Workday forecasts 2027 subscription revenue below estimates, shares fall

Feb 24 (Reuters) - Workday on ‌Tuesday forecast ​fiscal ​2027 subscription revenue below Wall Street estimates, signaling slower new client wins as corporations scrutinize large software purchases ‌amid economic uncertainty.

Shares of the enterprise software maker fell ⁠more than 8% in extended trading.

Higher interest rates and a choppy macro backdrop ‌have prompted companies to ‌delay big-ticket technology decisions, weighing on new business for software vendors even as Workday pushes further into artificial intelligence.

"Some net new ​large enterprise deals are taking longer to close," Rob Enslin, Workday's chief commercial officer said on a post-earnings call ⁠with analysts, citing federal, state and local government and higher education, healthcare and parts of ​the commercial market.

While it impacted the number of new deals completed in the fourth quarter, "most opportunities remain ​active in our pipeline, and a ‌few have already closed in the first quarter," Enslin added.

Workday forecast annual subscription revenue between $9.93 billion and $9.95 ⁠billion, missing analysts' average expectations of $10 billion, according to data compiled by LSEG.

While Workday remains committed to its medium-term subscription revenue growth targets, ⁠it is "prioritizing incremental investment in our agentic AI roadmap to capture a larger ​market opportunity," CFO Zane Rowe said.

Separately, software and services stocks sold off globally after artificial intelligence lab Anthropic announced new tools for business customers, ‌stoking investor concerns that AI-enabled automation could pressure some vendors' revenue streams.

Total revenue for the fourth quarter ‌ended January 31 came in at $2.53 billion, compared with analysts' estimates ⁠of $2.52 billion.

The Pleasanton, California-based ‌company's subscription revenue came in ​at $2.36 billion for the quarter, in line with expectations.

(Reporting by Juby Babu in Mexico City; Editing by ‌Tasim Zahid)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Monness, Crespi, Hardt Upgrades Workday (WDAY) to Buy
• Susquehanna lifts Micron stock target to $2,000 after record-breaking quarter
• Workday must face claims over AI hiring software bias