Workday (NASDAQ:WDAY) was in focus on Tuesday as several Wall Street analysts came to the back-office software company’s defense even as it reported weaker-than-expected guidance for fiscal 2025 and announced its plans to acquire startup Hiredscore.
Shares fell 4.9% in premarket trading.
The company’s fourth-quarter results were better-than-expected, but showed a “smaller than typical” beat and the guidance implied a “modest” slowdown in current remaining performance obligations, KeyBanc analyst Jason Celino said. Despite the soft guidance, Celino said he is “encouraged” by the company’s international growth and continued go-to-market improvements and upcoming pricing and packaging updates.
Celino reiterated his Overweight rating on Workday and raised his price target to $330 from $310 following the results.
Looking ahead, Workday expects fiscal 2025 subscription revenue to be between $7.73B and $7.78B, with the mid-point below the $7.77B estimate. Adjusted operating margin is forecast to be 24.5%, in-line with estimates.
Others agreed with Celino’s assessment that Workday’s long-term future is still intact, including Mizuho Securities analysts Siti Panigrahi.
While Workday is likely to face tougher comparisons in fiscal 2025, the company is still “well positioned” to become the preeminent vendor for back-office software and has several areas for growth, including international, net new adds in financial managements and gaining traction in the mid-market, Panigrahi said.
Panigrahi reiterated the firm’s Buy rating and bumped its price target to $325 from $290 after the results.
Workday also announced its intent to acquire startup HiredScore. Terms of the deal were not disclosed, but the company said it expects the deal to close before April 30, 2024.