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Workday (WDAY) Q2 Earnings Beat Estimates on Higher Revenues
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Workday, Inc. (WDAY - Free Report) reported strong second-quarter fiscal 2025 results, with the bottom and the top lines surpassing the respective Zacks Consensus Estimate.
The company reported revenue growth year over year, driven by solid customer wins across various industries, including education, financials, healthcare and more. Strategic expansions and strong contract renewals within the existing customer base also drove the top line. Management’s strong focus on innovations, AI integration and international expansion are positive factors.
WDAY’s Net Income
Net income on a GAAP basis was $132 million or 49 cents per share compared with $79 million or 30 cents results in the year-ago quarter. Despite higher operating expenses, the bottom line improved significantly due to higher revenues.
Non-GAAP earnings rose to $1.75 per share from $1.43 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents.
Net sales during the quarter were $2.085 billion, up from $1.787 billion in the year-ago quarter, backed by rising demand for the company’s HCM (Human Capital Management) and financial management solution. The top line surpassed the Zacks Consensus Estimate by $15 million.
The strong revenue growth accentuates the diversity and robustness of Workday’s product portfolio. Along with several new customer wins, the company witnessed several strategic expansions and contract renewals within its existing customer base. New customers, including GE Vernova, First Bus, Sunrise Senior Living and many other organizations, have opted to deploy WDAY’s HCM product suite. During the quarter, the company crossed 2,000 customers for Workday Financial Management. Workday also witnessed solid traction among government customers. Delaware County, Santa Cruz County has selected Workday’s solution during the quarter.
Subscription services revenues contributed $1.9 billion, up from $1.62 billion in the year-ago quarter. Net sales from Subscription services marginally surpassed our estimate of $1.89 billion. At the end of the quarter, the 12-month subscription revenue backlog was $6.8 billion, up 16.1% year over year, backed by higher contract renewals. Total subscription revenue backlog increased 20.9% year over year to $21.58 billion.
Revenues from Professional services were $182 million compared with $163 million in the prior-year quarter. The top line beat our estimate of $174.6 million.
Other Details for WDAY
Operating income during the quarter was $111 million compared with $36 million in the year-ago quarter. Non-GAAP operating income was $518 million, up from $421 million a year ago, with respective margins of 24.9% and 23.6%.
Workday’s Cash Flow & Liquidity
During the second quarter of fiscal 2025, the company generated $571 million of cash from operating activities compared with $425 million in the prior-year quarter. Workday repurchased $1.4 million shares during the quarter for $309 million. As of Jul 31, 2024, the company had cash and cash equivalents and marketable securities of $7.37 billion with long-term debt of $2.98 billion.
Outlook
For fiscal 2025, the company expects subscription revenues in the range of $7.700 billion to $7.725 billion, suggesting growth of 17% year over year. Professional services revenues are expected to be about $680-$690 million. The non-GAAP operating margin is projected to be 25.25%. Capital expenditure is approximated to be around $330 million.
For the third quarter of fiscal 2025, Workday expects Subscription services revenues to be $1.955 billion. Revenues from Professional services are estimated to be $175 million. For the fiscal third quarter, the non-GAAP operating margin is approximated to be 25.25%.
It is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
Ubiquiti Inc. (UI - Free Report) carries a Zacks Rank #2 (Buy) at present. The company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises.
Its excellent global business model, which is flexible and adaptable to evolving changes in markets, helps it to beat challenges and maximize growth. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.
AudioCodes Ltd. (AUDC - Free Report) , carrying a Zacks Rank #2 at present, delivered an earnings surprise of 10.14%, on average, in three of the trailing four quarters.
Is a vendor of advanced voice networking and media processing solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services.
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Workday (WDAY) Q2 Earnings Beat Estimates on Higher Revenues
Workday, Inc. (WDAY - Free Report) reported strong second-quarter fiscal 2025 results, with the bottom and the top lines surpassing the respective Zacks Consensus Estimate.
The company reported revenue growth year over year, driven by solid customer wins across various industries, including education, financials, healthcare and more. Strategic expansions and strong contract renewals within the existing customer base also drove the top line. Management’s strong focus on innovations, AI integration and international expansion are positive factors.
WDAY’s Net Income
Net income on a GAAP basis was $132 million or 49 cents per share compared with $79 million or 30 cents results in the year-ago quarter. Despite higher operating expenses, the bottom line improved significantly due to higher revenues.
Non-GAAP earnings rose to $1.75 per share from $1.43 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents.
Workday, Inc. Price, Consensus and EPS Surprise
Workday, Inc. price-consensus-eps-surprise-chart | Workday, Inc. Quote
Workday’s Revenues
Net sales during the quarter were $2.085 billion, up from $1.787 billion in the year-ago quarter, backed by rising demand for the company’s HCM (Human Capital Management) and financial management solution. The top line surpassed the Zacks Consensus Estimate by $15 million.
The strong revenue growth accentuates the diversity and robustness of Workday’s product portfolio. Along with several new customer wins, the company witnessed several strategic expansions and contract renewals within its existing customer base. New customers, including GE Vernova, First Bus, Sunrise Senior Living and many other organizations, have opted to deploy WDAY’s HCM product suite. During the quarter, the company crossed 2,000 customers for Workday Financial Management. Workday also witnessed solid traction among government customers. Delaware County, Santa Cruz County has selected Workday’s solution during the quarter.
Subscription services revenues contributed $1.9 billion, up from $1.62 billion in the year-ago quarter. Net sales from Subscription services marginally surpassed our estimate of $1.89 billion. At the end of the quarter, the 12-month subscription revenue backlog was $6.8 billion, up 16.1% year over year, backed by higher contract renewals. Total subscription revenue backlog increased 20.9% year over year to $21.58 billion.
Revenues from Professional services were $182 million compared with $163 million in the prior-year quarter. The top line beat our estimate of $174.6 million.
Other Details for WDAY
Operating income during the quarter was $111 million compared with $36 million in the year-ago quarter. Non-GAAP operating income was $518 million, up from $421 million a year ago, with respective margins of 24.9% and 23.6%.
Workday’s Cash Flow & Liquidity
During the second quarter of fiscal 2025, the company generated $571 million of cash from operating activities compared with $425 million in the prior-year quarter. Workday repurchased $1.4 million shares during the quarter for $309 million. As of Jul 31, 2024, the company had cash and cash equivalents and marketable securities of $7.37 billion with long-term debt of $2.98 billion.
Outlook
For fiscal 2025, the company expects subscription revenues in the range of $7.700 billion to $7.725 billion, suggesting growth of 17% year over year. Professional services revenues are expected to be about $680-$690 million. The non-GAAP operating margin is projected to be 25.25%. Capital expenditure is approximated to be around $330 million.
For the third quarter of fiscal 2025, Workday expects Subscription services revenues to be $1.955 billion. Revenues from Professional services are estimated to be $175 million. For the fiscal third quarter, the non-GAAP operating margin is approximated to be 25.25%.
Zacks Rank & Stocks to Consider
Workday currently carries a Zacks Rank #3 (Hold).
Arista Networks, Inc. (ANET - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. In the last reported quarter, it delivered an earnings surprise of 8.25%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
Ubiquiti Inc. (UI - Free Report) carries a Zacks Rank #2 (Buy) at present. The company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises.
Its excellent global business model, which is flexible and adaptable to evolving changes in markets, helps it to beat challenges and maximize growth. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.
AudioCodes Ltd. (AUDC - Free Report) , carrying a Zacks Rank #2 at present, delivered an earnings surprise of 10.14%, on average, in three of the trailing four quarters.
Is a vendor of advanced voice networking and media processing solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services.