Workday shares jumped nearly 12 per cent premarket on Friday after the enterprise software maker beat first-quarter revenue and profit estimates, easing concerns that AI rivals such as Anthropic could rapidly disrupt demand for traditional software vendors.
Subscription revenue at the Pleasanton, California-based company jumped 14.3 per cent to US$2.35 billion, with net new business driving 40 per cent of that growth, according to Chief Commercial Officer Rob Enslin.
Workday, however, retained its annual subscription revenue forecast.
“We are not sure these results will be a thesis changer but provide comforting data points nonetheless,” said Barclays’ analysts.
The stock has fallen over 43 per cent year-to-date while the S&P 500 software and services index is also down about 14 per cent in the same period.
A line chart with the title ‘How software stocks have performed’
Workday has been adding AI features across its platform to remain competitive including the March launch of Sana, its conversational AI layer.
Quarterly revenue came in at US$2.54 billion, compared with analysts’ average estimate of US$2.52 billion, according to data compiled by LSEG. Its quarterly adjusted per-share profit came in at US$2.66, well above analysts’ estimate of US$2.51.
“We believe Workday is relatively insulated from AI disruption due to its 80 million users, strong retention, and status as a system of record,” said analysts at Jefferies.
Workday’s 12-month forward price-to-earnings multiple is 10.93, compared with peer Salesforce’s 12.8.
Reporting by Kanchana Chakravarty in Bengaluru; Editing by Nivedita Bhattacharjee
