Software maker Workday plunged Thursday after the company lowered its outlook for subscription revenue growth through fiscal 2027 at an analyst day. WDAY stock sank more than 8%.
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%.
For WDAY stock, fiscal 2024 ends with the January quarter.
Workday stock tumbled 8.5% to close at 211.22 on the stock market today.
WDAY Stock: New Management Team
"The take-down on growth and margin expansion is disappointing, but we think new management is making the right strategic moves and that targets will prove conservative," TD Cowen analyst Derrick Wood said in a note to clients.
Workday has a new chief financial officer, Zane Rowe, formerly at VMware. Since 2022, Workday has had two co-chief executives — Aneel Bhusri and Carl Eschenbach. In early 2024, Eschenbach will be the sole CEO.
At Wolfe Research, analyst Alex Zukin said in his note: "While no one is celebrating lowered margin targets, our view is that WDAY is implementing many new go-to-market initiatives (particularly internationally) that require both incremental time and dollars to yield results. New CFO Zane Rowe prefers conservatism and optionality to ankle weights."
The analyst day coincided with a customer conference in San Francisco.
At Workday Rising, the company touted opportunities in artificial intelligence and international expansion.
At Jefferies, analyst Brent Thill said in a note: "We believe management's 25% margin guide is a floor, giving them room to invest in artificial intelligence, financial, and international growth while allowing new CFO Zane Rowe to adjust to WDAY."
Technical Ratings
Pleasanton, Calif.-based Workday sells software for human capital management, such as payroll tools. Also, it has expanded into financial software.
Meanwhile, WDAY stock holds a Relative Strength Rating of 91 out of a best-possible 99, according to IBD Stock Checkup. Further, Workday stock had dipped below its 50-day moving average, a bearish signal.
Before Thursday's retreat, WDAY stock had gained nearly 38% in 2023.
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