TLDR

  • Workday’s stock dropped approximately 10% in after-hours trading following the release of fiscal 2027 guidance that fell short of consensus estimates.
  • Fourth-quarter revenue of $2.53 billion and adjusted earnings per share (EPS) of $2.47 both exceeded expectations.
  • Fiscal 2027 subscription revenue guidance of $9.93 billion to $9.95 billion came in below the $9.99 billion analyst consensus.
  • The company intends to boost AI investments, which will slow margin growth in the short term.
  • WDAY has declined 39% in 2026 and 50% over the last 12 months.

Workday announced a strong fiscal fourth quarter on Tuesday, but investors zeroed in on future outlook — and reacted negatively to what they heard.

The HR and finance software firm reported adjusted EPS of $2.47, surpassing the $2.32 consensus. Revenue hit $2.53 billion, a 14.5% year-over-year increase, and slightly above the $2.52 billion estimate.

However, guidance for the new fiscal year is what drove the stock’s movement.

WDAY Stock Card

In after-hours trading, WDAY fell about 10%, continuing a harsh downward trend for the stock in 2026.

For fiscal Q1, Workday projected subscription revenue of $2.335 billion — a 13% increase from the prior year, but below the $2.35 billion analysts had anticipated. The company had previously indicated approximately 14% growth for the quarter.

For full fiscal 2027, Workday expects subscription revenue between $9.925 billion and $9.95 billion, representing 12% to 13% growth. The FactSet consensus was $9.99 billion, and Workday’s earlier guidance had targeted roughly 13% growth.

Operating margin guidance also missed expectations. Workday forecasts a 30.5% adjusted operating margin for Q1 and 30% for the full year, while analysts had modeled 30.9% and 31.2%, respectively.

CFO Zane Rowe stated on the earnings call that the company is “prioritizing additional investments in our AI roadmap to seize a bigger market opportunity,” but admitted this would result in margin expansion happening “more slowly in the short term.”

Leadership Change Adds to Uncertainty

Earlier this month, co-founder Aneel Bhusri returned to the CEO role, replacing Carl Eschenbach, who held the position for three years. Eschenbach was recognized for his strong customer relationships, especially in enterprise sales.

The leadership shift sparked concern on Wall Street. Jefferies analyst Brent Thill downgraded WDAY from buy to hold on Monday, expressing worries about the “abrupt” exit of the highly regarded former CEO.

Bhusri addressed AI-related worries during the earnings call. “You’ve all heard the idea that HR and ERP systems will be replaced or sidelined by AI,” he stated. “I simply don’t believe that will occur.”

Workday’s annualized revenue from AI products now surpasses $400 million. In the quarter, the company announced plans to launch an AI agent for managing shift change requests and acquired Pipedream, a startup that links AI agents to external services.

Deals Taking Longer to Close

Chief Commercial Officer Rob Enslin observed that certain large deals — especially in federal government and healthcare — are taking longer to finalize than anticipated.

This type of sales cycle slowdown is a persistent worry in the enterprise software sector currently.

WDAY has fallen 39.3% in 2026 to date, which would be its sharpest annual drop since its 2012 IPO. Over the last 12 months, the stock has declined 50.1%.

Fourth-quarter net income was $145 million, or 55 cents per share, up from $94 million, or 35 cents per share, in the prior year.