Workday Inc. saw its shares drop in late trading after the enterprise resource planning software company reported lower-than-expected fiscal first-quarter earnings.

For the quarter ended April 30, Workday reported a profit before costs such as stock compensation of 83 cents, down from 86 cents in the same quarter of last year. Revenue rose 22% from a year ago, to $1.43 billion. Analysts had been expecting an adjusted profit of 85 cents a share on revenue of $1.43 billion.

Subscription revenue in the quarter rose 23% year-over-year, to $1.27 billion, while operating cash flow was $439.7 million, down from $454.2 million in the prior year. Cash, cash equivalents and marketable securities were $6.26 billion as of April 30.

Highlights in the quarter included Workday announcing that it intends to create 1,000 new jobs at its European headquarters in Dublin and plans to build a new HQ at Grangegorman in Dublin. The company also completed the issuance and sale of $3 billion aggregate principal amount of senior notes in an underwritten, registered public offering.

“Our continued global momentum and a healthy deal pipeline position us well to deliver a strong fiscal 2023,” Chano Fernandez, co-chief executive officer of Workday, said in a statement.

For its fiscal second quarter of 2023, Workday predicted an adjusted operating margin of 17.5% on revenue of $1.517 billion to $1.519 billion. For the full fiscal year of 2023, the company is predicting revenue of $6.187 billion to $6.2 billion.

Workday is also predicting subscription revenue of $1.353 billion to $1.355 billion in its second quarter and $4.537 billion to $5.557 billion for the full year. Both would be up 22% compared to the previous periods last year.

The miss on earnings is the first time Workday hasn’t hit expectations going back at least two years. Workday has a track record of beating market expectations and that it didn’t for once is reflected in its share price.

Workday shares fell 9% after hours.

Photo: Workday