Shares in Workday popped Tuesday on January-quarter earnings and revenue that topped estimates. The software maker's guidance for WDAY stock also came in above expectations.
Pleasanton, Calif.-based Workday reported fourth-quarter results after the market close on Monday. WDAY stock climbed 6.6% to 244.24 in midday trading on the stock market today.
"The latest affirmation of a rebound in back-office digital transformation spending, this quarter reinforces our belief in a late-cycle enterprise investment cycle poised to benefit Workday and our other favored back-office players," said Mizuho Securities analyst Siti Panigrahi in a report.
Cowen analyst Derrick Wood said in a report: "strength was led by outsized large deal activity in the U.S., particularly in financial services."
For the three months ended Jan. 31, Workday earnings were 82 cents per share on an adjusted basis, up 12% from the year-earlier period. Revenue climbed 22% to $1.38 billion, including acquisitions.
Analysts expected Workday earnings of 71 cents a share on revenue of $1.365 billion. A year earlier, Workday earnings were 73 cents a share on sales of $1.13 billion.
WDAY Stock: Subscription Revenue Up 22%
Subscription revenue rose 22% to $1.23 billion, vs. estimates of $1.22 billion.
"Given the strength in our fourth quarter and our optimism that the environment will remain robust for finance and HR transformation initiatives, we are raising our guidance for fiscal 2023 subscription revenue to be in a range of $5.530 billion to $5.550 billion, representing year-over-year growth of 22%," Chief Financial Officer Barbara Larson said in a news release. "We are also raising our fiscal 2023 non-GAAP operating margin guidance to 18.5%."
The company sells software for human capital management, such as payroll tools. Also, it has expanded into financial software.
Heading into the Workday earnings report, the software stock owned a Relative Strength Rating of 32 out of a possible 99, according to IBD Stock Checkup. In addition, WDAY stock had pulled back 15% in 2022.
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