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Factors Setting the Tone for Workday's (WDAY) Q2 Earnings
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Workday, Inc. (WDAY - Free Report) is scheduled to report second-quarter fiscal 2021 results on Aug 27.
The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at 65 cents, which suggests growth of 47.7% from the year-ago reported figure. Notably, the consensus estimate for earnings has remained stable over the past 30 days.
The consensus mark for fiscal second-quarter revenues is currently pegged at $1.04 billion, indicating an improvement of 17.5% from the prior-year quarter.
Notably, the company beat estimates in three of the trailing four quarters and missing the same once, the average surprise being 20.95%.
Factors to Note
Workday’s fiscal second-quarter performance is expected to have gained from high demand for its cloud-based human capital management (HCM) solutions, courtesy of coronavirus crisis induced accelerated digital transformation of enterprises taking place across all industries.
Moreover, growing clout of Workday Prism Analytics and Business Planning Cloud offerings may have contributed to the company’s fiscal second-quarter performance.
Markedly, the company has rolled out Workday 2020 Release 1 with features including improved workforce planning with Workday Adaptive Planning. The customers can also benefit from utilization of Workday Assistant — an intuitive chatbot to enhance employees experience. These improved features are expected to have bolstered adoption of its offerings, which in turn is likely to get reflected in the to-be-reported quarter’s revenues.
Further, incremental adoption of Workday Extend, formerly known as Workday Cloud Platform, integrated with enhanced capabilities, is expected to have driven growth in the fiscal second quarter.
Also, synergies from Scout RFP and Adaptive Insights acquisitions, and strength in product suite, are expected to have contributed to revenues in the fiscal second quarter.
Notably, in the last reported quarter, synergies from Scout RFP aided Workday win multiple Fortune 500 customers, including “largest-ever” deal with a large health care company. Other notable wins were Lowe's (LOW - Free Report) and Albertsons. Meanwhile, Workday Financial Management solutions were adopted by the likes of Fannie Mae, Louisville-Jefferson County Metro Government, and Okta (OKTA - Free Report) .
Besides Workday’s expanded partnership with Microsoft (MSFT - Free Report) in a bid to help customers in utilizing Workday Adaptive Planning on Azure cloud platform bodes well. Management is optimistic regarding the fact that Microsoft has adopted Workday Adaptive Planning on Azure to aid clientele with planning, budgeting and forecasting business processes with predictive analytics capabilities.
Latest partnerships with Microsoft with primary focus on Teams and Azure Active Directory, and salesforce’s Work.com, are expected to have aided the company acquire more customers as enterprises increasingly seek to optimize employee work. This is likely to have benefited the to-be-reported quarter’s performance.
Also, solid traction across international markets might have driven subscription revenue growth in the fiscal second quarter backed by adoption of the company’s software solutions. Moreover, during the quarter, Workday announced the expansion of operations into Mexico, with Guillermo Reynoso being appointed the new country manager.
For the fiscal second quarter, Workday expects subscription revenues in the range of $913-$915 million. The Zacks Consensus Estimate is pegged at $915 million, indicating growth of 20.8% on a year-over-year basis.
Product Roll Outs in Q2 Remain Notable
During the quarter under review, the company launched Workday Help and Workday Journeys solutions to expand the capabilities of its employee experience offering –– Workday People Experience.
Additionally, the company rolled out Workday People Analytics — an augmented analytics application that delivers deep insights regarding the risks and opportunities related to a company’s workforce.
Although investments on product roll outs bodes well over the longer haul, increased expenditure on product portfolio expansion and sales and marketing is likely to have limited margin expansion in the fiscal second quarter.
Moreover, coronavirus-induced layoffs owing to broader macroeconomic weakness and lower spend from small and medium sized businesses (SMBs) might have negatively impacted contract renewals in the fiscal second quarter, which in turn is likely to have acted as a headwind.
Markedly, professional services revenues are projected to be $128 million. The Zacks Consensus Estimate is pegged at $128 million, suggesting a decline of 2% on a year-over-year basis.
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Factors Setting the Tone for Workday's (WDAY) Q2 Earnings
Workday, Inc. (WDAY - Free Report) is scheduled to report second-quarter fiscal 2021 results on Aug 27.
The Zacks Consensus Estimate for fiscal second-quarter earnings is pegged at 65 cents, which suggests growth of 47.7% from the year-ago reported figure. Notably, the consensus estimate for earnings has remained stable over the past 30 days.
The consensus mark for fiscal second-quarter revenues is currently pegged at $1.04 billion, indicating an improvement of 17.5% from the prior-year quarter.
Notably, the company beat estimates in three of the trailing four quarters and missing the same once, the average surprise being 20.95%.
Factors to Note
Workday’s fiscal second-quarter performance is expected to have gained from high demand for its cloud-based human capital management (HCM) solutions, courtesy of coronavirus crisis induced accelerated digital transformation of enterprises taking place across all industries.
Workday, Inc. Price and EPS Surprise
Workday, Inc. price-eps-surprise | Workday, Inc. Quote
Moreover, growing clout of Workday Prism Analytics and Business Planning Cloud offerings may have contributed to the company’s fiscal second-quarter performance.
Markedly, the company has rolled out Workday 2020 Release 1 with features including improved workforce planning with Workday Adaptive Planning. The customers can also benefit from utilization of Workday Assistant — an intuitive chatbot to enhance employees experience. These improved features are expected to have bolstered adoption of its offerings, which in turn is likely to get reflected in the to-be-reported quarter’s revenues.
Further, incremental adoption of Workday Extend, formerly known as Workday Cloud Platform, integrated with enhanced capabilities, is expected to have driven growth in the fiscal second quarter.
Also, synergies from Scout RFP and Adaptive Insights acquisitions, and strength in product suite, are expected to have contributed to revenues in the fiscal second quarter.
Notably, in the last reported quarter, synergies from Scout RFP aided Workday win multiple Fortune 500 customers, including “largest-ever” deal with a large health care company. Other notable wins were Lowe's (LOW - Free Report) and Albertsons. Meanwhile, Workday Financial Management solutions were adopted by the likes of Fannie Mae, Louisville-Jefferson County Metro Government, and Okta (OKTA - Free Report) .
Besides Workday’s expanded partnership with Microsoft (MSFT - Free Report) in a bid to help customers in utilizing Workday Adaptive Planning on Azure cloud platform bodes well. Management is optimistic regarding the fact that Microsoft has adopted Workday Adaptive Planning on Azure to aid clientele with planning, budgeting and forecasting business processes with predictive analytics capabilities.
Latest partnerships with Microsoft with primary focus on Teams and Azure Active Directory, and salesforce’s Work.com, are expected to have aided the company acquire more customers as enterprises increasingly seek to optimize employee work. This is likely to have benefited the to-be-reported quarter’s performance.
Also, solid traction across international markets might have driven subscription revenue growth in the fiscal second quarter backed by adoption of the company’s software solutions. Moreover, during the quarter, Workday announced the expansion of operations into Mexico, with Guillermo Reynoso being appointed the new country manager.
For the fiscal second quarter, Workday expects subscription revenues in the range of $913-$915 million. The Zacks Consensus Estimate is pegged at $915 million, indicating growth of 20.8% on a year-over-year basis.
Product Roll Outs in Q2 Remain Notable
During the quarter under review, the company launched Workday Help and Workday Journeys solutions to expand the capabilities of its employee experience offering –– Workday People Experience.
Additionally, the company rolled out Workday People Analytics — an augmented analytics application that delivers deep insights regarding the risks and opportunities related to a company’s workforce.
Although investments on product roll outs bodes well over the longer haul, increased expenditure on product portfolio expansion and sales and marketing is likely to have limited margin expansion in the fiscal second quarter.
Moreover, coronavirus-induced layoffs owing to broader macroeconomic weakness and lower spend from small and medium sized businesses (SMBs) might have negatively impacted contract renewals in the fiscal second quarter, which in turn is likely to have acted as a headwind.
Markedly, professional services revenues are projected to be $128 million. The Zacks Consensus Estimate is pegged at $128 million, suggesting a decline of 2% on a year-over-year basis.
Workday currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
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