Workday shares fell about 4 percent in extended trading on Tuesday, even though the cloud software company reported better-than-expected earnings for the fiscal second quarter, which ended July 31.
Here are the key numbers:
- Earnings: 31 cents per share, excluding certain items, vs. 26 cents per share as expected by analysts, according to Thomson Reuters.
- Revenue: $671.7 million, vs. $663.1 million as expected by analysts, according to Thomson Reuters.
Revenue rose 28 percent from a year earlier, according to a statement, down from 29 percent growth in the prior period.
Most of Workday’s revenue comes from subscriptions to its cloud services for human resources, finance and other business functions. In the quarter subscription revenue came in at $565.7 million, above the FactSet analyst consensus of $559 million.
The company reported sales in its professional services unit of $106.1 million, above the $104 million consensus.
Workday made its biggest acquisition yet in the quarter, buying Adaptive Insights, which provides cloud software for business planning, for $1.5 billion.
Workday said it’s expecting $609 million to $611 million in subscription revenue for the fiscal third quarter, above the FactSet consensus of $587 million. The company did not provide a full sales forecast. Analysts are expecting revenue in the quarter of $691.2 million, according to Thomson Reuters.
For the full 2019 fiscal year, Workday expects to hit $2.341 billion to $2.348 billion in subscription revenue, topping the $2.29 billion FactSet consensus. The full-year estimate includes the contribution from Adaptive Insights.
KeyBanc analysts raised their 12-month price target on Workday on Aug. 29, to $173 from $145.
“2018 is shaping up to be a breakout year for WDAY and a core growth holding for large-cap investors,” they wrote. The analysts pointed to progress at universities, as well as wins with a few large companies.
Workday shares are up 54 percent this year, closing at a record $156.69 on Tuesday.
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