Workday stock retreated on Wednesday after the company reported third-quarter earnings and revenue that topped Wall Street consensus estimates. But the enterprise software maker's fiscal 2026 subscription revenue guidance missed expectations.
Pleasanton, Calif.-based Workday reported financial results after the market close on Tuesday. On the stock market today, Workday stock retreated 10% to near 243 in early trading.
For the quarter ending Oct. 31, Workday earnings rose 21% to $1.89 per share from a year earlier on an adjusted basis. Revenue climbed 16% to $2.16 billion, including acquisitions, slightly above views.
Analysts expected Workday earnings of $1.76 a share on revenue of $2.13 billion.
Workday Stock: Early Fiscal 2026 Guidance
Also, the software maker provided preliminary fiscal 2026 subscription revenue guidance. Workday forecast subscription revenue of $8.8 billion, well below estimates of $8.885 billion.
"The company provided fourth-quarter guidance that came in slightly below the Street due to some moving pieces around several large deals," said William Blair analyst Jake Roberge in a report.
He added: "Workday also issued an initial outlook for fiscal 2026 that calls for $8.8 billion of subscription revenue (representing 14% growth) and 27.5% operating margin. Workday expects subscription revenue growth to be lowest in the first half of the year given the revenue ramp of the aforementioned deals and a difficult leap year comparison."
At Jefferies, analyst Brent Thill holds a cautious outlook.
"After multiple guidance cuts in fiscal 2025, investors still wonder if the 14% initial fiscal 2026 guide is fully de-risked," he said in a report.
Workday Stock Technical Ratings
The company sells software for human resources management, such as payroll tools. About 70% of revenue comes from human capital management products. Also, it has expanded into financial software.
Heading into the Workday earnings report, shares were down 3% in 2024.
Also, WDAY stock holds a Relative Strength Rating of 54 out of a best-possible 99, according to IBD Stock Checkup.
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