Workday Earnings: What To Look For From WDAY

Kayode Omotosho /
2024/05/22 3:01 am EDT

Finance and HR software company Workday (NASDAQ:WDAY) will be announcing earnings results tomorrow after market close. Here's what to look for.

Workday met analysts' revenue expectations last quarter, reporting revenues of $1.92 billion, up 16.7% year on year. It was a decent quarter for the company, with a narrow beat of analysts' billings estimates. Workday beat analysts' subscription revenue and EPS estimates. We note that its GAAP EPS beat expectations by a much wider margin due to the release of a valuation allowance for its deferred tax credits totaling $1.1 billion. The company also reiterated its full-year subscription revenue guidance.

Is Workday a buy or sell going into earnings? Read our full analysis here, it's free.

This quarter, analysts are expecting Workday's revenue to grow 17.2% year on year to $1.97 billion, in line with the 17.4% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.58 per share.

Workday Total Revenue

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Workday has a history of exceeding Wall Street's expectations, beating revenue estimates every single time over the past two years by 0.8% on average.

Looking at Workday's peers in the finance and HR software segment, some have already reported their Q1 results, giving us a hint as to what we can expect. Bill.com delivered year-on-year revenue growth of 18.5%, beating analysts' expectations by 5.6%, and Dayforce reported revenues up 16.4%, topping estimates by 1.3%. Bill.com traded down 10.6% following the results while Dayforce was also down 6%.

Read our full analysis of Bill.com's results here and Dayforce's results here.

There has been positive sentiment among investors in the finance and HR software segment, with share prices up 3.2% on average over the last month. Workday is up 1% during the same time and is heading into earnings with an average analyst price target of $314.5 (compared to the current share price of $259.39).

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