Workday Inc. reported robust fourth-quarter fiscal 2024 results, exceeding both top and bottom-line Zacks Consensus Estimates. The company showcased significant revenue growth year over year, attributed to substantial customer wins across diverse industries such as financials, healthcare, and education. Strategic expansions and successful contract renewals within the existing customer base further buoyed the impressive performance. Management’s unwavering focus on innovation, AI integration, and international expansion has distinctly contributed to the positive results.
Net Income Soars Year Over Year
On a GAAP basis, Workday reported net income of $1.18 billion or $4.42 per share, a substantial surge from a net loss of $126 million or a loss of 49 cents per share in the corresponding quarter of the previous year. This year-over-year increase in the top-line figures significantly bolstered net income. Non-GAAP net income also showed an upward trajectory, reaching $421 million or $1.57 per share, up from $256 million or 99 cents per share in the prior-year quarter. The bottom line exceeded the Zacks Consensus Estimate by 13 cents.
Impressive Revenue Growth and Diverse Client Wins
During the quarter, Workday’s net sales hit $1.92 billion, up from $1.64 billion in the year-ago period. This upsurge was primarily fueled by escalating demand for the company’s HCM and financial management solutions, overshadowing the Zacks Consensus Estimate by $9 million. In fiscal 2024, the company reported total revenues of $7.25 billion, marking a notable increase from $6.21 billion in the previous fiscal year.
The strong revenue growth underscores the diversity and strength of Workday’s product portfolio. The company not only secured several new customer accounts but also witnessed strategic expansions and contract renewals within its existing client base. Notable new customers included HHS, Randstad, Australian Stock Exchange, Boyd Gaming Corporation, UHS of Delaware, and VXI Global Solutions, all of whom opted for Workday’s HCM and financial management products.
Financial Insights and Cash Flow Position
In the fourth quarter of fiscal 2024, Workday generated $996 million in cash from operating activities, a significant increase from $694 million in the prior-year quarter. The entire fiscal year saw the company amass $2.14 billion in cash from operations, up from $1.65 billion in fiscal 2023. As of January 31, 2024, Workday boasted $7.8 billion in cash and marketable securities, coupled with long-term debt of $2.98 billion, exhibiting a healthy financial position.
Positive Outlook for Fiscal 2025
Looking ahead to fiscal 2025, Workday anticipates subscription revenues to range between $7.725 billion and $7.775 billion, signaling year-over-year growth between 17% and 18%. Professional services revenues are estimated to be around $630-$640 million. The company projects a non-GAAP operating margin of 24.5% for the upcoming fiscal year, with capital expenditure approximated at approximately $330 million. For the first quarter of fiscal 2025, the company projects Subscription services revenues of $1.81 billion and Professional services revenues of $163 million, with a non-GAAP operating margin of 24.5%.
Zacks Rank and Comparison with Peers
Workday currently holds a Zacks Rank #3 (Hold). In a comparative analysis, NVIDIA Corporation (Zacks Rank #1), InterDigital, Inc. (Zacks Rank #2), and Arista Networks, Inc. (Zacks Rank #2) are showcasing robust performances and offering investors compelling opportunities. NVIDIA stands out as a leader in visual computing technologies, leveraging its innovations in AI-based solutions for high-performance computing and gaming. InterDigital is a pioneer in advanced mobile technologies, while Arista Networks emphasizes a software-driven, data-centric approach to cloud architecture and networking.