We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Workday Inc. (WDAY - Free Report) reported impressive second-quarter fiscal 2024 results, with the bottom and the top line surpassing the respective Zacks Consensus Estimate.
The company reported higher revenues year over year, backed by solid net sales growth and customer wins in various sectors including healthcare, financial services, retail and hospitality. Management’s focus on product innovation, diversifying portfolio and AI integration supported the top line during the quarter.
Net Income
GAAP net income was $78.7 million or 30 cents per share against a net loss of $64.2 million or a loss of 25 cents per share in the year-ago quarter. The improvement can be primarily attributed to top-line expansion year over year.
Non-GAAP net income increased to $378.3 million or $1.43 per share from $217.7 million or 83 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 18 cents.
Total revenues in the fiscal second quarter were $1,786.8 million, up from $1,535.8 million reported in the year-earlier quarter. The top line surpassed the Zacks Consensus Estimate of $1,773 million. The solid improvement in net sales was driven by robust growth in Workday's financial, human capital and supply chain management solutions.
Over 65 million users entrusted Workday solutions to optimize the management of their vital business operations. During the fiscal second quarter, retail and hospitality exceeded $1 billion in annual recurring revenues, alongside financial services. The healthcare segment continued to exhibit robust growth, backed by the growing adoption of Workday supply chain solutions. Strength in the education and government sector is a positive factor. Workday’s partner referral program with AWS continued to drive multiple strategic wins during the quarter.
The company is actively engaged in integrating and harnessing the full potential of generative AI. The development of AI-based product capabilities currently focuses on natural language generation, content search, summarization, content augmentation and document understanding. Workday is witnessing a growing uptake of machine learning models, with around 3,000 customers actively sharing their data with Workday's ML models, resulting in over 50 million daily ML inferences being processed.
Subscription services revenues totaled $1,623.9 million, up 18.8% from $1,367.3 million reported in the year-ago quarter. Net sales surpassed our revenue estimate of $1,612.3 million. At the end of the quarter, the 24-month subscription revenue backlog increased 22.7% to $10.27 billion, driven by new ACV bookings and strong contract renewals.
Revenues from professional services were $162.8 million compared with $168.5 million in the prior-year quarter. The top line beat our revenue estimate of $160.1 million.
Other Details
Operating income during the quarter was $36.3 million against an operating loss of $34.1 million in the prior-year quarter. Non-GAAP operating income was $421.4 million for an operating margin of 23.6% compared with the respective figures of $301.6 million and 19.6% in the year-ago quarter.
Cash Flow & Liquidity
During the second quarter of fiscal 2024, the company generated $425.3 million of cash from operating activities compared with $114.4 million in the prior-year quarter. As of Jul 31, 2023, it had cash and cash equivalents and marketable securities of $6.66 billion with long-term debt of $2,977.8 million.
Outlook
For fiscal 2024, the company raised its guidance for subscription revenues to $6.570-$6.590 billion from the previously estimated range of $6.550-$6.575 billion, indicating growth of 18% year over year. Professional services revenues are expected in the range of $630-$650 million. The non-GAAP operating margin is projected to be 23.5%, up from the prior estimation of 23%. Capital expenditure is approximated to be around $300 million.
For the third quarter of fiscal 2024, management expects Subscription services revenues to be in the band of $1.678-$1.680 billion. Revenues from Professional services are estimated to be $165 million. For the fiscal third quarter, the non-GAAP operating margin is approximated to be 23.5%.
Zacks Rank & Other Stocks to Consider
Workday currently sports a Zacks Rank #1 (Strong Buy).
Motorola Solutions, Inc (MSI - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered an earnings surprise of 5.62%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 5.58%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
Ubiquiti, Inc. (UI - Free Report) , currently carrying a Zacks Rank #2, delivered an earnings surprise of 2.37%, on average, in the trailing four quarters. Earnings estimates for UI for the current year stand at $7.14 per share.
Ubiquiti Inc., along with its subsidiaries, offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. Its service-provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing, while enterprise product platforms provide wireless local area network infrastructure, video surveillance products and machine-to-machine communication components.
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 9.79%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 29.19%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Workday (WDAY) Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Workday Inc. (WDAY - Free Report) reported impressive second-quarter fiscal 2024 results, with the bottom and the top line surpassing the respective Zacks Consensus Estimate.
The company reported higher revenues year over year, backed by solid net sales growth and customer wins in various sectors including healthcare, financial services, retail and hospitality. Management’s focus on product innovation, diversifying portfolio and AI integration supported the top line during the quarter.
Net Income
GAAP net income was $78.7 million or 30 cents per share against a net loss of $64.2 million or a loss of 25 cents per share in the year-ago quarter. The improvement can be primarily attributed to top-line expansion year over year.
Non-GAAP net income increased to $378.3 million or $1.43 per share from $217.7 million or 83 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 18 cents.
Workday, Inc. Price, Consensus and EPS Surprise
Workday, Inc. price-consensus-eps-surprise-chart | Workday, Inc. Quote
Revenues
Total revenues in the fiscal second quarter were $1,786.8 million, up from $1,535.8 million reported in the year-earlier quarter. The top line surpassed the Zacks Consensus Estimate of $1,773 million. The solid improvement in net sales was driven by robust growth in Workday's financial, human capital and supply chain management solutions.
Over 65 million users entrusted Workday solutions to optimize the management of their vital business operations. During the fiscal second quarter, retail and hospitality exceeded $1 billion in annual recurring revenues, alongside financial services. The healthcare segment continued to exhibit robust growth, backed by the growing adoption of Workday supply chain solutions. Strength in the education and government sector is a positive factor. Workday’s partner referral program with AWS continued to drive multiple strategic wins during the quarter.
The company is actively engaged in integrating and harnessing the full potential of generative AI. The development of AI-based product capabilities currently focuses on natural language generation, content search, summarization, content augmentation and document understanding. Workday is witnessing a growing uptake of machine learning models, with around 3,000 customers actively sharing their data with Workday's ML models, resulting in over 50 million daily ML inferences being processed.
Subscription services revenues totaled $1,623.9 million, up 18.8% from $1,367.3 million reported in the year-ago quarter. Net sales surpassed our revenue estimate of $1,612.3 million. At the end of the quarter, the 24-month subscription revenue backlog increased 22.7% to $10.27 billion, driven by new ACV bookings and strong contract renewals.
Revenues from professional services were $162.8 million compared with $168.5 million in the prior-year quarter. The top line beat our revenue estimate of $160.1 million.
Other Details
Operating income during the quarter was $36.3 million against an operating loss of $34.1 million in the prior-year quarter. Non-GAAP operating income was $421.4 million for an operating margin of 23.6% compared with the respective figures of $301.6 million and 19.6% in the year-ago quarter.
Cash Flow & Liquidity
During the second quarter of fiscal 2024, the company generated $425.3 million of cash from operating activities compared with $114.4 million in the prior-year quarter. As of Jul 31, 2023, it had cash and cash equivalents and marketable securities of $6.66 billion with long-term debt of $2,977.8 million.
Outlook
For fiscal 2024, the company raised its guidance for subscription revenues to $6.570-$6.590 billion from the previously estimated range of $6.550-$6.575 billion, indicating growth of 18% year over year. Professional services revenues are expected in the range of $630-$650 million. The non-GAAP operating margin is projected to be 23.5%, up from the prior estimation of 23%. Capital expenditure is approximated to be around $300 million.
For the third quarter of fiscal 2024, management expects Subscription services revenues to be in the band of $1.678-$1.680 billion. Revenues from Professional services are estimated to be $165 million. For the fiscal third quarter, the non-GAAP operating margin is approximated to be 23.5%.
Zacks Rank & Other Stocks to Consider
Workday currently sports a Zacks Rank #1 (Strong Buy).
Motorola Solutions, Inc (MSI - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered an earnings surprise of 5.62%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 5.58%. You can see the complete list of today’s Zacks #1 Rank stocks here.
It provides services and solutions to government segments and public safety programs, along with large enterprises and wireless infrastructure service providers. It develops and services both analog and digital two-way radio, voice and data communications products and systems for private networks, wireless broadband systems and end-to-end enterprise mobility solutions to a wide range of enterprise markets.
Ubiquiti, Inc. (UI - Free Report) , currently carrying a Zacks Rank #2, delivered an earnings surprise of 2.37%, on average, in the trailing four quarters. Earnings estimates for UI for the current year stand at $7.14 per share.
Ubiquiti Inc., along with its subsidiaries, offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. Its service-provider product platforms offer carrier-class network infrastructure for fixed wireless broadband, wireless backhaul systems and routing, while enterprise product platforms provide wireless local area network infrastructure, video surveillance products and machine-to-machine communication components.
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1, delivered an earnings surprise of 9.79%, on average, in the trailing four quarters. In the last reported quarter, it pulled off an earnings surprise of 29.19%.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence-based solutions that now support high-performance computing, gaming and virtual reality platforms.