New York, Feb 25, 2026, 17:53 EST — After-hours
- Workday swung sharply, touching $117.76 before closing at $133.16; it was last down in after-hours trade.
- The company projected fiscal 2027 subscription revenue of $9.925 billion to $9.950 billion and a non-GAAP operating margin of about 30%.
- Evercore ISI downgraded the stock; D.A. Davidson cut its price target to $125, flagging choppy demand.
Workday, Inc. (WDAY) shares swung on Wednesday after the enterprise software maker laid out a slower growth path for its core subscription business, driving the stock to a fresh 52-week low before buyers stepped in. The stock closed up 2.2% at $133.16 and was down 1.6% at $131.00 in late after-hours trading. (Google)
The move matters because Workday sits in the middle of big corporate budgets for HR and finance systems. When it talks about deal timing and renewals, investors read it as a check on how confident companies feel about hiring plans, payroll spending and back-office upgrades.
This week, that read-through is tangled up with a wider question: whether “AI agents” will become the next add-on product line, or a cost center that drags on margins while customers wait to buy. Workday’s outlook is landing in a market that is already jumpy about which software vendors can defend their turf as AI tools spread.
Workday’s slide earlier in the day took it to the lowest level in more than five years, with investors weighing whether AI could undercut demand for traditional HR and payroll software and whether large deals are taking longer to close, particularly in government and healthcare. The stock is down about 40% so far in 2026, and the broader U.S. application software group has also come under pressure. (Reuters)
In its quarterly report late Tuesday, Workday forecast fiscal 2027 subscription revenue of $9.925 billion to $9.950 billion and a non-GAAP operating margin of about 30%, with first-quarter subscription revenue seen at $2.335 billion. CEO Aneel Bhusri said “AI gives us the chance to do it all again,” while CFO Zane Rowe said the company is “prioritizing investment in our agentic AI roadmap.” (Workday Investor Relations)
Subscription revenue is the recurring fee customers pay for Workday’s cloud software, and it is the company’s main engine. Backlog is a measure of subscription contracts signed but not yet recorded as revenue. Non-GAAP figures exclude items such as stock-based compensation, while “agentic AI” is industry shorthand for software agents that can take actions on a user’s behalf.
Evercore ISI analyst Kirk Materne downgraded Workday to “In Line” and cut his price target to $160 from $200. He wrote it was “hard to see” the story turning “in the immediate near-term,” adding that adoption of the company’s agent strategy will be “believing” once customers show more usage. (Streetinsider)
At D.A. Davidson, analyst Lucky Schreiner halved his price target to $125 and kept a Neutral rating. “Net new demand trends are volatile,” he wrote, saying the firm would stay on the sidelines “until organic demand show signs of stabilization.” (TipRanks)
For Thursday’s session, traders will be watching whether the after-hours dip deepens into the open, or whether the rebound from the day’s $117.76 low holds. With several firms cutting targets after the outlook, the tape could stay choppy even if the broader market steadies.
The risk is straightforward: if “timing” issues on large deals turn into cancellations, subscription growth could slip below the new range. At the same time, heavier AI spending could squeeze margins further if customers are slow to pay extra for new AI tools.
The next hard catalyst is Workday’s first-quarter results for the period ending April 30, when investors will look for cleaner signals on deal closures, subscription growth and whether AI products are turning into booked revenue rather than just talk.
