Workday Inc. (WDAY) Sinks 9.98% After Earnings, Profit Beats Forecast and Sales Above Forecast

2025-11-26 · Stocks · QuoteReporter

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Workday Inc. (WDAY) Sinks 9.98% After Earnings, Profit Beats Forecast and Sales Above Forecast

Workday, Inc., founded in 2005 by David A. Duffield and Aneel Bhusri, specializes in developing enterprise cloud applications for finance and human resources. Headquartered in Pleasanton, CA, the company offers financial management, human capital management, and analytics applications tailored for corporations, educational institutions, and government agencies. Workday is a key player in providing innovative cloud-based solutions for organizational needs.

Recent news indicates that Workday Inc (WDAY) has experienced a mixed third quarter in fiscal year 2026. Despite strong subscription growth and successful adoption of artificial intelligence (AI) technologies, which were highlighted during their Q3 earnings call, the company posted lukewarm quarterly subscription revenue, causing shares to fall. However, overall, Workday’s Q3 earnings and revenues surpassed Wall Street estimates, with both profit and sales rising due to the momentum in AI. These developments were closely watched, making Workday one of the key stocks to monitor this Wednesday alongside other major players like Dell and Deere.

The performance of Workday’s stock seems to be influenced by both the positive uptake of AI technologies and the less-than-expected subscription revenue, suggesting a nuanced investor response to mixed financial signals. This could potentially lead to fluctuations in stock prices as the market digests the full scope of Workday’s financial health and growth trajectory.

The current price of the asset is $209.725, reflecting a significant drop of 9.98% today, which indicates a strong bearish movement in the market. This price is near the 52-week low of $205.33, and only marginally above it by 2.14%, suggesting that the asset is potentially in a zone of strong support or facing continued downward pressure.

The asset’s price is substantially below the moving averages (MA20, MA50, MA200) with respective percentage differences of -7.76%, -10.31%, and -12.18%. This alignment below all major moving averages signifies a strong bearish trend over short, medium, and long-term periods.

The RSI at 36.73 points to a bearish momentum but not yet in the oversold territory (below 30), which could indicate that there might still be room for further downward movement before any potential reversal. The MACD value of -3.53 further confirms the bearish trend, suggesting that the momentum is still towards the downside.

Finally, the asset’s price is significantly down from the 52-week and YTD highs, by -28.66% and -26.07% respectively, reinforcing the bearish sentiment observed in other indicators. Overall, the asset is currently experiencing a strong downward trend, with potential for further declines unless a reversal pattern is observed soon.

Workday Inc. reported a robust fiscal third quarter 2026, with total revenues reaching $2.432 billion, marking a 12.6% increase from the previous year. Subscription revenues were a significant contributor, rising 14.6% to $2.244 billion. The company’s operating income improved significantly to $259 million, or 10.7% of revenues, up from $165 million or 7.6% of revenues year-over-year. Non-GAAP operating income also saw a substantial rise to $692 million, or 28.5% of revenues.

Diluted net income per share increased to $0.94 from $0.72 in the third quarter of FY 2025, while non-GAAP diluted net income per share grew to $2.32 from $1.89. Workday’s subscription revenue backlog reached $25.96 billion, up 17.0% year-over-year, with a 12-month subscription revenue backlog of $8.21 billion, a 17.6% increase.

Operating cash flows and free cash flows also showed significant growth, standing at $588 million and $550 million, respectively. The company’s financial position remains strong with $6.84 billion in cash, cash equivalents, and marketable securities.

For Q4 FY 2026, Workday projects subscription revenues of $2.355 billion, indicating a 15.5% growth, with a non-GAAP operating margin expected at least 28.5%. Full-year FY 2026 guidance has been adjusted to forecast subscription revenues of $8.828 billion, reflecting a growth of 14.4%, with a non-GAAP operating margin projected at approximately 29%.

Earnings Trend Table

The provided earnings data reveals a consistent upward trend in both estimated and reported EPS over a span of quarters from November 2023 to November 2025. Starting in November 2023, the estimated EPS was 1.41, gradually increasing each quarter to reach 2.17 by November 2025. This incremental growth suggests a steady improvement in the company’s financial expectations.

Similarly, the reported EPS also shows a progressive increase from 1.53 in November 2023 to 2.32 in November 2025. Notably, the reported EPS consistently exceeds the estimates, which is reflected in the positive surprise percentages recorded each quarter. These percentages range from a low of 6.19% in August 2024 to a high of 11.17% in May 2025, indicating not only that the company regularly outperforms analyst expectations but also that the degree of outperformance is substantial and improving over time.

This pattern of exceeding expectations could suggest strong operational performance and possibly a conservative approach in earnings forecasts by analysts. The consistent growth in EPS and the positive surprises are indicative of robust financial health and effective management execution.

In the most recent series of ratings changes for Outer, significant adjustments have been noted from various financial analysis firms.

1. Raymond James – November 21, 2025: Raymond James initiated coverage on Outer with a rating of “Market Perform.” This initiation suggests a neutral outlook, indicating that the firm expects the stock to perform in line with the broader market average. No specific target price was provided, which typically suggests a cautious or balanced view pending further performance indicators.

2. Piper Sandler – September 17, 2025: Piper Sandler upgraded Outer from “Underweight” to “Neutral” with a target price set at $235. This upgrade indicates a shift in expectation, suggesting that the perceived risks associated with Outer’s performance have decreased, or its fundamentals have shown improvement relative to previous assessments.

3. Guggenheim – September 17, 2025: On the same day, Guggenheim also adjusted their stance by upgrading Outer from “Neutral” to “Buy,” assigning a target price of $285. This represents a more bullish outlook compared to Piper Sandler’s neutral stance. The new target price implies that Guggenheim analysts expect significant upside potential from the current market price, reflecting confidence in Outer’s future market performance.

4. Oppenheimer – August 22, 2025: Oppenheimer reiterated its “Outperform” rating but adjusted the target price from $300 down to $270. This reiteration indicates continued confidence in the company’s ability to perform well above the market average, although the reduction in target price suggests some tempering of expectations regarding the company’s growth prospects or market conditions.

These rating changes reflect a mix of optimism and cautious realism, with overall improvement in sentiment from the financial analysts towards Outer, albeit with varying degrees of enthusiasm and expectation.

The current price of the stock stands at $209.73. Recent analyst ratings suggest a varied outlook, with target prices ranging from $235 to $285, indicating potential upside from the current market price. Piper Sandler upgraded their rating to ‘Neutral’ with a target price of $235, suggesting modest potential growth. Guggenheim, on the other hand, has shifted their rating to ‘Buy’ from ‘Neutral’ with a more optimistic target of $285. Oppenheimer maintains an ‘Outperform’ rating but adjusted their target down from $300 to $270, reflecting a reassessment of the stock’s future performance potential.

Overall, the average target price from these analysts suggests that there is expected growth for the stock, pointing to a positive trend in investor sentiment. This could be indicative of underlying strengths in the company’s earnings potential or strategic positioning in the market. However, the decrease in target price by Oppenheimer could signal some caution, possibly due to revised earnings expectations or market conditions impacting the sector.

Disclaimer: The information provided here is for educational and informational purposes only and should not be interpreted as financial advice, investment recommendations, or trading guidance. Markets involve risk, and past performance is not indicative of future results. You should always conduct your own research and consult with a qualified financial advisor before making any investment decisions. By acting, you accept full responsibility for your choices.