Workday shares experienced a significant premarket drop following a downbeat revenue forecast. The enterprise software maker anticipates reduced corporate spending amid economic uncertainty.
The company's stock has fallen sharply this year, amplified by investor apprehension over artificial intelligence startups introducing new enterprise tools. This has raised concerns that automation could impact revenue for established software providers.
Workday projects fiscal year 2027 subscription revenue between $9.93 billion and $9.95 billion, missing analyst expectations. The company plans to increase investment in its "agentic AI" development.
Analysts note that the forecast may not fully address investor unease surrounding AI's influence on software applications.
Workday, specializing in HR and payroll solutions, cited extended sales cycles, particularly in government, education, and healthcare sectors, as a factor delaying some large deals. However, many deals remain active, with some closing early in the current quarter.
Co-founder Aneel Bhusri, who recently returned as CEO, has expressed skepticism about AI entirely displacing traditional software solutions.