Workday Stock Falls, Full-Year Outlook With Acquisition Disappoints

Enterprise software maker Workday reported adjusted second-quarter sales and profit that topped analyst estimates, while its subscription revenue guidance came in just above projections with the help of a recent acquisition. Investors were expecting more though, and its stock fell Tuesday.


Workday (WDAY) shares slipped 3.1% to 151.80 in after-hours trading on the stock market today. As of Tuesday’s regular session, Workday stock had climbed 44% from a year ago.

Workday said adjusted earnings were 31 cents a share, up 29% from a year ago, with revenue rising 28% to $ 671.7 million, topping analyst estimates. A year earlier, Workday earned 24 cents a share on sales of $ 525 million.

Analysts expected Workday to report earnings of 26 cents on sales of $ 663 million for the period ended July 31.

Subscription Revenue Growth Eyed

Workday said subscription revenue for the quarter rose 30% to $ 565.7 million, also topping estimates. For the current quarter, Workday said it expects subscription revenue of $ 610 million at the midpoint of its outlook, compared with analyst consensus of $ 586 million. For full-year fiscal 2019, Workday forecast subscription revenue of $ 2.344 billion. Analysts had projected $ 2.29 billion.

Workday’s full-year guidance includes a recent acquisition. The software firm closed its $ 1.55 billion purchase of Adaptive Insights on Aug. 1.

Adaptive Insights specializes in financial planning software. That fits nicely with Workday’s core business of selling software for human relations, payroll and other business functions.

Workday has pushed its way onto IBD’s Leaderboard. Its main rivals include Oracle (ORCL) and SAP (SAP).


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