Software Company Workday Stock Drops After Missing Revenue Projections

Enterprise software company Workday saw its stock price tumble over 8% after projecting subscription revenue below Wall Street expectations for 2027. The company says businesses are delaying major software purchases due to economic uncertainty and higher interest rates.

Enterprise software company Workday experienced a significant stock decline Tuesday evening after announcing subscription revenue projections for fiscal 2027 that fell short of Wall Street’s expectations, as businesses continue to postpone major technology investments during uncertain economic times.

The company’s stock price dropped more than 8% during after-hours trading following the announcement.

Economic headwinds including elevated interest rates and an unstable economic environment have caused businesses to put off substantial technology spending decisions, creating challenges for software companies despite Workday’s expansion into artificial intelligence capabilities.

Chief Commercial Officer Rob Enslin explained during an analyst call following earnings results that “some net new large enterprise deals are taking longer to close.” He specifically mentioned delays in federal, state and local government sectors, as well as higher education, healthcare, and portions of the commercial marketplace.

Though these delays affected the completion of new contracts during the fourth quarter, Enslin noted that “most opportunities remain active in our pipeline, and a few have already closed in the first quarter.”

The California-based company projected yearly subscription revenue ranging from $9.93 billion to $9.95 billion, falling below the $10 billion average forecast from analysts tracked by LSEG data.

Chief Financial Officer Zane Rowe stated that while Workday maintains its medium-term subscription revenue growth objectives, the company is “prioritizing incremental investment in our agentic AI roadmap to capture a larger market opportunity.”

Adding to sector-wide concerns, software and technology service stocks declined globally after AI research company Anthropic unveiled new business-focused tools, raising investor worries that artificial intelligence automation might negatively impact some software companies’ revenue.

For the fourth quarter ending January 31, Workday reported total revenue of $2.53 billion, slightly exceeding analyst predictions of $2.52 billion.

The Pleasanton, California-headquartered company’s subscription revenue reached $2.36 billion during the quarter, meeting analyst expectations.