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Workday (NASDAQ:WDAY) Inc. reported its first quarter earnings, surpassing analyst expectations with an adjusted EPS of $1.74, $0.15 higher than the consensus estimate of $1.59.
The company's revenue also exceeded forecasts, coming in at $1.99 billion against the anticipated $1.97 billion.
Despite these strong results, Workday's stock fell sharply by 9% following the release, as the company provided a cautious subscription revenue guidance that has seemingly rattled investors.
For the fiscal 2025 full year, Workday anticipates subscription revenue to be between $7.700 billion and $7.725 billion, representing approximately 17% growth. The adjusted operating margin is projected at 25.0%.
For the fiscal 2025 second quarter, the company expects subscription revenue to reflect a similar growth rate of approximately 17%, with an adjusted operating margin of 24.5%.
The first quarter proved to be robust for Workday, with total revenues climbing 18.1% to $1.990 billion from the first quarter of fiscal 2024. Subscription revenues, a key metric for the company, increased by 18.8% compared to the same period last year.
The company also saw a significant improvement in its operating income, reporting $64 million, or 3.2% of revenues, a stark contrast to the operating loss of $20 million from the previous year's first quarter.
Adjusted operating income reached $515 million, or 25.9% of revenues, up from $396 million a year ago.
The positive financial performance was underscored by Workday CEO Carl Eschenbach, who highlighted the company's solid quarter of revenue growth and adjusted operating margin expansion.
CFO Zane Rowe noted the alignment of the first quarter performance with their expectations and the company's focus on efficiency, despite acknowledging elevated sales scrutiny and lower customer headcount growth.
