Workday (NASDAQ:) Inc. reported earnings for the first quarter, exceeding analysts’ expectations: adjusted earnings per share of $1.74, which was $0.15 above the consensus estimate of $1.59.
The company’s revenue also beat estimates, coming in at $1.99 billion versus expectations of $1.97 billion.
Despite the strong results, Workday shares fell sharply 9% after the report as the company provided cautious guidance for subscription revenue that appeared to rattle investors.
For the full fiscal year 2025, Workday forecasts subscription revenue to be between $7.700 billion and $7.725 billion, representing growth of approximately 17%. Adjusted operating margin is projected at 25.0%.
In the second quarter of fiscal 2025, 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 was strong for Workday, with total revenue up 18.1% to $1.990 billion compared to the first quarter of fiscal 2024. Subscription revenue, a key metric for the company, increased 18.8% year-over-year.
The company also saw a significant improvement in its operating income, reporting $64 million, or 3.2% of revenue, in stark contrast to an operating loss of $20 million compared to the prior year’s first quarter.
Adjusted operating income reached $515 million, or 25.9% of revenue, compared with $396 million a year ago.
The positive financial results were highlighted by Workday CEO Carl Eschenbach, who noted the company’s strong revenue growth for the quarter and adjusted operating margin expansion.
Chief Financial Officer Zane Rowe noted first-quarter results were in line with expectations and the company’s focus on efficiency, despite acknowledging an increased focus on sales and lower customer growth.