Enterprise software provider Workday Inc. beat expectations on earnings and revenue today as it posted its fourth quarter financial results, but its guidance for the coming quarter came up light and its stock was down almost 3% in extended trading.
The company reported a net loss for the quarter of $125.7 million, with earnings before certain costs such as stock compensation coming to 99 cents per share, up from 78 cents one year earlier. Revenue for the quarter came to $1.65 billion, up 20% from a year earlier.
The results were good, with Wall Street targeting earnings of just 78 cents per share on sales of $1.63 billion.
Workday also reported subscription revenue of $1.5 billion, up 22% from a year earlier and just ahead of the consensus estimate of $1.49 billion. For the full year fiscal 2023, it posted total revenue of $6.22 billion, up 21%, and subscription revenue of $5.5 billion, up 22%.
Workday is a pioneer in human resources software-as-a-service. It sells cloud software that specializes in applications for human capital management, financial management and enterprise resource planning. Using its software, companies can automate human resources and business tasks like payroll and expenses, while tracking employee data.
Workday co-founder and co-Chief Executive Aneel Bhusri said the company closed on a successful year, reinforcing the strength of its value proposition in helping enterprises manage their people and finances. “Despite the unpredictable environment, we remain well-positioned to drive the future of work for our more than 10,000 customers thanks to our amazing employees and unique approach to embedding artificial intelligence and machine learning into the very core of our platform,” he added.
The company was coming off a busy quarter that saw a lot of changes take place, both in its executive leadership and elsewhere. In December, investors were surprised by the sudden news that former co-CE Chano Fernandez would be stepping down from his role with immediate effect. The same day, Workday announced a replacement in the shape of board member Carl Eschenbach (pictured), a former executive of VMware Inc. At the time, Bhusri reiterated that he still intends to step down from his own role in January 2024, meaning that Eschenbach is expected to take over as sole CEO from that point onwards.
Eschenbach wasn’t long in the hot seat when he had to make a tough decision, announcing in January that Workday would be letting go 3% of its workforce, or around 525 people, citing a global economic environment that has proven “challenging” for companies of all sizes.
The challenge Workday is facing is evident in its guidance for the current quarter and full year, which came up short of expectations. For the first quarter, the company forecast total revenue of between $1.665 billion and $1.668 billion, below Wall Street’s forecast of $1.7 billion. For fiscal 2024, Workday sees revenue of between $7.155 billion and $7.225 billion, while analysts are targeting $7.26 billion.
“Our outlook reflects our strong fourth quarter execution and the scale of our model, balanced with our expectation that the environment will remain uncertain in the near-term,” said Workday Chief Financial Officer Barbara Larson in a statement.