(Reuters) – Workday forecast fourth-quarter subscription revenue below Wall Street expectations on Tuesday, hit by weaker client spending on its human capital management software.
Shares of the Pleasanton, California-based company fell over 10% in extended trading.
Workday is experiencing weak demand for its payroll software, as clients cut tech budgets due to high interest rates and a cooling labor market.
The company is facing stiff competition from larger rivals such as Automatic Data Processing, prompting it to introduce new artificial intelligence features to remain competitive in a crowded market.
Workday’s shares have dropped about 3% this year, underperforming compared to its peers such as ADP and Paycom.
The company forecast fourth-quarter subscription revenue of $2.03 billion, compared with estimates of $2.04 billion, according to data compiled by LSEG.
Workday said it expects fiscal 2025 subscription revenue to be $7.70 billion, below estimates of $7.72 billion.
Total revenue for the third quarter came in at $2.16 billion, versus expectations of $2.13 billion.
It reported subscription revenue of $1.96 billion for the quarter ended Oct.31, in line with analyst expectations.
On an adjusted basis, the company earned $1.89 per share, compared with estimates of $1.76 per share.
Separately, the company said it has appointed former UiPath and Google executive Rob Enslin to the newly created role of president and chief commercial officer.
(Reporting by Zaheer Kachwala and Kannaki Deka in Bengaluru; Editing by Mohammed Safi Shamsi)
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