Bhusri said they are able to attract better talent now that the startup growth in Silicon Valley has slowed 

“I suspect we’ll continue to hire well, I actually think the hiring environment is pretty attractive right now, the draw for many of the startups in Silicon Valley is not what it was just a year or two years ago.”

Workday (WDAY) CEO Aneel Bhusri stated that the key to cross-selling software to large enterprises is having a relationship with the Chief Information Officer

“On the sales side you know the relationships that the reps have at the CIO level and the CHRO level are really valuable as we sell financials in many cases back into that installed base and frankly the key player in that equation is the CIO, if we’ve got that CIO on our side after a successful HR deployment in many cases that individual actually opens up the door for the finance side and the sales cycle looks very, very similar to the HR sales cycle.”

Workday (WDAY) CEO Aneel Bhusri highlighted his competitors product shortcomings

“That’s a no from a competitive perspective, when we look at the landscape SAP still does not have a cloud offering for financials. Their strategy is S/4HANA, HANA’s a database, HANA does not equal cloud and far as I can tell they don’t have a multitenant true cloud offering what’s even underway for financials, so that’s a big win for us. And from the Oracle perspective, I think they claim Hyperion hosted as cloud. So we just see a lot of run rate, a lot of opportunity and that two comes out in the same cycle.”

Workday (WDAY) CEO Aneel Bhusri believes getting the company to profitability will help mute the volatility in the stock price

“When we saw what was occurring with our HCM product line and the level of profitability we’ve been achieving, we looked at it and said, this is a clear pathway here and frankly I don’t like the gyrations in the stock price when these markets swing wildly and I think frankly profitability is a buffer, I watched how sales versus stock traded when the market was melting down and how our stock traded, and fully there is a premium based on profitability.  And while we’re very focused on the market opportunity and the growth from a shareholder perspective and employee perspective having that level of profitability is important, and the Company that I admire most in the tech world like Amazon and Google and Facebook and Salesforce, it’s a rite of passage, they’ve passed it and it’s the next in our growth and evolution for being a long-term player in this market.”

Workday (WDAY) CEO Aneel Bhusri believes a company’s human resource private data is more important than it’s financial data

“When you sit down with Chief Security Officer at a Fortune 500 company, they’re so-so sensitive on the loss of any employee data. And finance data has a time value to it, it’s valuable for only a short amount of time and in many cases it’s not even, it’s not even that useful in the hands of other people, but people’s self-security numbers and personal information, are things that are near and dear to the hearts of every Chief Security Officer and there’re frankly privacy and security rules again around it. And I think what’s happened in that marketplace is they’ve come to a conclusion, there’s cloud actually far more secure and private than anything that was being done on premise and I think the same thing is happening with finance.”