Workday stock sinks on weak revenue guidance

Shares of Workday experienced a significant drop of 7% during after-hours trading on Tuesday, following the company's release of disappointing quarterly revenue projections. According to the latest financial statement, Workday reported a year-over-year revenue increase of 14.5% for the fiscal fourth quarter ending January 31. The company reported a net income of $145 million, translating to 55 cents per share, an improvement from the $94 million, or 35 cents per share, recorded in the same quarter last year. However, the adjusted earnings per share, which excludes stock-based compensation expenses, did not meet investor expectations. Workday anticipates an adjusted operating margin of 30.5% alongside projected subscription revenue of $2.335 billion for the upcoming fiscal first quarter, falling short of analysts' predictions of a 30.9% margin and $2.35 billion in revenue. For the fiscal year 2027, Workday estimates an adjusted operating margin of 30%, with subscription revenue expected to range between $9.93 billion and $9.95 billion, indicating a growth rate of 12% to 13%. Investor sentiment has soured recently, with concerns that advancements in artificial intelligence could hinder growth for leading software firms. As of the close on Tuesday, Workday's shares had plummeted 39% for 2026, marking the steepest decline since the company went public in 2012. Adding to the turmoil, on February 9, Workday announced the departure of CEO Carl Eschenbach after three years, with co-founder Aneel Bhusri stepping in as his successor. In response to market trends, the company has been integrating generative AI features into its offerings, including an AI agent designed to manage work shift requests. Company executives are set to discuss the latest results in a conference call scheduled for 4:30 p.m. ET. This story is still developing, and updates will follow.