HR software maker Workday forecasts weak billings growth

By Sai Sachin R

(Reuters) - Human resource software company Workday Inc forecast current-quarter billings below market expectations and reported a bigger quarterly net loss due to higher spending on marketing and product development.

Shares of Workday, which makes software to manage employee performance, payroll and expense, fell 8.5 percent in extended trading.

The company said it expected billings, a key indicator of the company's future sales, to be $290 million-$295 million in the second quarter ending July.

That number fell below market research firm FactSet StreetAccount's estimate of $303 million, FBR Capital Markets analyst Samad Samana said, adding that billings forecast for the full year had fallen short as well.

The company also forecast current-quarter revenue of $270 million-$274 million. Analysts on average had expected revenue of $272.4 million.

"We believe that the general outlook was for a beat-and-raise type of quarter, and they fell short of that," Samana said.

Workday forecast revenue of $1.125 billion-$1.145 billion for the year ending January. Analysts on average were expecting revenue of $1.14 billion, according to Thomson Reuters I/B/E/S.

The company, whose rivals include SAP SE and Oracle Corp, said net loss widened by 3.6 percent to $61.6 million, or 33 cents per share in the first quarter ended April 30, from a year earlier.

Total costs rose 43.7 percent to $304.4 million, with sales and marketing costs rising about 39 percent.

The company's revenue, however, rose 57 percent to $251 million, helped by strong subscription growth for its web-based human resource management software.

Analysts on average had expected revenue of $245 million.

Subscription revenue rose 63 percent to $201 million, said Workday, which counts Coca-Cola Co and Bank of America Corp among its customers.

On an adjusted basis, Workday reported a loss of 2 cents per share, smaller than the average analyst estimate of a loss of 8 cents.

Workday's shares, which have risen more than 13 percent this year, closed at $92.49 on the New York Stock Exchange on Tuesday.

(Additional reporting by Anya George Tharakan in Bengaluru; Editing by Maju Samuel)