Workday (WDAY) reported Q1 revenue of $2.24 billion and EPS of $2.23, exceeding consensus estimates by 1.10% and 12.06%, respectively, with revenue up 12.6% year-over-year. Subscription service revenues also slightly beat estimates at $2.06 billion, a 13.4% increase year-over-year, while professional services revenues came in at $181 million, above the $165.09 million estimate. Despite recent outperformance, with shares up 19.4% in the past month, Workday currently holds a Zacks Rank #5 (Strong Sell), suggesting potential underperformance in the near term.
Workday delivered a solid Q1 2025, reporting revenue of $2.24 billion, up 12.6% year-over-year and exceeding the Zacks Consensus Estimate by 1.10%. Similarly, EPS of $2.23 marked a substantial increase from $1.74 in the prior-year quarter and surpassed consensus by 12.06%. While subscription services revenue grew 13.4% year-over-year to $2.06 billion, marginally beating analyst forecasts, and professional services revenue of $181 million also topped estimates, a critical forward-looking metric, Subscription Revenue Backlog, came in at $24.62 billion, notably below the $25.32 billion anticipated by analysts. This shortfall in backlog, a key barometer of future revenue streams for SaaS companies, introduces a significant concern despite the strong quarterly performance and the stock's 19.4% appreciation over the past month, which outperformed the S&P 500 composite's 13.4% gain. The current Zacks Rank #5 (Strong Sell) further suggests potential for the stock to underperform the broader market in the near term, reflecting underlying caution despite the earnings beat.
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