Workday stock fell after the software maker on Thursday reported second-quarter earnings that topped Wall Street estimates while revenue edged by views amid lowered expectations. The software maker's guidance for Workday stock met expectations.
Workday reported earnings for the quarter ending July 30 after the market close on Thursday. The Pleasanton, Calif.-based company said earnings rose71% to 84 cents per share. Workday's revenue climbed nearly 13% to $2.348 billion, including acquisitions.
Analysts expected Workday to post earnings of 75 cents per share on revenue of $2.342 billion.
"Q2 results came in ahead of expectations, though the print failed to impress investors broadly concerned about artificial intelligence displacing the application layer," said Jefferies analyst Brent Thill in a report.
Workday Stock: Guidance In-line
For the current quarter ending in October, Workday expects subscription revenue of $2.235 billion, roughly in-line with estimates of $2.237 billion. Slowing subscription revenue growth has pressured Workday stock.
In addition, Workday announced the purchase of Paradox, a candidate experience agent that uses conversational AI to simplify the job application process.
"While the company reported solid quarterly results, third-quarter guidance for subscription revenue came in slightly below the street and the implied fourth-quarter guide anticipates an acceleration from third-quarter growth levels," said William Blair analyst Jake Roberge in a report.
"Management noted that the acceleration in the fourth quarter is being driven by ramping up new deals in the public sector and Workday Wellness as well as an inorganic benefit from its acquisition of Paradox."
On the stock market today, Workday stock fell more than 5% to near 216 in early trading. Workday stock had retreated 10% in 2025 heading into the earnings report.
Paradox Acquisition
At BMO Capital Markets, analyst Daniel Jester said in a report: "We think the acquisition of Paradox could be a helpful contributor to improving Workday's recruiting solutions, and as part of a broader effort to strengthen the platform with customers who have higher velocity hiring and more frontline workers."
Workday sells software for human resources management, such as payroll tools. About 70% of revenue comes from human capital management products. Also, it has expanded into financial software.
In January, Workday announced a restructuring that reduced its workforce by 8.5%, or 1,750 employees.
Workday stock holds a Composite Rating of 71 out of a best-possible 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, Workday stock has an Accumulation/Distribution Rating of C, according to IBD MarketSurge analysis. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading.
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