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Workday (WDAY) reported second-quarter earnings late Thursday that topped analyst estimates. WDAY stock surged in after-hours trading.
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For the three months ended July 31, Workday earned an adjusted $1.43 per share from revenue of $1.79 billion. The quarterly revenue marked a 16.3% increase from the same period last year for the Pleasanton, Calif.-based company.
Analysts expected Workday earnings of $1.26 per share on revenue of $1.77 billion, according to FactSet. A year earlier, Workday earnings were 83 cents a share on an adjusted basis for the second quarter, from sales of $1.54 billion.
Workday said subscription revenue for the fiscal second quarter increased 18.8% to $1.62 billion, compared with analyst estimates of $1.61 billion.
WDAY Stock Climbs In After-Hours Trading
WDAY stock jumped 4.1% to 234 in recent action on the stock market today.
Workday sells software for human resources and finance departments, such as payroll tools.
“The strength of our Q2 results and momentum going into the second half of our fiscal year highlight the compelling opportunity ahead for Workday,” said Zane Rowe, Workday’s chief financial officer, in written remarks.
Rowe was named Workday’s CFO in May. He added that Workday is raising its guidance for the fiscal year. The company is projecting subscription revenue of $6.58 billion at the midpoint of its range, representing 18% yearly growth. Analysts were projecting 6.57 billion before Workday’s earnings.
For the current quarter ending in October, Workday officials predicted subscription revenue of $1.679 billion, based on the midpoint of its range. Before today’s report, analysts were projecting subscription sales of $1.68 billion in the October-ending quarter, according to FactSet.
Solid Results, Conservative Outlook
In a brief client note following Workday’s earnings release, Evercore ISI analyst Kirk Materne said the company delivered “solid F2Q results,” highlighted by revenue growth above analyst consensus. But he added that the company’s outlook for the second half of the year appeared potentially conservative.
“We are not overly surprised at the relative lack of upside to the top-line guide as we expected management to remain fairly conservative given (Rowe) is still very new to the seat, and the macro environment remains a bit of a question in the near term,” Materne wrote.
Workday shares closed down 2.3% at 224.87 on the stock market today. The stock has advanced 38% on the year, coming into Thursday’s aftermarket earnings report.
WDAY stock holds a best-possible Composite Rating of 99 and a strong Relative Strength Rating of 94 out of 99, according to IBD Stock checkup.
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