Workday Stock Plunges as Growth Outlook Clouds Earnings Beat
Wednesday, Nov 27, 2024 9:47 am ET
1min read Workday (WDAY) stock fell sharply on Tuesday, despite reporting earnings and revenue that topped Wall Street's expectations. The enterprise software maker's updated fiscal 2025 guidance, which fell short of estimates, overshadowed the strong quarterly results, causing investors to reassess the company's growth prospects.
For the quarter ending October 31, Workday reported earnings of $1.89 per share, a 21% increase from the same period last year on an adjusted basis. Revenue climbed 16% to $2.16 billion, slightly above analysts' projections. The company also saw a rise in current remaining performance obligations (CRPO) bookings, which grew by 18%.
However, Workday's updated fiscal 2025 guidance was the primary driver behind the stock's decline. The company forecast subscription revenue of $7.703 billion at the midpoint of guidance, which fell short of analysts' estimates of $7.714 billion. This weak outlook suggests that Workday's growth may be slowing, prompting investors to reevaluate their positions in the stock.
Workday's stock market performance has been sensitive to guidance in recent quarters. In Q1 2024, the company's stock fell 12.3% despite beating earnings and revenue estimates. The drop was attributed to weak guidance for the current fiscal year, with the company predicting CRPO growth of 15% to 16%, below analysts' estimates of 17.5%.
The enterprise software maker's expansion into financial software has been a growth driver, but investors appear more focused on short-term performance. About 70% of Workday's revenue comes from human capital management products, with the remaining 30% from financial software. The company's foray into financial software has allowed it to offer integrated solutions for both HR and financial management, reducing churn and appealing to a wider range of customers.
Workday's earnings and revenue growth trends have historically influenced its stock performance. However, recent quarters have shown that investors are more concerned with the company's guidance. Despite the short-term setbacks, Workday's consistent earnings and revenue growth indicate long-term potential. As the company continues to expand into financial software and maintain strong demand for its core HR management products, investors should monitor earnings trends for future stock performance cues.
In conclusion, Workday's stock fell despite reporting strong earnings and revenue growth, as investors focused on the company's weak guidance for fiscal 2025. The enterprise software maker's expansion into financial software has been a growth driver, but investors appear more concerned with short-term performance. As Workday continues to grow, investors should monitor earnings trends and guidance to assess the company's long-term prospects.
For the quarter ending October 31, Workday reported earnings of $1.89 per share, a 21% increase from the same period last year on an adjusted basis. Revenue climbed 16% to $2.16 billion, slightly above analysts' projections. The company also saw a rise in current remaining performance obligations (CRPO) bookings, which grew by 18%.
However, Workday's updated fiscal 2025 guidance was the primary driver behind the stock's decline. The company forecast subscription revenue of $7.703 billion at the midpoint of guidance, which fell short of analysts' estimates of $7.714 billion. This weak outlook suggests that Workday's growth may be slowing, prompting investors to reevaluate their positions in the stock.
Workday's stock market performance has been sensitive to guidance in recent quarters. In Q1 2024, the company's stock fell 12.3% despite beating earnings and revenue estimates. The drop was attributed to weak guidance for the current fiscal year, with the company predicting CRPO growth of 15% to 16%, below analysts' estimates of 17.5%.
The enterprise software maker's expansion into financial software has been a growth driver, but investors appear more focused on short-term performance. About 70% of Workday's revenue comes from human capital management products, with the remaining 30% from financial software. The company's foray into financial software has allowed it to offer integrated solutions for both HR and financial management, reducing churn and appealing to a wider range of customers.
Workday's earnings and revenue growth trends have historically influenced its stock performance. However, recent quarters have shown that investors are more concerned with the company's guidance. Despite the short-term setbacks, Workday's consistent earnings and revenue growth indicate long-term potential. As the company continues to expand into financial software and maintain strong demand for its core HR management products, investors should monitor earnings trends for future stock performance cues.
In conclusion, Workday's stock fell despite reporting strong earnings and revenue growth, as investors focused on the company's weak guidance for fiscal 2025. The enterprise software maker's expansion into financial software has been a growth driver, but investors appear more concerned with short-term performance. As Workday continues to grow, investors should monitor earnings trends and guidance to assess the company's long-term prospects.
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