What Happened?
Shares of finance and HR software company Workday (NASDAQ:WDAY) jumped 6.5% in the pre-market session after the company provided preliminary guidance for its fiscal Q4 2025, expecting results to meet or exceed prior forecasts with the exception of GAAP operating margin.
The company also announced a restructuring plan to reduce its workforce by approximately 8.5%. Workday anticipates incurring costs related to the plan, which will impact its operating margins. As a result, the company expects its GAAP operating margin for Q4 2025 to be 22 to 23 percentage points lower than its non-GAAP operating margin.
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What The Market Is Telling Us
Workday’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 14.4% on the news that the company reported second-quarter earnings results, which beat across the board. Workday observed a macroeconomic environment consistent with the previous quarter and reiterated full-year FY25 subscription revenue guidance while slightly raising its full-year operating margin outlook. Overall, this was a solid quarter without many surprises, which is often comforting for the market.
Workday is up 9.2% since the beginning of the year, but at $275 per share, it is still trading 10.5% below its 52-week high of $307.21 from February 2024. Investors who bought $1,000 worth of Workday’s shares 5 years ago would now be looking at an investment worth $1,459.
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