Workday's stock took a hit, falling over 4% after-hours, following the company's earnings report that revealed disappointing guidance for the current quarter. Despite beating analyst expectations with earnings per share of $2.21 and revenue of $2.35 billion, the company's guidance for the third quarter was merely in line with expectations. Workday's subscription revenue is expected to grow 14.1% to $2.24 billion, slightly below analysts' estimates.
The company's CEO, Carl Eschenbach, remains optimistic about Workday's AI prospects, stating that concerns about AI disruption are "completely overblown." Workday has been actively developing its AI capabilities, including acquiring AI startups Flowise and Paradox, to enhance its software platform. The company's focus on AI is expected to drive growth, with its AI agents designed to automate complicated business processes and tasks.
Workday's acquisition of Flowise and Paradox is likely to enhance its AI capabilities, particularly in areas like human resources and hiring processes. However, the company faces challenges in the US government and education sectors due to reduced budgets. Workday anticipates this pressure to continue in the near term.
Despite the challenges, Workday's financials remain strong, with a market cap of $62.03 billion and a current price of $217.31. The company's P/E ratio stands at 127.38, and its 52-week low and high are $205.33 and $294.00, respectively. As Workday continues to navigate the competitive landscape, its focus on AI and commitment to innovation will likely play a crucial role in shaping its future growth and success.
