Workday stock tumbles after cutting outlook

Workday (WDAY) reported first quarter adjusted earnings per share of $1.74 per share, well above the estimate of $1.58. Revenue was about in line with estimates, $1.99 billion compared to the $1.97 billion expectation. However, the company cut its full-year subscription guidance. CFO Zane Rowe says in the release the "updated subscription revenue guidance reflects the elevated sales scrutiny and lower customer headcount growth we experienced during the quarter."

Yahoo Finance's Julie Hyman and Josh Lipton break down the results.

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This post was written by Stephanie Mikulich.

Video transcript

Work day just out with its quarterly results in the past few moments here and just looking at the numbers first quarter revenue coming in 1.99 billion.

That's very slightly ahead of what analysts had been anticipating first quarter earnings per share.

A buck 74.

That is well above the dollar 58 that analysts were anticipating.

You see the shares falling though some 8% and that looks like it has to do with the forecast perhaps second quarter subscription revenue.

The company forecasting at about $1.9 billion full year subscription revenue at 7.7 to 7.73 billion and full year operating margin looks like it's actually raising its forecast for that to 25%.

So we'll have to dig in here a little bit and see exactly what is going on and why there might be some disappointment.

Yeah, the company's bread and butter, of course, finance and hr products and the question will be on that, that guidance and kind of the puts and takes there.

What are they seeing really in the general spending environment international, by the way, they had highlighted in the past the strength.

So interesting to see what the, what trends they're seeing overseas.

The margins are interesting because I know the tree had questions about sales marking R and D and the trajectory there because the company's been investing in JJ A I, you know, heading into the print, this stock was not working, it was already down about 5% so far this year and we're down about another 8% now in the after hours.

Yeah, just looking at this a little bit more here.

It looks like the company did cut its subscription revenue guidance for the second quarter, its fiscal second quarter which ends July 31st.

Um It says that subscription revenue will grow 17% to about $1.9 billion.

But Carl Eschenbach, the CEO making some comments here um in the uh in the statement and sort of pointing to maybe that that is the area here.

Um And Zane Ro, the CFO says our updated subscription revenue guidance reflects the elevated sales scrutiny and lower customer head count growth we experienced during the quarter.

So looks like perhaps that's what's going on.

A lot of questions there.