(Reuters) – Workday Inc reported better-than-expected quarterly revenue on Thursday, as more customers signed up for its cloud-based financial and human resources software, and the company raised its subscription revenue forecast for 2020.
Workday has been trying to become a one-stop solution for back-office services in a fiercely competitive market and has been benefiting as more enterprises turn to cloud-based applications to manage their payroll and human resources.
When asked about whether Workday was seeing an impact to business from Brexit, or ongoing trade tensions between the United States and China, Chief Executive Officer Aneel Bhusri told analysts on a conference call that the company had not yet seen a slowdown in business.
“I know there’s a lot of uncertainty in the air, and we’re trying to read the tea leaves the same way you are,” he said.
During the quarter, the company said it added The Gap, Stanley Black & Decker and Rockwell Automation in North America, among others, as new human capital management customers.
It also added an insurance company as a customer for its cloud financial management services.
Demand for cloud products is estimated to grow by 17.3% to $206.2 billion in 2019, according to Gartner.
“There’s no question they are gaining share against legacy PeopleSoft and SAP,” Wedbush Securities analyst Steve Koenig said, adding that the company’s comments on its Adaptive Insights product bode well for long-term traction with financial applications.
Workday bought Adaptive Insights, a provider of cloud platforms for business planning, for $1.55 billion last year.
Bhusri said the company had seen “some really big wins” as clients like Airbus and AstraZeneca had chosen the Adaptive product line.
Subscription revenue in the second quarter jumped 34% to $757.2 million. Workday said it now sees subscription revenue between $3.06 billion and $3.07 billion in fiscal 2020, up from an earlier expectation of $3.05 billion to $3.06 billion.
The company also forecast third-quarter subscription revenue between $783 million and $785 million. Analysts, on average, were expecting $782.6 million.
The company’s net loss widened to $120.7 million, or 53 cents per share, in the quarter ended July 31, from $86.2 million, or 40 cents per share, a year earlier.
However, on an adjusted basis, Workday earned a profit of 44 cents, beating estimates of 35 cents per share.
Total revenue rose 32% to $887.8 million, also above analysts’ estimates of $872.3 million.
Reporting by Tamara Mathias, Ayanti Bera and Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber