Workday’s Outlook for Subscription Services Revenue Sends Stock Tumbling [Video]

Shares of Workday (WDAY) sank 8% Wednesday, a day after the human resources software firm predicted weaker-than-expected full-year subscription services revenue. 

The company sees fiscal 2025 subscription services revenue of $7.703 billion. It had anticipated a range of $7.700 billion and $7.725 billion last quarter. Analysts surveyed by Visible Alpha were looking for $7.714 billion. Workday also believes non-GAAP operating margin will be 25.0%, which also missed some forecasts.

In the third quarter, the company reported adjusted earnings per share (EPS) of $1.89, with revenue increasing 16% year-over-year to $2.16 billion. Both beat estimates.

Subscription services revenue gained 16% to $1.96 billion, with professional services revenue up 15% to $201 million.

Chief Executive Officer (CEO) Carl Eschenbach said the performance reflected “global momentum around our AI-driven innovations, and the strength of our partner ecosystem.” Eschenbach noted that organizations increasingly are turning to Workday as they look for ways to cut back on costs.

Workday shares …