Workday cuts full-year subscription revenue forecast

A close-up of the Workday logo on its headquarters in Pleasanton, California.Smith Collection | Archive Photos | Getty Images

Human resources software provider Workday cut its annual subscription revenue forecast on Thursday, citing concerns about lower customer headcount growth as a hiring slowdown and IT budget cuts soften demand for its payroll services.

Shares of the Pleasanton, California-based company fell nearly 9% in extended trading.

A tough macroeconomic environment has dampened demand for the company's human resource and payroll services, with U.S. tech companies continuing to lay off staff after massive retrenchment drives last year.

The company sees subscription revenue for fiscal year 2025 in the range of $7.70 billion to $7.73 billion, down from its prior forecast of $7.73 billion to $7.78 billion. Analysts expect revenue of $7.76 billion.

"Our updated subscription revenue guidance reflects the elevated sales scrutiny and lower customer headcount growth we experienced during the quarter," said Workday CFO Zane Rowe.

For the second quarter, Workday expects subscription revenue of about $1.90 billion, nearly in line with analyst estimates, according to LSEG data.

Workday's total revenue for the first quarter ended April 30 stood at $1.99 billion, compared with analysts' average estimate of $1.97 billion.

Subscription revenue rose 18.8% to $1.82 billion in the quarter.

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