Workday shares fell 10% in extended trading on Tuesday after the human resources and finance software maker reported quarterly guidance that fell short of analyst expectations, overshadowing a solid fourth-quarter earnings beat .
Q4 Performance vs. Expectations
| Metric | Actual | LSEG/StreetAccount Estimate |
|---|---|---|
| Adjusted EPS | $2.47 | $2.32 |
| Revenue | $2.53 billion | $2.52 billion |
Revenue grew 14.5% year over year in the fiscal fourth quarter, which ended Jan. 31 . Net income of $145 million, or 55 cents per share, was up from $94 million, or 35 cents per share, in the same period a year earlier .
Disappointing Guidance
The market reaction focused on Workday’s forward-looking projections:
| Period | Metric | Workday Guidance | StreetAccount Estimate |
|---|---|---|---|
| Q1 FY2027 | Subscription Revenue | $2.335 billion | $2.35 billion |
| Q1 FY2027 | Adjusted Operating Margin | 30.5% | 30.9% |
| Full FY2027 | Subscription Revenue | $9.93B-$9.95B (12-13% growth) | — |
| Full FY2027 | Adjusted Operating Margin | 30% | — |
AI Progress and Leadership Transition
Despite the guidance miss, Workday highlighted progress in artificial intelligence:
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Annualized AI product revenue now exceeds $400 million
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The company plans to release an AI agent for handling work shift modification requests
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Workday recently acquired Pipedream, a startup connecting AI agents to external services
CEO Aneel Bhusri pushed back against industry narratives that AI could replace HR and enterprise resource planning software: “You’ve all heard the narrative out there that HR and ERP will be replaced or relegated to the background by AI. I personally just don’t see that happening” .
The results come amid a leadership transition. On Feb. 9, Workday announced that CEO Carl Eschenbach was stepping down after three years, with co-founder Aneel Bhusri replacing him .
Market Context
Workday’s decline reflects broader investor concerns that AI models could constrain growth for major software companies . As of Tuesday’s close, Workday shares were down 39% for 2026, on track for the sharpest annual decline since the company went public in 2012 .
Rob Enslin, the company’s chief commercial officer, noted that some deals with large new customers—particularly in federal government and health care—are taking longer to close .
Finance chief Zane Rowe emphasized the company’s focus: “Aneel’s focus is on driving the growth more so than just hitting that operating margin exclusively” .
