Shares of enterprise software company Workday (NYSE: WDAY) dipped Tuesday after the company gave a disappointing outlook.
Shares closed down more than 8 percent but have held gains of about 30 percent over the last 12 months.
Workday estimated on Monday that their revenue for fiscal full-year 2018 will be roughly between $2.01 billion and $2.03 billion, a touch above a consensus Thomson Reuters estimate of $1.99 billion.
"Expectations were high given the YTD run in the stock," Samad Samana, vice president and senior research analyst at Stephens, told CNBC. He added that the number of net new core customers added in the last quarter was "disappointing."
The cloud company further disappointed on their earnings call on Monday, saying that Workday will no longer provide annual guidance on billings, one of the primary metrics that investors can use to gauge demand and performance. Instead, Workday believes their operating cash flow guidance is a better indicator of their performance.
"Billings are typically a key indicator of future growth for a software company and the suspension of that guidance can sometimes be viewed as a red flag," said Ryan MacDonald, senior research analyst at Wunderlich Securities.
Both Wunderlich and Stephens have a hold rating on Workday.
Workday shares 5-day performance
Workday CEO Aneel Bhusri said in an interview on CNBC's " Mad Money " Monday that his company has benefited from consolidation in other parts of the enterprise software industry. Leading competitor Oracle (NYSE: ORCL) acquired NetSuite late last year.
"My guess is that most of the NetSuite management team will be gone in 12-18 months," Workday's Bhusri said. "And so, most of those companies chose not to do business with Oracle (NYSE: ORCL). I think they might come back to market and create an opportunity for Workday."
Adjusted earnings for the fiscal fourth quarter beat expectations, coming in at 7 cents per share on revenue of $436.7 million. Analysts polled by Thomson Reuters expected a loss of 1 cent per share on revenue of $430.3 million.
Sales for fiscal full-year 2017 rose 35 percent from the prior year to $1.57 billion. The company saw gains in their subscription revenue for the year as well, up 39 percent from the prior year to $1.29 billion.
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