Workday (WDAY) Q3 Earnings Report Preview: What To Look For

Petr Huřťák /
2022/11/28 4:09 am EST

Finance and HR software company Workday (NASDAQ:WDAY) will be reporting results tomorrow after market hours. Here's what you need to know.

Last quarter Workday reported revenues of $1.53 billion, up 21.8% year on year, beating analyst revenue expectations by 1.11%. It was a decent quarter for the company, with topline results surpassing expectations.

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 19.4% year on year to $1.58 billion, in line with the 20% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.84 per share.

Workday Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. 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 1.24%.

Looking at Workday's peers in the finance and HR software segment, some of them have already reported Q3 earnings results, giving us a hint of what we can expect. Bill.com delivered top-line growth of 94.2% year on year, beating analyst estimates by 9.02% and Paycom Software reported revenues up 30.4% year on year, exceeding estimates by 1.79%. Bill.com traded up 3.45% on the results, and Paycom Software was up 1.91%. 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 while some of the software stocks have fared somewhat better, they have not been spared, with share price declining 7.03% over the last month. Workday is down 4.37% during the same time, and is heading into the earnings with analyst price target of $204.40, compared to share price of $148.12.

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.