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Can Healthy Revenue Growth Aid Workday's (WDAY) Q2 Earnings?

·4 min read

Workday, Inc. WDAY is scheduled to report second-quarter fiscal 2023 results on Aug 25, after the market closes. In the last reported quarter, the company recorded a negative earnings surprise  of 3.5%. It pulled off a trailing four-quarter earnings surprise of 22.6%, on average.

The Pleasanton, CA-based enterprise software solutions company is expected to have recorded year-over-year higher revenues due to increased sales from both Professional services and Subscription services.

Factors at Play

In the fiscal second quarter, Workday announced the partnership with German football club Borussia Dortmund (BVB), an eight-time German football league champion. As part of the deal, Workday will become the club’s official finance and HR enterprise cloud partner through the end of the season in 2024. The consensus estimate for total revenues from Professional Services stands at $164 million, which implies an increase from $147 million reported a year ago.

In the fiscal second quarter, the company announced that it achieved FedRAMP Authorized Status at the Moderate security impact level from Federal Risk and Authorization Management Program (FedRAMP) for Workday Government Cloud, thereby making  its official entry into the U.S. federal government. With this status, Workday is now certified by the federal government in catering to the cloud security requirements and can thereby help federal agencies accelerate their digital transformations. The consensus estimate for total revenues from Subscription Services stands at $1,354 million, which implies an increase from $1,113 million reported a year ago.

For the July quarter, the Zacks Consensus Estimate for total revenues is pegged at $1,519 million, which indicates growth of 20.6% from the year-ago quarter’s reported figure. The consensus estimate for adjusted earnings per share stands at 80 cents suggesting a decline of 34.9% year over year.

 

Workday, Inc. Price and EPS Surprise

Workday, Inc. Price and EPS Surprise
Workday, Inc. Price and EPS Surprise

Workday, Inc. price-eps-surprise | Workday, Inc. Quote

What Our Model Says

Our proven model does not predict an earnings beat for WDAY this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Workday’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, stands at 0.00% with both pegged at 80 cents.
    
Zacks Rank: It currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these  have the right combination of elements to post earnings beat this quarter:

Chewy, Inc CHWY is slated to release second-quarter 2022 results on Aug 30. Chewy has an Earnings ESP of +1.03% and a Zacks Rank #1. In the last reported quarter, the company delivered an earnings surprise of 133.3%. It pulled off a trailing four-quarter earnings surprise of 4.05%, on average. It engages in pure play-ecommerce business in the United States. It offers approximately 100,000 products from 3,000 partner brands.

Intuit Inc. INTU has an Earnings ESP of +1.92% and Zacks Rank #2. Intuit is set to report fourth-quarter and full-year fiscal 2022 results on Aug 23. In the last reported quarter, the company delivered an earnings surprise of 0.7%. It pulled off a trailing four-quarter earnings surprise of 16.8%, on average. The company carries out its operations by providing financial management and compliance products and services for consumers, small businesses, self-employed and accounting professionals in the United States, Canada and the rest of the world.

Ultra Beauty, Inc. ULTA is scheduled to release second-quarter 2022 results on Aug 25. Ultra Beauty has an Earnings ESP of +2.37% and a Zacks Rank #2. In the last reported quarter, the company delivered an earnings surprise of 41.9%. It pulled off a trailing four-quarter earnings surprise of 50%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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