Economy

Workday Shares Fall After Company Issues Tepid Financial Guidance

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Nov 27, 2025

THE BARE STORY

Shares of Workday fell after the software company reported third-quarter earnings and issued financial guidance that disappointed investors. The company’s stock dropped more than 5% in extended trading Tuesday and fell by nearly 8% on Wednesday. The decline was linked to a forecast for the fourth quarter that included an adjusted operating margin of at least 28.5%, which was below analyst expectations. Workday also revised its full-year subscription revenue forecast to $8.83 billion, an update some analysts described as a minor increase.

Despite the reaction to its forecast, the company’s results for the fiscal third quarter, which ended October 31, surpassed expectations. Workday reported revenue of $2.43 billion, an increase of approximately 13% from the prior year, with subscription revenue accounting for $2.24 billion. The company posted adjusted earnings of $2.32 per share and net income of $252 million, up from $193 million in the same period a year ago.

In its report, Workday highlighted its focus on artificial intelligence. The company recently completed a $1.1 billion acquisition of AI software firm Sana and has announced new AI agents. According to CEO Carl Eschenbach, AI products contributed over 1.5 percentage points to annualized revenue growth. Eschenbach also stated that Workday faced some "turbulence" with higher education customers that rely on U.S. funding. The company’s updated revenue guidance includes contributions from the Sana acquisition and a new contract with the U.S. Defense Intelligence Agency.

Following the report, analysts offered mixed reactions. Analysts at Stifel wrote that the company's underlying momentum does not show signs of stabilization, and they lowered their price target on the stock. Analysts at Cantor Fitzgerald noted that the guidance was close to a slight downgrade. In contrast, analysts at RBC said they were encouraged by Workday's early AI momentum, though they also reduced their price target.

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• Workday issued financial guidance that disappointed investors and analysts. The company’s stock fell significantly after it provided a forecast for the fourth quarter that included an adjusted operating margin of at least 28.5%, which was below analyst expectations. This guidance prompted a negative reaction in the market, with shares dropping more than 5% in extended trading.

• Analysts expressed concern that the company's momentum is not stabilizing. Following the report, some analysts viewed the company's updated full-year subscription revenue forecast as only a "minor increase." Analysts at Stifel wrote that Workday's underlying momentum shows no signs of stabilization and lowered their price target, while analysts at Cantor Fitzgerald noted the guidance was close to a slight downgrade.

• The company acknowledged facing specific market challenges. CEO Carl Eschenbach stated that Workday experienced "turbulence" with its higher education customers, particularly those that are dependent on U.S. funding. This highlights a specific area of difficulty that could impact future performance.

How it may affect me

As a U.S. reader:

• Your retirement or investment accounts may see a short-term decline if they hold Workday stock, which fell significantly after the company's financial guidance was released.

• The company's growing focus on AI could change the HR and financial software used by many U.S. companies, potentially altering future workplace processes for their employees.

• Administrative services at some universities could be affected, as the company noted "turbulence" with higher education customers that rely on U.S. funding.

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