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					                                                                            MORGAN            STANLEY             RESEARCH
                                                                            NORTH          AMERICA


                                                                            Morgan Stanley & Co. LLC          Jennifer Swanson Lowe, CFA
                                                                                                              Jennifer.Lowe@morganstanley.com
                                                                                                              +1 212 761 3665

                                                                                                              Jonathan Parker
                                                                                                              Jonathan.Parker@morganstanley.com
                                                                                                              +1 212 761 4223


                August 26, 2013


Stock Rating    Workday
Equal-weight

Industry View
                Solid Business Momentum
In-Line
                Continues                                                   Key Ratios and Statistics
                                                                            Reuters: WDAY.N Bloomberg: WDAY US
                                                                            Software / United States of America
                Our work points to continued strong demand for              Shr price, close (Aug 23, 2013)                                    $75.76
                WDAY HCM and building interest in Financials and            Mkt cap, curr (mm)                                                $15,072
                the upcoming Big Data module. Growing demand                52-Week Range                                                $76.03-45.05
                should help sustain revenue growth and drive
                upside to numbers, but we see this upside potential         Fiscal Year ending                    01/12      01/13    01/14e     01/15e
                as priced in at ~21x EV/CY14 rev.                           Revenue, net ($mm)                     134        274        438        656
                                                                            Sales, consensus ($mm)                    -       270        439        664
                Expecting another solid quarter. Legacy ERP                 EPS ($)**                            (0.62)     (0.65)     (0.73)     (0.70)
                providers like Oracle and SAP posted mixed Q2 results,      Consensus EPS ($)§                        -     (1.27)     (0.71)     (0.69)
                                                                            ModelWare EPS ($)                    (0.54)     (0.60)     (0.88)     (1.02)
                but we believe that secular demand for SaaS solutions       Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare
                remains healthy, and WDAY should benefit as a share         framework (please see explanation later in this note).
                                                                            § = Consensus data is provided by Thomson Reuters Estimates.
                gainer. We est. Q213 total rev. of $116M and EPS of         ** = Based on consensus methodology
                                                                            e = Morgan Stanley Research estimates
                ($0.19), largely in-line with cons., and current billings
                growth of +44% YoY, although we see significant room
                for upside. Recent survey work continues to point to
                growing mindshare beyond HCM, where traction
                remains most meaningful, and we see WDAY as a
                leading beneficiary of the shift to SaaS.

                Current billings still key focus. WDAY’s shift from
                multi-year prepaid deals to billing only one year in
                advance should cause total billings to again lag current
                billings growth in Q2, although we expect this impact to
                moderate in Q3. We project total billings growth of
                +22% YoY in Q214 to $118.8M, but forecast current
                billings to grow +44% YoY to $122.4M, down from 63%
                growth in Q114 against a 9 point easier comp and +5%
                growth QoQ, well below the 3-yr. avg. of +20%. As a
                result, we see room for upside, as business trends and
                execution remain solid.

                FY14 should move higher. We model Q314 rev/EPS at
                $116.4M/($0.18) vs. cons. at $115.3M/($0.19), but see
                room for WDAY to guide rev higher, as cons. Q314 rev.
                                                                            Morgan Stanley does and seeks to do business with
                growth at +59% trails current billings growth of 63-91%
                                                                            companies covered in Morgan Stanley Research. As
                the past four quarters. FY14 cons. ests of $439.4M /        a result, investors should be aware that the firm may
                ($0.71) also appear to have upside, as the implied 61%      have a conflict of interest that could affect the
                rev. growth is also well below recent current billings      objectivity of Morgan Stanley Research. Investors
                growth.                                                     should consider Morgan Stanley Research as only a
                                                                            single factor in making their investment decision.
                                                                            For analyst certification and other important
                                                                            disclosures, refer to the Disclosure Section,
                                                                            located at the end of this report.
                                                                                                                                                                          MORGAN                  STANLEY                         RESEARCH

                                                                                                                                                                          August 26, 2013
                                                                                                                                                                          Workday




Exhibit 1                                                                                                                                                                 Exhibit 4
Our Estimates for Q2 Results and Q3 Expectations                                                                                                                          YoY Customer Growth Has Consistently Been 50%+
                                      Q214e                                            Q314e                                             FY14e
    WDAY                                                                                                                                                                    700                                                                                                                          70%
                                 MS       Cons.                                    MS      Cons.                                      MS      Cons.
Sub. Revenue                    $76.3     $76.1                                   $88.9    $88.6                                    $332.5   $336.0                                                                                                                                                      60%
                                                                                                                                                                            600
Growth, YoY                     80.8%     80.3%                                   72.3%    71.8%                                     74.7%   76.5%
                                                                                                                                                                                                                                                                                                         50%
                                                                                                                                                                            500
Total Revenue                   $99.9                  $100.5                    $116.4                   $115.3                    $437.5                      $439.4
                                                                                                                                                                                                                                                                                                         40%
Growth, YoY                     59.4%                  60.3%                      60.3%                   58.8%                      59.9%                      60.6%       400
                                                                                                                                                                                                                                                                                                         30%
Total Billings                  $118.8                 $119.2                    $120.8                  $126.5                     $522.9                      $530.0      300
                                                                                                                                                                                                                                                                                                         20%
Growth, YoY                      22.4%                  22.7%                    56.2%                    63.6%                      41.0%                       42.9%
                                                                                                                                                                            200                                                                                                                          10%
Current Billings                $122.4                 $123.9                    $123.2                  $128.6                     $538.2                      $545.3
                                                                                                                                                                            100                                                                                                                          0%
Growth, YoY                      43.9%                  45.7%                    44.2%                    50.5%                      50.2%                      52.2%




                                                                                                                                                                                                                                                                       7/13E

                                                                                                                                                                                                                                                                                10/13E

                                                                                                                                                                                                                                                                                         1/14E

                                                                                                                                                                                                                                                                                                 4/14E
                                                                                                                                                                                   10/10

                                                                                                                                                                                           1/11

                                                                                                                                                                                                  4/11

                                                                                                                                                                                                           7/11

                                                                                                                                                                                                                  10/11

                                                                                                                                                                                                                           1/12

                                                                                                                                                                                                                                  4/12

                                                                                                                                                                                                                                         7/12

                                                                                                                                                                                                                                                10/12

                                                                                                                                                                                                                                                        1/13

                                                                                                                                                                                                                                                                4/13
Op. Income                      -$28.8                  -$31.0                   -$28.8                    -$33.4                   -$117.2                     -$125.1
Op. Margin                      -28.8%                 -30.8%                    -24.7%                   -29.0%                    -26.8%                      -28.5%
EPS                              -$0.18                 -$0.18                   -$0.18                    -$0.19                    -$0.73                      -$0.71                                  Customer Count                                        Customer Growth, % YoY

FCF                             -$37.1                 -$30.0                     -$30.2                   -$26.3                       -$79.6                  -$86.6    Source: Company Data, Morgan Stanley Research

Source: Company Data, Morgan Stanley Research.
                                                                                                                                                                          Exhibit 5

Exhibit 2                                                                                                                                                                 Significant Percentage of Oracle Customers Plan to
Our Ests Look For Rev. Growth to Decelerate                                                                                                                               Evaluate or Migrate to Workday HCM
Despite Easier Comparison                                                                                                                                                         100%
                                                                                                                                                                                  90%
  $160M                                                                                                                                                           150%
                                                                                                                                                                                  80%
  $140M
                                                                                                                                                                  120%            70%                              59%                                                     58%
  $120M
                                                                                                                                                                                  60%
  $100M                                                                                                                                                           90%             50%
   $80M
                                                                                                                                                                                  40%
   $60M                                                                                                                                                           60%
                                                                                                                                                                                  30%                                                                                      25%
                                                                                                                                                                                                                   31%
   $40M                                                                                                                                                                           20%
                                                                                                                                                                  30%
   $20M                                                                                                                                                                           10%                                                                                      10%
                                                                                                                                                                                                                     6%
                                                                                                                                                                                                                     4%                                                        8%
    $0M                                                                                                                                                           0%               0%
              4/11

                         7/11

                                    10/11

                                                1/12

                                                           4/12

                                                                      7/12

                                                                                 10/12

                                                                                             1/13

                                                                                                        4/13

                                                                                                                   7/13E

                                                                                                                               10/13E

                                                                                                                                            1/14E

                                                                                                                                                        4/14E




                                                                                                                                                                                                                  Nov-12                                                May-13

                                                                                                                                                                                                   Not using and do not plan to use Workday for HCM
                                                                                                                                                                                                   Not using, but planning to evaluate Workday for HCM
              Subscription Revenue                                    Pro Services                             Total Sub Growth, % YoY                                                             Not using today, but plan to migrate to Workday for HCM
                                                                                                                                                                                                   Currently using Workday for HCM
Source: Company data, Morgan Stanley Research estimates
                                                                                                                                                                          Source: Company Data, Morgan Stanley Research


Exhibit 3
                                                                                                                                                                          Exhibit 6
Our Current Billings Forecasts Implies Significant
Deceleration Which is Conservative                                                                                                                                        Workday’s Financials Offering Also Expected to See
                                                                                                                                                                          Large Number of Evaluations From Oracle Custs
    150%
                                                                                                                                                                                  100%
    125%                                                                                                                                                                           90%
                                                                                                                                                                                   80%
    100%
                                                                                                                                                                                   70%
                                                                                                                                                                                                                                                                          66%
                                                                                                                                                                                   60%                              75%
      75%
                                                                                                                                                                                   50%
      50%                                                                                                                                                                          40%
                                                                                                                                                                                   30%
      25%                                                                                                                                                                          20%                                                                                    29%
                                                                                                                                                                                                                    23%
                                                                                                                                                                                   10%
       0%                                                                                                                                                                                                                                                                  5%
                                                                                                                                                                                      0%                              2%
              2

                         2

                                     2

                                                 2

                                                            3

                                                                       3

                                                                                  3

                                                                                              3

                                                                                                         4
                                                                                                                   4e

                                                                                                                               4e

                                                                                                                                            4e

                                                                                                                                                        5e




                                                                                                                                                                                                                  Nov-12                                               May-13
            11

                     21



                                            41

                                                       11

                                                                  21

                                                                             31

                                                                                         41
                                 31




                                                                                                    11
                                                                                                                21

                                                                                                                           31

                                                                                                                                         41

                                                                                                                                                    11
          Q

                     Q

                                Q

                                            Q

                                                       Q

                                                                  Q

                                                                             Q

                                                                                         Q

                                                                                                    Q
                                                                                                               Q

                                                                                                                           Q

                                                                                                                                        Q

                                                                                                                                                    Q




                                                                                                                                                                                                  Not using and do not plan to use Workday for Financials
                            Total Billings Growth YoY                                                     Current Billings Growth YoY                                                             Not using, but planning to evaluate Workday for Financials
                                                                                                                                                                                                  Not using today, but plan to migrate to Workday for Financials
                                                                                                                                                                                                  Currently using Workday's Financial Management solutions
Source: Company Data, Morgan Stanley Research
                                                                                                                                                                          Source: Company Data, Morgan Stanley Research




                                                                                                                                                                                                                                                                                                              2
                                                                                                   MORGAN                STANLEY               RESEARCH

                                                                                                   August 26, 2013
                                                                                                   Workday




Exhibit 7
WDAY Income Statement
($ millions, Except Per-Share Data)
                                                                                            2013                                                     2014E                                                     2015E
                                             FY10       FY11       FY12        4/12       7/12       10/12       1/13      FY13        4/13      7/13E    10/13E      1/14E     FY14E       4/14E          7/14E     10/14E      1/15E     FY15E

Subscription Revenue                        13.7        36.6       88.6       36.9       42.2        51.6       59.6      190.3      68.4        76.3      88.9       98.9      332.5      109.0          123.1      137.3      150.3      519.7
  Year over year % change                 326.9%      166.2%     142.2%     129.7%     114.7%      116.1%     105.4%     114.7%     85.3%       80.8%     72.3%      65.9%      74.7%      59.3%          61.4%      54.6%      51.9%      56.3%
Professional Services Revenue               11.5        31.5       45.8       19.9       20.5        21.0       21.9       83.3      23.2        23.6      27.5       30.7      105.1       28.3           32.0       36.4       39.8      136.6
  Year over year % change                 261.8%      173.6%      45.6%     130.9%      95.9%       67.2%      55.0%      82.0%     16.7%       15.3%     30.9%      40.0%      26.1%      22.0%          35.3%      32.1%      29.9%      30.0%
Total Revenue                               25.2        68.1      134.4       56.8       62.7        72.6       81.5      273.7      91.6        99.9     116.4      129.6      437.5      137.3          155.1      173.7      190.1      656.2
 Year over year % change                  294.6%      169.6%      97.5%     130.1%     108.1%       99.2%      88.9%     103.6%     61.3%       59.4%     60.3%      58.9%      59.9%      49.8%          55.2%      49.3%      46.7%      50.0%
 Quarter over quarter % change                                               31.7%      10.4%       15.8%      12.3%                12.4%        9.0%     16.5%      11.3%                  6.0%          13.0%      12.0%       9.4%
Cost of Revenue
 Cost of Subscription Revenue                 6.6       11.4       22.1        7.5        8.9        10.0       12.3       38.7       14.7       16.8       19.5       21.8       72.7       24.0           27.1       30.2       33.1      114.3
 Cost of Professional Services Revenue       13.8       28.3       42.6       17.4       19.1        19.6       19.9       76.0       21.0       22.5       26.2       29.1       98.8       26.6           30.1       34.2       37.4      128.4
Total Cost of Revenue                        20.4       39.7       64.7       24.9       28.0        29.6       32.2      114.6       35.7       39.2       45.7       50.9      171.5       50.6           57.2       64.4       70.5      242.7
Gross Profit                                   4.8     28.4       69.7       31.9       34.7        43.0       49.3      159.0       56.0        60.7      70.7       78.7      266.0       86.7           97.9      109.3      119.6      413.6
 Gross Margin                               19.1%     41.7%      51.8%      56.2%      55.4%       59.3%      60.5%      58.1%      61.1%       60.7%     60.7%      60.7%      60.8%      63.1%          63.1%      62.9%      62.9%      63.0%
 Subscription Gross Margin                  51.8%     68.8%      75.1%      79.6%      78.9%       80.7%      79.4%      79.7%      78.6%       78.0%     78.0%      78.0%      78.1%      78.0%          78.0%      78.0%      78.0%      78.0%
 Professional Services Gross Margin        -20.0%     10.1%       6.9%      12.8%       6.9%        6.7%       9.2%       8.8%       9.6%        5.0%      5.0%       5.0%       6.0%       6.0%           6.0%       6.0%       6.0%       6.0%

Operating Expenses
 Sales & Marketing                           20.7       36.2       69.5       24.5       29.1        31.6       35.5      120.7       37.2       43.0       50.1       55.1      185.3       55.8           61.3       68.6       74.1      259.8
 Research & Development                      29.8       38.6       60.9       20.4       23.0        26.8       29.0       99.1       34.1       35.0       39.6       43.4      152.1       46.7           49.6       53.9       58.0      208.2
 General & Administration                     4.9        7.9       13.5        5.6        6.7         8.1       10.1       30.5        9.1       11.5       12.2       13.0       45.8       15.1           16.3       16.5       17.1       65.0

Total Operating Expenses                     55.3       82.7      143.9       50.5       58.8        66.5       74.6      250.3       80.5       89.4      101.8      111.4      383.2      117.5          127.2      139.0      149.2      532.9
 Year over year % change                     19%        50%        74%        84%        70%         78%        67%        74%        60%        52%        53%        49%        53%        46%            42%        36%        34%        39%

Operating Income                             (50.5)     (54.4)     (74.3)     (18.5)     (24.1)      (23.5)     (25.2)     (91.3)     (24.5)     (28.8)     (31.2)     (32.7)    (117.2)     (30.8)         (29.2)     (29.7)     (29.6)    (119.4)
 Operating Margin                         -200.0%     -79.9%     -55.2%     -32.6%     -38.4%      -32.3%     -30.9%     -33.4%     -26.8%     -28.8%     -26.8%     -25.3%     -26.8%     -22.5%         -18.9%     -17.1%     -15.6%     -18.2%

Net Interest and Other Income (Expense)          -          -       (1.2)      (0.1)      (0.6)       (0.4)      (0.2)      (1.3)      (0.3)      (2.2)      (1.8)      (1.5)      (5.8)      (1.2)          (1.0)      (0.6)      (0.5)      (3.2)

Income Before Taxes                         (50.5)     (54.4)     (75.4)     (18.6)     (24.7)      (23.8)     (25.4)     (92.6)     (24.8)      (31.0)    (33.0)     (34.2)    (123.0)     (32.0)         (30.2)     (30.3)     (30.1)    (122.6)
  % of revenues                           -200.0%     -79.9%     -56.1%     -32.8%     -39.4%      -32.8%     -31.2%     -33.8%     -27.0%      -31.0%    -28.3%     -26.4%     -28.1%     -23.3%         -19.5%     -17.4%     -15.8%     -18.7%

Provision (Benefit) for Income Taxes            -          -          -          -       (0.1)        0.1        0.1        0.1        0.1          -          -          -        0.1          -              -          -          -          -
  % Tax Rate                                 0.0%       0.0%       0.0%       0.0%      -0.5%        0.3%       0.4%       0.1%       0.5%       0.0%       0.0%       0.0%       0.1%       0.0%           0.0%       0.0%       0.0%       0.0%

Net income                                  (50.5)     (54.4)     (75.4)     (18.6)     (24.6)      (23.9)     (25.5)     (92.6)     (24.9)      (31.0)    (33.0)     (34.2)    (123.1)     (32.0)         (30.2)     (30.3)     (30.1)    (122.6)
 Net margin                               -200.0%     -79.9%     -56.1%     -32.8%     -39.2%      -32.9%     -31.3%     -33.8%     -27.2%      -31.0%    -28.3%     -26.4%     -28.1%     -23.3%         -19.5%     -17.4%     -15.8%     -18.7%
                            (1)
Pro Forma EPS - Operating                  ($0.41)    ($0.41)    ($0.62)    ($0.14)    ($0.18)     ($0.17)    ($0.16)    ($0.65)    ($0.15)    ($0.18)    ($0.19)    ($0.20)    ($0.73)    ($0.18)        ($0.17)    ($0.17)    ($0.17)    ($0.70)
 Year over year % change                   NM         NM         NM         NM         NM          NM         NM         NM         NM         NM         NM         NM         NM         NM             NM         NM         NM         NM
ESOs Expense, net of tax                     0.01       0.01       0.03       0.01       0.01        0.03       0.03       0.08       0.04       0.06       0.08       0.10       0.27       0.10           0.11       0.11       0.12       0.44
EPS, net of ESOs, after tax (Modelware)    ($0.42)    ($0.43)    ($0.65)    ($0.15)    ($0.19)     ($0.20)    ($0.19)    ($0.73)    ($0.19)    ($0.24)    ($0.27)    ($0.30)    ($1.00)    ($0.29)        ($0.28)    ($0.28)    ($0.28)    ($1.14)
Weighted avg. common shares (Basic)         102.0      109.7      122.0      131.0      136.3       141.6      161.9      142.7      168.1      168.0      169.7      171.4      169.3      173.0          174.6      176.2      177.8      175.4
Diluted Shares Outstanding (Operating)      122.3      131.6      146.3      161.1      169.4       195.5      195.9      180.5      200.0      199.9      201.9      204.0      201.5      205.9          207.8      209.7      211.6      208.7

Period end basic shares outstanding          99.8      110.0      126.0      135.0      137.5       159.2      165.5      149.3      167.2      168.9      170.5      172.2      169.7      173.8          175.4      177.0      178.6      176.2
Change in avg. shares (QoQ)                  5.7%      10.3%      14.5%       3.8%       1.9%       15.7%       4.0%      18.5%       1.0%       1.0%       1.0%       1.0%      13.7%       0.9%           0.9%       0.9%       0.9%       3.8%

Source: Company Data, Morgan Stanley Research




                                                                                                                                                                                                      3
                                                                                           MORGAN             STANLEY         RESEARCH

                                                                                           August 26, 2013
                                                                                           Workday




Exhibit 8
WDAY Balance Sheet
($ in millions, except EPS)
                                                                                     2013                                             2014E                                          2015E
                                                FY10   FY11     FY12      4/12     7/12       10/12    1/13     FY13       4/13   7/13E     10/13E   1/14E   FY14E   4/14E       7/14E     10/14E     1/15E    FY15E
Assets
Cash and Cash Equivalents                       34.4    30.5     57.5     29.5     36.7      443.0     84.2      84.2     219.3   178.4     144.4    113.0   113.0    95.6        63.7      47.6      34.1      34.1
Short Term Investments                          20.6     3.7     53.6     90.7     85.9      354.4    706.2     706.2     586.5   586.5     586.5    586.5   586.5   586.5       586.5     586.5     586.5     586.5
Accounts Receivables, net                        6.8    15.4     54.5     54.9     68.5       61.1     67.4      67.4      60.3    68.8      68.5     92.1    92.1   104.1       117.2     115.8     147.8     147.8
Deferred Commissions                             4.9     6.4      9.5      9.0      8.3        8.6      9.8       9.8      10.1    10.9      11.2     12.3    12.3    14.2        15.6      16.8      19.3      19.3
Prepaids and Other Current Assets                2.2     3.8      8.1     10.7     10.5       14.5     16.7      16.7      17.5    19.9      24.1     24.5    24.5    31.1        35.1      41.3      41.7      41.7
Total Current Assets                            68.9    59.9    183.2    194.9    209.9      881.7    884.3     884.3     893.7   864.5     834.7    828.4   828.4   831.6       818.1     808.0     829.3     829.3

Property and Equipment, net                      8.8    12.9     25.9     25.2     29.4       39.8     44.6      44.6      54.2    70.4      87.3    105.2   105.2   117.7       130.4     143.3      156.6     156.6
Deferred Commissions, less current              12.3    11.3     13.2     14.0     15.5       17.1     18.6      18.6      19.1    20.7      21.2     23.3    23.3    27.0        29.6      32.0       36.6      36.6
Intangible Assets, net                           0.9     0.2      0.1      0.1      0.0          -        -         -         -       -         -        -       -       -           -         -          -         -
Goodwill                                         6.5     8.5      8.5      8.5      8.5        8.5      8.5       8.5       8.5     8.5       8.5      8.5     8.5     8.5         8.5       8.5        8.5       8.5
Other Assets                                     0.5     0.3      1.9      2.1      3.8        3.2      3.1       3.1       5.8     4.1       3.3      2.8     2.8     7.1         4.2       2.7        2.9       2.9
Total Assets                                    97.8    92.9    232.6    244.7    267.2      950.1    959.1     959.1     981.3   968.2     955.1    968.1   968.1   991.9       990.8     994.5    1,033.9   1,033.9

Liabilities
Accounts Payable                                 0.9     0.5      2.7      2.3      3.4        3.5      2.7       2.7      16.4    15.5      16.2     14.2    14.2    14.5        16.2      21.7      20.5      20.5
Accrued Expenses                                 3.0     3.6      5.6      8.2     14.3       14.9     13.6      13.6      13.9    17.0      26.0     22.7    22.7    18.1        20.5      32.3      26.2      26.2
Accrued Compensation                             4.4     6.0     13.9     18.2     18.1       22.5     27.2      27.2      43.3    35.7      37.1     38.8    38.8    71.2        59.4      60.4      61.9      61.9
Deferred Revenue                                24.1    56.4    114.7    129.3    151.6      164.4    199.3     199.3     224.4   246.8     253.6    300.0   300.0   325.9       361.4     375.7     451.3     451.3
Capital Lease Obligation, current                        1.7      7.1      7.2      8.2        9.6     12.0      12.0      11.2    13.4      15.6     17.9    17.9    20.5        23.1      25.7      28.3      28.3
Other Short-term Liabilities                     0.3     0.3      1.2      1.4        -          -        -         -         -       -         -        -       -       -           -         -         -         -
Total Current Liabilities                       32.6    68.4    145.2    166.6    195.6      214.9    254.8     254.8     309.1   328.4     348.5    393.6   393.6   450.2       480.6     515.8     588.2     588.2

Deferred Revenue                                29.6    42.0     73.4     83.8     95.9       87.7     85.9      85.9      76.6    73.0      70.6     70.6    70.6    67.4        63.7      60.0      54.8      54.8
Other Liabilities                                4.2     7.3     10.1      9.8     14.2       14.6     13.1      13.1      13.6    13.6      13.6     13.6    13.6    13.6        13.6      13.6      13.6      13.6
Capital Lease Obligation, noncurrent               -     2.3      8.6      6.9      7.9       17.4     13.0      13.0      10.2    12.2      14.2     16.2    16.2    18.6        21.0      23.4      25.8      25.8
Total Liabilities                               66.4   120.1    237.3    267.2    313.5      334.6    366.8     366.8     409.5   427.2     446.9    494.0   494.0   549.8       578.8     612.8     682.3     682.3

Total Stockholders' Equity                      31.4   (27.2)    (4.7)   (22.5)   (46.4)     615.5    592.3     592.3     571.8   541.0     508.2    474.2   474.2   442.2       412.0     381.7     351.6     351.6

Total Liabilities and Stockholders' Equity      97.8    92.9    232.6    244.7    267.2      950.1    959.1     959.1   981.255   968.2     955.1    968.2   968.2   992.0       990.8     994.5    1,033.9   1,033.9

Source: Company Data, Morgan Stanley Research




                                                                                                                                                                             4
                                                                                                     MORGAN                STANLEY              RESEARCH

                                                                                                     August 26, 2013
                                                                                                     Workday




Exhibit 9
WDAY Cash Flow Statement
($ in millions, except EPS)
                                                                                                          2013                                               2014E                                           2015E
                                                               FY10     FY11       FY12      4/12       7/12      10/12       1/13     FY13       4/13    7/13E   10/13E    1/14E    FY14E      4/14E    7/14E    10/14E   1/15E    FY15E

Net Income                                                     (49.9)   (56.2)    (79.6)    (20.1)     (26.9)     (41.3)     (30.9)   (119.2)    (33.0)   (41.9)   (48.4)   (53.6)   (176.9)    (53.1)   (52.5)   (53.6)   (54.4)   (213.7)

Depreciation and Amortization                                    3.3      5.3       9.3       3.5        3.9       4.5         5.8     17.7        6.6      7.9      9.2     10.5      34.1      12.0    13.5      15.0    16.5      56.9
Stock Compensation Expenses                                      0.9      1.7       4.2       1.4        2.3       6.2         5.4     15.3        7.4     11.1     15.6     19.6      53.7      21.1    22.3      23.3    24.3      91.1
Amortization of Deferred Commissions                             3.4      4.9       7.1       3.3        2.3       2.8         3.0     11.4        2.5      4.1      4.6      4.8      16.0       3.1     6.2       6.6     7.2      23.2
Other Non-Cash Charge                                           (1.0)     0.6       0.1       0.0        0.0      11.3         0.0     11.3       (0.0)       -        -        -      (0.0)        -       -         -       -         -

Changes in Working Capital
 Accounts Receivable                                             1.0    (14.5)    (39.0)    (0.5)      (13.5)       7.4      (6.3)     (13.0)      7.1     (8.5)     0.3    (23.5)    (24.6)    (12.1)   (13.0)     1.4    (31.9)   (55.7)
 Deferred Commissions                                          (11.1)    (5.8)    (12.0)    (3.6)       (3.1)      (4.7)     (5.7)     (17.2)     (3.2)    (6.5)    (5.4)    (7.9)    (23.1)     (8.8)   (10.3)   (10.1)   (14.3)   (43.5)
 Prepaid Expenses and Other Assets                              (0.7)    (1.7)     (4.3)    (2.6)       (1.5)      (3.4)     (2.1)      (9.7)     (3.6)    (2.4)    (4.1)    (0.5)    (10.6)     (6.5)    (4.0)    (6.2)    (0.4)   (17.2)
 Other Assets                                                      -      0.2      (0.6)    (0.2)          -          -         -       (0.2)        -      1.7      0.8      0.5       3.0      (4.3)     3.0      1.5     (0.3)    (0.1)
 Accounts Payable                                               (0.3)     0.3       2.2     (0.4)        0.8       (0.3)     (0.1)      (0.1)      2.4     (0.9)     0.7     (1.9)      0.2       0.3      1.6      5.6     (1.3)     6.2
 Accrued Compensation                                              -      4.9       7.9      4.3         2.3        2.9       5.2       14.7      15.1     (7.6)     1.4      1.7      10.6      32.4    (11.8)     1.0      1.5     23.1
 Accrued Expenses                                                0.0      0.4       3.4      2.9         1.0        0.6      (1.4)       3.2       0.4      3.1      9.0     (3.4)      9.1      (4.5)     2.3     11.8     (6.1)     3.5
 Deferred Revenue                                               24.3     44.0      89.7     25.0        34.4        4.7      33.1       97.2      15.7     18.9      4.4     46.4      85.4      22.7     31.8     10.6     70.4    135.4
 Other Items and Liabilities                                       -      0.5      (2.0)    (0.3)          -          -         -       (0.3)        -        -        -        -         -         -        -        -        -        -
Net Cash Provided by (used in) Operating Activities            (30.1)   (15.3)    (13.8)    12.7         1.9       (9.4)      5.9       11.2      17.3    (21.0)   (12.1)    (7.3)    (23.2)      2.1    (10.8)     6.8     11.2      9.3
 YoY % change                                                            NM        NM                                                   NM                                             NM                                            NM
Capital Expenditures                                            (4.2)   (3.7)      (5.0)     (2.2)      (3.8)      (0.8)      (9.1)    (15.9)     (1.9)   (16.1)   (18.1)   (20.3)    (56.4)    (14.5)   (16.2)   (17.9)   (19.7)    (68.2)
Maturities/(Purchases) of Investments                          (10.3)   15.8      (51.2)    (37.4)       4.4     (268.8)    (352.4)   (654.2)    118.9                                118.9                                              -
Net Cash Paid for Acquisitions, Other Assets                               -          -         -          -          -          -         -         -        -        -        -         -         -        -        -        -         -
Other Investing Activities                                                 -          -                    -          -          -         -       0.1        -        -        -       0.1         -        -        -        -         -
Net Cash Provided by (used in) Investing Activities            (14.5)   12.2      (56.2)    (39.6)       0.6     (269.6)    (361.5)   (670.1)    117.1    (16.1)   (18.1)   (20.3)     62.5     (14.5)   (16.2)   (17.9)   (19.7)    (68.2)

Proceeds from Issuance of Common Shares                           -         -         -                    -     684.6           -    684.6          -        -        -        -         -         -        -        -        -         -
Proceeds from Issuance of Preferred Shares                     75.6         -      95.0                              -           -        -          -                                    -                                              -
Proceeds from Exercise of Stock Options and Restricted Stock    1.1       0.6       6.3       0.7        6.4       3.0         0.3     10.4        4.6                                  4.6                                              -
Net Borrowing                                                     -      (1.0)     (4.3)     (1.8)      (1.8)     (2.4)       (3.5)    (9.5)      (3.8)    (3.8)    (3.8)    (3.8)    (15.0)     (5.0)    (5.0)    (5.0)    (5.0)    (20.0)
Other Financing Activities                                        -         -         -                    -         -           -        -        0.0        -        -        -       0.0         -        -        -        -         -
Net Cash Provided by (used in) Financing Activities            76.7      (0.3)     97.0      (1.1)       4.6     685.2        (3.3)   685.5        0.8     (3.8)    (3.8)    (3.8)    (10.4)     (5.0)    (5.0)    (5.0)    (5.0)    (20.0)

 Exchange Rate Impact                                              -     (0.4)      0.0       0.0       (0.0)       0.0       (0.0)     (0.0)     (0.1)       -        -        -       (0.1)       -        -        -        -         -

Change in Cash and Cash Equivalents                            32.0      (3.9)     27.0     (28.0)       7.2     406.2      (358.8)    26.6      135.1    (40.9)   (34.0)   (31.4)     28.9     (17.4)   (32.0)   (16.1)   (13.5)    (78.9)

Cash, Beginning of Period                                        2.3    34.4       30.5     57.5        29.5      36.7      443.0      57.5       84.2    219.3    178.4    144.4      84.2     113.0    95.6      63.7    47.6     113.0

Cash, end of Period                                            34.4     30.5       57.5     29.5        36.7     443.0       84.2      84.2      219.3    178.4    144.4    113.0     113.0      95.6    63.7      47.6    34.1      34.1

Free Cash Flow                                                 (34.4)   (19.0)     (18.8)   10.5        (1.9)     (10.2)      (3.2)     (4.7)     15.4    (37.1)   (30.2)   (27.7)     (79.6)   (12.4)   (27.0)   (11.1)    (8.5)    (58.9)
YoY Growth                                                               NM         NM                                                  NM                                              NM                                            NM
Margin                                                                           -14.0%                                               -1.7%                                          -18.2%                                         -9.0%

Adjusted Free Cash Flow                                        (34.4)   (19.0)    (17.6)    10.6        (1.2)      (9.8)      (3.0)     (3.4)     15.7    (34.9)   (28.4)   (26.2)    (73.8)    (11.2)   (26.0)   (10.5)    (8.0)    (55.7)
YoY Growth                                                               NM        NM                                                   NM                                             NM                                             NM

Free Cash Flow Adjusted for Capital Leases                     (30.1)   (19.0)    (34.8)    10.3        (5.6)     (23.5)      (4.7)    (23.4)     15.3    (45.1)   (38.2)   (35.7)   (103.7)    (22.4)   (37.0)   (21.1)   (18.5)    (98.9)
YoY Growth                                                               NM        NM                                                   NM                                             NM                                             NM

Source: Company Data, Morgan Stanley Research




                                                                                                                                                                                                  5
MORGAN        STANLEY   RESEARCH

August 26, 2013
Workday




                                   6
                                                                                MORGAN         STANLEY         RESEARCH

                                                                                August 26, 2013
                                                                                Workday




                                                      Morgan Stanley ModelWare is a proprietary analytic framework that helps clients
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                                                      basis. ModelWare also emphasizes the separation of operating performance of a company
                                                      from its financing for a more complete view of how a company generates earnings.



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                                                                                                                                                     7
                                                                                 MORGAN         STANLEY         RESEARCH

                                                                                 August 26, 2013
                                                                                 Workday




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                                        % of                   % of % of Rating
Stock Rating Category       Count       Total     Count Total IBC Category
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Equal-weight/Hold            1302        45%         496         47%         38%
Not-Rated/Hold                112         4%          27          3%         24%
Underweight/Sell              467        16%         123         12%         26%
Total                       2,890                   1056
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Stock Price, Price Target and Rating History (See Rating Definitions)




                                                                                                                                                       8
                                                                                            MORGAN            STANLEY           RESEARCH

                                                                                            August 26, 2013
                                                                                            Workday




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                                                                                             MORGAN            STANLEY            RESEARCH

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                                                                                       MORGAN    STANLEY            RESEARCH




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Industry Coverage:Software

Company (Ticker)                              Rating (as of) Price* (08/23/2013)


Jennifer Swanson Lowe, CFA
Adobe Systems (ADBE.O)                        E (09/10/2010)                  $45.77
Akamai Technologies, Inc.                     E (04/28/2011)                   $47.1
(AKAM.O)
Bazaarvoice Inc (BV.O)                       E (01/03/2013)                   $10.94
Brightcove Inc (BCOV.O)                      E (03/28/2012)                   $10.01
IntraLinks Holdings, Inc. (IL.N)            NR (08/11/2011)                    $8.33
Intuit (INTU.O)                              E (07/06/2011)                   $64.18
Jive Software Inc (JIVE.O)                   O (01/23/2012)                   $12.65
NetSuite (N.N)                               U (10/14/2010)                    $96.6
Nuance Communications Inc.                   E (05/01/2013)                   $19.31
(NUAN.O)
Responsys Inc. (MKTG.O)                       E (09/21/2012)                  $14.97
ServiceNow Inc (NOW.N)                        E (07/24/2012)                  $45.74
ServiceSource International Inc.              E (11/06/2012)                  $12.95
(SREV.O)
Workday (WDAY.N)                              E (11/06/2012)                  $75.76
Keith Weiss, CFA
AVG Technologies (AVG.N)                      E (03/12/2013)                  $22.42
Autodesk (ADSK.O)                             E (11/11/2010)                  $38.91
Check Point Software Technologies             E (11/03/2011)                  $57.72
Ltd. (CHKP.O)
Citrix Systems Inc (CTXS.O)                  E (09/24/2012)                   $72.71
Fortinet Inc. (FTNT.O)                       E (04/11/2013)                   $20.34
Microsoft (MSFT.O)                           O (04/16/2013)                   $34.75
Oracle Corporation (ORCL.N)                  O (06/23/2008)                   $31.77
Palo Alto Networks Inc (PANW.N)              O (05/16/2013)                    $47.7
QLIK Technologies Inc. (QLIK.O)              O (09/04/2012)                   $34.75
Red Hat, Inc. (RHT.N)                        E (03/16/2012)                   $51.57
Salesforce.com (CRM.N)                       O (05/23/2011)                   $43.59
SolarWinds, Inc. (SWI.N)                     E (04/03/2013)                   $36.99
Sourcefire (FIRE.O)                          E (08/01/2011)                   $75.74
Splunk Inc (SPLK.O)                          E (05/14/2012)                   $50.21
Symantec (SYMC.O)                            O (01/15/2013)                   $26.33
Tableau Software (DATA.N)                    E (06/11/2013)                   $67.67
VMware Inc (VMW.N)                           E (01/29/2013)                    $87.8

Stock Ratings are subject to change. Please see latest research for each company.
* Historical prices are not split adjusted.




© 2013 Morgan Stanley

				
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