Stock Story -
What Happened: Shares of finance and HR software company Workday (NASDAQ:WDAY) jumped 14.4% in the pre-market session after the company reported second-quarter earnings results, which beat across the board. Workday observed a macroeconomic environment consistent with last quarter and reiterated full-year FY25 subscription revenue guidance while slightly raising its full-year operating margin outlook. Overall, this was a solid quarter without many surprises, which is often comforting for the market.
Is now the time to buy Workday? Find out by reading the original article on StockStory, it’s free.
What is the market telling us: Workday’s shares are quite volatile and over the last year have had 5 moves greater than 5%. But moves this big are very rare even for Workday and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 13.9% on the news that the company reported first-quarter earnings results with billings unfortunately missing analysts' expectations, while revenue beat by a narrow margin. Adding to the weakness was subscription revenue guidance for the next quarter and the full year, which came in slightly below expectations. Specifically, the company called out increased deal scrutiny, as fewer large deals were closed compared to the previous quarter. Also, it noted that customers committed to lower headcount levels on renewals than expected. Looking ahead, the company expects the challenges to persist in the near term, and this factor was baked into the revised FY 2025 subscription revenue guidance.
Overall, this was a mediocre quarter for Workday, given the weak performance and underwhelming guidance. Also, the highlighted challenges are likely to affect investors' sentiments in the near term.
Workday is down 4% since the beginning of the year, and at $257.61 per share it is trading 16.1% below its 52-week high of $307.21 from February 2024. Investors who bought $1,000 worth of Workday’s shares 5 years ago would now be looking at an investment worth $1,340.