By Owen Tucker-Smith

Workday stock rose about 6% Wednesday after the software company reported fourth-quarter earnings ahead of expectations.

The company, which specializes in clients' human-resources and finance needs, reported sales and earnings ahead of consensus estimates late Tuesday, powered by growth in subscription revenue.

Workday announced earlier this month that it was cutting about 8.5% of its workforce. The company's earnings commentary, according to D.A. Davidson analysts, showed that the reduction was about "re-allocating resources around a more focused AI and global strategy."

Stifel analysts attributed after-hours stock movement Tuesday to growth in current remaining performance obligations, one of the company's key metrics, as well as the expectation that subscription growth could pick up in the second half of the coming year. "It is clear from the move in the stock that near-term concerns regarding another potential downward top-line growth revision have been shelved," the analysts added.

Other key figures:

-- Subscription revenue at Workday jumped almost 16% in the fourth quarter, while total revenue rose 15%. The company reported adjusted earnings of $1.92 a share, above what analysts on Wall Street were expecting.

-- The Stifel analysts flagged that the company's outlook for subscription revenue in the coming year was "at the low end" of previous guidance.

-- The company on Wednesday also said that it was partnering with employment agency Randstad to integrate Workday's AI-powered recruiting agent with Randstad's talent network, allowing the businesses to spot talent quickly.

Workday stock is up 4.4% over the past six months.

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February 26, 2025 12:20 ET (17:20 GMT)

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