Close-up of the Workday logo on its headquarters in Pleasanton, California.
Smith Group | Photo archive | Getty Images
HR software provider a work day The company lowered its forecast for annual subscription revenue on Thursday, citing concerns about lower client growth, as a hiring slowdown and IT budget cuts reduce demand for payroll services.
Shares of the Pleasanton, Calif.-based company fell nearly 9% in extended trading.
The difficult macroeconomic environment has weakened demand for the company's human resources and payroll services, as US technology companies continue to lay off employees after massive cutbacks last year.
The company expects subscription revenue for fiscal year 2025 to range between $7.70 billion to $7.73 billion, down from its previous forecast of $7.73 billion to $7.78 billion. Analysts expect revenues of $7.76 billion.
“Our updated subscription revenue guidance reflects the increased scrutiny on sales and lower customer headcount growth we saw during the quarter,” said Workday CFO Zane Rowe.
For the second quarter, Workday expects subscription revenue to be about $1.90 billion, roughly in line with analyst estimates, according to LSEG data.
Workday's revenue for the first quarter ended April 30 totaled $1.99 billion, compared to analysts' average estimate of $1.97 billion.
Subscription revenue rose 18.8% to $1.82 billion in the quarter.
