Workday leaps 12% after beating earnings expectations on work-from-home demand
- Workday jumped as much as 12% in early Friday trading after beating estimates for second-quarter earnings and revenue.
- The company also raised its guidance for full-year subscription revenue above Wall Street's forecast.
- Workday promoted Co-President Chano Fernandez to co-CEO, where he'll serve alongside CEO Aneel Bhusri.
- The firm's better-than-expected results point to strength in the workplace-software sector as companies scramble to adapt to remote work.
- Watch Workday trade live here.
Workday soared as much as 12% in early Friday trading after the cloud software company revealed second-quarter earnings and revenue above Wall Street's expectations.
The company surged through the quarter ended July 31 on strong demand for work-from-home solutions. Workday reported growth among companies looking to navigate the coronavirus pandemic and shifts to telecommuting. The firm expanded its partnership with IBM for helping clients plan and monitor returns to offices as the economy reopens.
Workday also promoted Chano Fernandez to co-CEO from co-president. Fernandez will work alongside Aneel Bhusri, who's served as the company's chief executive since its founding in 2005. The new co-CEO will lead Workday's marketing, sales, and customer support divisions.
Here are the key numbers:
Revenue: $1.06 billion, versus the $1.04 billion estimate from economists surveyed by Bloomberg
Earnings per share: 84 cents, versus the 66 cent estimate
Full-year subscription revenue: between $3.73 billion and $3.74 billion, versus the $3.7 billion estimate
"It was a strong quarter despite the environment, with continued demand for our products as more organizations realize how mission critical cloud-based systems are in supporting their people and businesses through continuous change," Bhusri said in a statement.
Workday's results cement strength in the workplace-software sector amid the pandemic and resulting economic slump. Salesforce reported similarly healthy earnings on Tuesday, citing clients' rush to upgrade technology and ease the transition to remote work.
Several analysts raised their outlooks for Workday shares following the earnings surprise. Canaccord Genuity analyst David Hynes raised his price target on the shares to $265 from $215 and reiterated his "buy" rating. Morgan Stanley analyst Keith Weiss lifted his target to $295 from $215, adding that the company's latest results reveal a "clearer path to accelerating growth."
Workday closed at $216.63 per share on Thursday, up 32% year-to-date.
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