Workday Stock Plunges Amid Soft Subscription Revenue Guidance

Workday (WDAY) shares plunged more than 11% in extended trading Thursday after the cloud-based professional services company provided softer-than-expected current-quarter and full-year subscription revenue guidance.

For the current quarter ending July 31, the company guided subscription revenue coming in at $1.895 billion, missing estimates of $1.903 billion. Looking at the fiscal 2025 full year, the company trimmed its subscription revenue forecast to between $7.7 billion and $7.725 billion from its prior range of $7.725 billion to $7.775 billion.

“Our updated subscription-revenue guidance reflects the elevated sales scrutiny and lower customer-headcount growth we experienced during the quarter,” Workday CFO Zane Rowe said in the company’s earnings statement.

However, Workday said its increased efficiencies helped it boost its annual adjusted operating margin by half a percentage point to 25%.

For the three-month period ending April 30, the company posted net sales of $1.99 billion, slightly ahead of the $1.97 billion consensus view. On the earnings front, it posted an adjusted profit of $1.74 per share, surpassing analysts’ expectations of $1.58 a share.

Separately, Workday announced late Thursday that the Defense Intelligence Agency (DIA) had selected it to modernize its human resources efforts, helping the company expand its footprint into the public sector.

Monitor Reaction to This Level Amid

Since completing a double bottom pattern in November 2022, Workday shares have trended higher, with momentum accelerating after the 50-day moving average (MA) crossed above the 200-day MA to generate a golden cross signal early last year. More recently, the stock has undergone a correction of more than 20% but found support around the 200-day MA. 

Given the stock sits positioned to open sharply lower Friday morning after the company’s soft subscription guidance, investors should monitor how the price responds to support near a key horizontal line around $238 that closely aligns with a significant November-price gap. A decisive close below this crucial level could lead to a deeper pullback to longer-term support at the $205 region.

Workday shares fell 11.2% to $231.60 in after-hours trading.

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As of the date this article was written, the author does not own any of the above securities.