Factors Setting The Tone For Workday (WDAY) Q3 Earnings

Workday, Inc. (NASDAQ:WDAY) is scheduled to report third-quarter fiscal 2020 results on Dec 3.

The Zacks Consensus Estimate for fiscal third-quarter revenues is currently pegged at $920.7 million, indicating a rise of 23.9% from the prior-year quarter’s figure.

The consensus mark for fiscal third-quarter earnings is pegged at 38 cents, which suggests a rally of 22.6% year over year.

Notably, the company surpassed the Zacks Consensus Estimate for earnings in the trailing four quarters, the average being 41.4%.

In the fiscal second quarter, the company reported non-GAAP earnings of 44 cent per share that beat the Zacks Consensus Estimate of 35 cents. Total revenues of $887.8 million surpassed the Zacks Consensus Estimate by 1.7%.

Factors Likely to Influence Q3 Results

Workday’s fiscal third-quarter performance is likely to have benefited from high demand for its HCM and financial management solutions. In fact, Workday’s HCM suite of applications indicates strong growth momentum driven by the transition of organizations to the cloud.

Moreover, growing clout of Workday Prism Analytics and Adaptive Insights business planning cloud offerings have been driving the company’s performance.

Workday, Inc. Price, Consensus and EPS Surprise

Improving customer satisfaction rate, backed by the company’s diversified product portfolio, is another positive. Also, Workday is gaining traction in international markets like Germany, Europe and Asia where it has added new customers. Well, an expanding customer base is likely to support incremental adoption of the company’s software solutions. This is expected to have favored the top line in the to-be-reported quarter.

In the last earnings call, management guided that for fiscal third quarter, subscription revenues are likely to be in the range of $783-$785 million. The figure indicates a rise from $624.4 million reported in the year-ago quarter. Further, professional services revenues were projected at $135 million, suggesting growth from $118.7 million in the prior-year quarter.

However, growing expenses associated with marketing and employee headcount are likely to have exerted pressure on the company’s margins in the fiscal third quarter.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for Workday this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Workday has a Zacks Rank #3 and an Earnings ESP of -2.74%.

Stocks to Consider

Here are some stocks you may consider as our proven model shows that these have the right mix of elements to beat estimates:

CDW Corporation (NASDAQ:CDW) has an Earnings ESP of +0.30% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dynatrace, Inc (NYSE:DT) has an Earnings ESP of +10.53% and a Zacks Rank of 2.

Coupa Software (NASDAQ:COUP) has an Earnings ESP of +8.70% and a Zacks Rank of 3.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>