TLDR
- Workday stock fell ~10% in after-hours trading after issuing below-consensus guidance for fiscal 2027.
- Q4 revenue of $2.53B and adjusted EPS of $2.47 both beat expectations.
- FY2027 subscription revenue guidance of $9.93B–$9.95B missed the $9.99B analyst consensus.
- The company plans to increase AI investment, slowing near-term margin expansion.
- WDAY is down 39% in 2026 and 50% over the past 12 months.
Workday reported a solid fiscal fourth quarter on Tuesday, but investors focused on what comes next — and they didn’t like what they saw.
Workday, $WDAY, Q4-26.
Margins expanding, EPS accelerating.
📊 Adj. EPS: $2.47 🟢
💰 Revenue: $2.53B 🟢
📈 Net Income: $145MNon-GAAP operating margin expanded to 30.6% from 26.4% YoY.
Operating leverage clearly improving into FY27. pic.twitter.com/XQKYO6gKHk— EarningsTime (@Earnings_Time) February 24, 2026
The human resources and finance software company posted adjusted earnings per share of $2.47, beating the $2.32 consensus. Revenue came in at $2.53 billion, up 14.5% year over year, and just above the $2.52 billion estimate.
But guidance for the new fiscal year is what moved the stock.
In after-hours trading, WDAY dropped roughly 10%, extending a brutal run for the stock in 2026.
For fiscal Q1, Workday guided to $2.335 billion in subscription revenue — up 13% from a year ago, but below the $2.35 billion analysts expected. The company had previously signaled around 14% growth for the quarter.
For the full fiscal year 2027, Workday sees subscription revenue of $9.925 billion to $9.95 billion, implying 12%–13% growth. The FactSet consensus had been $9.99 billion, and Workday’s own prior guidance pointed to about 13% growth.
Operating margin guidance also fell short. Workday expects a 30.5% adjusted operating margin in Q1 and 30% for the full year. Analysts were modeling 30.9% and 31.2%, respectively.
CFO Zane Rowe said on the earnings call that the company is “prioritizing incremental investment in our AI roadmap to capture a larger market opportunity,” but acknowledged this means margin expansion will come “at a slower pace in the near term.”
Leadership Change Adds to Uncertainty
Earlier this month, co-founder Aneel Bhusri stepped back into the CEO role, replacing Carl Eschenbach, who had been in the position for three years. Eschenbach was known for strong customer relationships, particularly in enterprise sales.
The transition raised eyebrows on Wall Street. Jefferies analyst Brent Thill downgraded WDAY to hold from buy on Monday, citing concerns about the “abrupt” departure of the well-regarded former CEO.
Bhusri pushed back on AI concerns during the earnings call. “You’ve all heard the narrative out there that HR and ERP will be replaced or relegated to the background by AI,” he said. “I personally just don’t see that happening.”
Workday’s annualized revenue from AI products now exceeds $400 million. During the quarter, the company said it would release an AI agent for handling shift modification requests and acquired Pipedream, a startup that connects AI agents to external services.
Deals Taking Longer to Close
Chief Commercial Officer Rob Enslin noted that some large deals — particularly in federal government and health care — are taking longer to close than expected.
That kind of sales cycle slowdown is a recurring concern across enterprise software right now.
WDAY is down 39.3% in 2026 so far, which would mark its steepest annual decline since going public in 2012. Over the past 12 months, the stock is off 50.1%.
Net income for Q4 came in at $145 million, or 55 cents per share, up from $94 million, or 35 cents per share, a year ago.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
