Finance and HR software company Workday (NASDAQ: WDAY) will be announcing earnings results tomorrow after market close. Here’s what to expect.
Workday beat analysts’ revenue expectations by 1.4% last quarter, reporting revenues of $2.16 billion, up 15.8% year on year. It was a strong quarter for the company, with a solid beat of analysts’ annual recurring revenue estimates and an impressive beat of analysts’ EBITDA estimates.
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 13.5% year on year to $2.18 billion, slowing from the 16.7% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.78 per share.
Analysts covering the company have generally 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 Q4 results, giving us a hint as to what we can expect. Bill.com delivered year-on-year revenue growth of 13.9%, meeting analysts’ expectations, and Paycor reported revenues up 13.1%, topping estimates by 1.9%. Bill.com traded down 35.6% following the results while Paycor’s stock price was unchanged.
Read our full analysis of Bill.com’s results here and Paycor’s results here.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market has been optimistic as of late due to a soft landing. This is an economic situation where rate hikes successfully quelled inflation but did not send the economy into a recession. Furthermore, recent rate cuts and Donald Trump's triumph in the 2024 Presidential election have been tailwinds for the market, and while some of the finance and HR software stocks have shown solid performance, the group has generally underperformed, with share prices down 2.8% on average over the last month. Workday is down 2.5% during the same time and is heading into earnings with an average analyst price target of $294.91 (compared to the current share price of $256.39).
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