Stocks got a nice boost on Thursday, as investors came to grips with the possibility that commentary from the Federal Reserve at its annual Jackson Hole symposium might not be as ill-received by Wall Street as they had feared. Nevertheless, as the symposium got under way with comments from Kansas City Fed President Esther George Thursday night and Fed Chair Jerome Powell Friday morning, markets prepared for potential turbulence. As of 7:45 a.m. ET, before Powell's speech began, futures on the Nasdaq Composite (^IXIC -1.15%) had fallen 66 points to 13,090.
Even with the importance of macroeconomic issues, shareholders are still looking closely at financial reports from individual companies to get a broader sense of business conditions across key industries. The latest numbers from Workday (WDAY -0.26%) and Affirm Holdings (AFRM -0.16%) painted different pictures of the current environment, and together, they provide an interesting look at the dynamics across some high-growth areas in the business world. Below, you'll find more about both companies and how their businesses are faring.
Workday gets to work
Shares of Workday were up more than 11% in premarket trading on Friday. The human resources enterprise software platform provider reported mixed numbers for its fiscal second quarter ending July 31.
Workday's revenue kept rising during the period, with sales of $1.54 billion climbing 22% year over year. Workday got a slightly faster 23% growth rate from its subscription-based revenue, which makes up nearly 90% of its total sales. However, on the bottom line, Workday ran into some headwinds. Adjusted net income fell by nearly a third to $0.83 per share, as the company saw dramatic increases in costs for product development and sales and marketing expenses.
Nevertheless, Workday shareholders were pleased by the company's outlook. The HR software specialist reported strong demand for its products as its client users try to adapt to fast-changing conditions in the labor market. It maintained its guidance for $5.537 billion to $5.557 billion in subscription revenue for the full fiscal year, which would be roughly 22% higher than the final numbers from last year. Even better, Workday expects that its adjusted operating margin will be better than previously expected, hopefully addressing some of the pressures that the software company has seen in earnings.
Workday has largely flown under the radar for many investors, but its stock has rebounded sharply from its worst levels of the year. Yet it still trades 40% below its all-time highs, and that potentially leaves plenty of room for further share price advances to come.
No affirmation from Affirm shareholders
Moving the other way were shares of Affirm Holdings. The consumer finance stock dropped more than 13% in premarket trading as investors reacted negatively to the buy now, pay later company's fiscal fourth-quarter results for the period ending June 30.
At first glance, Affirm's growth rates looked highly impressive. Gross merchandise volume (GMV) for the quarter rose 77% year over year to $4.4 billion, allowing the company to close its fiscal 2022 with 87% growth in GMV. Affirm saw 29,000 more merchants join its active ranks, with the integration with Shopify's Shop Pay Installments platform providing most of the new business. Active customer counts nearly doubled to 14 million year over year, and total transactions climbed 139% to 12 million.
Yet the impact on Affirm's financials was mixed. Revenue showed a healthy climb of 55% for the full year, but fourth-quarter growth slowed to 39%. Yet higher provisions for credit losses weighed on Affirm's earnings, with net losses for the year rising to more than $700 million compared to $441 million in fiscal 2021.
Affirm's fate might be closely tied to what the Federal Reserve says at its meetings, because interest rates play a key role in the health of the consumer economy and in Affirm's ability to keep getting financing for its business. Investors will want to keep a close eye on Jackson Hole to see how the latest news could affect the buy now, pay later space and Affirm's place in it.
