Workday Beats Analysts’ Expectations in Q1; Shares Down

Workday (WDAY) beat earnings and revenue estimates in the fiscal first quarter 2022. The company provides enterprise cloud applications for finance and human resources.

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Shares of the software company declined 1.1% in Wednesday’s extended trading session.

The company’s revenues of $1.18 million surpassed the Street’s estimates of $1.16 million and jumped 15.4% from the year-ago period. Subscription revenue increased 17.0% year over year to $1.03 billion.

Earnings came in at $0.87 per share, beating the consensus estimates of $0.73 per share and soared 97.7% year-over-year.

Workday CFO Robynne Sisco said, “We delivered solid first-quarter results driven by strong execution against an improving market backdrop.”

He further said, “As a result, we are raising our fiscal 2022 guidance for subscription revenue to a range of $4.425 to $4.440 billion, growth of 17%. We expect second-quarter subscription revenue of $1.095 billion to $1.097 billion, growth of 18%. We are also raising our fiscal 2022 non-GAAP operating margin guidance to a range of 18% to 19%.” (See Workday stock analysis on TipRanks)

On May 18, Monness analyst Brian White maintained a Buy rating and a price target of $280 (18.1% upside potential).

White commented, “Held hostage by this pandemic, we expect Workday to benefit from the great U.S. reopening and accelerated digital transformation trends, emerging from this crisis a stronger company.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 12 Buys versus 5 Holds. The average analyst price target of $274.29 implies 15.7% upside potential to current levels. Shares have increased 39.1% over the past year.