Carl Eschenbach, co-CEO of Workday, speaking on CNBC’s “Squawk Box” at the World Economic Forum Annual Meeting in Davos, Switzerland, on Jan. 18, 2024.
Adam Galici | CNBC
Workday shares soared 12% on Friday, one day after the finance and human resources software maker issued fiscal second-quarter results that exceeded analysts’ estimates and announced plans to further widen its adjusted operating margin through 2027.
Here is how the company did, compared to LSEG consensus:
Earnings per share: $1.75 adjusted vs. $1.65 expected
Revenue: $2.085 billion vs. $2.071 billion expected
Workday’s revenue was up about 17% year over year in the quarter ending July 31, according to a statement. Subscription revenue growth grew 17%. Net income, at $132 million, or 49 cents per share, increased from $79 million, or 30 cents per share, in the same quarter a year ago.
With respect to guidance, Workday is now looking for an adjusted operating margin of 25.25% in the 2025 fiscal year, compared to the 25% forecast it provided in May.
On a Thursday conference call with analysts, Zane Rowe, Workday’s finance chief, said he expects the company’s adjusted operating margin to expand to 30% in the 2026 and 2027 fiscal years, along with an annual subscription revenue growth of 15%. In September 2023, Workday said it was targeting a 25% adjusted operating margin for fiscal 2027 and subscription revenue growth between 17% and 19%.
“We are relentlessly focused on scaling all of our processes across the company as we review our product and go-to-market initiatives,” Rowe said. “We’re also becoming increasingly more targeted in our growth investments, balancing product development with go-to-market resources.”
Deutsche Bank analysts led by Brad Zelnick increased their 12-month price target on Workday stock to $275 from $265. They have a hold rating on the stock.
“The increased 30% operating margin target was the big upside surprise as it is now committed both sooner and greater than most were expecting,” the analysts wrote.
Citi, Evercore ISI and Piper Sandler analysts also raised their Workday price targets following the company’s report.
Conditions aren’t perfect for Workday, however. Organizations are still being more careful than usual before agreeing to sign contracts, Rowe said, adding that headcount growth among the existing customer base has slowed down.
Many other software companies have pointed to rougher economic conditions in recent quarters. But on Friday, Federal Reserve Chair Jerome Powell said “the time has come for policy to adjust,” an indication that the central bank will lower its benchmark rate. That might benefit growing cloud software companies such as Workday. Investors moved away from those assets and opted for more defensive investments in 2022 as they anticipated rate hikes to ward off inflation.
The WisdomTree Cloud Computing Fund, an exchange-traded fund that includes Workday, ended the day up 2% in Friday’s trading session. The S&P 500 index gained 1%.
But Workday CEO Carl Eschenbach did not suggest that market conditions will improve soon.
“In fact, we think the current environment of IT spending and the environment we’re selling into isn’t something that’s just been here the last couple quarters,” he said. “We think it’s the new norm going forward. We’re prepared because we have a great product.”
China is one of Nvidia’s largest markets, particularly for data centers, gaming and artificial intelligence applications.
Avishek Das | Lightrocket | Getty Images
Two Chinese nationals in California have been arrested and charged with the illegal shipment of tens of millions of dollars‘ worth of AI chips, including from Nvidia, the Department of Justice said Tuesday.
Chuan Geng, 28, and Shiwei Yang, 28, exported the sensitive chips and other technology to China from October 2022 through July 2025 without obtaining the required licenses, the DOJ said.
The illicit shipments included Nvidia’s H100 general processing units, according to a criminal complaint provided to CNBC. The H100 is amongst the U.S. chipmaker’s most cutting-edge chips used in artificial intelligence applications.
The Department of Commerce has placed such chips under export controls since 2022 as part of broader efforts by the U.S. to restrict China’s access to the most advanced semiconductor technology.
This case demonstrates that smuggling is a “nonstarter,” Nvidia told CNBC. “We primarily sell our products to well-known partners, including OEMs, who help us ensure that all sales comply with U.S. export control rules.”
“Even relatively small exporters and shipments are subject to thorough review and scrutiny, and any diverted products would have no service, support, or updates,” the chipmaker added.
Geng and Yang’s California-based company, ALX Solutions, had been founded shortly after the U.S. chip controls first came into place.
According to the DOJ, law enforcement searched ALX Solutions’ office and seized phones belonging to Geng and Yang, which revealed incriminating communications between the defendants, including those about evading U.S. export laws by shipping sensitive chips to China through Malaysia.
The review also showed that in December 2024, ALX Solutions made over 20 shipments from the U.S. to shipping and freight-forwarding companies in Singapore and Malaysia, which the DOJ said are commonly used as transshipment points to conceal illicit shipments to China.
ALX Solutions did not appear to have been paid by entities they purportedly exported goods to, instead receiving numerous payments from companies based in Hong Kong and China.
The U.S. Department of Commerce’s Bureau of Industry and Security and the FBI are continuing to investigate the matter.
The smuggling of advanced microchips has become a growing concern in Washington. According to a report from the Financial Times last month, at least $1 billion worth of Nvidia’s chips entered China after Donald Trump tightened chip export controls earlier this year.
In response to the report, Nvidia had said that data centers built with smuggled chips were a “losing proposition” and that it does not support unauthorized products.
With Opendoor shares up almost fivefold since the beginning of July and trading volumes hitting record levels, CEO Carrie Wheeler thanked investors for their “enthusiasm” on Tuesday’s earnings call.
“I want to acknowledge the great deal of interest in Opendoor lately and that we’re grateful for it,” Wheeler said, even as the stock sank more than 20% after hours. “We appreciate your enthusiasm for what we’re building, and we’re listening intently to your feedback.”
Prior to its recent surge, Opendoor’s stock had been mostly abandoned, falling as low as 51 cents in late June. The situation was so dire that the company was considering a reverse split that could lift the price of each share by as much 50 times as a potential way to keep its Nasdaq listing. Opendoor said last week that it’s back in compliance and canceled the reverse split proposal.
Opendoor’s business is centered around using technology to buy and sell homes, pocketing the gains. The company was founded in 2014 and went public through a special purpose acquisition company (SPAC) during the Covid-era boom of late 2020. But when interest rates began climbing in 2022, higher borrowing costs reduced demand for homes.
Revenue sank by about two-thirds from $15.6 billion in 2022 to $5.2 billion last year.
Much of the stock’s bounce in the past six weeks was spurred by hedge fund manager Eric Jackson, who announced in July that his firm had taken a position in Opendoor. Jackson said he believes Opendoor’s stock could eventually get to $82. It closed on Tuesday at $2.52, before dropping below $2 in extended trading.
Jackson’s bet is that a return to revenue growth and increased market share will lead to profitability, and that investors will start ascribing a reasonable sales multiple to the business.
The turnaround isn’t yet showing much evidence of working. For the second quarter, Opendoor reported a revenue increase of about 4% to $1.57 billion. Its net loss narrowed to $29 million, or 4 cents a share, from $92 million, or 13 cents, a year earlier.
In the current quarter, Opendoor is projecting just $800 million to $875 million in revenue, which would represent a decline of at least 36% from a year earlier. Opendoor said it expects to acquire just 1,200 homes in the the third quarter, down from 1,757 in the second quarter and 3,504 in the third quarter of 2024. It’s also pulling down marketing spending.
“The housing market has further deteriorated over the course of the last quarter,” finance chief Selim Freiha said on Tuesday’s earnings call. “Persistently high mortgage rates continue to suppress buyer demand, leading to lower clearance and record new listings.”
Wheeler highlighted Opendoor’s effort to expand its business beyond so-called iBuying and into more of a referrals business that’s less capital intensive. She called it “the most important strategic shift in our history.”
Investors, who have been bidding up the stock in waves, were less than enthused with what they heard. But at least there are finally people listening.
“This increased visibility is an opportunity to tell our story to a broader audience,” Wheeler said. “We intend to make the most of it.”
Super Micro Computer shares slid 15% in extended trading on Tuesday after the server maker reported disappointing fiscal fourth-quarter results and issued weak quarterly earnings guidance.
Here’s how the company did in comparison with LSEG consensus:
Earnings per share: 41 cents adjusted vs. 44 cents expected
Revenue: $5.76 billion vs. $5.89 billion expected
Super Micro’s revenue increased 7.5% during the quarter, which ended on June 30, according to a statement.
For the current quarter, Super Micro called for 40 cents to 52 cents in adjusted earnings per share on $6 billion to $7 billion in revenue for the fiscal first quarter. Analysts surveyed by LSEG were looking for 59 cents per share and $6.6 billion in revenue.
For the 2026 fiscal year, Super Micro sees at least $33 billion in revenue, above the LSEG consensus of $29.94 billion.
Super Micro saw surging demand starting in 2023 for its data center servers packed with Nvidia for handling artificial intelligence models and workloads. Growth has since slowed.
The company avoided being delisted from the Nasdaq after falling behind on quarterly financial filings and seeing the departure of its auditor.
As of Tuesday’s close, Super Micro shares were up around 88% so far in 2025, while the S&P 500 index has gained 7%.
Executives will discuss the results on a conference call starting at 5 p.m. ET.