Workday Grows Strong Despite Recession

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Enterprise services provider Workday (NASDAQ: WDAY) recently announced its second quarter results that continued to surpass market expectations. While some other tech companies have struggled, Workday’s performance and outlook continued to impress the market. The stock grew 11% in the after-hours trading session.

Workday’s Financials

Workday’s second quarter revenues grew 21.9% to $1.54 billion, ahead of the Street’s forecast of $1.52 billion. Non GAAP EPS was $0.83, also ahead of the market’s forecast of $0.79. GAAP net loss decreased to $64.2 million compared to loss of $105.7 million a year ago.

By segment, Subscription services revenues grew 22.8% to $1.37 billion. Professional services revenues grew 14.7% to $168.5 million.

For the third quarter, Workday expects subscription revenues of $1.418-$1.40 billion. For FY22, Workday forecasts subscription revenues of $5.537-$5.557 billion. The market was looking for total revenues of $1.58 billion for the quarter with an EPS of $0.89.

Workday is also seeing the impact of macro economic conditions. But it feels optimistic about its performance. It mentioned that two of its deals that had slipped in the last quarter due to the recessionary conditions were closed in the current quarter, resulting in a strong start to the quarter.

Workday’s Product Upgrades

Recently, Workday announced a new partnership with Borussia Dortmund (BVB), a German football club. Workday will become the club’s official finance and HR enterprise management cloud partner through the end of the season in 2024. The partnership will allow Workday to reach and engage with BVB’s multitude of supporters and have prominent brand placements on BVB’s social and digital platforms.

Workday continued to see significant cross-sell within its customer base. It added two large Fortune 500 core financial management customers during the quarter – Salesforce and American Electric Power. Salesforce was already an HCM customer for Workday, but it recently expanded its partnership with Workday to include core financials in addition to Accounting Center, Adaptive Planning, and Prism Analytics among other add-ons. The expansion of these services shows how the broader solution set is being sold into the existing base and helping Workday grow its ACVs.

Workday Adaptive Planning recently celebrated its four-year anniversary as part of Workday, and now serves over 6,000 planning customers, which includes more than 20% of the Fortune 500. It continues to see strong adoption of Workday Extend and Prism Analytics as both solutions are providing organizations the ability to adapt in the changing world. Extend allows customers to build apps that are tailored for their unique use cases and are able to eliminate the need for other custom development tools.

Over the last year, Workday has more than doubled the number of customers and now has more than 750 applications that have been developed on the Workday platform. Prism Analytics, has more than 1,000 customers, and is enabling organizations to bring operational data into Workday to drive real-time business insights. These solutions are driving an increased level of engagement with Workday’s partner community as well.

Its stock is trading at $159.9 with a market capitalization of $40.9 billion. It hit a 52-week high of $307.81 in November last year and a 52-week low of $134.10 in July.

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