(Reuters) -Workday reported third-quarter subscription revenue in line with Wall Street estimates on Tuesday, signaling softer demand and sending its shares down nearly 7% in extended trading.
The human resources software provider’s fourth-quarter subscription revenue forecast was also barely above estimates, hit by sluggish demand from certain higher education customers that depend heavily on federal funding.
Workday competes with Oracle, SAP and payroll providers such as Automatic Data Processing. Its customers include United Airlines, Visa and FedEx.
In an uncertain economy, some customers are tightening spend on platforms like Workday as they reassess budgets and timing.
The company expects fourth-quarter subscription revenue of about $2.36 billion, compared with analysts’ average estimate of $2.35 billion, according to data compiled by LSEG.
In the third quarter, the company’s revenue rose 12.6% to $2.43 billion, slightly beating estimates of $2.42 billion.
Subscription revenue also rose 14.6% to $2.24 billion in the quarter ended October 31, which came in line with estimates.
The company reported adjusted profit per share of $2.32 for the quarter, compared with an estimate of $2.18 per share.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Alan Barona)
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