Workday (WDAY) Said to Win Contract with 'Mega Retailer', Others, Says William Bliar

(Updated - January 11, 2017 10:28 AM EST)

Workday (NYSE: WDAY) signed a deal with a mega retailer, according to William Blair analyst Justin Furby, citing a Workday partners. Workday also closed a deal with a large real estate firm and a pharmaceutical company.

Discussing the deal with the mega retailer, the analyst said, "Though we are not privy to the size of the contract, it would represent by far the largest company Workday has ever signed—more than five times larger (on a headcount basis) than any of its existing HR customers. Workday competed against incumbent SAP, and we understand the retailer will pursue a phased deployment of Workday over the next three to four years. Our sense is that a contract of this significance would have ramped up billing terms (i.e., Workday probably did not invoice for the entire employee base on contract signing), but when fully scaled, we believe a deal of this size could represent $30 million or more of annual subscription revenue (though it is very difficult to get a sense of true contract terms)."

Commenting on the two additional deals, the analyst added, "We also learned of a 70,000-plus employee real estate firm that recently closed (HR), a 50,000-plus employee pharmaceutical firm that closed (HR), and several large enterprise opportunities in pipeline that could close in the coming weeks. Financials commentary remains consistent quarter-over-quarter—activity here continues to be predominantly in the midmarket, and while we are aware of at least a few active financials opportunities in the large enterprise, our sense is that financials continues to represent a minority (roughly 10%) of new ACV signings, and we do not believe management’s guidance for fiscal 2018 contemplates a meaningful acceleration of this product. We also picked up relatively constructive commentary on the emerging Student Information Systems (SIS) market, though one partner flagged the public sector vertical as being soft."

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