Workday (WDAY) Q1 Earnings: What To Expect

Jabin Bastian /
2022/05/25 8:00 am EDT
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Finance and HR software company Workday (NASDAQ:WDAY) will be reporting results tomorrow after market hours. Here's what to expect.

Last quarter Workday reported revenues of $1.37 billion, up 21.6% year on year, in line with analyst expectations. It was a good quarter for the company, with a decent beat of top-line analysts' estimates.

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

This quarter analysts are expecting Workday's revenue to grow 21.2% year on year to $1.42 billion, improving on the 15.3% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.85 per share.

Workday Total Revenue

The analysts covering the company have been growing increasingly bearish about the business heading into the earnings, with revenue estimates seeing three downward revisions over the last thirty days. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 1.44%.

Looking at Workday's peers in the finance and HR software segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. Bill.com delivered top-line growth of 179% year on year, beating analyst estimates by 5.7% and Paycom Software reported revenues up 29.8% year on year, exceeding estimates by 3%. Bill.com traded down 19.4% on the results, and Paycom Software was up 8.11%. Read our full analysis of Bill.com's results here and Paycom Software's results here.

Tech stocks have had a rocky start in 2022 and software stocks have not been spared, with share price down on average 20.2% over the last month. Workday is down 21.1% during the same time, and is heading into the earnings with analyst price target of $282.1, compared to share price of $161.86.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.