By Dhirendra Tripathi
Investing.com – Workday stock (NASDAQ:WDAY) climbed 7.5% in premarket trading Tuesday after the company raised its guidance for annual subscription revenue while projecting fatter margins.
The company said the environment will remain robust for finance and HR transformation initiatives and it was thus expecting yearly subscription revenue to be $5.54 billion at the midpoint of its guidance range, up 22%.
“We are also raising our fiscal 2023 non-GAAP operating margin guidance to 18.5%,” Chief Financial Officer Barbara Larson said in a statement.
The company’s subscription revenue grew over 22% in the fourth quarter and it closed the year with a total subscription revenue backlog at about $13 billion, the 27% growth reflecting notable visibility into future sales.
The company’s stock had suffered a hammering in November when it said its subscription revenue will rise 21%. The outlook had then disappointed given it was the same pace it had grown by in the third quarter, and not materially different.
Workday closed in January with more than 60 million users. The company’s cloud-based applications help support finance and people operations for some of the world's largest organizations. Many of them have varied requirements regarding where their data can be stored, accessed, and managed.
The company had in October announced a tie-up with Alphabet (NASDAQ:GOOGL). Google Cloud will help businesses run Workday enterprise applications for finance, HR, and planning in a public cloud environment, with ease-of-management, and low network latency.
Total revenue in the fourth quarter rose nearly 22% to $1.38 billion. Of this, subscription revenue was $1.23 billion. Net income per share rose by 5 cents to 82 cents.