Shares of Workday (NASDAQ:WDAY) gained nearly 9% in after-hours trading yesterday following the release of its fiscal first quarter of Fiscal Year 2024 results. Based on its strong quarterly performance, the cloud-based financial management software provider lifted guidance for Fiscal Year 2024.
Q1 adjusted earnings per share came in at $1.31, which beat analysts’ consensus estimate of $1.12 per share. Sales increased by 17.4% year-over-year to $1.68 billion and surpassed analysts’ expectations of $1.67 billion.
The company’s topline benefitted from a 20.1% jump in revenues from Subscription Services. In addition, the total subscription backlog hit a staggering $16.65 billion, up 31.6% year-over-year. Meanwhile, WDAY’s adjusted operating income rose 37.2% to $395.9 million.
Based on an upbeat performance, Workday lifted the lower end of its Fiscal 2024 subscription revenue outlook to $6.55 billion to $6.58 billion, reflecting 18% year-over-year growth.
For the fiscal second quarter, WDAY expects subscription revenue to be between $1.611 billion and $1.613 billion. Further, the 24-month backlog is anticipated to increase by about 20% year-over-year. Lastly, management expects an adjusted operating margin of nearly 22%.
Is WDAY a Good Stock to Buy?
Increased demand for automation of business operations to reduce expenses and increase efficiency may continue to enhance the company’s performance. Additionally, WDAY continues to expand partnerships with large companies to extend its reach and capabilities.
Wall Street analysts are cautiously optimistic about WDAY stock and have a Moderate Buy consensus rating, which is based on 18 Buys and seven Holds. The average stock price target of $218.87 implies 11.4% upside potential.
As per TipRanks data, the most accurate analyst for Workday is Daiwa analyst Stephen Bersey. Copying the analyst’s trades on this stock and holding each position for one year could result in 93% of your transactions generating a profit, with an average return of 30.26% per trade.
