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Workday (WDAY) Q1 Earnings Miss Estimates, Revenues Up Y/Y

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Workday, Inc. (WDAY - Free Report) reported weak first-quarter fiscal 2023 results (ended Apr 30, 2022), with the bottom line missing the consensus estimate. WDAY is quite confident about its growth opportunities in fiscal 2023. It plans to focus on customer satisfaction via increased industry investments and expanded innovation efforts.

Quarter Details

Total revenues in the quarter were $1,434.7 million compared with $1,175 million in the prior-year quarter, reflecting growth of 22.1%. The top line outpaced the Zacks Consensus Estimate of $1426 million. Subscription services revenues were $1272.1 million compared with $1032.2 million a year ago, reflecting growth of 23.2%. Professional services revenues were $162.6 million, up 13.9% from $142.9 million in the prior-year quarter.

Net loss reported in the quarter was $102.2 million or a loss of 41 cents per share compared with a loss of $46.5 million or 19 cents per share in the prior-year quarter. Despite the top-line growth, higher SG&A expenses and operating expenses led to wider loss during the quarter.

Non-GAAP net income during the quarter was 83 cents per share compared with 87 cents in the prior-year quarter, down 4.6%. The figure missed the Zacks Consensus Estimate by 3 cents. WDAY, to meet its ESG commitments, has announced two ESG solutions to help customers drive their social initiatives.

Operating Details

Operating losses during the quarter were $72.8 million compared with a loss of $38.3 million in the prior-year quarter. WDAY has completed the issuance and sale of $3,000 million aggregate principal amount of senior notes in an underwritten, registered public offering.

Workday, Inc. Price, Consensus and EPS Surprise

Workday, Inc. Price, Consensus and EPS Surprise

Workday, Inc. price-consensus-eps-surprise-chart | Workday, Inc. Quote

Cash Flow & Liquidity

During the fiscal first quarter, WDAY generated $439.7 million of cash from operating activities compared with $452.4 million in the prior-year quarter. As of Apr 30, 2022, the company had cash and cash equivalents and marketable securities of $6,255.3 million with long-term debt of $2973.1 million.

Guidance

WDAY, to reflect the continued momentum in its business has raised its guidance for fiscal 2023. Subscription revenues for the fiscal year are now expected to be in the band of $5,537-$5,557 million, representing growth of 20% year over year. Professional services revenues for the year are still expected to be $650 million.

For the second quarter of fiscal 2023, WDAY expects subscription revenues to be in the band of $1,353-$1,355 million. Professional revenues are expected to be $164 million. The Non-GAAP operating margin is projected to be 17.5%.

Zacks Rank & Stocks to Consider

Workday currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Duck Creek Technologies, Inc. is a better-ranked stock in the broader Zacks Computer and Technology sector, sporting a Zacks Rank #1. Current-year estimates have been revised up by 400% over the past year, while that for the next year is up 40%.

The long-term earnings growth expectation for Duck Creek is 50%.

SAP SE (SAP - Free Report) , carrying a Zacks Rank #2 (Buy), is a key pick for stock investors. SAP has a long-term earnings growth expectation of 5.89%.

SAP, with its Rise with SAP solution, was adopted by clients, including Accenture, Canon Production Printing, Exide Industries Limited, NEC Corporation, Qinqin Food, Rising Auto and TELUS.

Silicon Motion Technology (SIMO - Free Report) , carrying Zacks Rank #2, is another great pick for investors. It has a long-term earnings growth expectation of 9%, with an earnings surprise of 3.8% on average in the trailing four quarters.

Silicon Motion has established itself as the leading merchant supplier of client SSD controller to module makers, including most leaders in the United States.


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