Workday Stock Fell despite Earnings Beat



Stock fell more than 13% last week

The stock of technology (QQQ) company Workday (WDAY) fell 13.5% in the week ended December 1, 2017, to close at $100.52. The stock is now trading 52% above its 52-week low of $65.79 and 14% below its 52-week high of $116.89.


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Revenue of $555.4 million in fiscal 3Q18

Workday reported its fiscal 3Q18 results last week with revenue of $555.4 million, a rise of 34% YoY (year-over-year). Non-GAAP (generally accepted accounting principles) EPS (earnings per share) was $0.24. Analysts expected the company to post revenue of $540 million with EPS of $0.15. While Workday beat revenue estimates by 2.9%, it beat EPS estimates by 60% in fiscal 3Q18.

Revenue was driven by improvement in subscription and professional revenues. Subscription revenues rose 37.2% YoY to $463.6 million, and professional services revenue returned -21.4% to $91.8 million.

Workday generated almost 80% of revenue in the United States (SPY), while international revenue rose 48% YoY to $116 million. The company added 37 financial management customers in 3Q18, a rise of 60% YoY.

Analysts remain optimistic with regard to the stock. Of the 39 analysts covering Workday, 12 have recommended a “buy,” five have recommended a “sell,” and 22 have recommended a “hold.” Analysts’ stock price target for Workday is $107.53, with a median target estimate of $110. Workday is trading at a discount of 10% to the median analyst estimate.


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