Workday shares drop as guidance disappoints investors

Published 22/05/2025, 21:24
© Reuters

Investing.com -- Workday Inc (NASDAQ:WDAY), the AI platform for managing people, money, and agents, reported better-than-expected first-quarter earnings and revenue on Monday, but shares tumbled 5.5% in after-hours trading as the company’s guidance failed to impress investors.

The cloud-based enterprise software provider posted adjusted earnings per share of $2.23 for the fiscal first quarter ended April 30, 2025, surpassing the analyst estimate of $2.01. Revenue came in at $2.24 billion, slightly above the consensus estimate of $2.22 billion and up 12.6% YoY.

Despite the earnings beat, Workday’s outlook for the current quarter and full fiscal year appeared to disappoint Wall Street. The company forecast second-quarter subscription revenue of $2.16 billion, representing 13.5% growth. For the full fiscal year 2026, Workday reiterated its subscription revenue guidance of $8.8 billion, a 14% increase YoY.

"Our first quarter results highlight the ongoing progress across our strategic growth areas and the continued efficiencies we are driving throughout the business," said Zane Rowe, CFO of Workday. "We remain focused on executing in this uncertain environment."

The company’s 12-month subscription revenue backlog grew 15.6% YoY to $7.63 billion, while total subscription revenue backlog increased 19.1% to $24.62 billion.

Workday repurchased approximately 1.3 million shares of Class A common stock for $293 million during the quarter. The company also announced that its Board of Directors approved a new $1 billion share repurchase program.

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