Key Takeaways
- Workday shares declined approximately 10% in extended trading following weaker-than-expected fiscal 2027 projections.
- Fourth-quarter results exceeded forecasts with revenue reaching $2.53B and adjusted earnings per share of $2.47.
- Fiscal 2027 subscription revenue outlook of $9.93B–$9.95B came in below the Street’s $9.99B expectation.
- Management indicated plans to ramp up AI-related spending, which will constrain margin expansion in the near future.
- Shares of WDAY have declined 39% year-to-date in 2026 and are down 50% over the trailing twelve months.
Workday delivered fourth-quarter results that topped Wall Street’s projections on Tuesday, yet the market’s attention quickly shifted to the company’s forward outlook — and the reaction was decidedly negative.
The enterprise software provider, which specializes in human capital management and financial applications, reported adjusted earnings of $2.47 per share, surpassing the analyst consensus of $2.32. Total revenue reached $2.53 billion, reflecting a 14.5% increase from the prior year and slightly ahead of the anticipated $2.52 billion.
However, the company’s forward guidance proved to be the stock’s undoing.
During after-hours trading, WDAY plummeted approximately 10%, continuing a challenging stretch for shareholders throughout 2026.
For the first quarter of fiscal 2027, management projected subscription revenue of $2.335 billion — representing 13% year-over-year growth but trailing the Street’s $2.35 billion forecast. This came as a disappointment, as the company had previously suggested growth would approach 14% for the period.
Looking at the full fiscal 2027, Workday anticipates subscription revenue between $9.925 billion and $9.95 billion, indicating growth of 12% to 13%. This range fell short of the FactSet consensus estimate of $9.99 billion and was below the company’s earlier indications of roughly 13% growth.
Profitability metrics also disappointed. The company forecasts an adjusted operating margin of 30.5% for the first quarter and 30% for the entire fiscal year. Wall Street had been modeling 30.9% and 31.2%, respectively.
During the earnings conference call, CFO Zane Rowe explained that the organization is “prioritizing incremental investment in our AI roadmap to capture a larger market opportunity,” while conceding that this strategy means margin expansion will proceed “at a slower pace in the near term.”
CEO Transition Sparks Questions
Earlier in February, company co-founder Aneel Bhusri returned to the chief executive position, taking over from Carl Eschenbach, who had led the company for three years. Eschenbach had built a reputation for cultivating strong client relationships, especially among large enterprise accounts.
This leadership shift caught the attention of industry analysts. Jefferies analyst Brent Thill lowered his rating on WDAY from buy to hold earlier this week, expressing concerns about the “abrupt” exit of the highly-respected former chief executive.
Bhusri addressed skepticism around artificial intelligence during the earnings discussion. “You’ve all heard the narrative out there that HR and ERP will be replaced or relegated to the background by AI,” he remarked. “I personally just don’t see that happening.”
The company’s AI product portfolio now generates more than $400 million in annualized revenue. This past quarter, Workday announced plans to launch an AI agent designed to manage shift modification requests and revealed the acquisition of Pipedream, a platform that enables AI agents to integrate with third-party services.
Enterprise Sales Cycles Extending
Chief Commercial Officer Rob Enslin acknowledged that certain major transactions — especially those involving federal government agencies and healthcare organizations — are experiencing longer-than-anticipated sales cycles.
This type of deal velocity slowdown has become a common theme across the enterprise software sector in recent months.
WDAY has fallen 39.3% during 2026 to date, positioning it for the worst annual performance since its initial public offering in 2012. Looking back twelve months, the stock has lost 50.1% of its value.
The company posted net income of $145 million in the fourth quarter, equivalent to 55 cents per share, compared to $94 million, or 35 cents per share, in the same period last year.
