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Workday Q1 Earnings Beat Estimates on Solid Revenue Growth
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Workday, Inc. (WDAY - Free Report) reported solid first-quarter fiscal 2026 results, with the bottom line and 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, manufacturing, media, financial Services, retail and hospitality. Management’s strong focus on innovations, AI integration and international expansion is a positive factor.
Net Income
Net income on a GAAP basis was $68 million or 25 cents per share compared with $107 million or 40 cents per share in the year-ago quarter. Despite healthy top-line growth, higher expenses affected the net income during the quarter.
Non-GAAP net income per share was $2.23 compared with $1.74 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 24 cents.
Net sales during the quarter were $2.24 billion, up from $1.99 billion in the year-ago quarter, backed by rising demand for the company’s HCM (Human Capital Management) and financial management solutions. The top line surpassed the Zacks Consensus Estimate by $24 million.(See the Zacks Earnings Calendar to stay ahead of market-making news.)
In the first quarter, healthy traction in manufacturing, media, financial services, retail and hospitality, drove the top line. Collins Food Limited, Gannon University, Inland Technologies, Suzano, Ramsey County and many more organizations adopted Workday solutions.
Subscription services revenues contributed $2.05 billion, up from $1.81 billion in the year-ago quarter. Net sales matched our estimate of $2.05 billion. At the end of the quarter, the 12-month subscription revenue backlog was $7.63 billion, up 15.6%, backed by higher contract renewals. The total subscription revenue backlog was $24.62 billion, up 19% year over year. Revenues from professional services were $181 million compared with $175 million in the prior-year quarter. The top line beat our estimate of $165 million.
Other Details
Operating income during the quarter was $39 million compared with $64 million in the year-ago quarter. Non-GAAP operating income was $677 million, up from $515 million a year ago, with respective margins of 30.2% and 25.9%. The year-over-year improvement was backed by a combination of revenue outperformance, ongoing cost discipline and improved efficiencies across the company.
Cash Flow & Liquidity
During the first quarter of fiscal 2026, the company generated $457 million of cash from operating activities compared with $372 million in the prior-year quarter.
As of April 30, 2025, it had cash and cash equivalents and marketable securities of $7.97 billion, with long-term debt of $2.98 billion.
Outlook
For the second quarter of fiscal 2026, Workday expects Subscription services revenues to be $2.34 billion, representing growth of 12%. Revenues from Professional services are estimated to be $180 million. Management expects the non-GAAP operating margin to be 28%.
For fiscal 2026, the company expects subscription revenues to be $8.8 billion, suggesting growth of 14% year over year. Professional services revenues are expected to be about $700 million. The non-GAAP operating margin is projected to be 28.5%. Capital expenditure is approximated to be around $250 million, down slightly from fiscal 2025. Non-GAAP tax rate is expected to be 19%. Operating cash flow is forecasted to be $2.75 billion.
WDAY’s Zacks Rank & Stocks to Consider
Workday currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader industry have been discussed below.
In the last reported quarter, it delivered an earnings surprise of 4.88%. Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence. Juniper also introduced new features within the AI-driven enterprise portfolio that enable customers to simplify the rollout of their campus wired and wireless networks while bringing greater insight to network operators.
InterDigital (IDCC - Free Report) carries a Zacks Rank #2 (Buy) at present. In the trailing four quarters, InterDigital delivered an earnings surprise of 158.41%. It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. InterDigital boasts a comprehensive portfolio of more than 33,000 granted patents and applications. The company witnessed an exceptional year in innovation in 2024, with more than 5,000 new patent filings worldwide.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank of 2 at present, supplies products to a prestigious set of customers, including Fortune 500 global companies in markets such as cloud titans, enterprises, financials and specialty cloud service providers.
Arista delivered a trailing four-quarter average earnings surprise of 11.82% and has a long-term growth expectation of 14.81%. Arista currently serves five verticals, namely cloud titans (customers that deploy more than one million servers), cloud specialty providers, service providers, financial services and the rest of the enterprise.
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Workday Q1 Earnings Beat Estimates on Solid Revenue Growth
Workday, Inc. (WDAY - Free Report) reported solid first-quarter fiscal 2026 results, with the bottom line and 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, manufacturing, media, financial Services, retail and hospitality. Management’s strong focus on innovations, AI integration and international expansion is a positive factor.
Net Income
Net income on a GAAP basis was $68 million or 25 cents per share compared with $107 million or 40 cents per share in the year-ago quarter. Despite healthy top-line growth, higher expenses affected the net income during the quarter.
Non-GAAP net income per share was $2.23 compared with $1.74 per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 24 cents.
Workday, Inc. Price, Consensus and EPS Surprise
Workday, Inc. price-consensus-eps-surprise-chart | Workday, Inc. Quote
Revenues
Net sales during the quarter were $2.24 billion, up from $1.99 billion in the year-ago quarter, backed by rising demand for the company’s HCM (Human Capital Management) and financial management solutions. The top line surpassed the Zacks Consensus Estimate by $24 million.(See the Zacks Earnings Calendar to stay ahead of market-making news.)
In the first quarter, healthy traction in manufacturing, media, financial services, retail and hospitality, drove the top line. Collins Food Limited, Gannon University, Inland Technologies, Suzano, Ramsey County and many more organizations adopted Workday solutions.
Subscription services revenues contributed $2.05 billion, up from $1.81 billion in the year-ago quarter. Net sales matched our estimate of $2.05 billion. At the end of the quarter, the 12-month subscription revenue backlog was $7.63 billion, up 15.6%, backed by higher contract renewals. The total subscription revenue backlog was $24.62 billion, up 19% year over year. Revenues from professional services were $181 million compared with $175 million in the prior-year quarter. The top line beat our estimate of $165 million.
Other Details
Operating income during the quarter was $39 million compared with $64 million in the year-ago quarter. Non-GAAP operating income was $677 million, up from $515 million a year ago, with respective margins of 30.2% and 25.9%. The year-over-year improvement was backed by a combination of revenue outperformance, ongoing cost discipline and improved efficiencies across the company.
Cash Flow & Liquidity
During the first quarter of fiscal 2026, the company generated $457 million of cash from operating activities compared with $372 million in the prior-year quarter.
As of April 30, 2025, it had cash and cash equivalents and marketable securities of $7.97 billion, with long-term debt of $2.98 billion.
Outlook
For the second quarter of fiscal 2026, Workday expects Subscription services revenues to be $2.34 billion, representing growth of 12%. Revenues from Professional services are estimated to be $180 million. Management expects the non-GAAP operating margin to be 28%.
For fiscal 2026, the company expects subscription revenues to be $8.8 billion, suggesting growth of 14% year over year. Professional services revenues are expected to be about $700 million. The non-GAAP operating margin is projected to be 28.5%. Capital expenditure is approximated to be around $250 million, down slightly from fiscal 2025. Non-GAAP tax rate is expected to be 19%. Operating cash flow is forecasted to be $2.75 billion.
WDAY’s Zacks Rank & Stocks to Consider
Workday currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader industry have been discussed below.
Juniper Networks, Inc. (JNPR - Free Report) sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last reported quarter, it delivered an earnings surprise of 4.88%. Juniper is leveraging the 400-gig cycle to capture hyperscale switching opportunities inside the data center. The company is set to capitalize on the increasing demand for data center virtualization, cloud computing and mobile traffic packet/optical convergence. Juniper also introduced new features within the AI-driven enterprise portfolio that enable customers to simplify the rollout of their campus wired and wireless networks while bringing greater insight to network operators.
InterDigital (IDCC - Free Report) carries a Zacks Rank #2 (Buy) at present. In the trailing four quarters, InterDigital delivered an earnings surprise of 158.41%. It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. InterDigital boasts a comprehensive portfolio of more than 33,000 granted patents and applications. The company witnessed an exceptional year in innovation in 2024, with more than 5,000 new patent filings worldwide.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank of 2 at present, supplies products to a prestigious set of customers, including Fortune 500 global companies in markets such as cloud titans, enterprises, financials and specialty cloud service providers.
Arista delivered a trailing four-quarter average earnings surprise of 11.82% and has a long-term growth expectation of 14.81%. Arista currently serves five verticals, namely cloud titans (customers that deploy more than one million servers), cloud specialty providers, service providers, financial services and the rest of the enterprise.