Workday(US:WDAY) Benzinga·2025-05-23 16:42Core Viewpoint - Workday Inc experienced a significant decline in stock price following the release of its fiscal first-quarter results, which highlighted mixed performance against market expectations [1]. Financial Performance - Workday reported subscription revenue of $2.059 billion, with a year-on-year growth of 13.4%, surpassing Piper Sandler's estimate of 13.0% [3][5]. - The company achieved an operating margin of 30%, an increase from 26% in the previous quarter, attributed to moderated headcount growth [4]. - Non-GAAP earnings per share were reported at $2.23, exceeding the consensus estimate of $2.01 [8][13]. Subscription Backlog and Guidance - The 12-month subscription backlog (cRPO) grew by 15.6%, above the Street's expectation of 15.1%, although this included contributions from short-term tenant contracts [2]. - Management's guidance for cRPO growth in the fiscal second quarter is set at 15%-16%, which includes the aforementioned contributions [2]. - Analysts noted that the guidance for subscription revenue growth in the second quarter is 13.5%, slightly below the consensus of 13.7% [5][15]. Analyst Ratings and Price Targets - KeyBanc Capital Markets maintained an Overweight rating but reduced the price target from $335 to $325 [2]. - Piper Sandler raised its price target from $230 to $255 while maintaining a Neutral rating [3]. - Goldman Sachs reaffirmed a Buy rating and increased the price target from $275 to $300 [5]. - RBC Capital Markets maintained an Outperform rating with a price target of $340 [12]. - Needham and Citizens also maintained Buy ratings with price targets of $300 and $315, respectively [17][15]. Market Reaction - The market reaction to Workday's results was described as "overblown," with analysts suggesting that revenue growth is back-weighted and driven by already signed deals [6]. - Workday's stock fell by 12.04% to $239.32 following the earnings announcement [19].