Enterprise software company Workday Inc. saw its shares jump by almost 10 percent on Wednesday after it was revealed that Wal-Mart Stores Inc. had signed a subscription to use its human resources platform.
Trading in Workday’s stock was briefly halted on the New York Stock Exchange pending the release of material news after it rose by more than 8.5 percent. The halt came after investment banking firm William Blair LLC’s financial analyst Justin Furby revealed that the company had “recently signed an HR deal with one of the world’s largest employers, with over 2 million employees globally.”
In an 8-K filing with the Securities & Exchange Commission, Workday later confirmed the news: “Workday announced that Wal-mart Stores, Inc., a worldwide retailer, has purchased a subscription to Workday Human Capital Management, Recruiting, Learning and Planning. Workday is not updating its financial guidance for the fourth quarter of the current fiscal year ending January 31, 2017 or for the fiscal year ending January 31, 2018.”
William Blair later revealed that Workday had beaten out rival firm SAP SE to win the contract, which is “more than five times larger (on a headcount basis) than any of its existing HR customers.” A second investment banking firm, Drexel Hamilton LLC, later said that the deal could be worth between $100 million and $200 million in annual revenue for Workday, basing that estimate on Wal-Mart’s employee count. The retail firm is believed to be the world’s largest private employer.
“However, Workday did not specify the number of Wal-Mart employees that will be part of this subscription,” Drexel Hamilton analyst Brian White wrote in a research note. “Also, a deal of this size will take some time to ramp and thus we do not expect the full revenue impact be felt in the first year or two.”
Pleasanton, California-based Workday sells cloud-based software for human relations, payroll and other business functions. The company’s share price had taken a big hit on Dec. 2 of last year following its third-quarter earnings call, when it revealed that a number of proposed deals with large enterprise customers had been delayed because of “economic and political uncertainty.”