Workday Stock Soars as Earnings Edge Past Estimates

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Workday shares took off in response to the earnings news.


Courtesy Workday

Workday

shares are trading higher after the provider of enterprise human-resources and financial software posted quarterly financial results that were slightly better than Wall Street expected..

The company also maintained its full-year guidance, in contrast to results one day earlier from

Salesforce.com
,
which reduced its outlook, citing a slowdown in customer approvals of new business. The strong results, showing few effects of the recent economic slowdown, could give a boost to sentiment about enterprise-application stocks.

For its fiscal second quarter, ended July 31, Workday posted revenue of $1.54 billion, up 22% from a year earlier, slightly ahead of the Wall Street consensus at $1.52 billion. Subscription revenue was $1.37 billion, up 23%, and a tick above the company’s guidance range of $1.353 billion to $1.355 billion. On an adjusted, fully diluted basis, the company earned 83 cents a share, ahead of the Street’s call for 79 cents. Under generally accepted accounting principles, the company lost 25 cents a share.

“We continue to see a strong global demand for our products, underscoring how organizations are continuing to drive digital transformation across finance and HR to support the changing world of work,” co-CEO Aneel Bhusri said in a statement.  

For the third quarter, Workday is projecting subscription revenue of $1.418 billion to $1.420 billion, up 21%, and slightly above the consensus call for $1.415 billion.

The company reiterated its forecast for January 2023 fiscal year revenue of $5.537 billion to $5.557 billion, while increasing its projection for non-GAAP operating margin for the year to 19%, from 18.5%. The company said the outlook “reflects the momentum in our business and the mission-critical nature of our solutions, while also balancing the current macro environment.”

In late trading, Workday shares were 11% higher at $180.27.

Write to Eric J. Savitz at eric.savitz@barrons.com