Products You May Like
Workday, a maker of human resources and finance software, reported better-than-expected quarterly results on Tuesday. The shares popped more than 10% in extended trading.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: $1.92 adjusted vs. $1.78 expected
- Revenue: $2.21 billion vs. $2.18 billion expected
Revenue increased 15% year over year in the quarter that ended on Jan. 31, according to a statement. Net income fell to $94 million, or 35 cents per share, from $1.19 billion, or $4.52 per share, in the same quarter a year earlier.
“The prior year period benefited from a $1.1 billion release of the valuation allowance related to U.S. federal and state deferred tax assets,” Workday said.
The company is seeing greater demand for artificial intelligence tools.
“In fact, AI is front and center in every conversation I have with customers, prospects and partners. They want to move beyond incremental productivity gains,” CEO Carl Eschenbach said on a conference call with analysts. “They’re also looking for ROI that helps them drive growth back into their business,” Eschenbach added.
Around 30% of Workday’s expansions with existing clients drew on at least one AI product, in line with the previous quarter, Eschenbach said. Additional AI products will become available over the next year, he said.
The rise of the Department of Government Efficiency creates opportunity for Workday, which has focused more on federal sales over the past year and a half, Eschenbach said.
“The systems they have, specifically ERP, HCM, or financial systems, are very antiquated,” he said. “In fact, the majority of them are still on premises, which means they’re inefficient. And as we think about DOGE and what that could potentially do going forward, if you want to drive efficiency in the government, you have to upgrade your systems,” the CEO added.
After becoming Workday’s sole CEO last year, he said the company has hired Google Cloud executive Gerrit Kazmaier to be president of products and technology. Sayan Chakraborty, who currently holds that title, will retire after being at Workday for about a decade.
During the quarter, Workday announced the hiring of former UiPath CEO Rob Enslin as its new president and chief commercial officer. Workday also said it would use AI to summarize employee feedback in its Peakon product.
The company called for a 28% adjusted operating margin on $2.05 billion in subscription revenue for the fiscal first quarter. Analysts polled by StreetAccount had expected an adjusted margin of 26.7% and $2.06 billion in revenue.
For fiscal 2026, Workday now sees an adjusted margin of 28%, with $8.8 billion in subscription revenue, implying 14% growth. That is slightly higher than the forecast management gave in November.
As of Tuesday’s close, Workday shares were flat year over year, while the S&P 500 index was up 1%.
WATCH: Workday CEO on the future of work: Will depend on both human and digital labor going forward