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Workday (WDAY) Beats Q2 Earnings Estimates on Top-Line Growth
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Workday, Inc. (WDAY - Free Report) reported relatively healthy second-quarter fiscal 2023 results (ended Jul 31, 2022), with the bottom line and top line beating the consensus estimate. With solid demand trends, the company is confident about its growth opportunities for fiscal 2023. It plans to focus on higher investments in key industries and innovation efforts to expand its footprint within the partner ecosystem.
Quarter Details
Net loss in the reported quarter was $64.2 million or a loss of 25 cents per share against net income of $105.7 million or 41 cents per share in the prior-year quarter. Despite top-line growth, higher operating expenses led to a loss during the quarter. Non-GAAP net income was $217.7 million or 83 cents per share compared with $319.8 million or $1.23 per share in the prior-year quarter. The figure beat the Zacks Consensus Estimate by 4 cents.
Total revenues in the quarter were $1,535.8 million compared with $1,260.4 million in the prior-year quarter, driven by higher digital transformation initiatives across Finance and HR domains in tune with the evolving market conditions. The top line outpaced the Zacks Consensus Estimate of $1519 million. Subscription services revenues were $1,367.3 million compared with $1,113.5 million a year ago, while Professional services revenues increased to $168.5 million from $146.9 million in the prior-year quarter.
Operating Details
Operating loss during the quarter was $34.1 million compared with $1.1 million in the prior-year quarter. Non-GAAP operating income was $301.6 million for an operating margin of 19.6% compared with respective tallies of $291.8 million and 23.2% in the year-earlier quarter.
Cash Flow & Liquidity
During the first six months of fiscal 2023, WDAY generated $554.1 million of cash from operating activities compared with $650.9 million in the prior-year period. As of Jul 31, 2022, the company had cash and cash equivalents and marketable securities of $6,292.9 million with long-term debt of $2,974 million.
Guidance
With continued momentum in its business, the company reiterated its earlier guidance for fiscal 2023. Subscription revenues for the fiscal year are expected to be in the band of $5,537-$5,557 million, representing growth of 22% year over year. Professional services revenues for the year are expected to be around $650 million. Non-GAAP operating margin is projected to be 19%.
For the third quarter of fiscal 2023, WDAY expects subscription revenues to be in the band of $1,418-$1,420 million. Professional revenues are expected to be $164 million. The non-GAAP operating margin is projected to be 18%.
TESSCO Technologies Incorporated , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 49.4% since August 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Spirent Communications plc (SPMYY - Free Report) carries a Zacks Rank #2. Earnings estimates for the current year for the stock have moved up 10.8% since August 2021, while that for the next year is up 11.8%.
Founded in 1936 and headquartered in Crawley, the United Kingdom, Spirent offers a comprehensive, end-to-end solution that validates forwarding performance, latency and functional capabilities in an integrated approach that reduces the cost of ownership. It is a leading provider of Ethernet validation solutions in the market.
Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.8%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 17.1% since February 2022.
Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit Internet service to consumers' homes and mobile devices.
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Workday (WDAY) Beats Q2 Earnings Estimates on Top-Line Growth
Workday, Inc. (WDAY - Free Report) reported relatively healthy second-quarter fiscal 2023 results (ended Jul 31, 2022), with the bottom line and top line beating the consensus estimate. With solid demand trends, the company is confident about its growth opportunities for fiscal 2023. It plans to focus on higher investments in key industries and innovation efforts to expand its footprint within the partner ecosystem.
Quarter Details
Net loss in the reported quarter was $64.2 million or a loss of 25 cents per share against net income of $105.7 million or 41 cents per share in the prior-year quarter. Despite top-line growth, higher operating expenses led to a loss during the quarter. Non-GAAP net income was $217.7 million or 83 cents per share compared with $319.8 million or $1.23 per share in the prior-year quarter. The figure beat the Zacks Consensus Estimate by 4 cents.
Workday, Inc. Price, Consensus and EPS Surprise
Workday, Inc. price-consensus-eps-surprise-chart | Workday, Inc. Quote
Total revenues in the quarter were $1,535.8 million compared with $1,260.4 million in the prior-year quarter, driven by higher digital transformation initiatives across Finance and HR domains in tune with the evolving market conditions. The top line outpaced the Zacks Consensus Estimate of $1519 million. Subscription services revenues were $1,367.3 million compared with $1,113.5 million a year ago, while Professional services revenues increased to $168.5 million from $146.9 million in the prior-year quarter.
Operating Details
Operating loss during the quarter was $34.1 million compared with $1.1 million in the prior-year quarter. Non-GAAP operating income was $301.6 million for an operating margin of 19.6% compared with respective tallies of $291.8 million and 23.2% in the year-earlier quarter.
Cash Flow & Liquidity
During the first six months of fiscal 2023, WDAY generated $554.1 million of cash from operating activities compared with $650.9 million in the prior-year period. As of Jul 31, 2022, the company had cash and cash equivalents and marketable securities of $6,292.9 million with long-term debt of $2,974 million.
Guidance
With continued momentum in its business, the company reiterated its earlier guidance for fiscal 2023. Subscription revenues for the fiscal year are expected to be in the band of $5,537-$5,557 million, representing growth of 22% year over year. Professional services revenues for the year are expected to be around $650 million. Non-GAAP operating margin is projected to be 19%.
For the third quarter of fiscal 2023, WDAY expects subscription revenues to be in the band of $1,418-$1,420 million. Professional revenues are expected to be $164 million. The non-GAAP operating margin is projected to be 18%.
Zacks Rank & Stocks to Consider
Workday currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
TESSCO Technologies Incorporated , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 49.4% since August 2021.
TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.
Spirent Communications plc (SPMYY - Free Report) carries a Zacks Rank #2. Earnings estimates for the current year for the stock have moved up 10.8% since August 2021, while that for the next year is up 11.8%.
Founded in 1936 and headquartered in Crawley, the United Kingdom, Spirent offers a comprehensive, end-to-end solution that validates forwarding performance, latency and functional capabilities in an integrated approach that reduces the cost of ownership. It is a leading provider of Ethernet validation solutions in the market.
Harmonic Inc. (HLIT - Free Report) , carrying a Zacks Rank #2, delivered an earnings surprise of 79.8%, on average, in the trailing four quarters. Earnings estimates for Harmonic for the current year have moved up 17.1% since February 2022.
Harmonic provides video delivery software, products, system solutions, and services worldwide. With more than three decades of experience, it has revolutionized cable access networking via the industry's first virtualized cable access solution, enabling cable operators to more flexibly deploy gigabit Internet service to consumers' homes and mobile devices.