New York, Feb 25, 2026, 05:05 ET — Premarket
- Workday shares slid roughly 9% in premarket trading after the company’s fiscal 2027 subscription guidance came in below expectations.
- Company blames sluggish large-deal signings, and says it expects to ramp up investment in “agentic AI”.
- Early in the quarter, traders are watching deal flow and margins, especially after a steep slide so far this year.
Workday shares dropped 9.4% to $117.98 in premarket trade Wednesday, deepening a slide after the company’s fiscal 2027 subscription revenue guidance missed Wall Street’s mark. The stock has lost roughly 40% since January, as investors grow uneasy about possible competition from Anthropic’s new AI-driven enterprise tools, which could squeeze legacy software vendors. Piper Sandler noted the outlook “does not allay investors’ general concerns.” Workday now trades near 12 times forward earnings, while Salesforce fetches a multiple closer to 14. 1
Investors usually zero in on subscription revenue, the steady, recurring payments Workday collects for its cloud software.
Softer subscription guidance tends to signal more than just a few deals moving to next quarter—it points to cooling demand. And this is hitting right as software investors wrestle with the question of who gets to put a price tag on AI, and who risks seeing their product commoditized by it.
Workday shares tumbled over 8% after hours on Tuesday, following a fiscal 2027 subscription revenue outlook that missed Wall Street’s target. President Rob Enslin cited delays in closing certain large enterprise deals, telling analysts “some net new large enterprise deals are taking longer to close.” Still, he noted most of those opportunities “remained active,” and a handful had already wrapped up early in the first quarter. 2
Workday’s revenue for the quarter ended Jan. 31 landed at $2.532 billion, a 14.5% increase, with subscription revenue climbing 15.7% to $2.360 billion. Looking ahead, the company is targeting fiscal 2027 subscription revenue between $9.925 billion and $9.950 billion, and expects a non-GAAP operating margin of roughly 30%. CFO Zane Rowe pointed to ongoing investment in Workday’s agentic AI roadmap. For CEO Aneel Bhusri, AI represents what he called “the chance to do it all again” in both HR and finance. 3
Non-GAAP figures leave out things like stock-based compensation, aiming to show operating performance through a separate lens. When Workday talks about “agentic AI,” they’re pointing to AI agents that actually execute tasks within business workflows, beyond just creating text.
The company’s earnings release and outlook came bundled in a Form 8-K filed Tuesday. 4
Workday wrapped up Tuesday at $130.23, after shares swung from $126.62 to $134.72. Volume landed around 10.44 million shares. 5
At 5:50 p.m. EST, shares had slipped to $118.50 in after-hours action, off roughly 9% from the session’s close. 6
Workday shares took a hit Wednesday after Evercore ISI lowered its rating to “In Line” from “Outperform” and slashed the price target to $160 from $200. The downgrade was pinned on the CEO handoff, questions about the company’s early-stage agentic strategy, and a tempered fiscal 2027 revenue outlook. Evercore also pointed to the squeeze on near-term operating leverage as AI spending ramps up. 7
Still, it’s not all downside. Should those delayed big deals come through in the weeks ahead, investors might read the guidance as cautious—rather than a warning flag about demand.
The risk? Sales cycles drag out, stretching into repeated delays, and if AI investments outpace revenue growth, margins take a hit.
Attention shifts to Workday’s fiscal Q1, wrapping up April 30, as investors look for proof the company can deliver on both subscription and margin goals even as it pours money into AI. 8
