Workday's Q4 Might Be Mixed, But The Wal-Mart Contract Was Huge

Workday Inc (NYSE: WDAY) is scheduled to report Q4 results on February 27.

Despite the slow start in November, the company will likely report solid results, with the highlight of the quarter being its contract wins, William Blair’s Justin Furby said in a report, while maintaining an Outperform rating.

“Our fieldwork suggests solid fourth-quarter results with upside across all key metrics,” Furby wrote.

Contract Wins

While Workday’s performance is likely to have bounced back after a slow start to Q4, the highlight of the quarter is the mega win at Wal-Mart Stores Inc (NYSE: WMT), which could represent more than $30 million of annual subscription revenue once the deal ramps up, Furby mentioned.

Related Link: Workday Signs Big HR Deal With Wal-Mart

The win at Wal-Mart is a multiyear deployment and the impact on Q4 billings is likely to be limited. However, “much (if not all) of the Walmart billing will be incremental to guidance,” the analyst stated. SAP (NYSE: SAP) had been vying for this deal.

The other notable wins include Boeing (NYSE: BA), a 70,000-employee real estate company, a 50,000- employee pharmaceutical company, a 30,000-employee financial services company, Macquarie Bank [with 14,000 employees], Ohio State and Iowa State.

While management may announce in-line or marginally better guidance for fiscal 2018, there is upside to the FQ1 billings guidance of low teens growth, Furby noted.