WDAY

Investing.com -- Software stocks fell sharply Tuesday as disappointing preliminary results from IBM (NYSE:IBM) rippled across the sector, pulling shares of major software companies lower. "The IBM update will deliver a devastating blow to software/services stocks as investors will worry about the capex pivot negatively impacting the whole industry, but the race to secure hardware raises its own set of worries," Vital Knowledge analyst Adam Crisafulli said in a quick comment. Following IBM’s update, investors reacted sharply to the cooling sentiment in the broader software space: Accenture (NYSE:ACN): Fell 7% ServiceNow (NYSE:NOW): Dropped 8% Workday (NASDAQ:WDAY): Declined 9.7% Salesforce (NYSE:CRM): Slipped 6% Atlassian Corp Plc (NASDAQ:TEAM): Fell 8.3% SAP SE ADR (NYSE:SAP): Sank 5.5% Adobe NASDAQ:ADBE): Fell 6.1% The decline is rooted in a fundamental shift in enterprise capital expenditure (capex) caused by a global memory supply shortage. Here is why this dynamic is specifically hurting software stocks: Capex Reprioritization: IBM reported that, toward the end of June, its clients—facing a supply-constrained market—shifted their spending away from software and general-purpose IT to "lock in" hardware like servers, storage, and memory. Because memory prices have spiked—exacerbated by intense demand from AI data centers—enterprises are exhausting their budgets just to secure critical hardware. The AI Tax on Enterprise Budgets: The industry is currently experiencing a "structural" memory shortage. Hyperscalers and AI infrastructure providers are consuming the vast majority of high-bandwidth memory (HBM) and DRAM production. As a result, when enterprises do manage to secure hardware, they are paying significantly higher premiums, leaving less room in their annual budgets for software renewals, licensing, or new digital transformation projects. Short-Term Revenue Headwinds: Investors are concerned that this is not an isolated issue for IBM. If large enterprise clients are delaying software purchases to prioritize hardware inventory—a trend referred to as "capex reprioritization"—it suggests a near-term revenue slowdown for the entire software-as-a-service (SaaS) and consulting sector. IBM’s revenue of $17.2 billion missed the $17.86 billion consensus, with non-GAAP EPS of $2.93 falling short of the $3.02 estimate. Beyond the hardware buying shift, the compan...

IBM stock suffered its worst day ever on Tuesday after the company’s preliminary second-quarter earnings missed analysts’ targets. In a letter to shareholders, CEO Arvind Krishna explained the shortfall was largely driven by the company’s infrastructure business. “What played out was worse than our expectations,” Krishna wrote.

Software stocks were hammered after IBM preannounced weaker-than-expected Q2 financial results. Shares in IT services firms also fell.

Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at Workday (NASDAQ:WDAY) and its peers. Organizations are constantly looking to improve organizational efficiencies, whether it is financial planning, tax management or payroll. Finance and HR software benefit from the SaaS-ification of businesses, large and small, who much prefer the flexibility of cloud-based, web-browser delivered software paid for on a subscription basis than the hassle and expense of purchasing and managing on-premise enterprise software. The 12 finance and hr software stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 0.6% above. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 7.5% since the latest earnings results. Born from the vision of PeopleSoft founders after Oracle's hostile takeover of their previous company, Workday (NASDAQ:WDAY) provides cloud-based software for financial management, human resources, planning, and analytics to help organizations manage their business operations. Workday reported revenues of $2.54 billion, up 13.5% year on year. This print exceeded analysts’ expectations by 1.1%. Overall, it was a very strong quarter for the company with an impressive beat of analysts’ billings estimates. "We had a great Q1, and it makes one thing clear: Workday is ready for this AI moment. Our core business is strong, our AI strategy is working, and we're moving with the speed and focus required to lead," said Aneel Bhusri, co-founder, CEO, and chair, Workday. The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $122.25. Is now the time to buy Workday? Access our full analysis of the earnings results here, it’s free. Initially created to solve the challenges of international student tuition payments, Flywire (NASDAQ:FLYW) provides specialized payment processing and software solutions that help educational institutions, healthcare systems, travel companies, and businesses manage complex payments. Flywire reported revenues of $184 million, up 42.9% year on year, outperforming analysts’ expectations by 7.2%. The business had an exceptional quarter with an impressive beat of analysts’ EBITDA estimates and...

June S&P 500 E-Mini futures (ESM26) are trending down -0.05% this morning as oil prices and bond yields climbed after the U.S. and Iran exchanged heavy fire in the Persian Gulf. The price of WTI crude climbed over +2% on Wednesday amid skepticism over the prospects of a U.S.-Iran peace deal and as renewed fighting erupted in the Middle East. The U.S. Central Command said in a post on X that American forces successfully intercepted Iranian ballistic missiles and drones, and conducted self-defense strikes on Qeshm Island in response to attempted attacks by Iran across the Middle East. Iran’s attacks followed a U.S. strike on an empty oil tanker that the U.S. said was attempting to breach its blockade. Meanwhile, the Trump administration said the ceasefire between the U.S. and Iran remains in place. Investors Bearish on Oracle Ahead of Earnings - Unusually Heavy ORCL Put Options Trading Salesforce vs. ServiceNow: 1 AI Giant Is Leaving the Other Behind Microsoft Stock Is Up Nearly 30% From Its March Lows, But You Shouldn’t Sell MSFT Just Yet Get exclusive insights with the FREE Barchart Brief newsletter. Subscribe now for quick, incisive midday market analysis you won't find anywhere else. Treasuries fell across the curve as higher oil prices fueled worries about inflationary pressures, with the benchmark 10-year yield rising four basis points to 4.49%. “Market pessimism once again grows over the prospects of a U.S.-Iran deal that could pave the way for a reopening of the Strait of Hormuz,” according to Saxo Bank analysts. Still, “for now, the risk premium continues to be partly offset by President Trump’s repeated insistence that an interim agreement remains within reach.” The Organisation for Economic Co-operation and Development said on Wednesday that the global economy is poised for a marked slowdown this year as higher energy costs weigh on consumer spending and business investment, but it could worsen significantly if the Middle East conflict extends into 2027. Investors are now awaiting a fresh batch of U.S. economic data, with particular attention on the ADP employment report, and an earnings report from semiconductor giant Broadcom. In yesterday’s trading session, Wall Street’s major indexes ended in the green, with the S&P 500, Dow, and Nasdaq 100 posting new record highs. Hewlett Packard Enterprise (HPE) surged over +19% and was the top percentage gai...

The subdued stock price reaction suggests that Workday, Inc.'s (NASDAQ:WDAY) strong earnings didn't offer any surprises. We think that investors have missed some encouraging factors underlying the profit figures. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. As finance nerds would already know, the accrual ratio from cashflow is a key measure for assessing how well a company's free cash flow (FCF) matches its profit. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. The ratio shows us how much a company's profit exceeds its FCF. That means a negative accrual ratio is a good thing, because it shows that the company is bringing in more free cash flow than its profit would suggest. While it's not a problem to have a positive accrual ratio, indicating a certain level of non-cash profits, a high accrual ratio is arguably a bad thing, because it indicates paper profits are not matched by cash flow. To quote a 2014 paper by Lewellen and Resutek, "firms with higher accruals tend to be less profitable in the future". Over the twelve months to April 2026, Workday recorded an accrual ratio of -0.46. Therefore, its statutory earnings were very significantly less than its free cashflow. Indeed, in the last twelve months it reported free cash flow of US$3.0b, well over the US$847.0m it reported in profit. Workday shareholders are no doubt pleased that free cash flow improved over the last twelve months. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. Happily for shareholders, Workday produced plenty of free cash flow to back up its statutory profit numbers. Because of this, we think Workday's underlying earnings potential is as good as, or possibly even better, than the statutory profit makes it seem! And on top of that, its earnings per share increased by 76% in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. Ultimately, this article has formed an opinion based on historical data. However, it can al...

Palantir stock rose Monday, eyeing an early buy point, as software names again rallied, boosted by financial results at Snowflake and Dell.

Workday delivered a well-received Q1, as the market responded positively to growth in both revenue and profitability. Management attributed the strong performance to renewed momentum in its core business and the rapid adoption of its AI-powered agent solutions, which are helping customers automate HR and finance processes. CEO Aneel Bhusri pointed to this being Workday's best first quarter for new annual contract value (ACV) in five years, citing increased customer demand for AI-driven functionality and improved operational focus. Bhusri emphasized, “We are seeing momentum once again building in the business,” highlighting that AI agents and the integration of Sana and Paradox platforms were key contributors. Is now the time to buy WDAY? Find out in our full research report (it’s free). Revenue: $2.54 billion vs analyst estimates of $2.52 billion (13.5% year-on-year growth, 1.1% beat) Adjusted EPS: $2.66 vs analyst estimates of $2.52 (5.7% beat) Adjusted Operating Income: $809 million vs analyst estimates of $769.1 million (31.8% margin, 5.2% beat) Operating Margin: 13.3%, up from 1.7% in the same quarter last year Billings: $1.86 billion at quarter end, up 18.2% year on year Market Capitalization: $30.75 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Keith Weiss (Morgan Stanley) asked about Workday’s total cost of ownership versus customers building solutions in-house with new code-generation tools. CEO Aneel Bhusri and President Garrett Katzmeyer explained that Workday’s unique data model, security, and business process framework give it a clear advantage, emphasizing that customers prefer compliant, integrated solutions over “lawless” alternatives. Gabriela Borges (Goldman Sachs) inquired about customer feedback and challenges when deploying agentic AI. Katzmeyer highlighted that Workday engages on concrete business problems, which helps avoid common proof-of-concept pitfalls, and noted that rapid adoption has led to default provisioning of self-service agents to all customers. Michael Turrin (Wells Fargo) questioned the balance between margin expansion and growth investments. CFO Zane C. Rowe stated that...

Valued at a market cap of $31.6 billion, Workday (WDAY) stock is down almost 60% from all-time highs. Investors are worried about AI replacing software services companies such as Workday, which has driven its stock price lower in the past year. However, Workday just posted its best first-quarter growth in new bookings in five years, beat Wall Street estimates on both earnings and revenue, and raised its full-year profit margin forecast. For a tech stock that has been beaten down in 2026, this report could be a meaningful turning point. Investors Pile Into Tesla Call Options in Huge, Unusual Volume - a Bullish Signal? Trump Just Bet $2 Billion on Quantum Computing: Ranking IBM, QBTS and RGTI Stock Now Berkshire Hathaway Buys Macy’s After 60 Years Away From Department Stores. M Stock Offers Real Estate, Dividends, and an Interesting Twist. Tired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now! The numbers suggest Workday's artificial intelligence strategy is working, and the market is starting to believe it. On May 21, Workday reported fiscal first-quarter results that came in ahead of analyst expectations across the board. The company posted adjusted earnings of $2.66 per share, topping the $2.51 consensus estimate, while revenue of $2.54 billion edged past the $2.52 billion forecast. Net income jumped to $222 million from just $68 million a year earlier, a more than threefold increase. Subscription revenue, the company's core business, rose 14% year-over-year to $2.35 billion. The 12-month subscription backlog grew 15.5% to $8.81 billion, a sign that clients are committing to more spending ahead. Operating cash flow surged 52% to $696 million. For the full fiscal year 2027, management raised its non-GAAP operating margin guidance to 30.5%, up from the 30% it projected as recently as February. For the second quarter, Workday called for subscription revenue of roughly $2.46 billion and a 30% adjusted operating margin, both in line with or slightly above analyst expectations. Workday CEO Aneel Bhusri, who returned to lead the company earlier this year, replacing Carl Eschenbach, called the first quarter as the "best first quarter of new ACV growth in five years." More than a quarter of all expansion revenue from existing customers came directly from AI products. Deals that included AI were more than 50% larger...

Enterprise software company Workday (NASDAQ:WDAY) announced better-than-expected revenue in Q1 CY2026, with sales up 13.5% year on year to $2.54 billion. Its non-GAAP profit of $2.66 per share was 5.7% above analysts’ consensus estimates. Is now the time to buy WDAY? Find out in our full research report (it’s free). Revenue: $2.54 billion vs analyst estimates of $2.52 billion (13.5% year-on-year growth, 1.1% beat) Adjusted EPS: $2.66 vs analyst estimates of $2.52 (5.7% beat) Adjusted Operating Income: $809 million vs analyst estimates of $769.1 million (31.8% margin, 5.2% beat) Operating Margin: 13.3%, up from 1.7% in the same quarter last year Billings: $1.86 billion at quarter end, up 18.2% year on year Market Capitalization: $30.42 billion Workday delivered a well-received Q1, as the market responded positively to growth in both revenue and profitability. Management attributed the strong performance to renewed momentum in its core business and the rapid adoption of its AI-powered agent solutions, which are helping customers automate HR and finance processes. CEO Aneel Bhusri pointed to this being Workday's best first quarter for new annual contract value (ACV) in five years, citing increased customer demand for AI-driven functionality and improved operational focus. Bhusri emphasized, “We are seeing momentum once again building in the business,” highlighting that AI agents and the integration of Sana and Paradox platforms were key contributors. Looking ahead, Workday’s guidance is shaped by its commitment to scaling AI agent adoption and expanding into adjacent markets such as IT service management. Management is focused on streamlining operations and investing in high-impact areas, with CFO Zane C. Rowe stating, “We remain focused on the potential for AI to transform our HCM and finance solutions.” The company expects continued growth in agentic AI revenue, broader deployment of newly launched AI solutions like the Sana Travel Agent and Sana for ITSM, and increased uptake of its flex credits pricing model. Management believes this focus will support long-term revenue growth and further margin expansion as AI-driven efficiencies materialize. Management credited the quarter’s positive results to accelerating AI agent adoption, operational discipline, and increased customer expansion, especially in key international markets. AI agent adoption accelerates: T...

Market Catalysts host Julie Hyman takes a look at some of Friday's trending tickers and stories, including Deckers Outdoor's (DECK) fourth quarter sales, Workday (WDAY) stock rising on first quarter earnings, IMAX (IMAX) reportedly exploring a sale, and Estée Lauder (EL) stock surging after merger talks with Puig ended.

All three major US stock indexes were up in late-morning trading Friday, as Wall Street is set to se