Workday’s shares rose in after-hours trading Wednesday as the enterprise software maker’s sales growth pushed earnings above analysts’ estimates despite the coronavirus crisis.
For the first quarter, Workday reported revenue of $1.02 billion, up 23% from the year-ago period, while adjusted earnings were 44 cents a share. Analysts had expected earnings of 37 cents per share on revenue of $1.003 billion.
“Despite a challenging environment, we reported solid first-quarter results, which we believe are a direct reflection of the mission-critical nature of our solutions,” CFO Robynne Sisco said in a news release.
The company also lowered its full-year subscription revenue guidance to a range of $3.67 billion to $3.69 billion from the previously-announced range of $3.755 billion to $3.770 billion, reflecting COVID-19 impacts.
“We’ve started to see an effect on our business on several fronts, including new business bookings, GAAP and non-GAAP operating expenses and cash collections from customers,” Sisco told analysts on an earnings call. “The updated guidance we are providing today takes into account these impacts based on what we have observed over the last few months.”
In Wednesday’s extended session, Workday shares climbed 5.4% to $179.61.
According to Investor’s Business Daily, “Many software growth stocks have outperformed Workday amid the coronavirus crisis. Workday depends on new customers for growth and it faces hurdles closing large deals amid the COVID-19 lockdown, analysts say.”
Company Co-President Luciano Fernandez said Workday has seen “higher-than-normal deal pushouts, particularly in industries most impacted [by the coronavirus], including travel, hospitality and health care.”
In “this uncertain environment,” he told analysts, some companies are prolonging the process of deciding whether to make deals with Workday “as they focus first on assessing and responding to the immediate impacts to their business.”
“The good news is that based on where we stand today, most of the pipeline impact has been opportunities moving into later periods rather than deals altogether going away, with the largest expected impact to be in Q2 and Q3,” Fernandez said.