UPDATED 19:03 EDT / AUGUST 29 2019

CLOUD

Workday’s hot streak continues as it beats earnings targets again

Workday Inc. continued its hot streak as it easily topped expectations for its second-quarter financial results.

The company, which sells financial management and human capital management software to companies, reported earnings before certain costs such as stock compensation of 44 cents per share on revenue of $887.8 million, up 32% from a year prior. Wall Street was looking for earnings of just 35 cents per share on revenue of $872.31 million.

Workday added that its subscription revenue grew 34% year over year to $757.2 million.

Workday has now beaten expectations in four straight quarters, and the positive run looks set to continue as the company also raised its full fiscal-year guidance. Executives said that based on the better-than-expected second-quarter results, the company is now looking at full-year subscription revenue of $3.06 billion to $3.07 billion, up from its earlier forecast of $3.04 billion to $3.06 billion. Wall Street had forecast full-year subscription revenue of $3.047 billion.

One of the reasons for Workday’s continued success is that it’s executing well on its strategy of becoming a more comprehensive provider of back office services, not just for its primary market of small and medium size businesses, but also for larger companies.

“It was a strong quarter, with continued global customer momentum across the Fortune 500 and Global 2,000, as more organizations look to Workday for the ability to plan, execute, and analyze in one system powered by machine learning,” Workday co-founder and Chief Executive Officer Aneel Bhusri (pictured) said in a statement.

Workday has also been growing the range of services it offers. In the wake of last year’s $1.55 billion acquisition of Adaptive Insights Inc., it began selling a new workforce planning module for the Adaptive Insights Business Planning Cloud, which is used to create and test complex business scenarios. The new product, which is really more a set of templates to use with the existing business planning engine, enables better collaboration between the finance and human resources departments for workforce planning, analysis and reporting.

Holger Mueller of Constellation Research Inc. told SiliconANGLE Workday had gotten a good boost from its acquisition of Adaptive Insights, but the next step was to show continued organic growth of its businesses. New products in offing will be key to that, he said.

“The product pipeline is strong,” Mueller said. “First and foremost all eyes will be on the Workday platform-as-a-service offering, which is a cloud platform scheduled to go generally available this fall. Analysts were also asking about Workday ‘s new blockchain-based certification tool during the conference call. We’ll have to wait and see if Workday can convert the excitement into more revenue.”

Photo: Intel Capital/Flickr

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