Enterprise solutions company, Workday (WDAY), is setting up to post another profit loss when they report second quarter earnings after today’s closing bell. Estimize is currently looking for EPS of $-0.04 as compared to Wall Street’s $-0.06, both a welcomed improvement from year-ago results of $-0.11. The Estimize community is also expecting growth in sales, with a consensus of $275.8M, higher than both the Street’s $274.0M and company guidance for $243.5M. Despite negative profits, WDAY has a decent history of beating, surpassing the Estimize EPS consensus in 6 of the last 8 quarters and beating revenue expectations in 7 of the last 8 quarters.

While revenue has consistently increased between 57% and 110% on a year-over-year basis since the company IPO’d in late 2012, Workday still isn’t profitable and seemingly hasn’t recovered from the crash in cloud computing segment in the spring of 2014. After reaching a high of $109.92 on February 28, 2014, the stock dropped to a low of $67.61 by April 25, and still hovers around that level. Workday also trades at a rich valuation, its stock is priced around 17x sales. Mature companies within the industry like salesforce (CRM) and Oracle (ORCL) trade at 8x and 5x sales by comparison. 

Cloud is no doubt a high growth segment, with large tech companies scrambling to increase their efforts in the SaaS space which should offer some solace to WDAY investors. However, the valuations these tech giants are willing to pay to acquire these cloud services are below Workday’s multiple, and could even continue to drop along with stock market enthusiasm. With Worday’s stock down 14% this year, investors are going to want to see some decent fundamental strength in tonight’s report, like was showcased in the recent salesforce.com release, handily beating estimates and raising full-year revenue guidance for the second time.

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WDAY data by YCharts