Workday reported better-than-expected fiscal first quarter results and named Zane Rowe, formerly of VMware, as CFO effective June 12.
The finance and HR software provider reported a breakeven first quarter on revenue of $1.68 billion, up 17.4% from a year ago. Non-GAAP earnings were $1.31 a share.
Wall Street was expecting Workday to report non-GAAP earnings of $1.12 a share on revenue of $1.58 billion.
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In a statement, Workday co-CEO Aneel Bhusri said the company intends to build on the AI and machine learning capabilities in its platform. Carl Eschenbach, co-CEO, Workday, said the company will continue to take an industry-first approach with its ecosystem.
Bhusri said on an earnings conference call:
"We have the quantity and quality of data that further differentiates us, meaning that we not only have access to an enormous amount of data due to the more than 60 million users representing more than 600 billion transactions over the last year. But we also have a unified data model that allows us to build and train models"
He said that Workday has been leveraging AI and large language models for years. "We believe we need to look past the hype cycle and identify the real ways our customers can extract business value from LLMs," said Bhusri.
Bhusri added that Workday is looking at generative AI for content generation, perhaps performance reviews.
"There are other SKUs coming down the road. There's content generation. You could think about the one that everybody talks about, performance reviews as an example. There are ways to monetize it, but we want to make sure it's a brand-new product that couldn't be built without it. And I would just say stay tuned. You'll see us start rolling things out, but we're doing things around generative AI very carefully to make sure that we follow our path on ethics and security and doing it the right way."
As for the outlook, Workday projected fiscal 2024 subscription revenue to be between $6.55 billion and $6.57 billion. In a nutshell, Workday raised the lower end of its previous guidance range. For the second quarter, Workday projected subscription revenue to be between $1.611 billion and $1.613 billion. Non-GAAP operating margin for fiscal 2024 will be 23%.
Rowe will take over for current Workday CFO Barbara Larson, who is leaving to spend more time with his family. Rowe was most recently CFO of VMware. Before VMware, Rowe was CFO at EMC and CFO at United Airlines.
