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Workday Posts 1st-Quarter Earnings

- By Alberto Abaterusso

Shares of Workday Inc. (WDAY) were down 0.52% to $211.76 in after-hours trading on Tuesday after beating consensus estimates on non-GAAP earnings for the first quarter of fiscal 2020 by 2 cents, posting 43 cents per share, which was up 30.3% year over year.

The GAAP result was a loss of 52 cents per share or nearly 49% worse than the loss of 35 cents per share for the prior-year quarter, missing consensus estimates by 6 cents.

Revenue was $825.06 million, up 33.4% and beating market expectations by $10.85 million. By segment, subscription services revenue was up 34.3% to $701 million and professional services revenue rose 28.5% to $124 million.

The Pleasanton, California-based provider of management software also noted 33.3% growth in non-GAAP operating income to $107.7 million, a flat non-GAAP operating income margin of 13% and a 13.5% increase in operating cash flow to $209.2 million.

Looking ahead, Workday raised its expectations of subscription revenue to a range of $3.045 billion to $3.06 billion for full fiscal year 2020, which will end on Jan. 31, 2020. It raised its range for the quarter ended July 31 to between $746 million and $748 million.

The balance sheet had $1.89 billion in cash on hand and short-term securities, nearly $1.22 billion in total debt and about $1.83 billion in total unearned revenues as of April 30.

"We believe our ability to enable more organizations to plan, execute and analyze in one system powered by machine learning, coupled with our commitment to employee and customer success, will further solidify our foundation for enduring growth," co-founder and CEO Aneel Bhusri said.

The share price was $212.87 at close on Tuesday for a market capitalization of about $47.98 billion. A 62% rise for the 52 weeks through May 28 sent the share price to over the 200, 100 and 50-day simple moving average lines. The 52-week range is $117.24 to $217.63.

The 14-day relative strength index of 60 suggests the stock is neither oversold nor overbought.

Workday Inc. has underperformed the Nasdaq Composite index by 17% so far this year.

Wall Street issued an overweight recommendation rating for shares of Workday Inc., meaning the stock is foreseen to outperform either the industry or the entire market within 52 weeks. The average target price per share is $204.51.

Disclosure: I have no position in any securities mentioned.

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This article first appeared on GuruFocus.