Workday shares drop on lower-than-expected earnings

Workday shares drop on lower-than-expected earnings

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Workday Inc. saw its share drop in late trading after the enterprise resource planning software company reported lower-than-expected earnings.

For the quarter ending April 30, Workday reported non-generally accepted accounting principles diluted net income per share of 83 cents, down from 86 cents in the same quarter of last year. Revenue came in at $1.43 billion, up 22/1% year-over-year.

Analysts had been expecting EPS of 85.47 cents on revenue of $1.43 billion.

Subscription revenue in the quarter came in at $1.27 billion, up 23% year-over-year, while operating cash flows were $439.7 million compared to $454.2 million in the prior year. Cash, cash equivalents and marketable securities were $6.26 billion as of April 30.

Highlights in the quarter included Workday announcing that it intends to create 1,000 new jobs at its Europen headquarters in Dublin and plans to build a new HQ at Grangegorman in Dublin. The company also completed the issuance and sale of $3 billion aggregate principal amount of senior notes in an underwritten, registered public offering.

“Our continued global momentum and a healthy deal pipeline position us well to deliver a strong fiscal 2023,” Chano Fernandez, co-chief executive officer of Workday, said in a statement. “As we look ahead, we will continue to remain focused on our people, who are so critical to our success, as well as driving high rates of customer satisfaction through our industry investments, as well as our expanded innovation efforts with our partner ecosystem.”

For its fiscal second quarter of 2023, Workday predicted a non-GAAP operating margin of 17.5% on revenue of $1.517 billion to $1.519 billion. For the full fiscal year of 2023, the company is predicted revenue of $6.187 billion to $6.2 billion.

Workday is also predicting subscription revenue of $1.353 billion to $1.355 billion in its second quarter and $4.537 billion to $5.557 billion for the full year. Both, if delivered, would be up 22% compared to the previous periods last year.

The miss on earnings is the first time Workday hasn’t hit expectations going back at least two years. Workday has a track record of beating market expectations and that it didn’t for once is reflected in its share price.

Workday shares were down 9.01% after hours to be sitting at $153 as of 8 p.m. EDT.

Photo: Workday

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