In the past few years, 9GAG has become the go-to place for the latest funny memes and the best viral content on the web. It is an extremely popular website with over 100 million visitors per month and it seems like everyone is on 9GAG these days.

But how does 9GAG make money? 9GAG makes money by selling ads to companies that want to advertise new products and services, charging pro membership fees, accepting donations, and selling merchandise on the 9GAG shop. 9GAG is a profitable, fast-growing community website.

In this article, we’ll take a closer look at its business model and find out all its revenue sources.

About 9GAG

9GAG is a website with a social media presence and a mobile app that features popular funny memes, animated gifs, and viral videos.

Similarweb reports that in June 2021, the website ranked number 426 in the world in terms of popularity. The website had 113.26 million unique visitors in June 2021.

Each website visitor spent an average of 9:54 minutes on the site and viewed 4.72 web pages. The number of total web page views during June 2021 was 534,587,200.

How Does 9GAG Make Money?

The one driving goal of the 9GAG company is to make Internet fun more accessible. 9GAG makes money from advertisements, 9GAG pro membership fees, donations, and merchandise sales.

According to Similarweb, 88.71 % of the web visitors to 9GAG.com are direct, which means they visit the website using the URL of 9GAG.com. Search engines are responsible for sending only 4.81% of the web traffic to 9GAG.com. Social media are responsible for sending 5.83% of the web traffic to 9GAG.com.

The owners of 9GAG sell the placement of advertisements in 9GAG content, such as display ads on the website mixed in with the viral content. Another example is the ads mixed in with the viral videos. These are revenue producers if the users who uploaded them agree to have their videos monetized by 9GAG.

9GAG features viral videos on 9GAG.com and the 9GAG social media accounts found on Instagram, Facebook, Twitter, and YouTube.

Under its terms of service, 9GAG.com does not share any earnings from advertisements with the video creators.

This is a private company. Revenues and earnings are not published publicly. However, some think that the company makes about $1.2 million in advertising revenue each month.

Making Money from Viral Content

A report from HM Social Media breaks it down with more specifics about 9GAG. 9GAG got popular before Facebook, especially in Asia.

9GAG compares to Reddit, and the notorious 4CHAN in that no-holds-barred humor is the main attraction for many of the web visitors, to the point of often being sophomoric and offensive.

For the most part, the audience has a teenage male mentality with interests in video gaming, anime, comics, sports, food, drinks, and animals. A popular chat board called “Ask Girls” will give you an idea of what the guys on 9GAG.com are thinking about.

On a good day, over 11 million visitors will view 9GAG.com, which adds up to over four billion visitors annually. Multiply by five, and you have 20 billion page views per year. This gives 9GAG.com a Google page ranking of six in the top ten most popular funny meme websites.

The users make the content. The viewers then up-vote or down-vote the content. Popularity makes it trending, and that creates a viral response. The content has an addictive quality. Once you start reading it, it is challenging to stop.

The company uses only a handful of about eight human editors to help select content for promotion on the website and social media.

The company admits that there are occasional problems with hate speech and offensive content that slips through. However, users are diligent in reporting such content, and human editors can take it down very quickly before it hurts too many people.

The millions of daily website viewers create ad revenues of up to $13,000 per day, which generates an estimation of $9.8 million per year.

9GAG does not use any third-party advertising systems like Google’s Adsense, which takes a commission from the ad placements. Instead, the website uses a proprietary native platform to capture 100% of the ad revenues.

9GAG sells the web traffic for a tidy sum, and advertisers are happy to pay for it. The web pages are kept reasonably clean, with limited advertisements. Therefore, ad placement on 9GAG.com has a significant impact for an advertiser.

In addition to the revenues generated by the 9GAG.com website, the company makes a significant amount of revenue from the sponsorship of content on social media. The amount is undisclosed but is thought to rival the website’s revenues.

Capital Invested

9GAG was co-founded by Ray Chan and Brian Yu in Hong Kong in 2008 as a side project for fun with other college buddies.

Craft reports that the company has raised a total of $2.8 million since its inception. Wikipedia disagrees and said the amount raised was $2.8 million in July 2012 or August 2012. Whatever the timing actually was, the capital raise was only done once, over nine years ago. The company has been self-funded ever since.

In July 2021, it was estimated that the company had 123 employees, up 5% from the previous year. The company maintains offices in Hong Kong and Mountain View, California, located in the Silicon Valley area.

9GAG investors for the one and only financing round of $2.8 million included 500 Startups, BoxGroup, First Round Capital, Freestyle Capital, Gary Vaynerchuk, Greycroft, Kevin Rose, Lowercase Capital, Maneesh Arora, Naval Ravikant, Othman Laraki, Philip Kaplan, Scott Banister, True Ventures, and the very successful incubator Y Combinator.

Advertising on 9GAG

9GAG calls itself a global social media and digital publisher with a worldwide audience of about 150 million, mostly Generation Y (also known as Millennials) and Generation Z members.

Gen Y members were born between 1981 and 1996, making them between 25 and 40 years old. There are close to 72 million Gen Y members in the United States.

Gen Z members are younger than Gen Y. They were born between 1996 and the mid-2000s. In America, there are approximately 90 million Gen Zers.

In June 2018, Iconosqaure said that 9GAG was the sixth most followed brand on Instagram. In 2017, Sharablee said 9GAG was the number one social media influencer for entertainment and gaming.

9GAG has over 40 million active registered users and over 100 million followers on social media, representing about 2.2 billion social media views each month. Entrepreneur.com said in 2018 that 9GAG had 42 million followers on Instagram and 39 million likes on Facebook.

The appeal of the 9GAG system is that most of the content is user-generated, which creates a shared social media experience.

Advertisers can pay for the premium sponsorships of influencers. Advertisers can have compelling viral videos made with branded content. Advertisers gain direct access to the Gen Y and Gen Z audience that is challenging to access through other media and advertising campaigns.

9GAG Competitors

Some of the general competitors of 9GAG for Internet advertising sales include Reddit, Feedly, Flipboard, and Digg. Some of the direct competitors reported by Alexa are websites that offering memes, animated gifs, and viral videos namely ImgFlip.com, Imgur.com, KnowYourMeme.com, and 9cache.com.

Serious Threat of Chinese Government Censorship

Many of the posts on 9GAG are pretty racy. There is also a section on 9GAG.com for those over 18 years old that is not suitable for work (NSFW). Many things can be freely presented on 9GAG except for any criticism of the Chinese government.

In mainland China, the government has website-blocking software that prevents anyone living in Mainland China from viewing any of the 9GAG material unless they use a virtual private network (VPN) to get around the ban. Using a VPN to bypass Chinese government censorship is illegal in China.

The recent anti-democratic crackdown in Hong Kong, with the shutting down of the last democratic newspaper, and the jailing of many reporters that worked for the paper, has also put the 9GAG company at risk of being closed down.

There are memes on 9GAG that make the President of China, Xi Jinping, look so … well, let’s say they are unflattering.

The Non-Asian Audience is Much Larger than the Asians

According to Alexa, the biggest audience segment of non-Asians is the Germans, who make up 9.6% of the website visitors. The United States represents the second largest group, with Americans making up 6% of website visitors. Denmark is equal to the United States, with Danes making up 6% of the website visitors. French visitors are about 3%.

If the Chinese crackdown comes against 9GAG, then, as long as the founders and most of the staff are not trapped in Hong Kong, the website, mostly in the English language, will continue to flourish. Alexa also reports that 3,523 websites link to 9GAG.

The company continues to operate on the mission to “Go fun the world.” It seems like this will never go completely out of style.

The editors of 9GAG noticed that young people around the same age have similar problems that become the foundation for jokes. Sharing jokes works across multiple cultures in many instances, especially if the subjects are about graduating from college and other important life events that many young people experience.

There was talk in 2018 about making a comedy television program and building up the 9GAG media empire. Right now, the company is testing live chat boards that are still in beta mode. Users who sign up have access to the live chat, from “ask me anything” to a random chat by age group.

Conclusion: How Does 9GAG Make Money?

To sum up, 9GAG earns revenue through advertising, donations, and selling their own merch on their 9GAG store. It does so by making sure that the website is user-friendly and contains a lot of funny viral content to engage users for a longer time. 

Now, while 9GAG’s business model might be questionable, its growth and popularity are not. The website already has over 42 million followers on Facebook and over 16 million followers on Twitter. 

There are few major reasons that contribute to its popularity. First of all, 9GAG is an extremely user-friendly site. Every page is filled with pictures and the website is always very fast. On top of this, the site design, which resembles Reddit, gives users a familiar feeling. Their fun and friendly user interface keep millions of people coming back for more humorous content.

Thanks for visiting. We hope that we’ve managed to help you better understand how 9GAG generates revenue. If you have something to add or any question, don’t hesitate to email us. We’ll be glad to respond.

Have a great day 🙂

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ShipBob, an on-demand shipping fulfillment service, seeks to change the world of shipping. They are dedicated to making shipping painless for online brands by handling everything from picking, packing, and shipping orders to inventory management and returns. But how does ShipBob make money? 

ShipBob makes money by charging the following fees for its order fulfillment services: a one-time implementation fee, receiving fees, warehousing fees, and shipping fees. Their pricing is based on a full-service cost of direct-to-consumer order fulfillment.

You’ve seen the ShipBob vans driving around the streets. You see their advertisements on billboards and read their catchy tagline: “We Ship. You Grow.” But what is Shipbob’s business model, is it profitable, and do they compete with any of the other shipping companies out there? Read on for answers to these questions and many more!

About ShipBob

ShipBob is a global logistics company that handles order fulfillment for direct-to-consumer online sales. The company was founded in 2014 by Dhruv Saxena and Divey Gulati, both originally from New Delhi, India. The founders have known each other since childhood.

ShipBob is a private company and has raised a total of $330.5 million since its inception. Of that amount, Techcrunch reported BainCapital invested $200 million (June 2021), which valued the company at $1 billion+.

How Does ShipBob Make Money?

ShipBob charges its 5,000+ clients for order fulfillment and shipping logistics services. The company earned $57.9 million in 2019, according to Craft. The company is profitable and it re-invests its profits back into the business. The $200 million it raised recently in June 2021 will be used for further expansion.

ShipBob’s growth-plan pricing is based on a standard fee structure, suitable for clients that ship 1 to 400 items per month, which includes the following:

• A charge to receive inventory ($25 for the first two hours, $40 per hour thereafter).
• There is a monthly charge for warehousing products ($40 per pallet, $10 per shelf, and $5 per bin).
• A charge for each order shipped includes packaging, labor, and shipping costs (varies based on weight, size, destination, and type of shipping service used).
• Up to four picks are included for each order ($0.20 per pick thereafter).

ShipBob as an Amazon Alternative

Unlike Amazon, which charges a sales commission on each sale made through the Amazon system, ShipBob is not involved in selling the item.

For online retailers that have an active website making sales or are selling directly to the customers through popular systems such as eBay, using ShipBob for order fulfillment is one way to have the shipping efficiency of an Amazon-like system and increase the gross margins of the sales.

Amazon’s pricing is very steep for some companies and product categories. Professional vendors on Amazon pay variable closing fees plus a referral fee commission ranging from 6% to 25%. Most Amazon referral fees are 8% to 15% of the sale, averaging 13%.

In March 2021, ShipBob announced a partnership with Square. Square is an online marketplace with millions of sellers. With a few minutes of setup effort, sellers on the Square system can sync their product catalog with ShipBob and enable shipping through ShipBob. Then, ShipBob fulfills the orders through its network of global fulfillment centers.

After an order is picked, packed, and shipped, ShipBob notifies the interested parties about the tracking information. It is easy for both the seller and the customer to have full visibility of the shipping process. The package is tracked from the time the order is placed until the time the order is delivered.

ShipBob has 21 fulfillment centers located in the United States, Canada, Ireland, Australia, and the United Kingdom. The new capital raised in June 2021 will be used to more than double the number of ShipBob fulfillment centers, including adding new countries to the global list.

ShipBob’s Extraordinary Growth

ShipBob started in 2014 in Chicago. The early funding support came from Y Combinator. In terms of value, ShipBob is 37^th on the list of the top 161 companies funded by Y Combinator. Other investors in ShipBob are Hyde Park Angels, Hyde Park Venture Partners, and Menlo ventures.

The company raised $5 million of Series A funding in 2016. Series B was in 2017 for $17.5 million. Series C funding came in 2018 for $40 million. Series D in 2020 was $68 million, led by Softbank Vision. Series E funding in 2021 was $200 million from Bain Capital.

The pandemic helped ShipBob grow. Revenues for 2020 are estimated to be up over 70% from the year before.

ShipBob focuses on the online store and marketplace integration. Sellers with product catalogs for sale online on the following popular e-commerce systems, and more, are supported:

• Amazon
• Backerkit
• Bigcommerce
• eBay
• IndieGoGo
• Kickstarter
• Magento
• ShipStation
• Shopify
• Square
• Woocommerce

Even though ShipBob competes with Amazon on order fulfillment services, it also does work with Amazon retailers who choose to use ShipBob for order fulfillment.

Prior to ShipBob’s debut in 2014, everything for an e-commerce store could be automated except shipping and logistics. ShipBob filled an immediate need.

ShipBob’s co-founder, Gulati, estimated that a successful online business could save 20% to 25% in overhead costs by outsourcing its order fulfillment to ShipBob.

Fulfillment Centers

ShipBob has the following 21 fulfillment centers open and operating (as of August 2021):

• In the USA: Cicero, Yorkville, and Woodridge (IL), Edison and Budd Lake  (NJ), Bethlehem 1 & 2 (PA), Moreno Valley and Rancho Dominguez (CA), Carrollton and Grapevine 1 & 2 (TX), Chattanooga (TN), St. Petersburg (FL), Twin Lakes (WI), Phoenix (AZ), and Louisville (KY)
• In Canada: Ottawa
• In Ireland: Kilkenny
• In the UK: Feltham
• In Australia: Melbourne

One of the Fastest-Growing American Companies

The Financial Times (FT) ranked ShipBob 60^th among the top fastest-growing American companies in 2021. The FT says that ShipBob has experienced 1,024% growth since its inception. The compound annual growth rate (CAGR) was 124%.

Earnings in 2019 were $57+ million compared to $5 million in 2016. This represents over 10x growth in revenues during that three-year period. ShipBob had 431 employees in 2019 and now wants to hire workers to end up with more than 800 in 2021 and beyond.

For 2021, INC. ranks ShipBob 47^th on the top list of the 5,000 fastest-growing companies in the Midwestern area of the United States. The median growth for this region is 110%. ShipBob is reported by Inc. as having 265% growth year-over-year.

Fast Company ranked ShipBob 8^th on the list of the top ten most innovative logistics companies in 2021.

In 2020, ShipBob expanded to international fulfillment. The company released a new, free-to-use software tool that accurately estimates shipping times and costs.

It completed the integrations with eBay, Loop, Shopify, and Squarespace. An innovative integration with Google Ads allows vendors to accurately estimate shipping times that appear in Google Ads in real-time.

Vendors using ShipBob can now offer guaranteed shipping services that compete with Amazon Prime.

ShipBob Competitors

The main competitors for ShipBob are Amazon, Easyship, Flowspace, Oberlo, Printful, ShipHero, Shippo, ShipStation, and Spocket.

Growth of Global Logistics Market

Grand View Research estimates the market size for e-commerce global fulfillment to be $86.4 billion in 2021. The CAGR is projected to be 10% from 2021 to 2028, resulting in a market size of $168.7 billion forecasted for 2028.

The Advantages of Using ShipBob

ShipBob is designed for small to medium sized businesses that ship up to 500 packages per month, with the median being around 100 packages shipped monthly. The service specializes in next-day and two-day shipping.

It is very difficult for a small business to set up an order fulfillment system that is efficient and works fast. Consumers expect excellent customer service, immediate shipping, easy returns, and fast delivery. These logistics standards are easier for a large organization to accomplish than a small company.

Nevertheless, by using a sophisticated order fulfillment service such as ShipBob, small companies may provide the same shipping and handling service as larger enterprises.

ShipBob says some companies that outsource order fulfillment to ShipBob experience up to a 97% increase in order value, an 18% reduction in online shopping cart abandonment, and up to a 70% reduction in shipping costs. While these case studies are interesting, not everyone has the same experience.

The reason ShipBob is making money is that it solves significant pain points for its customers. The integration with popular online selling systems makes it a time-saver for those customers using that system. The integration with these major selling systems is one of the main reasons that the company’s revenues continue to grow rapidly.

ShipBob allows a small company to provide excellent customer service to handle shipping and returns like a much larger company does. The shipping rates are adjustable to a client’s specific needs. There are many locations for fulfillment warehouses that can be a part of a strategic marketing rollout plan.

In the United States, the ShipBob warehouses are located near the major metropolitan centers, including Chicago, Dallas, Los Angeles, San Francisco, and New York. This allows for next-day and two-day delivery options.

ShipBob packs and ships in either standard non-branded boxes or uses the customer’s branded boxes (an additional fee applies for customer packaging use). Amazon does not allow a company to use its own branded boxes when shipping through the Amazon fulfillment centers.

Each ShipBob customer has a dedicated manager. The software used for the entire process is controlled by ShipBob and is free for the customer to use.

ShipBob handles inventory management, warehouse management, and the entire fulfillment process. All the software operations are cloud-based, which allows for increased efficiency and real-time monitoring. This is useful for forecasting.

Conclusion: How Does ShipBob Make Money?

To sum up, ShipBob is a last-mile logistics service that helps retailers and online brands send packages through their inexpensive, quick, and reliable service from fulfillment centers to the end address. It earns revenue by charging businesses fees for providing storage spaces, picking, packing, and shipping their products.

ShipBob has enabled anyone to build their own e-commerce stores without worrying about the hassle of shipping orders through not-so-user-friendly shipping services. Their platform connects directly to your inventory and picks, packs, and ships your orders to customers on your behalf.

Thanks for reading this article. If you find it useful, please share it with a friend, and do not forget to follow us on our social media pages.

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Workday is a cloud-based software solution that specializes in human capital management, more commonly referred to as HCM. This platform is intended to help company leaders track and manage their employees’ performances while also providing insight into the financial status of the company as a whole.

Have you ever wondered how Workday makes money? Is it profitable? How does this company manage to stay afloat amidst fierce competition from Oracle and SAP? If so, this article will answer all of your questions in detail.

Workday operates on a subscription-based business model. It makes money from subscriptions and professional service fees. Subscription revenues consist of monthly fees that clients pay to access the company’s software. Professional service fees are the charges for consulting services associated with the implementation and customization of Workday products and reports.

We’ll take a closer look at their business model and find out different revenue streams of Workday, one by one.

So, let’s dive right in.

About Workday

Workday, Inc. is a prominent American software vendor focusing on financial and human capital management cloud-based solutions. Based in Pleasanton, CA, the company offers critical business solutions to organizations of varying sizes. It has a viable business model that helps achieve growth. 

Workday develops and delivers cloud applications for human capital management (HCM), finance, and enterprise performance management (EPM).

The company’s HCM solutions comprise its core human capital software that provides business functionality such as talent management, performance management, compensation, and succession planning capabilities to help clients attract, develop, motivate and retain employees.

Its current product offerings include:

• Workday Human Capital Management
• Workday Financial Management 
• Spend management software – simplifies the way companies manage spending
• Enterprise analytics and reporting software
• Process automation tools
• App development extensions – simplifies cloud integration
• Student information system software
• Enterprise business planning software

Revenue Streams of Workday

Workday monetizes services through subscriptions and software sales. Clients take advantage of its cloud-based platform, which offers enterprise management solutions like financial management, talent management, enterprise planning, human capital management, and spend management.

Workday delivers its software primarily to business customers through a SaaS delivery model. It currently has over 8000 customers globally. 

Its distinctive open application architecture allows partners to develop and deliver a wide range of applications using a standardized set of cloud APIs, including professional services, analytics, and connectors to on-premises data sources.

Workday’s robust technology platform is highly scalable and secure, providing customers with a clear economic advantage because they only need to pay for the software they use.

Workday’s Value Proposition

Workday’s mass-market business model offers several value propositions, including performance, accessibility, status, and convenience. Clients take advantage of a wide selection of products, thanks to Workday’s strategic acquisitions. 

As a result, the company now owns platforms like Upshot, Zaption, and Gridcraft. In turn, Workday (WDAY) diversified its services and overall capabilities.

It ensures convenience by providing business solutions that simplify day-to-day operations for clients. The service provider allows clients to leverage unified finance and human resource management system. By utilizing the solution, clients minimize complexity, thanks to real-time reporting and the availability of analytics tools.

As a prominent software-as-a-service (SaaS), Workday maintains a 99.9 percent uptime rate. In addition, it bolsters security and privacy by maintaining regulatory compliance. Every two years, it releases a major update to keep its system secure and running smoothly.

It boasts a strong brand, thanks to its stellar track record, high customer satisfaction rate, and overall success.

Workday serves thousands of business clients globally. These clients include

• Sony Corporation
• Johnson & Johnson
• Warner Music Group
• Electronic Arts
• Adobe
• Visa Inc.
• Toyota
• Church & Dwight

The software vendor’s value proposition has helped attract prominent corporate clients and several accolades. Workday is the recipient of Gartner’s 2020 HCM Magic Quadrant ‘Leader’ award for midmarket and large enterprises.

Investors find the software vendor attractive because it offers cloud-based SaaS products that address key operating needs for midsize and large corporate clients.

Many top companies use the solutions to support remote teams. With Workday’s apps, companies can streamline payroll processes and the creation of expense reports.

The business solutions provider offers division manager dashboards to simplify remote team supervision. Companies using the solutions also benefit from tools for enterprise planning, talent management, and expenditure management.

Meanwhile, educational institutions can use Workday’s platform and product extensions to assist learners in studying from home. Likewise, school districts gain access to workforce management tools and payroll solutions.

These tools make it easier to manage teaching and administrative staff working remotely.

Is Workday (WDAY) Making Money?

Founded in March 2005, Workday capitalized on the work-from-home revolution triggered by the pandemic. As a result, its stock rose significantly between January and September 2020. It jumped from $167.46 to $208.41.

The company’s revenues grew by approximately 19.62 percent in the second quarter of 2020. According to reports, its profits rose from $691.52 million in January 2020 to $777.69 million in July 2020.

In 2019, Workday enrolled an increased number of new corporate clients. These customers contributed to a marked increase in the software vendor’s profits. It beat revenue forecasts for the financial year. The company derives 85 percent of its total revenue from software subscriptions, which grew by 34.3 percent to $701 million.

Analysts attribute the increase in subscriptions to a widespread shift to cloud-based business apps. More companies now rely on these applications to manage various operational aspects, including payroll and human resources.

Given this background, Workday is working tirelessly to transform itself into a one-stop platform for back-office services. Hence, it acquired the software development firm Adaptive Insights in 2018.

In 2019, the vendor revised its subscription revenue projections for 2020 upwards to approximately $3.060 billion. The estimates were significantly higher than analysts’ expectations.

Workday’s projections received a boost when its signed new prominent corporate clients, such as Procter & Gamble, Carl Zeiss AG, Old Mutual Limited, and Cisco Systems.

However, the business has not been smooth sailing for the vendor. It also witnessed a widened net loss in the first quarter ending April 30, 2019. On the bright side, the healthy pace of widespread cloud migrations underpins its hopes for improved revenue growth.

Business Model of Workday

Although Workday operates in a competitive market with big brands, such as SAP and Oracle, the vendor still records significant gains in subscriptions.

It claims a considerable share of the human capital management (HCM) market, thanks to its innovative software products that deliver value without disrupting clients’ day-to-day operations.

However, increased investment in research and development comes at a cost. The company’s profits often take a knock due to increased spending in marketing and product development.

Meanwhile, Workday’s acquisition of Adaptive Insights also dug a hole in its $3.4 billion cash reserves. Nevertheless, its management team argued that the deal, which cost $1.55 billion, will help Workday accelerate the planning product roadmap.

The company plans to leverage Adaptive Insights’ advanced analytics and modeling capabilities. In turn, enhanced modeling and analytics should boost Workday’s financial management software adoption by corporate clients.

Innovative Products

The vendor is looking to augment revenue from its HCM solutions with financial management apps, which have seen significant adoption in recent years.

In the fourth quarter of 2017, Workday welcomed more than 50 new financial management clients. Two of these clients were Fortune 500 companies.

In 2018, the software vendor took additional steps to bolster its financial management solution by incorporating three new features. These key components include:

• Workday Prism Analytics
• Workday Planning
• Workday Benchmarking

In turn, the company attracted the attention of top companies like Race Truck Petroleum, Sprouts Farmers Market, and Rivera.

Workday further enhanced its business software suite’s appeal by introducing supply chain planning and management software. This approach helps the vendor support clients’ need to switch costs when it comes to back-office software.

Workday is recording successes with its financial management software by targeting the world’s most prominent companies. Many global organizations are yet to migrate to cloud-based financial management solutions.

Workday finds it relatively easier to compete effectively with established vendors like SAP and Oracle with its enterprise cloud-native apps.

It is no surprise that Workday’s market share in the cloud ERP space is rising. The vendor is optimistic about future prospects, given that most new ERP spending flows into cloud-based solutions.

On the other hand, a cloud HCM Gartner Award given to Workday recently demonstrates the vendor’s growing influence in the human capital management (HCM) market.

Notable clients on Workday’s books include Qualcomm, Humana, and Citigroup Management Corporation. The most impressive part is that the list of top clients continues to grow as cloud migration gains steam.

Delighting Customers

A key factor in Workday’s market appeal is its high customer satisfaction rate. In 2021, the vendor achieved a 97 percent client satisfaction rate.

Analysts consider this aspect as a key factor that will determine the success of Workday’s business model.

Business Model Resilience

Analysts believe that Workday can weather rough patches, thanks to its resilient business model. For this reason, some experts predict the business software provider can maintain growth rates of up to 20 percent in the near term.

Likewise, investors can count on the firm retaining its status as an attractive long-term investment option.

Workday’s business model helped turn it into one of the most disruptive software vendors on the market. This multi-billion dollar a year company maintains steady free cash flow (FCF) profitability.

It achieves an impressive growth rate and FCF profitability with a combination of effective go-to-market approaches, a high customer satisfaction rate, and other key points. These catalysts undoubtedly drive significant margin expansion.

Its business model entails targeting its client base, enabling the vendor to bolster operational resilience. As a result, the firm can reduce marketing expenses while boosting revenue with add-on sales opportunities. In the past few years, the add-on opportunities have grown, helping Workday to maximize its net retention rate.

The add-on business recently helped the vendor record its first-ever $1 billion revenue in a quarter. The figure represented a revenue increase of 23 percent year on year.

A combination of a strong existing and new client base, including add-on offerings, makes it easier to maintain a growth rate of 20 percent or higher. It is no surprise that analysts see a sustained upside potential when it comes to Workday’s margin expansion. The company could outperform conservative margin projections.

A key component of Workday’s growth potential is its software licensing model. The vendor employs a per-user pricing scheme, which is significantly robust and resilient.

This approach ensures predictability in the revenue expected from individual contracts. Its licensing model only recognizes modifications in the total number of users per contract. In addition, clients sign contracts based on a minimal licensing value adjustable at renewal.

Workday licensing contracts also come with measures to minimize issues for clients due to employment changes that impact the per-user pricing scheme. A combination of base value minimums and annual contracts helps reduce volatility, limiting the downside. Clients can reset base values upon contract renewal.

Conclusion: How Does Workday Make Money?

To sum things up, Workday is a cloud-based software company that provides HR and financial management services to companies of all types and sizes to help streamline their business processes and increase efficiency. Workday works on the SAAS model and earns revenue by selling subscriptions to use its services. 

Powered by their proprietary cloud software along with their live chat support and on-demand technical support, they are able to provide their customers with exceptional services that allow them to seamlessly streamline operations with services such as time tracking, human resource automation, performance management, payroll, big data analytics, and finance applications.

You’ve read all the details, now let’s wrap it up. The business model of the company is very straightforward – they offer a cloud-based financials and human resource management solution. It is one of the most dynamic companies in the segment and has grown tremendously since its inception in 2005.

Workday strives hard towards becoming the number one company in the world concerning enterprise human resources management software solutions.

We believe that companies like this will eventually replace the traditional software packages that are being used by most organizations today.

Thank you for reading this article. Hope you enjoyed and had garnered a lot of knowledge from it. If you have questions, comments, feedback or suggestions feel free to drop us an email. 

We wish you all the best!

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