- Enterprise software firm’s stock hits highest in more than a year
- Subscriptions up 20%-plus for eighth quarter on the spin
- Guidance shifted higher on bulging revenue backlog
Just 24-hours after Nvidia’s knockout quarter, it’s the turn of Workday (WDAY:NASDAQ) to blow investors away. The enterprise software maker reported first quarter (Q1) earnings and revenue that topped analyst estimates and narrowed guidance towards the top of the analyst range, sending the stock soaring 15% in after-hours trading.
Pre-market data implies the stock opening at $211.25, its highest in more than a year.
Workday provides enterprise Cloud applications in the human capital management (human resources in plain English) and financial management (such as payroll), primarily to large enterprises. Workday had grown organically until 2018 when it announced the first of several meaningful acquisitions, in the form of business planning software provider Adaptive Insights in a $1.55 billion. Adaptive is still its largest acquisition to date.
QUARTERLY NUMBERS
In the three months to 30 April 2023, Workday posted earnings per share (EPS) of $1.31 on an adjusted basis, up 58% from a year earlier, on a 17% jump in revenue to $1.68 billion, bolstered by a handful of small (ish) acquisitions.
Analysts had been anticipating $1.12 of EPS on $1.67 billion revenue.
Workday’s adjusted operating income rose 37.2% to $395.9 million.
Subscriptions jumped 20% for the eighth quarter on the spin, to $1.53 billion, which investors read as highly impressive considering the macro path during that period. The subscription revenue backlog is predicted to hit $16.65 billion versus $15.89 billion estimated by analysts on average.
GUIDANCE SHIFTS UP
Based on an upbeat performance, Workday lifted the lower end of its fiscal 2024 subscription revenue outlook from $6.55 billion to $6.58 billion, implying 18% year-on-year growth.
Workday now sees Q2 subscription revenue to be between $1.611 billion and $1.613 billion, while the 24-month backlog is anticipated to increase by about 20% year-on-year.
Management expects an adjusted operating margin of nearly 22%.
‘This is supported by commentary from close UK partner Kainos (KNOS), which in latest results confirmed a strong demand environment and a positive outlook, with Workday-related annual recurring revenue growing at 40%,’ said Megabuyte analyst Nathan Jackson.
