Weak Guidance Overshadows Workday’s Solid Q4 Results, Shares Tumble

Workday (NASDAQ: WDAY) delivered a strong Q4 FY2026 report after Tuesday’s close, but an initial after-hours selloff signals investors may have been hoping for more from the company’s forward guidance.

The software company posted non-GAAP EPS of $2.47, up 28.6% year over year, beating the consensus estimate of $2.32. Total revenue reached $2.532 billion, up 14.5% year over year, driven by subscription revenue of $2.36 billion, up 15.7%. The non-GAAP operating margin expanded 420 basis points to 30.6%, and full-year free cash flow grew 26.86% to $2.777 billion.

The headline numbers were solid, but FY2027 guidance is where the story gets complicated. Workday guided for full-year subscription revenue of $9.925 billion to $9.950 billion, representing 12% to 13% growth, a modest deceleration from FY2026’s pace. The 12-month subscription backlog of $8.833 billion, up 15.8%, offers some reassurance that demand remains intact.

Co-founder Aneel Bhusri, who returned as CEO to lead the company’s AI push, struck an optimistic tone: “We built Workday to bring innovation back to the worlds of HR and finance, and AI gives us the chance to do it all again.” The company delivered 1.7 billion AI actions across its platform in FY2026 and completed acquisitions of Paradox, Sana, and Pipedream to build out its agentic AI capabilities.

Shares dropped roughly 8% in after-hours trading and were down nearly 13% in Wednesday’s premarket trading. Whether the guidance reflects conservative floor-setting or genuine demand softness remains an open question as enterprise AI spending priorities continue to shift.