Workday shares fell 8% in extended trading on Tuesday after the human resources and finance software maker reported light quarterly guidance.
Here's how the company performed relative to LSEG consensus:
- $2.47 adjusted vs. $2.32 expected
- Revenue: $2.53 billion vs. $2.52 billion expected
Workday's revenue grew 14.5% year over year in the fiscal fourth quarter, which ended on Jan. 31, according to a statement. Net income of $145 million, or 55 cents per share, was up from $94 million, or 35 cents per share, in the same period a year earlier.
Adjusted earnings per share excludes the impact from stock-based compensation expense.
Workday called for a 30.5% adjusted operating margin with $2.335 billion in subscription revenue for the fiscal first quarter. Analysts polled by StreetAccount had been looking for a 30.9% margin and $2.35 billion in subscription revenue.
For the 2027 fiscal year, Workday sees an adjusted operating margin of 30%, with $9.93 billion to $9.95 billion in subscription revenue, which implies 12% to 13% growth.
Investors have become more concerned in recent weeks that artificial intelligence models could constrain growth for major software companies. As of Tuesday's close, Workday shares were down 39% for 2026, which would be the sharpest decline on file since the company went public in 2012.
On Feb. 9, Workday said CEO Carl Eschenbach was stepping down after three years, with Aneel Bhusri, a co-founder, replacing him.
The company has been adding generative AI features to its portfolio. During the quarter, Workday said it would release an AI agent for handling requests to modify work shifts. Workday also acquired Pipedream, a startup with tools for connecting AI agents to a variety of external services.
"You've all heard the narrative out there that HR and ERP will be replaced or relegated to the background by AI," Bhusri said on a conference call with analysts, using the acronym for enterprise resource planning. "I personally just don't see that happening."
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