Workday stock struggles as lower headcounts hit forecasts

Workday Inc (NASDAQ: WDAY) stock slumped on Friday, down 13%, on reduced full-year subscription revenue guidance.

The human resources software group now expects subscription revenue to be between $7.7 billion and $7.725 billion, a slight decrease from its prior forecast of $7.725 billion to $7.775 billion.

This revised guidance reflects an uptick in ‘sales scrutiny’ and, is the result of reduced headcount growth across its customer base.

Despite the lowered forecast, Workday described robust results for the first quarter of its new financial year.

Revenue increased by 18% year-over-year to $1.99 billion, exceeding Wall Street's expectations.

Workday's first-quarter profit stood at $107 million, or 40 cents per share, a significant improvement from the break-even results reported in the same period last year. Subscription revenue for the quarter reached $1.82 billion.

It added that earnings (adjusted) per share amounted to $1.74, which was better than the $1.57 pencilled in by analysts.

"Our first quarter performance was in line with our expectations across our key financial metrics," chief financial officer Zane Rowe said.

"We were pleased with our progress across key growth initiatives in Q1, which help build a foundation for long-term growth."