Workday co-founder Anil Bhusri speaks at the Workday Charity Classic at Stanford University Golf Course on August 28, 2024 in Stanford, California.
David Paul Morris | Bloomberg | Getty Images
working day Shares fell 10% in after-hours trading Tuesday after the human resources and finance software maker reported a downbeat quarterly outlook.
Here is the company’s performance compared to the LSEG consensus:
Earnings per share: $2.47 adjusted vs. $2.32 expected Revenue: $2.53 billion vs. $2.52 billion expected
Workday’s revenue increased 14.5% year-over-year in the fiscal fourth quarter ended Jan. 31, according to the announcement. Net income was $145 million, or 55 cents per share, up from $94 million, or 35 cents per share, in the year-ago period.
Adjusted earnings per share excludes the impact of stock-based compensation expense.
Workday expected fiscal first-quarter subscription revenue of $2.335 billion and adjusted operating margin of 30.5%. Analysts surveyed by Street Account expected a profit margin of 30.9% and subscription revenue of $2.35 billion.
Workday expects adjusted operating margins of 30% and subscription revenue of $9.93 billion to $9.95 billion in fiscal 2027, representing growth of 12% to 13%.
Investors have grown increasingly concerned in recent weeks that artificial intelligence models could throttle the growth of big software companies. As of Tuesday’s close, Workday stock was down 39% in 2026, the biggest drop on record since the company went public in 2012.
Workday announced on February 9 that CEO Karl Eschenbach will step down after a three-year term and be replaced by co-founder Anil Bhusri.
The company has added generative AI capabilities to its portfolio, and annual revenue from AI products now exceeds $400 million.
Workday announced that it will release an AI agent to handle shift change requests during the quarter. Workday also acquired Pipedream, a startup that provides tools to connect AI agents to a variety of external services.
“You’ve all heard about HR and ERP being replaced by AI or relegated to the background,” Bhusri said on a conference call with analysts, using the acronym for enterprise resource planning. “Personally, I don’t see that happening.”
Rob Enslin, the company’s chief commercial officer, said some deals with large new customers, such as those in the federal government and health care sectors, are taking longer to close.
“Anneel is focused on driving growth, not just achieving operating margins,” said Zane Lowe, Workday’s finance director.
WATCH: Workday CEO Karl Eschenbach: AI is a tailwind for the company, but there’s ‘absolutely no headwind’
