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Workday CEO Carl Eschenbach walks to a morning session during the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 11, 2025.
David Paul Morris | Bloomberg | Getty Images
Shares of Workday (WDAY) experienced a decline of over 5% in after-hours trading on Tuesday. This reaction followed the release of the finance and human resources software provider’s quarterly margin guidance, which fell short of Wall Street’s anticipated figures.
Here’s a breakdown of Workday’s performance against LSEG consensus estimates:
- Earnings per share: $2.32 adjusted vs. $2.18 expected
- Revenue: $2.43 billion vs. $2.42 billion expected
The company’s forecast for the fourth quarter includes an adjusted operating margin of at least 28.5% and subscription revenue of $2.355 billion, as per their recent statement. Market expectations, as measured by StreetAccount consensus, were slightly higher, projecting a 28.7% margin and $2.35 billion in subscription revenue.
Workday’s revenue demonstrated a growth of approximately 13% year-over-year in the third quarter, which concluded on October 31. Net income reached $252 million, or 94 cents per share, marking an increase from $193 million, or 72 cents per share, in the corresponding quarter of the previous year.
Subscription revenue for the third quarter totaled $2.24 billion, accompanied by an adjusted operating margin of 28.5%. StreetAccount-polled analysts had predicted $2.24 billion in subscription revenue and a 28.1% margin.
The third fiscal quarter was marked by several strategic moves for Workday. They unveiled new artificial intelligence agents designed to enhance employee performance analysis and financial health assessments. Furthermore, the company announced its intent to acquire Sana, an AI and learning software startup, for $1.1 billion. Adding to the mix, activist investor Elliott Management disclosed a stake in Workday valued at over $2 billion.
Despite these advancements, Workday’s stock has faced headwinds this year. Market observers have been debating the potential threat that generative AI tools pose to the growth trajectories of established cloud software companies. Year-to-date, Workday shares have decreased by 9% in 2025, contrasting with the Nasdaq Composite index’s gain of 19%. This divergence underscores concerns about the impact of disruptive technologies on Workday’s future prospects. While Workday is actively integrating AI into its platform, the broader market sentiment suggests a degree of uncertainty regarding the long-term competitive landscape. Analysts are closely watching how Workday navigates this evolving tech landscape and leverages its AI investments to maintain its market position and drive future growth.
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