Yahoo Finance Will Workday (WDAY) Q1 Earnings Gain From Top-Line Expansion?
Workday, Inc. WDAY is set to report first-quarter fiscal 2025 results on May 23, after the closing bell. It pulled off a trailing four-quarter earnings surprise of 12.69% on average. Increasing demand for its human capital management (HCM) and financial management solutions in multiple end markets is likely to have led to a top-line expansion year over year during the quarter. Its policy of strategic acquisition and AI integration across its solution suite has strengthened its portfolio and enhanced commercial prospects. However, growing competition in the HCM market and macroeconomic challenges are headwinds.
Factors at Play
During the quarter, Workday launched Workday Adaptive Planning and Consolidation, a cutting-edge solution amalgamating the robust planning capabilities of Workday Adaptive Planning with the comprehensive close and consolidation functionalities in Workday Financial Management. This innovative solution aims to revolutionize data management, financial reporting and analytics for enterprises, enhancing their efficiency and agility in navigating complex financial processes. The expanding product portfolio is likely to have aided its fiscal first-quarter performance.
In the quarter under review, Workday announced a strategic partnership with Insperity, a leading provider of human resources and business performance solutions. The collaboration aims to craft innovative HR solutions that cater to small and mid-sized businesses. Such developments are likely to have boosted the top line during the quarter.
However, competition in the HCM and financial management software market is increasing, which could lead to pricing pressure and affect Workday’s margins. Despite efforts to broaden its market presence, Workday continues to derive a substantial portion of its revenues from the United States. The lack of geographical diversity exposes the company to various market risks.
Our estimate for Subscription Services revenues is pegged at $1,810 million, suggesting 18.5% year-over-year growth. Our estimate for Professional Services revenues is pegged at $163 million.
For the April quarter, the Zacks Consensus Estimate for revenues is pegged at $1.97 billion, up from the year-ago quarter’s reported figure of $1.68 billion. The consensus estimate for adjusted earnings per share is pegged at $1.57, suggesting an increase from $1.31 reported in the prior year.
Key Developments in Q1
Workday signed a definitive agreement to acquire HiredScore. HiredScore offers AI-powered talent orchestration solutions that allow enterprises to enhance recruiting and talent mobility processes by leveraging data-driven insights. By integrating HiredScore’s comprehensive expertise with Workday Talent Management and Workday Skills Cloud, WDAY intends to build robust, transparent, and intelligent AI-native talent acquisition and internal mobility solutions. The buyout will improve Workday’s capabilities in addressing the evolving challenges faced by human resource leaders across industries, thereby improving its prospects in the human resources domain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Workday for the fiscal first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%, with both pegged at $1.57. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Workday, Inc. Price and EPS Surprise
Workday, Inc. price-eps-surprise | Workday, Inc. Quote
Zacks Rank: Workday currently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
NVIDIA Corporation NVDA is set to release quarterly numbers on May 22. It has an Earnings ESP of +2.50% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
AutoZone, Inc. AZO is set to release quarterly numbers on May 21. It has an Earnings ESP of +0.81% and a Zacks Rank #2.
Target Corporation TGT has an Earnings ESP of +6.39% and carries a Zacks Rank of 3. The company is set to report quarterly numbers on May 22.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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