Workday released its first quarterly results since the return of co-founder Aneel Bhusri and it’s fair to say that the markets were not too impressed, the share price falling by about 10%.
Its overall results were solid enough: Subscription revenue for the quarter was $2.36 billion, up 16% year on year, and full year subscription revenue was $8.833 billion, up 14%. But while these figures didn’t represent a disaster for the company, there were underlying concerns.
The key word of the day was “slow” — as manifested by the number of times that it cropped up during the earnings call. “Margin strength was the result of solid revenue growth, ongoing efficiencies we are driving across the business, and a slightly slower ramp in hiring,” said CFO Zane Rowe before chipping in with “margin expansion, albeit at a slower pace.”
Customers are showing less commitment and more hesitancy. “Average contract duration in the quarter was down year over year, driven by a higher mix of renewal and customer base activity,” Rowe said, while Workday President Rob Enslin said, “Some new large enterprise deals are taking longer to close.”
Like all software companies, Workday is feeling the effects of AI on its bottom line and the company it trying to put a brave face on it.
“We built Workday to bring innovation back to the worlds of HR and finance, and AI gives us the chance to do it all again,” said CEO Aneel Bhusri. “We operate at the heart of the global enterprise, where trust and accuracy matter most. That gives Workday a unique opportunity to bring AI directly into the HR and finance workflows our customers rely on every day and to deliver real, measurable value.”