Workday (NASDAQ:WDAY) fell in pre-market trading after its outlook disappointed investors. The human capital management software vendor expects FY25 subscription revenue to be between $7.73 billion and $7.78 billion. This is below the mid-point consensus estimate of $7.77 billion. For FY25, the company anticipates professional services revenue in the range of $630 million to $640 million and has projected an adjusted operating margin of 24.5%, in line with estimates.
For the first quarter, WDAY has forecasted subscription revenue to be $1.8 billion, up by 18% year-over-year. It also expects its subscription revenue growth to increase by 5% in the second quarter on a sequential basis.
In Q4, the company posted revenues of $1.9 billion, an increase of 17% year-over-year but lower than consensus estimates of $1.92 billion. WDAY reported adjusted earnings of $1.57 per share compared to $0.99 per share in the same period last year, which exceeded consensus estimates of $1.47 per share.
In addition, the company announced the acquisition of HiredScore for an undisclosed amount and expects to close the deal by April 30, 2024. HiredScore is an AI startup that provides streamlined talent management through data-driven solutions.
What Is the Future of Workday Stock?
Analysts remain bullish about WDAY stock with a Strong Buy consensus rating based on 24 Buys and eight Holds. Over the past year, WDAY has surged by more than 60%, and the average WDAY price target of $304.10 implies a downside potential of 1.01% at current levels. However, it’s worth noting that estimates will likely change following today’s earnings report.
