Workday shares jump as AI demand eases investor concerns
FILE PHOTO: A Workday logo appears in this illustration taken August 18, 2025. REUTERS/Dado Ruvic/Illustration/File Photo
May 22 : Workday shares jumped 8.5 per cent 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 vendors.
Subscription revenue at the Pleasanton, California-based company jumped 14.3 per cent to $2.35 billion, with net new business driving 40 per cent of that growth, Chief Commercial Officer Rob Enslin said on Thursday.
Workday also reiterated its annual subscription revenue forecast.
At least seven brokerages raised their price targets on Workday stock, while two trimmed it after the results. The company was set to add more than $2 billion to its market valuation of $30.42 billion if gains hold.
"We are not sure these results will be a thesis changer but provide comforting data points nonetheless," analysts at Barclays said in a note to clients.
The stock has slumped around 43 per cent so far this year, while the S&P 500 software and services index has fallen about 14 per cent in the same period.
Workday has been adding AI features across its platform to remain competitive including the March launch of Sana, its conversational AI layer.
The company's AI-driven tools help organizations automate tasks such as screening job applications, scheduling interviews and streamlining workforce planning.
Revenue for the three months through April 30 came in at $2.54 billion. Analysts on an average expected $2.52 billion, according to data compiled by LSEG. Adjusted per-share profit of $2.66 was well above an estimated $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 10.90, compared with peer Salesforce's 12.80.
"While there are some who believe that AI can disrupt Workday, I see something different — our chance to once again be a disruptor with AI clearly driving that disruption," CEO Aneel Bhusri said on a post-earnings call.
