Workday Earnings & Revenues Beat Estimates In Q3

Workday Inc. (WDAY - Free Report) delivered third-quarter fiscal 2019 non-GAAP earnings of 31 cents per share, surpassing the Zacks Consensus Estimate of 15 cents. The figure also improved 29.2% year over year.

Strong growth can primarily be attributed to a jump of 33.8% in revenues, which totaled $743.2 million. The figure outpaced the Zacks Consensus Estimate for revenues of $723 million. The robust top-line performance was driven by solid growth in subscription and professional revenues.

Subscription revenues (84% of total revenues) surged 34.7% year over year to $624.4 million, on the back of expanding customer base and robust net new ACV growth. Further, synergies from Adaptive Insights acquisition and strong product suite positively impacted the reported quarter’s revenues. The figure surpassed the guidance of $609-$611 million.

Professional services revenues (16% of total revenues) grew 29.4% from the year-ago quarter to $118.8 million and were better than the guidance of $114 million.

Revenues outside the United States climbed 47% to $170 million, representing a record 23% of total revenues in the reported quarter.

Workday’s shares have gained 44.6% year over year, significantly outperforming the industry’s rally of 4.8%.

Business Highlights

During the reported quarter, Workday extended capabilities and tools in Workday HCM with new customer experience.

Workday has more than 8,500 customers. During the third quarter, the company added Bank of Montreal, Glencore International, and Piedmont Airlines, a subsidiary of American Airlines as its new HCM customers. The clientele now includes more Fortune 500 customers driven by higher adoption of Workday Financial Management.

The company was ranked #3 on the list of the 100 Best Workplaces for Millennials by Fortune and Great Place to Work Institute. Additionally, the company was ranked #1 on the Fortune Future 50 list.

Workday recently went live on Adaptive Insights business planning cloud. The move is likely to aid Workday pursue its goal of emerging as an industry leader in better business decisions and operational expertise. It will also aid the company evolve as a provider of enterprise-level software solutions for financial management as well as human resource domains.

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