Workday forecasts fourth-quarter subscription revenue below estimates as client spending weakens

Paycom Software

26/11/2024 21:53

Nov 26 (Reuters) - Workday  WDAY.O  forecast
fourth-quarter subscription revenue below Wall Street
expectations on Tuesday, hit by weaker client spending on its
human capital management software.
    Shares of the Pleasanton, California-based company fell over
10% in extended trading.
    Workday is  experiencing weak demand for its payroll
software, as clients cut tech budgets due to high interest rates
and a cooling labor market. 
    The company is facing stiff competition from larger rivals
such as Automatic Data Processing  ADP.O , prompting it to
introduce new artificial intelligence features to remain
competitive in a crowded market. 
    Workday's shares have dropped about 3% this year,
underperforming compared to its peers such as ADP and Paycom
 PAYC.N .
    The company forecast fourth-quarter subscription revenue of
$2.03 billion, compared with estimates of $2.04 billion,
according to data compiled by LSEG. 
    Workday said it expects fiscal 2025 subscription revenue to
be $7.70 billion, below estimates of $7.72 billion. 
    Total revenue for the third quarter came in at $2.16
billion, versus expectations of $2.13 billion. 
        It reported subscription revenue of $1.96 billion for
the quarter ended Oct.31, in line with analyst expectations. 
  
        On an adjusted basis, the company earned $1.89 per
share, compared with estimates of $1.76 per share. 
        Separately, the company said it has appointed former
UiPath and Google executive Rob Enslin to the newly created role
of president and chief commercial officer. 
    
      
        

 (Reporting by Zaheer Kachwala and Kannaki Deka in Bengaluru;
Editing by Mohammed Safi Shamsi)
 ((Zaheer.Kachwala@thomsonreuters.com;))