New York, Feb 25, 2026, 05:05 ET — Premarket
- Workday shares down about 9% in premarket after fiscal 2027 subscription outlook missed estimates
- Company points to slower large-deal closes; plans more spending on “agentic AI”
- Traders eye early-quarter deal flow and margins after a sharp year-to-date slide
Workday shares fell 9.4% to $117.98 in premarket trading on Wednesday, extending a sharp drop after the company’s fiscal 2027 subscription revenue outlook came in below Wall Street expectations. The stock is down about 40% this year, with investors also fretting that new enterprise tools from AI startup Anthropic could pressure traditional app-software vendors. Piper Sandler said the forecast “does not allay investors’ general concerns,” and Workday trades at about 12 times forward earnings versus Salesforce near 14. (Reuters)
Subscription revenue — recurring fees customers pay for cloud software — is the line investors tend to anchor on for Workday.
A softer subscription guide often reads as demand slowing, not just deals slipping a quarter. It also lands at a touchy moment: software investors are trying to work out who can charge for AI, and who gets commoditized by it.
Late Tuesday, Workday forecast fiscal 2027 subscription revenue below expectations and the stock slid more than 8% in extended trading. Company President Rob Enslin told analysts that “some net new large enterprise deals are taking longer to close,” though he said most opportunities remained active and some had already closed early in the first quarter. (Reuters)
In the quarter ended Jan. 31, Workday reported revenue of $2.532 billion, up 14.5%, while subscription revenue rose 15.7% to $2.360 billion, it said. The company projected fiscal 2027 subscription revenue of about $9.925 billion to $9.950 billion and a non-GAAP operating margin of about 30%. CFO Zane Rowe said Workday is “prioritizing investment in our agentic AI roadmap,” while CEO Aneel Bhusri said AI gives Workday “the chance to do it all again” in HR and finance. (SEC)
Non-GAAP results exclude certain costs — such as stock-based compensation — to give investors a different view of operating performance. Workday’s “agentic AI” language refers to AI agents that can take actions inside business workflows, not just generate text.
A Form 8-K filed on Tuesday attached the earnings release and outlook. (SEC)
Workday ended Tuesday’s regular session at $130.23 after trading between $126.62 and $134.72, with about 10.44 million shares changing hands. (Investing)
By 5:50 p.m. EST, the stock was at $118.50 in after-hours trading, down about 9% from the close. (MarketWatch)
Evercore ISI downgraded Workday to “In Line” from “Outperform” on Wednesday and cut its price target to $160 from $200, citing the CEO transition, early-stage agentic strategy and the reduced fiscal 2027 revenue view. The firm also flagged the hit to near-term operating leverage from higher AI investment. (Investing)
But the setup isn’t one-way. If the delayed large deals close over the next few weeks, investors could decide the guide was simply conservative, not a sign of deeper demand trouble.
The downside case is uglier: longer sales cycles turn into pushouts that keep happening, while AI spending rises faster than revenue and squeezes margins.
The next checkpoint is Workday’s fiscal first quarter, which ends April 30, and whether it can hit its subscription and margin targets while it funds the AI push. (Workday)
