Workday Reports Better-than-Expected Q3 Earnings, but Shares Plummet on Soft Guidance
Workday (NASDAQ:), a cloud-based enterprise applications provider, reported stronger-than-expected third-quarter earnings and revenue, but its shares fell more than 10% in premarket trading as the company’s subscription revenue guidance fell short of market expectations.
Workday posted adjusted earnings per share of $1.89, beating the analyst estimate of $1.76, while revenue came in at $2.16 billion, a 15.8% increase year-over-year and exceeding the consensus estimate of $2.13 billion. CEO Carl Eschenbach attributed the solid performance to the company’s strong customer base, global momentum around AI-driven innovations, and the strength of its partner ecosystem.
Despite the strong quarterly performance, investors focused on the company’s outlook. Workday forecasted fourth-quarter subscription revenue of $2.03 billion, below the $2.04 billion consensus projection, and expected fiscal 2025 subscription revenue of $7.70 billion, also below analyst expectations.
The company also set subscription growth for fiscal 2026 at around 14%, which analysts at RBC Capital Markets described as “disappointing.” However, analysts at Deutsche Bank saw upside to fiscal 2026 numbers and recommended buying the dip.