Workday guides $2.335B Q1 subscriptions with 30.5% margin; price target cut to $125
Workday posted $2.53B in Q4 revenue and $2.47 adjusted EPS, beating $2.52B and $2.32, but shares fell over 9% after guiding Q1 subscription revenue of $2.335B and 30.5% margin below estimates. DA Davidson cut its price target to $125 from $250, citing concerns over the transition and guidance.
1. Q4 earnings beat but shares drop
Workday delivered $2.53Â billion in fiscal Q4 revenue and $2.47 in adjusted EPS, surpassing consensus forecasts of $2.52Â billion and $2.32 EPS. Despite the beat, shares slid more than 9% due to investor disappointment with the upcoming quarter’s outlook.
2. Q1 guidance details below expectations
For the fiscal Q1, the company forecast $2.335Â billion in subscription revenue and a 30.5% adjusted operating margin, both slightly under analyst estimates of $2.35Â billion and 30.9% margin. The guidance shortfall raised questions about near-term growth and profitability.
3. Price target halved by DA Davidson
DA Davidson reduced its price target by 50%, lowering it from $250 to $125, reflecting concerns about Workday’s transition phase and the subdued guidance. The cut underscores caution around the company’s ability to navigate AI investments and maintain subscription growth.