Shares of Workday Inc. (WDAY, Financial) gained 1.12% to $189.75 in after-hours trading on Thursday after beating consensus estimates for second-quarter 2020 financial results.Ă‚
The software company recorded a loss of 53 cents per share, which topped estimates by 5 cents. The loss increased 32.5% year over year.
Revenue was $887.8 million, reflecting 32.2% growth from the prior-year quarter and surpassing expectations by $15.36 million.
During the quarter, subscription services sales grew 33.9% to $757.2 million and professional services sales increased 23% to $130.6 million.
The Pleasanton, California-based provider of management software also posted a 60 basis points increase in the operating loss to 13.8% of total revenue. In contrast, the operating cash flow improved 74.1% to $100.3 million.
“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. In addition, we celebrated one year with Adaptive Insights and continue to make great progress on our integration vision,” Co-Founder and CEO Aneel Bhusri said. “As we move into the second half of the year, we are continuing to invest in areas that leverage our strengths and open new opportunities.”
Looking ahead, Workday raised its guidance for subscription revenue to a range of $3.06 billion to $3.07 billion from the previous range of $3.045 billion to $3.06 billion for full-year 2020, which will end on Jan. 31, 2020. The company also projects subscription revenue of $783 million to $785 million for the third quarter, which will end Oct. 31.
As of July 31, the balance sheet had $1.93 billion in cash on hand and short-term securities and about $1.23 billion in convertible senior notes. The company also booked nearly $1.9 billion in total unearned revenues. Total equity was worth $2.21 billion.
The closing share price was $187.65 on Thursday for a market capitalization of $42.41 billion. The stock is trading below the 200-, 100- and 50-day simple moving average lines despite a 21% rise over the past year through Aug. 29. The 52-week range is $117.72 to $226.83.
The 14-day relative strength index of 42 suggests the stock is neither oversold nor overbought.
Wall Street issued an overweight recommendation rating for shares of Workday with an average target price of $216.03 per share, reflecting 15.2% upside from Thursday’s closing price.
Workday does not pay a dividend.
Disclosure: I have no positions in any securities mentioned.
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