Enterprise cloud applications company Workday (WDAY) delivered better-than-expected fiscal second-quarter 2022 results. Revenue and earnings came in above consensus estimates as the company benefited from digital acceleration.
Quarterly revenue grew 18.7% year-over-year to $1.26 billion, beating consensus estimates of $1.24 billion. Subscription revenue was up 19.5% year-over-year to $1.11 billion. Diluted net income per share landed at $1.23, above consensus estimates of $0.78.
According to co-CEO Aneel Bhusri, Q2 represented one of the strongest quarters in the company’s history as the customer community grew to more than 55 million users. The company also ended the quarter with more than half of the Fortune 500 companies as clients. (See Workday stock charts on TipRanks)
“Looking to the future, we are well positioned for the second half of the year and will continue to invest in our go-to-market strategy and our people, who are foundational to our success,” said Chano Fernandez, co-CEO, Workday
Impressed by the second-quarter performance, management has raised its full-year Fiscal 2022 guidance for subscription revenue, which is now expected to range between $4.50 billion and $4.51 billion. Fiscal third-quarter 2022 subscription revenue, on the other hand, is expected at between $1.156 billion and $1.158 billion.
Recently, Cowen & Co analyst Derrick Wood reiterated a Hold rating on the stock with a $250 price target, implying 1.31% upside potential to current levels.
Wood stated, “Regarding top line, we think transactional activity remains solid but that large ERP/HCM cloud migration projects are still lagging, which creates a governor on growth upside, especially this year when growth in book of renewal business is slower.”
Consensus among analysts is a Strong Buy based on 11 Buys and 2 Holds. The average Workday price target of $281.75 implies 14.18%% upside potential to current levels.