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Enterprise services provider Workday (Nasdaq: WDAY) recently announced its first quarter results that surpassed market expectations. Due to the macro conditions, Workday reduced its subscription outlook for the year, sending the stock falling 11% in the after-hours trading session.
Workday’s FinancialsWorkday’s first quarter revenues grew 18% to $1.99 billion, ahead of the Street’s forecast of $1.97 billion. Non GAAP-EPS came in at $1.74, compared with $1.33 a year ago. The market had forecast EPS of $1.59.By segment, Subscription services revenues grew 18.8% to $1.82 billion. Professional services revenues came in at $175 million compared with $156 million reported a year ago.During the quarter, Workday experienced increased deal scrutiny and slower headcount growth impacting large deals and renewals. The pressure was more challenging in the EMEA markets compared to the previous year. It is also seeing lower headcount growth at the time of renewals and expects the situation to continue through the end of the year.For the second quarter, Workday expects Subscription services revenues to be $1.895 billion, falling short of the market’s expectations of $1.903 billion. It expects to end the year with subscription revenues in the range of $7.700-$7.725 billion, lower than its earlier outlook of $7.725-$7.775 billion. The market was looking for subscription revenues of $7.76 billion for the year.
Workday’s AI Expansion Workday continues to add to its AI capabilities. Last quarter, it announced several new AI innovations to make it easier for developers and partners to build intelligent solutions for customers to discover. It released developers’ access to Workday AI for building intelligent apps with Workday Extend.Some of the new features include Intelligent Answers that leverages generative AI to enable users to get answers on existing documents or multiple files, HCM Recommender that applies machine learning to worker profile data and job requisition data to recommend similar workers based on user-defined attributes, and Data Query that leverages generative AI to simplify the data query process by enabling a user to create a data query in natural language.It also announced the general availability of Workday AI Marketplace that will give Workday customers access to the AI solutions from Workday and its partners in one place. There are currently more than 15 AI partner solutions available in Workday AI Marketplace that are helping customers choose AI solutions that help them address challenges in areas such as accounting, contracts, fraud detection, recruiting, and skills transformation.Workday has rolled out around 50 AI features and plans on releasing another 25 AI features later this year. With access to over 65 million users generating more than 800 billion transactions per year on its platform, Workday’s AI engine has access to a very high volume of clean, trusted data that can be leveraged for improved AI capabilities.Workday’s stock is trading at $212.46 with a market capitalization of $56.4 billion. It touched a 52-week high of $202.01 in October last year and a 52-week high of $311.28 in February this year.More By This Author:Will Google Acquire Hubspot And Enter The SaaS Business?
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