Results: Workday, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Workday, Inc. (NASDAQ:WDAY) came out with its yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks like a credible result overall - although revenues of US$7.3b were what the analysts expected, Workday surprised by delivering a (statutory) profit of US$5.21 per share, an impressive 450% above what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Workday

Following the latest results, Workday's 36 analysts are now forecasting revenues of US$8.41b in 2025. This would be a solid 16% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to tumble 67% to US$1.73 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$8.45b and earnings per share (EPS) of US$1.83 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Althoughthe analysts have revised their earnings forecasts for next year, they've also lifted the consensus price target 6.1% to US$313, suggesting the revised estimates are not indicative of a weaker long-term future for the business. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Workday at US$350 per share, while the most bearish prices it at US$190. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Workday'shistorical trends, as the 16% annualised revenue growth to the end of 2025 is roughly in line with the 18% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 12% annually. So it's pretty clear that Workday is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that in mind, we wouldn't be too quick to come to a conclusion on Workday. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Workday analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Workday has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.