Workday posts strong earnings and revenue amid rapid uptake of its AI agents

Workday Inc., a human resources management software company, delivered strong earnings and revenue in its second quarter, exceeding analyst expectations. The company reported earnings of $2.75 per share, surpassing the projected $2.61 per share, and revenue of $2.65 billion, surpassing the estimated $2.64 billion. Earnings before certain costs like stock compensation reached $2.75 per share, and net income for the quarter was $632 million, a significant increase from $228 million in the same period one year prior.

Workday's 12-month subscription revenue backlog expanded 14.2% to $9.03 billion, and total subscription revenue backlog rose 8% to $27.4 billion. Co-founder and CEO Aneel Bhusri highlighted that AI agents contributed more than 25% to new Annual Contract Value (ACV) and were being adopted by over 5,500 customers. Despite some concerns about AI disrupting their business, industry analyst Rebecca Wettemann assured that Workday's AI agents were driving application sales, countering the 'SaaSpocalypse' narrative.

CFO Zane Rowe attributed the company's momentum to AI emerging as a strategic driver of customer expansion. For the current quarter, Workday projected subscription revenue of $2.515 billion, and for the full year, the subscription revenue guidance was adjusted to between $9.94 billion and $9.95 billion. However, Workday's stock has faced challenges, down 9.8% year-to-date, trailing the broader S&P 500 Index, which gained 13% over the same period.