HomeMost PopularInvesting Workday's Fourth-Quarter Earnings Preview Anticipating Solid Revenue Growth: Workday's...

Workday’s Fourth-Quarter Earnings Preview Anticipating Solid Revenue Growth: Workday’s Q4 Earnings

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Workday, Inc. WDAY is gearing up for the release of its fourth-quarter fiscal 2024 results on Feb 26, after the closing bell. The company has surpassed earnings expectations with a trailing four-quarter average surprise of 13.23%.

Headquartered in Pleasanton, CA, Workday is expected to unveil robust revenue figures propelled by the strong demand for its human capital management (HCM) and financial management solutions. Its extensive product portfolio has consistently attracted customers across various market segments. Additionally, the incorporation of advanced artificial intelligence (AI) and machine learning (ML) capabilities has been a significant tailwind for the company.

Driving Factors

During the quarter, Workday announced an expanded collaboration with Accenture, aimed at assisting companies in accelerating their adoption of skills-based talent strategies to unleash greater agility and potential. The implementation of the AI-powered Workday Skill Cloud will enable businesses to effectively identify reskilling and upskilling opportunities within their operations, thereby maximizing future growth potential.

An integrated skills accelerator that leverages Workday Learning, Workday Journeys, and Workday Prismβ€”preconfigured with Accenture talent transformation capabilitiesβ€”has been instrumental in bridging the gaps in skills and competencies among individuals or within a workforce. This development is expected to have a positive impact on the company’s revenues in the quarter.

Workday’s revenue growth continues to be driven by the high demand for its HCM and financial management solutions. The company has experienced significant traction owing to its cloud-based business model and an expanding product portfolio. The increasing significance of Workday Prism Analytics and Adaptive Insights business planning cloud offerings holds promise for sustained growth.

The company has been broadening its portfolio beyond core HCM solutions into the financial domain, customizing offerings for various industries and verticals such as education, the public sector, and financial services, among others. This strategic move has facilitated strong renewals and an expanding customer base as enterprises aim to consolidate spending and enhance operational efficiency. The expanded product portfolio base is expected to have bolstered its performance in the fourth quarter.

The estimate for Subscription Services revenues is set at $1,755 million, indicating a 17.4% year-over-year growth. Likewise, Professional Services revenues are estimated at $158 million. The Zacks Consensus Estimate for revenues in the December quarter stands at $1,913 million, up from the year-ago figure of $1,646 million. The consensus estimate for adjusted earnings per share is projected at $1.44, signaling an increase from 99 cents reported in the prior year.

Earnings Whispers

Our proven model does not predict an earnings beat for Workday for the fiscal fourth quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) augments the likelihood of an earnings beat. However, this isn’t the case here.

Earnings ESP: The Earnings ESP, representing the variance between the Most Accurate Estimate and the Zacks Consensus Estimate, currently stands at 0.00%, with both pegged at $1.44.

Workday, Inc. Price and EPS Surprise

Workday, Inc. Price and EPS Surprise
Workday, Inc. price-eps-surprise | Workday, Inc. Quote

Zacks Rank: Workday currently carries a Zacks Rank #3.

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:

CommScope COMM is scheduled to report quarterly numbers on Feb 29. It has an Earnings ESP of +9.09% and a Zacks Rank of 3.

Heico HEI is scheduled to report quarterly numbers on Feb 26. It has an Earnings ESP of +1.77% and a Zacks Rank of 2.

VTEX VTEX is scheduled to report quarterly numbers on Feb 27. It has an Earnings ESP of +500.01% and a Zacks Rank of 2.

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

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Workday, Inc. (WDAY) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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