Workday $WDAY ( ▲ 0.87% ) took another hit after issuing softer-than-expected guidance, sending shares sharply lower in after-hours trading and keeping pressure on the stock into the next session. While the HR and finance software company delivered solid results for the most recent quarter, investors focused on what comes next, and they didn’t like what they saw.
The company’s outlook for both the upcoming quarter and full fiscal year fell just short of Wall Street expectations, reinforcing concerns that growth is slowing at a time when software companies are already under scrutiny.
Strong quarter, weak confidence
For the quarter ended January 31, subscription revenue, which accounts for more than 90% of Workday’s business, climbed nearly 16% year over year to $2.36 billion, matching analyst forecasts. Adjusted earnings also came in above expectations.
But guidance overshadowed everything. Forecasts for the April quarter and for fiscal 2027 subscription revenue both landed slightly below consensus estimates, suggesting momentum may be cooling after years of steady expansion.
AI anxiety hangs over SaaS
Workday’s outlook arrives during a broader identity crisis for software-as-a-service companies. Investors are increasingly questioning whether generative AI tools could automate tasks that traditional enterprise software was built to handle.
CEO Aneel Bhusri pushed back on those fears, arguing that Workday operates in complex domains that are difficult to replicate. The company is also betting heavily on “agentic AI,” with annualized revenue from its AI offerings now exceeding $400 million.
From market darling to deep drawdown
Despite those efforts, the stock’s trajectory has been brutal. Shares are down roughly 45% this year alone, marking the steepest annual decline since Workday went public in 2012.
Zoom out further, and the picture looks even harsher: the stock now sits more than 60% below its all-time high, a stark reversal for a company once seen as a cornerstone of enterprise cloud growth.