Workday reported October-quarter earnings that topped estimates while the company's guidance came in better-than-feared. WDAY stock popped on the news as the S&P 500 rallied on views the Federal Reserve will slow rate hikes.
The enterprise software maker reported third quarter earnings late Tuesday.
For the three months ended Oct. 31, Workday earnings were 99 cents a share on an adjusted basis, down 10% from the year-earlier period. Revenue climbed 20.5% to $1.6 billion, including acquisitions.
Workday Stock Buyback Announced
Analysts expected Workday earnings of 84 cents a share on revenue of $1.586 billion. A year earlier, Workday earnings were $1.10 a share on sales of $1.327 billion.
WDAY stock popped 17.2% to close at 167.90 on the stock market today.
The company also announced a $500 million stock repurchase program.
"We lowered fiscal 2024 subscription revenue growth to 18.5% year-over-year into the print and the updated guide of 17% to 19% was better than feared," said BMO Capital Markets analyst Daniel Jester in a report. He added: "The lower end represents a modest degradation in net new business from the current environment."
WDAY Stock: Subscription Revenue Guidance
Pleasanton, Calif.-based Workday said subscription revenue rose 22% to $1.43 billion, edging by estimates of $1.42 billion.
For full-year fiscal 2023, the software maker raised subscription revenue guidance to $5.56 billion vs. consensus estimates of $5.55 billion. It forecast operating margin of 19.2% vs. estimates of 19%.
Thus far in 2022, Workday stock had retreated 47% amid a bear market in technology companies.
Low Relative Strength Rating
The company sells software for human capital management, such as payroll tools. Also, it has expanded into financial software.
WDAY stock holds a Relative Strength Rating of 23 out of a best-possible 99, according to IBD Stock checkup.
With valuations of software growth stocks falling, Workday looms as a possible acquirer. Workday had nearly $6.3 billion in cash on its balance sheet as of the July quarter.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
