Workday stock update: Workday shares fell more than 13% as hiring slowdown weighed on demand for payroll services.
Companies are slowing hiring new employees as they navigate the pressures of long-term rising interest rates and sticky inflation.
If the losses continue, Workday is expected to lose about $9 billion in market value.
The company expects subscription revenue in fiscal 2025 to be between $7.73 billion and $7.73 billion. This is a decrease from the previous forecast of $7.73 billion to $7.78 billion, the company said after the market closed on Thursday.
Analysts currently expect annual subscription revenue to reach $7.73 billion, according to LSEG data. “Growth will gradually slow, but we believe the drivers are macro, not company-specific,” Bernstein analysts wrote in a note. U.S. employment growth slowed more than expected in April, with annual wage growth falling below 4% for the first time in nearly three years. Analysts also noted that larger corporate deals were taking longer to close, especially in Europe, hurting Workday’s forecasts.
“Workday is under pressure in Europe, with headcount down at renewals and increased scrutiny of large deals during the quarter,” Morningstar analysts wrote in a note.
The company closed fewer large deals in the first quarter than in the same period last year, especially in Europe, the Middle East and Africa, CEO Carl Eschenbach said on an earnings call Thursday.
Workday’s total revenue for the quarter was $1.99 billion, compared to analyst estimates of $1.97 billion.
“Globally, most industries, especially Europe, are experiencing a more challenging environment,” Workday co-president Douglas Robinson said Thursday.
On Friday, at least 15 brokerages lowered their price targets for the stock. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shilpi Majumdar)
