Workday stock wavered in the wake of its analyst day, where the enterprise software maker outlined its plans to grow subscription revenue by more than 20% post-fiscal 2022, a target slightly above consensus estimates.
Pleasanton, Calif.-based Workday (WDAY) hosted the virtual analyst day on Tuesday. Workday stock rose 1.5% to 274.13 in morning trading on the stock market today. Workday stock had edged down earlier. WDAY stock popped in late August on better-than-expected June-quarter earnings.
The company sells software for human capital management, or HCM, such as payroll tools. It has expanded into financial management software.
Workday forecast 30%-plus growth in financial software and high-teens growth in human capital management, analysts said.
“Applying a 20% compound annual growth rate from fiscal 2022 implies about $9.4 billion in fiscal 2026 vs. $4.5 billion in fiscal 2022,” Cowen analyst J. Derrick Wood said in a report. Analysts had projected 19% subscription revenue growth.
Workday Stock: Margin Guidance Disappoints
Fiscal 2022 ends on Dec. 31, 2021. Workday said it expects international markets to account for 30% of subscription revenue by fiscal 2026, up from 24% now.
Workday’s near-term margin guidance came in below views.
“While fiscal 2023 operating margin guidance of 18% (vs. consensus of 20%) disappointed investors, management reiterated 25% operating margin at $10 billion revenue run rate,” Mizuho Securities analyst Siti Panigrahi said in a report.
At Morgan Stanley, analyst Keith Weiss said in a report: “Management highlighted an expanding product portfolio combined with go-to-market investments. Workday remains well positioned in human capital management, with greater than 60% of new HCM annual contract value coming from outside of the core HCM solutions.”
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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