At the end of April, Workday had $805.8 million in cash and marketable securities. The company finished the quarter with a net loss of $33 million. Other things being equal, this would have allowed Workday to last 24 quarters without the need for additional financing. Of course, this is not a realistic example. I give this one to give you a feeling that the company was not cash-strapped at the moment it took the decision to issue debt.
The company has stated that it will use proceeds for general corporate purposes. It was not alone. On the same day, its peer, Cornerstone OnDemand (NASDAQ: CSOD) stated its plans to sell $220 million of convertible senior notes due 2018 with the same goal. Just as Workday, Cornerstone offers cloud HR solutions.
Cornerstone had $76 million in cash and cash equivalents at the end of the first quarter. The net loss for the quarter was $10 million. The situation looks different from the one of Workday. Cornerstone is not so cash-rich, and it would be great for the company to enhance its liquidity situation.