Workday beats earnings but shares drop due to weak fiscal 2025 guidance

From Investing.com: 2024-11-27 04:14:12

Workday reported strong Q3 earnings, beating estimates with $1.89 EPS and $2.16 billion revenue, a 15.8% YoY increase. Despite this, shares dropped 6% in after-hours trading due to weaker guidance for fiscal 2025 subscription revenue of $7.703 billion, below expectations of 17% growth.

CEO Carl Eschenbach highlighted customer trust, AI innovations, and partner ecosystem strength as key factors in Workday’s solid performance. The company’s 12-month subscription revenue backlog rose 15.3% to $6.98 billion, with total subscription revenue backlog hitting $22.19 billion, up 20.3% YoY.

Operating cash flows for Workday were $406 million, down from $451 million, with free cash flows at $359 million, lower than $391 million in the previous year. For Q4, the company anticipates $2.025 billion in subscription revenue and a 25.0% non-GAAP operating margin.

The updated fiscal 2025 guidance includes subscription revenue of $7.703 billion and a non-GAAP operating margin of 25.5%, indicating continued growth and profitability for Workday.



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