Workday shares fall as guidance disappoints despite Q2 beat

NEW YORK - Workday Inc . (NASDAQ:WDAY ) reported better-than-expected second-quarter results but saw its shares drop 3% in after-hours trading as the company's guidance failed to impress investors.

The cloud-based enterprise software provider posted adjusted earnings per share of $1.75, surpassing the analyst estimate of $1.65. Revenue for the quarter came in at $2.09 billion, slightly above the consensus estimate of $2.07 billion and up 16.7% YoY.

Despite the solid quarterly performance, Workday's outlook for the third quarter and full fiscal year 2025 appeared to disappoint investors. The company expects third-quarter subscription revenue of $1.955 billion, representing 16% growth. For the full year, Workday reiterated its subscription revenue guidance of $7.700 billion to $7.725 billion, a 17% increase YoY.

Carl Eschenbach, CEO of Workday, commented on the results, saying, "Workday delivered a solid quarter of growth and operating margin expansion, as businesses of all sizes and industries around the world increasingly turn to Workday as their trusted partner in navigating the future of work."

The company reported that its 12-month subscription revenue backlog grew 16.1% YoY to $6.80 billion, while total subscription revenue backlog increased 20.9% to $21.58 billion.

Workday slightly raised its expectation for fiscal 2025 non-GAAP operating margin to 25.25%, up from its previous guidance. The company also announced a new $1.0 billion share repurchase program.

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Source: Investing.com