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Workday (WDAY) Q4 Earnings Beat Estimates on Higher Revenues
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Workday Inc. (WDAY - Free Report) reported solid fourth-quarter fiscal 2024 results, with the bottom and the top line surpassing the respective Zacks Consensus Estimate.
The company reported revenue growth year over year, driven by solid customer wins across various industries, including education, financials, healthcare and more. Strategic expansions and strong contract renewals within the existing customer base also drove the top line. Management’s strong focus on innovations, AI integration and international expansion are positive factors.
Net Income
Net income on a GAAP basis was $1.18 billion or $4.42 per share against a net loss of $126 million or a loss of 49 cents per share in the year-ago quarter. The year-over-year top-line expansion boosted the net income.
Non-GAAP net income rose to $421 million or $1.57 per share from $256 million or 99 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 13 cents.
In fiscal 2024, the company reported a GAAP net income of $1.38 billion or $5.21 per share against a loss of $367 million or a loss of $1.44 per share in fiscal 2023. In fiscal 2024, non GAAP net income rose to $1.54 billion or $5.84 per share from $949 million or $3.64 per share in the prior year.
Net sales during the quarter were $1.92 billion, up from $1.64 billion in the year-ago quarter, backed by rising demand for the company’s HCM (Human Capital Management) and financial management solution. The top line surpassed the Zacks Consensus Estimate by $9 million.
In fiscal 2024, the company reported $7.25 billion in revenues compared with $6.21 billion in fiscal 2023.
The strong revenue growth accentuates the diversity and robustness of Workday’s product portfolio. Along with several new customer wins, the company also witnessed several strategic expansions and contract renewals within its existing customer base. New customers, including HHS, Randstad, Australian Stock Exchange, Boyd Gaming Corporation, UHS of Delaware and VXI Global Solutions, selected the full platform of Workday HCM and financial management products.
Many enterprise customers of Workday’s HCM products, including Huntington Bank, Intermountain Health and Stewart Title Guaranty, opted to deploy the financial management solution. In healthcare, the company witnessed strong growth in ACV bookings. In education, it secured multiple deal wins with various institutions such as Oregon State University, Portland Community College and more.
Subscription services revenues contributed $1.76 billion, up from $1.49 billion in the year-ago quarter. Net sales surpassed our estimate of $1.75 billion. At the end of the quarter, the 12-month subscription revenue backlog was $6.62 billion, up 20% backed by higher contract renewals.
Revenues from professional services were $162 million compared with $150 million in the prior-year quarter. The top line beat our estimate of $158 million.
Other Details
Operating income during the quarter was $79 million against an operating loss of $89 million in the year-ago quarter. Non-GAAP operating income was $461 million, up from $305 million a year ago, with respective margins of 23.9% and 18.5%.
Cash Flow & Liquidity
During the fourth quarter of fiscal 2024, the company generated $996 million of cash from operating activities compared with $694 million in the prior-year quarter. In fiscal 2024, the company generated $2.14 billion of cash from operations compared with $1.65 billion in fiscal 2023.
As of Jan 31, 2024, it had cash and cash equivalents and marketable securities of $7.8 billion with long-term debt of $2.98 billion compared with respective figures of $6.12 billion and $2.97 billion.
Outlook
For fiscal 2025, the company expects subscription revenues in the range of $7.725 billion to $7.775 billion, suggesting growth of 17% to 18% year over year. Professional services revenues are expected to be about $630-$640 million. The non-GAAP operating margin is projected to be 24.5%. Capital expenditure is approximated to be around $330 million.
For the first quarter of fiscal 2025, Workday expects Subscription services revenues to be $1.81 billion. Revenues from Professional services are estimated to be $163 million. For the fiscal first quarter, the non-GAAP operating margin is approximated to be 24.5%.
Zacks Rank & Stocks to Consider
Workday currently carries a Zacks Rank #3 (Hold).
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), delivered a trailing four-quarter average earnings surprise of 20.18%. In the last reported quarter, it delivered an earnings surprise of 13.41%. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 170.50%. In the last reported quarter, it delivered an earnings surprise of 16.53%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 13.28%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
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Workday (WDAY) Q4 Earnings Beat Estimates on Higher Revenues
Workday Inc. (WDAY - Free Report) reported solid fourth-quarter fiscal 2024 results, with the bottom and the top line surpassing the respective Zacks Consensus Estimate.
The company reported revenue growth year over year, driven by solid customer wins across various industries, including education, financials, healthcare and more. Strategic expansions and strong contract renewals within the existing customer base also drove the top line. Management’s strong focus on innovations, AI integration and international expansion are positive factors.
Net Income
Net income on a GAAP basis was $1.18 billion or $4.42 per share against a net loss of $126 million or a loss of 49 cents per share in the year-ago quarter. The year-over-year top-line expansion boosted the net income.
Non-GAAP net income rose to $421 million or $1.57 per share from $256 million or 99 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 13 cents.
In fiscal 2024, the company reported a GAAP net income of $1.38 billion or $5.21 per share against a loss of $367 million or a loss of $1.44 per share in fiscal 2023. In fiscal 2024, non GAAP net income rose to $1.54 billion or $5.84 per share from $949 million or $3.64 per share in the prior year.
Workday, Inc. Price, Consensus and EPS Surprise
Workday, Inc. price-consensus-eps-surprise-chart | Workday, Inc. Quote
Revenues
Net sales during the quarter were $1.92 billion, up from $1.64 billion in the year-ago quarter, backed by rising demand for the company’s HCM (Human Capital Management) and financial management solution. The top line surpassed the Zacks Consensus Estimate by $9 million.
In fiscal 2024, the company reported $7.25 billion in revenues compared with $6.21 billion in fiscal 2023.
The strong revenue growth accentuates the diversity and robustness of Workday’s product portfolio. Along with several new customer wins, the company also witnessed several strategic expansions and contract renewals within its existing customer base. New customers, including HHS, Randstad, Australian Stock Exchange, Boyd Gaming Corporation, UHS of Delaware and VXI Global Solutions, selected the full platform of Workday HCM and financial management products.
Many enterprise customers of Workday’s HCM products, including Huntington Bank, Intermountain Health and Stewart Title Guaranty, opted to deploy the financial management solution. In healthcare, the company witnessed strong growth in ACV bookings. In education, it secured multiple deal wins with various institutions such as Oregon State University, Portland Community College and more.
Subscription services revenues contributed $1.76 billion, up from $1.49 billion in the year-ago quarter. Net sales surpassed our estimate of $1.75 billion. At the end of the quarter, the 12-month subscription revenue backlog was $6.62 billion, up 20% backed by higher contract renewals.
Revenues from professional services were $162 million compared with $150 million in the prior-year quarter. The top line beat our estimate of $158 million.
Other Details
Operating income during the quarter was $79 million against an operating loss of $89 million in the year-ago quarter. Non-GAAP operating income was $461 million, up from $305 million a year ago, with respective margins of 23.9% and 18.5%.
Cash Flow & Liquidity
During the fourth quarter of fiscal 2024, the company generated $996 million of cash from operating activities compared with $694 million in the prior-year quarter. In fiscal 2024, the company generated $2.14 billion of cash from operations compared with $1.65 billion in fiscal 2023.
As of Jan 31, 2024, it had cash and cash equivalents and marketable securities of $7.8 billion with long-term debt of $2.98 billion compared with respective figures of $6.12 billion and $2.97 billion.
Outlook
For fiscal 2025, the company expects subscription revenues in the range of $7.725 billion to $7.775 billion, suggesting growth of 17% to 18% year over year. Professional services revenues are expected to be about $630-$640 million. The non-GAAP operating margin is projected to be 24.5%. Capital expenditure is approximated to be around $330 million.
For the first quarter of fiscal 2025, Workday expects Subscription services revenues to be $1.81 billion. Revenues from Professional services are estimated to be $163 million. For the fiscal first quarter, the non-GAAP operating margin is approximated to be 24.5%.
Zacks Rank & Stocks to Consider
Workday currently carries a Zacks Rank #3 (Hold).
NVIDIA Corporation (NVDA - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), delivered a trailing four-quarter average earnings surprise of 20.18%. In the last reported quarter, it delivered an earnings surprise of 13.41%. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 (Buy) at present, delivered a trailing four-quarter average earnings surprise of 170.50%. In the last reported quarter, it delivered an earnings surprise of 16.53%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 13.28%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.