Workday Inc (NASDAQ:WDAY) stock rose 6.68% (As on February 26, 11:23:18 AM UTC-4, Source: Google Finance) after the company posted strong quarterly results that surpassed analysts’ expectations. Net income for the period fell from $1.19 billion one year earlier to just $94 million, though the company explained the discrepancy. It noted that it had benefited from a deferred tax asset valuation allowance of $1.1 billion in the year-ago quarter. Subscription revenues were $2.040 billion, an increase of 15.9% from the same period last year. Non-GAAP operating income for the fourth quarter was $584 million, or 26.4% of revenues, compared to a non-GAAP operating income of $462 million, or 24.0% of revenues, in the same period last year. 12-month subscription revenue backlog was $7.63 billion, up 15.2% from the same period last year.

Meanwhile, Workday welcomed new core customers including First-Citizens Bank & Trust, St. Louis County, UnityPoint Health, and Vermont State College System and expanded existing relationships with Aon, Sallie Mae Bank, Sutter Health, and Toyota. Workday added new strategic partnerships with Randstad and TechWolf, and added five new Workday Wellness partners, including MetLife.

WDAY in the fourth quarter of FY 24 has reported the adjusted earnings per share of $1.92, beating the analysts’ estimates for the adjusted earnings per share of $1.78. The company had reported the adjusted revenue growth of 15 percent to $2.21 billion in the fourth quarter of FY 24, beating the analysts’ estimates for revenue of $2.18 billion.

Additionally, Operating cash flows were $2.461 billion compared to $2.149 billion in the prior year. Free cash flows were $2.192 billion compared to $1.917 billion in the prior year. Workday repurchased approximately 2.9 million shares of Class A common stock for $700 million as part of its share repurchase programs. Cash, cash equivalents, and marketable securities were $8.02 billion as of January 31, 2025.

Looking ahead to the next quarter, Workday issues a somewhat conservative forecast, saying it sees subscription revenue of $2.05 billion and an adjusted operating margin of 28%. Wall Street is looking for slightly more subscription revenue of $2.06 billion, albeit with a lower adjusted operating margin of 26.7%.

For fiscal 2026, Workday is shooting for $8.8 billion in subscription revenue and an adjusted operating margin of 28%. The revenue forecast is a tad higher than the number it provided three months earlier, and implies growth of 14% compared to fiscal 2025, where it delivered $7.718 billion in subscription sales.