Shares in Workday fell Tuesday after the enterprise software maker reported fourth-quarter earnings that topped estimates while revenue met Wall Street targets. The company reiterated 2025 subscription revenue guidance for WDAY stock.
Workday reported Q4 results after the market close on Monday.
For the quarter ending Jan. 31, Workday earnings rose 58% to $1.57 per share from a year earlier on an adjusted basis.
Revenue climbed 17% to $1.92 billion, including acquisitions.
The Pleasanton, Calif.-based company said subscription revenue rose 18% to $1.8 billion, topping estimates of $1.76 billion.
Analysts expected Workday earnings of $1.47 a share on revenue of $1.92 billion. A year earlier, Workday earnings were 99 cents a share on sales of $1.65 billion.
Workday Stock: Smaller Beat
"The $5 million subscription revenue beat (versus guidance) was on the lighter side for Workday," said William Blai analyst Matthew Pfau in a report. "Also, the company guided for 17.5% to 18.5% CRPO (current remaining performance obligations) growth in the first quarter, which is a deceleration from 20% in the fourth quarter and 22% in the third quarter."
Pfau added: "The smaller than normal subscription revenue beat combined with the decelerating CRPO growth is likely causing concern about whether the fiscal 2025 subscription revenue guidance is conservative."
A key financial metric, CRPO bookings are an aggregate of deferred revenue and order backlog.
On the stock market today, WDAY stock fell 5.6% to near 290 in early trading.
Workday's board of directors approved a new $500 million share repurchase program.
WDAY Stock: Subscription Revenue Outlook
The company reiterated 2025 guidance. Workday provided initial fiscal 2025 guidance in November. It forecast subscription revenue growth of 17% to 18%, in-line with views.
Workday said it expects profit margins to improve in fiscal 2025. Analysts predict operating margins of 24.4% in fiscal 2025.
The company sells software for human resources management, such as payroll tools. Also, it has expanded into financial software.
Heading into the Workday earnings report, shares had advanced nearly 11% in 2024.
In September, Workday lowered its outlook for subscription revenue growth through fiscal 2027 at an analyst day. Workday told analysts Wednesday it now expects subscription revenue growth in a range of 17% to 19% in the next three fiscal years, down from its earlier target of 20%.
According to IBD Stock Checkup, WDAY stock holds a Relative Strength Rating of 92 out of a best-possible 99.
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