Shares of financial and HR software company Workday (NASDAQ:WDAY) fell 12.4% in the morning session after the company reported disappointing third-quarter results. The invoices were missing because the company was continuously monitoring deals in EMEA. Important deals were also canceled in the quarter, which had a negative effect on revenue recognition.
As for AI potential, management’s comment suggests it is still in its infancy. This may have upset some investors who were hoping for more bullish updates, especially in light of the stronger results some SaaS peers reported.
Expectations also lagged somewhat, with fourth quarter subscription revenue and non-GAAP operating margin slightly missing. Overall, this quarter was weak, leaving room for improvement.
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Workday’s stock isn’t very volatile, having only seen four moves above 5% in the past year. Such big moves are rare for Workday and indicate that this news has significantly affected the market’s perception of the company.
The biggest move we wrote about in the past year came three months ago, when shares rose 14.4% on news that the company reported second-quarter earnings results that were better across the board. Workday noted a macroeconomic environment consistent with the previous quarter and reiterated full-year subscription revenue expectations while slightly raising full-year operating margin guidance. Overall, this was a solid quarter without many surprises, which is often reassuring for the market.
Workday is down 5.8% year-to-date and at $252.97 per share is trading 17.7% below its 52-week high of $307.21 set in February 2024. Investors who bought $1,000 five years ago bought shares of Workday would now be looking at an investment worth $1,408.
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