By Senad Karaahmetovic

Premarket trading on Friday saw Workday’s shares drop more than 8 percent after it reported a worse-than-expected Q1 adjusted EPS.

Workday Q1 adjustedEPS was 83c compared with 87c for the same period last year. This is below the analyst consensus estimate of 85c per shares. 1.43 Billion in revenue was achieved, an increase of 22% YoY. This is in line with analyst expectations. The subscription revenue was $1.27 Billion, which is 23% more than the expected.

WDAY anticipates that Q2 revenues will be in the $1.35-$1.36 billion range, while analysts expected $1.35 trillion.

Software company estimates that it will generate subscription revenue of between $5.54 billion and $5.56 billion for the year. That’s up from its previous forecast of $5.53 to $5.55 trillion, which analysts had also predicted at $5.55 to $5.53 billion.

“We had a solid start to the year, as organizations across the globe continue to choose Workday as their strategic finance and HR partner,” said CFO Barbara Larson.

Kash Rangan, analyst at Goldman Sachs, lowered the price target from $300.00 to $260.00 per Share.

“Acknowledging the uncertain macroeconomic backdrop head-on will likely serve as a net positive, in our view, as estimates are de-risked and management can execute against a more conservative playbook… We look beyond the near-term noise and see a great buying opportunity for a high-quality franchise. We also note that periods of slower growth tend to last only several months, giving room to the possibility that Workday sees close-rates pick up in 2H,” Rangan told clients.

KeyBanc analyst Michael Turits cut the price target to $207.00 per share from $229.00 after a “modest” beat.

“While mgmt is confident in closing the pushouts this year, we slightly lower our FY23E revs. Given the macro uncertainty and cRPO miss, we have adjusted the model to the lower end of the guidance. Lowering PT to $207 given 1Q results and risk around back office demand in a weakening macro, but retain confidence around the relative strength of the business and conviction in multiple LT catalysts in both cloud HCM and Fins as we wrote post a recent NDR,” Turits said in a note.