Workday Q2 earnings, sales top expectations

Aneel Bhusri, co-CEO and chairman of Workday, said the company now has more than 55 million users.

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Workday delivered better-than-expected second quarter results with sales growth of 18.7%.

The company, which makes cloud ERP and financials software, reported second quarter revenue of $1.26 billion. Subscription revenue was $1.11 billion, up 19.5% from a year ago. Workday reported earnings of 41 cents a share, or $1.23 a share on a non-GAAP basis.

Wall Street was expecting Workday to report second quarter revenue of $1.24 billion with non-GAAP earnings of 78 cents a share.

Ahead of Workday's results, analysts were mixed about the company due to slowing growth in large ERP and HCM projects. In a research note, Cowen analyst J. Derrick Wood said Workday's transactional deals were solid and the company's growth depends on financials traction. Jefferies analyst Brent Thill noted that Workday will see spending on back-office applications rebound.

Aneel Bhusri, co-CEO and chairman of Workday, said the company now has more than 55 million users and more than half of the Fortune 500 as customers. Chano Fernandez, co-CEO of Workday, said the company will continue to invest in its go-to-market strategy.

As for the outlook, Workday said it is raising its fiscal 2022 guidance for subscription revenue to $1.156 billion to $1.158 billion with non-GAAP operating margins of 21%.