Workday Inc. said today it’s buying a company called VNDLY Inc. for $510 million in cash to improve its suite of enterprise human resources management tools.

The acquisition came as the company beat forecasts for its third-quarter financial results, though that didn’t help prevent the company’s stock from sliding in extended trading.

VNDLY is a cloud contractor and vendor management startup that sells software used by companies to manage external workforce personnel. Workday, which sells tools for enterprises to manage their finances and human resources, clearly thinks it will be a good fit for its latter offering. That’s likely true at a time when companies are finding it increasingly difficult to fill their full-time job openings.

Workday Chief Strategy Officer Pete Schlampp explained that the face of work is changing at many organizations, so they need a better way to manage the outside contractors they hire. VNDLY provides that, so it appears to be a useful capability for the Workday HR platform.

“VNDLY is at the forefront of the vendor management industry with an innovative and intuitive approach,” Schlampp said. “The powerful combination of our technologies and talent will help customers better manage their evolving workforce dynamics, helping them keep pace with today’s changing world of work,”

By folding VNDLY’s capabilities into Workday, companies will be able to manage their internal and external staff via the same interface. That should eliminate the need for human resources personnel to keep switching between different tools based on the workers they’re dealing with.

Another advantage, according to Workday, is that managing the entire workforce from one place will aid companies as they plan their workforce needs, regardless of the type of staff. It will also help organizations better manage internal and external compliance and risk, Workday said.

The integration between the two platforms should proceed pretty smoothly since they are, in fact, already integrated to an extent. On its website, VNDLY boasts of a certified integration with Workday.

Workday said the deal is expected to close by the end of January 2022.

As for Workday’s third-quarter earnings results, the company put in a decent shift. It reported a profit before certain costs such as stock compensation of $1.10 per share on revenue of $1.33 billion, up 20% from a year ago. That was better than expected, with analysts looking for earnings of just 86 cents per share on sales of $1.31 billion.

Workday co-Chief Executive Chano Fernandez (pictured) said the company was seeing demand for its products that went beyond expectations.

The key metric for Workday tends to be its subscription revenue, which rose by 21%, to $1.17 billion in the quarter. That came in just ahead of Wall Street’s forecast of $1.16 billion, but it failed to satisfy investors, with the company’s stock losing more than 9% of its value in extended trading.

Constellation Research Inc. analyst Holger Mueller told SiliconANGLE that Workday is on a steady growth path with its revenue rising 20% and that it should be able to keep this up so long as it continues to address market needs.

“It is clear Workday’s former organic strategy of building more in house has been replaced by an acquisition strategy, as today’s purchase of VNDLY demonstrates,” Mueller said. “This adds a key upsell opportunity for Workday customers who also need to manage external workers.”

Mueller also drew attention to an acquisition Workday made in September, when it snapped up the price quote configuration software provider Zimit Inc. for an undisclosed price.

“That was another portfolio expansion which may even lead to a fully fledged customer relationship management offering sooner rather than later,” Mueller said. “Now all eyes will be watching how Workday expands its total addressable market. If it manages to do that, it will keep doing well.”

For the fourth quarter, Workday is forecasting subscription revenue of $1.216 billion to $1.218 billion, just ahead of the $1.207 billion consensus estimate.

Photo: Workday