Street Calls of the Week
Investing.com -- Workday (NASDAQ:WDAY) reported quarterly profit and revenue that topped Wall Street expectations, but shares dipped more than 4% in premarket trading Friday after the company issued a weak revenue outlook for the current quarter.
The company posted second-quarter earnings of $2.21 per share, compared with analysts’ estimates of $2.11.
Revenue rose to $2.35 billion, slightly above expectations of $2.34 billion. Subscription revenue jumped 14% to $2.17 billion.
The 12-month subscription backlog (cRPO) came in at $7.91 billion, up 16.4% year over year and slightly above management’s 15%–16% guidance.
Looking ahead, Workday projected revenue of $2.235 billion, missing analysts’ forecast of $2.423 billion for the current quarter.
It also guided full-year fiscal 2026 (FY26) revenue to $8.815 billion, lower than Wall Street’s estimate of $9.51 billion.
Intuit (NASDAQ:INTU) lifted its FY26 subscription revenue forecast to $8.82 billion, up from its prior forecast of $8.80 billion.
"While Workday delivered a modest topline beat and ~50 bps of cRPO upside, it does not appear that the underlying momentum of the business is showing any real signs of acceleration," Stifel analysts commented, trimming their price target on the stock to $255 from $275.
"We note FY26 guidance was raised primarily due to the announced Paradox acquisition; absent this, subscription revenue guidance would have been unchanged from last quarter, suggesting a softer 2H following this quarter’s beat," they added.
Separately, TD Cowen analysts were more optimistic, saying that the maintained organic revenue guidance for FY26 still points to a reacceleration in growth during the second half.
They noted that AI momentum “seems strong," adding that despite the share price drop, selling pressure on “good” SaaS results appears to linger, though they believe a "strong valuation floor" is in place.
Chief Executive Carl Eschenbach said growth was supported by artificial intelligence and international demand, while CFO Zane Rowe said the company lifted its subscription revenue outlook to $8.815 billion, representing 14% growth, and raised its operating margin forecast to 29%.
(Pratyush Thakur contributed to this report.)