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WDAY Appears a Solid Portfolio Pick on Healthy Subscription Revenues
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Workday, Inc. (WDAY - Free Report) is witnessing an improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current and next fiscal year have increased 10.2% and 7.5%, respectively, since January 2024, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Growth Drivers of WDAY
Headquartered in Pleasanton, CA, Workday is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, making it easier for organizations to provide analytical insights and decision support. Apart from Financial Management and Human Capital Management (HCM) solutions, the company offers applications related to Payroll, Time Tracking, Recruiting, Learning, Planning, Professional Services Automation and Student.
Workday’s revenues continue to be aided by high demand for its HCM and financial management solutions. The company’s cloud-based business model and expanding product portfolio have been the primary growth drivers. Moreover, the growing clout of Workday Prism Analytics and Adaptive Insights business planning cloud offerings holds promise. Based on its expanding product portfolio, we believe that Workday has strong growth prospects.
Workday’s HCM suite of applications demonstrates solid growth momentum, driven by the transition of organizations to the cloud. A steady flow of customers portrays a high customer satisfaction rate, which bodes well for its long-term business model. Workday is also gaining traction in the international market, driven by higher digital transformation initiatives across finance and HR domains, in tune with evolving market conditions.
The company is expanding its portfolio beyond core HCM solutions into the financial domain. It is customizing them for diverse industries and verticals, such as education, the public and financial services, among others. This has helped it witness strong renewals and expand its customer base as business enterprises aim to consolidate spend and improve efficiency levels. This augurs well for the company’s long-term growth.
Subscription Revenues Buoy WDAY
Workday recorded strong third-quarter fiscal 2025 Subscription revenues. This portrayed the strength of its existing customer relationships across industries and the growing clout of its artificial intelligence (AI) innovations as more organizations are consolidating on the Workday platform.
Subscription services revenues totaled $1.96 billion, up from $1.69 billion in the year-ago quarter. At the fiscal third-quarter end, the 12-month subscription revenue backlog was $6.98 billion, up 15.3% year over year, driven by higher contract renewals. Total subscription revenue backlog increased 20.3% year over year to $22.19 billion.
With an improved market share, a focus on innovation and streamlined operations, Workday expects steady growth in the Subscription business in the impending quarters. For the fourth quarter of fiscal 2025, the company expects Subscription services revenues of $2.025 billion, up 15% year over year. For fiscal 2025, management anticipates Subscription revenues of $7.703 billion, indicating growth of 17% year over year, while for fiscal 2026, Subscription revenues are likely to grow 14% to $8.8 billion.
Other Key Picks
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 15%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use 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, 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 experiences. Arista delivered an earnings surprise of 14.8%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2, is another solid pick. The company is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. Qualcomm is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge.
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WDAY Appears a Solid Portfolio Pick on Healthy Subscription Revenues
Workday, Inc. (WDAY - Free Report) is witnessing an improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current and next fiscal year have increased 10.2% and 7.5%, respectively, since January 2024, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #2 (Buy) stock appears to be a solid investment option. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Growth Drivers of WDAY
Headquartered in Pleasanton, CA, Workday is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system, making it easier for organizations to provide analytical insights and decision support. Apart from Financial Management and Human Capital Management (HCM) solutions, the company offers applications related to Payroll, Time Tracking, Recruiting, Learning, Planning, Professional Services Automation and Student.
Workday’s revenues continue to be aided by high demand for its HCM and financial management solutions. The company’s cloud-based business model and expanding product portfolio have been the primary growth drivers. Moreover, the growing clout of Workday Prism Analytics and Adaptive Insights business planning cloud offerings holds promise. Based on its expanding product portfolio, we believe that Workday has strong growth prospects.
Workday’s HCM suite of applications demonstrates solid growth momentum, driven by the transition of organizations to the cloud. A steady flow of customers portrays a high customer satisfaction rate, which bodes well for its long-term business model. Workday is also gaining traction in the international market, driven by higher digital transformation initiatives across finance and HR domains, in tune with evolving market conditions.
The company is expanding its portfolio beyond core HCM solutions into the financial domain. It is customizing them for diverse industries and verticals, such as education, the public and financial services, among others. This has helped it witness strong renewals and expand its customer base as business enterprises aim to consolidate spend and improve efficiency levels. This augurs well for the company’s long-term growth.
Subscription Revenues Buoy WDAY
Workday recorded strong third-quarter fiscal 2025 Subscription revenues. This portrayed the strength of its existing customer relationships across industries and the growing clout of its artificial intelligence (AI) innovations as more organizations are consolidating on the Workday platform.
Subscription services revenues totaled $1.96 billion, up from $1.69 billion in the year-ago quarter. At the fiscal third-quarter end, the 12-month subscription revenue backlog was $6.98 billion, up 15.3% year over year, driven by higher contract renewals. Total subscription revenue backlog increased 20.3% year over year to $22.19 billion.
With an improved market share, a focus on innovation and streamlined operations, Workday expects steady growth in the Subscription business in the impending quarters. For the fourth quarter of fiscal 2025, the company expects Subscription services revenues of $2.025 billion, up 15% year over year. For fiscal 2025, management anticipates Subscription revenues of $7.703 billion, indicating growth of 17% year over year, while for fiscal 2026, Subscription revenues are likely to grow 14% to $8.8 billion.
Other Key Picks
InterDigital, Inc. (IDCC - Free Report) sports a Zacks Rank of 1 at present. It has a long-term growth expectation of 15%. IDCC is a pioneer in advanced mobile technologies enabling wireless communications and capabilities. The company designs and develops a whole range of advanced technology solutions for use 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, 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 experiences. Arista delivered an earnings surprise of 14.8%, on average, in the trailing four quarters. It is well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
Qualcomm Incorporated (QCOM - Free Report) , carrying a Zacks Rank #2, is another solid pick. The company is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. Qualcomm is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge.