Corporate system software provider Workday (NASDAQ: WDAY) reported better-than-expected earnings and revenue for the third quarter and raised its guidance for fiscal 2024. The company’s shares surged over 9% in the Wednesday premarket.
Workday’s Subscription Revenue Grew 18% in Q3
Shares of Workday popped more than 9% in Wednesday’s premarket after the system software vendor posted Q3 earnings and revenue that beat analysts’ expectations.
For the quarter that ended in October, Workday reported adjusted earnings per share (EPS) of $1.53, well above the consensus estimates of $1.41. Under generally accepted accounting standards, the company made 43 cents per share.
Revenue came in at $1.87 billion, up 17% year-over-year and topping Workday’s own guidance of around $1.84 billion, while analysts were looking for $1.85 billion. In September, the firm slashed its revenue growth guidance through fiscal 2027.
Subscription revenue stood at $1.69 billion, up 18% from a year earlier, surpassing the company’s 17% growth forecast. Workday posted a subscription backlog of $18.45 billion, almost 31% higher than in the same quarter last year.
“More companies around the world are turning to Workday to manage their most precious assets: their people and money.”
– Carl Eschenbach, Workday’s co-CEO said in a statement.
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Workday Raises 2024 Guidance, Reiterates AI Focus
On the back of a strong third quarter, the corporate HR and financial software provider issued improved guidance for the full fiscal year, beating Wall Street’s estimates.
Notably, the company expects subscription revenue to hit $6.598 billion for the fiscal 2024 year, representing year-over-year growth of 19%. This guidance is up from the previous forecast range of $6.57 billion to $6.59 billion.
“We are also raising our fiscal 2024 non-GAAP operating margin guidance to 23.8%. Our focus is centered on investing to drive durable long-term growth while expanding margins.”
– said the company’s CFO Zane Rowe.
Meanwhile, the company reiterated its AI-related plans. Workday’s co-founder and co-CEO, Aneel Bhusri, said the firm’s strategy to implement AI technology directly into the core of products continues to please customers “and is fueled by platform strategy, unrivaled dataset and emphasis on being human-centric.”
In the meantime, Workday continues to leverage generative AI to develop a conversational experience for Workday Adaptive Planning users.
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