Workday Focuses on Building Partner Ecosystem for Innovation

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Despite the uncertain macro-economic conditions, enterprise services provider Workday (NASDAQ: WDAY) feels confident in its ability to deliver. It believes that its cloud-based finance and HR solutions are mission-critical to organizations, making Workday relatively resilient to economic conditions. Its recently announced third quarter results continued to surpass market expectations.

Workday’s Financials

Workday’s third quarter revenues grew 20.5% to $1.6 billion, ahead of the Street’s forecast of $1.586 billion. Non GAAP EPS was $0.99, down 10% and ahead of the market’s forecast of $0.84.

By segment, Subscription services revenues grew 22% to $1.43 billion, marginally ahead of the Street’s forecast of $1.42 billion. Professional services revenues grew from $155.7 million a year ago to $166.7 million.

During the quarter, Workday continued to add several new HCM customers, including Intermountain Health, SGS, and Texas Roadhouse. For its finance solution, it added new customers in Cincinnati Children’s Hospital Medical Center, EZCORP, and Thomas Jefferson University.

For the current fiscal year, Workday forecast subscription revenues of $5.56 billion, ahead of the market’s forecast of $5.55 billion.

Workday’s Product Upgrades

Workday recently introduced next-generation skills technology that allows organizations to easily and securely bring skills data in and out of Workday. Through this new capability, companies will gain deeper insight into workforce skills and deliver more personalized employee experiences. As organizations look to accelerate skills-based talent strategies, they need visibility and insight into their existing skill bank. But the various tools that track these skills are disparate and require costly, custom integrations.

By building an open and connected skills ecosystem, Workday will help organizations to import relevant skills data from third-party systems into Workday. Customers will be able to better manage skills data flows and gain visibility into how skills are being used across the business.

Workday’s Partner Ecosystem

Workday continues to invest in its partner program, and recently launched Industry Accelerators, a new industry program that accelerates customer enterprise cloud transformations with partners. Its vision for its partner ecosystem is focused on creating faster time to value for customers and helping meet organizations’ needs through more innovation, joint go-to-market strategies, and an expanded services network.

Workday and its partners are already developing packaged solutions with Workday Extend, Workday Prism Analytics, and Workday Adaptive Planning for joint customers. As of September this year, Workday partners and customers have built over 750 Workday Extend apps and extensions to address unique business needs.

To continue to support the growth through the partner program, Workday eliminated fees for the Workday Extend partner program. Additionally, to help its partners continue to build solutions that meet customers’ needs, Workday will invest in partner education, including accelerating certifications and onboarding processes, as well as launching its next-generation partner portal to help enable greater collaboration.

It plans to enable the ecosystem to double the consulting capacity by fiscal 2026, with existing and new partners. This enhanced partner program will be released in early 2023, and will include the three consolidated tracks for innovation, go-to-market, and service partners.

Its stock is trading at $165.45 with a market capitalization of $42.53 billion. It touched a 52-week high of $285.58 a year ago and has recovered from the 52-week low of $128.72 it had fallen to in July.

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. I am an investor in this company.

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