Workday delivered a solid earnings beat Thursday night, posting $2.35 billion in revenue and $2.21 per share versus Wall Street's $2.34 billion and $2.11 expectations. But CEO Carl Eschenbach's warnings about government funding pressures and Trump's education policies sent shares sliding in after-hours trading, highlighting the mixed signals rippling through enterprise software.
Workday just delivered the kind of earnings beat that should have investors celebrating, but CEO Carl Eschenbach's sobering commentary about government funding cuts is telling a different story in after-hours trading. The enterprise software giant posted revenue of $2.35 billion and adjusted earnings of $2.21 per share, handily beating the Street's $2.34 billion and $2.11 expectations.
The mixed reaction reflects the challenging backdrop facing enterprise SaaS companies as macro pressures intensify. Workday's 13% revenue growth sounds impressive until you consider the headwinds building in two of its key verticals. "The part of Workday that works with state and local governments faced challenges during the quarter," Eschenbach told analysts during the earnings call, according to the company's statement.
The government sector warnings come as municipalities nationwide grapple with budget constraints. "I think we'll continue to see that as people are trying to figure out what the funding slowdown is going to look like, all the way to the state level," Eschenbach explained. This admission reveals how even software companies with sticky enterprise contracts aren't immune to public sector belt-tightening.
Meanwhile, higher education is facing its own reckoning under President Donald Trump's aggressive education policies. The administration's executive order signed in March to dismantle the Department of Education is creating ripple effects throughout the sector. "If it's a higher ed university that includes a healthcare system, they too are getting a little pullback in funding," Eschenbach warned investors.
