06:31 AM EDT, 08/23/2024 (MT Newswires) -- Workday (WDAY) shares rose early Friday as the maker of cloud applications for finance and human resources reported fiscal second-quarter results above market estimates and reiterated its full-year subscription revenue outlook.

Adjusted earnings advanced to $1.75 a share for the three-month period ended July 31 from $1.43 the year before, the company said late Thursday, while the consensus on Capital IQ was $1.65. Revenue jumped about 17% year over year to $2.09 billion, ahead of the Street's view for $2.07 billion. The stock jumped 12% in recent premarket activity.

"Our second quarter performance was ahead of our expectations across our key financial metrics," Chief Financial Officer Zane Rowe said in a statement. "We remain focused on balancing targeted investments across our growth areas along with driving efficiencies across the company."

Subscription revenue gained 17% to $1.9 billion, while professional services inclined to $182 million from $163 million in the 2023 quarter. US revenue totaled $1.56 billion, while international revenue came in at $524 million, Rowe said on an earnings call, according to a Capital IQ transcript.

Adjusted operating margin increased to 24.9% from 23.6% last year, according to the company. Total costs and expenses rose to $1.97 billion from $1.75 billion in the prior-year quarter.

Workday expects subscription revenue of roughly $1.96 billion for the ongoing three-month period, reflecting an annual increase of about 16%. The company also estimates an adjusted operating margin of 25.25% for the quarter.

For fiscal 2025, the company continues to project subscription revenue of $7.7 billion to $7.73 billion, representing an annual growth of 17%. It now anticipates its adjusted operating margin to be at 25.25% for the year versus the prior guidance of about 25%.

Workday expects annual subscription revenue growth of about 15% in fiscal 2026 and 2027, Rowe told analysts. "Over the past year, we've made good progress across our key growth areas," the CFO said. "While a number of these initiatives are still in their early development, they are already supporting growth in (fiscal 2025) as well as for future years as they scale across our products and geographies."

Price: 259.85, Change: +28.77, Percent Change: +12.45