06:24 AM EDT, 05/23/2025 (MT Newswires) -- Workday (WDAY) reported better-than-expected fiscal first-quarter results and issued a subscription revenue outlook for the ongoing three-month period that matched Wall Street's estimates.

The cloud human resources company anticipates subscription revenue to be at $2.16 billion for the second quarter, it said late Thursday, in line with the current FactSet-polled consensus. The guidance represents annual growth of about 14%, while the metric advanced 13% to $2.06 billion in the prior quarter.

The stock dropped 6.4% in the most recent premarket activity.

Workday continues to project subscription revenue of $8.8 billion for fiscal 2026, while the Street is looking for $8.81 billion. Adjusted operating margin is now pegged at 28.5% for the current fiscal year, up from its previous forecast of 28%.

"While there's heightened macro uncertainty, particularly across certain markets and verticals, we haven't seen this meaningfully impact our business and our growth prospects," Chief Financial Officer Zane Rowe said during an earnings call, according to a FactSet transcript. "Though it's early in the year and the environment remains fluid, we remain focused on execution and our strategic initiatives."

The company posted adjusted earnings of $2.23 a share for the three months through April, up from $1.74 the year before, topping the average analyst estimate of $2.01. Revenue climbed 13% to $2.24 billion, ahead of the Street's view for $2.22 billion. Professional services revenue rose to $181 million from $175 million in the prior-year quarter.

US and international revenue rose 13% each to $1.68 billion and $559 million, respectively, Rowe said on the call. "Total subscription revenue backlog at the end of the quarter was $24.62 billion, up 19%, and gross revenue retention rates remained a strong 98%," the CFO added.

Adjusted operating margin increased to 30.2% from 25.9% last year, according to Workday. The company expects the metric to come in at 28% for the ongoing quarter.

"We continue to position the business to drive long-term growth and margin expansion," Rowe told analysts.