Workday Earnings: Cross Currents Yield Good Results With Lowered Fiscal 2025 Revenue Guidance

We are lowering our fair value estimate for wide-moat Workday to $270 per share from $285 after the company posted good first-quarter results relative to our expectations but a lower revenue outlook for the year. Workday experienced pressure in Europe, lower headcount upon renewals, and increased scrutiny on larger deals during the quarter, which management expects to persist for the rest of the year. Despite a lower revenue outlook, the firm slightly raised its profitability guidance. As a result, we have lowered our growth assumptions slightly through fiscal 2026. Shares were pressured and down 11% after hours, and if the selloff persists in the next trading session, we believe shares are attractive.