Workday Stock Slides 14% Amid Soft Subscription Revenue Guidance

Workday shares ( WDAY ) fell 14% in extended trading on Thursday after the company provided softer-than-expected current-quarter and full-year subscription revenue guidance. The company lowered its full-year subscription revenue forecast due to elevated sales scrutiny and lower customer headcount growth. Workday ( WDAY ) also announced a partnership with the Defense Intelligence Agency to modernize the government agency's human resources efforts. The company's updated subscription-revenue guidance reflects the elevated sales scrutiny and lower customer-headcount growth experienced during the quarter. However, Workday ( WDAY ) said its increased efficiencies helped boost its annual adjusted operating margin by half a percentage point to 25%.

For the three-month period ending April 30, the company posted net sales of $1.99 billion, slightly ahead of the consensus view. On the earnings front, it posted an adjusted profit of $1.74 per share, surpassing analysts' expectations of $1.58 a share. Workday ( WDAY ) announced late Thursday that the Defense Intelligence Agency (DIA) had selected it to modernize its human resources efforts, helping the company expand its footprint into the public sector.

Workday ( WDAY ) shares have trended higher since completing a double bottom pattern in November 2022, with momentum accelerating after the 50-day moving average crossed above the 200-day MA to generate a golden cross signal early last year. Investors should monitor how the stock responds to support near a key horizontal line around $238 that closely aligns with a significant November-price gap. A decisive close below this crucial level could lead to a deeper pullback to longer-term support at the $205 region.