May 22 (Reuters) – Workday shares jumped nearly 12% premarket 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 software vendors.
Subscription revenue at the Pleasanton, California-based company jumped 14.3% to $2.35 billion, with net new business driving 40% of that growth, according to Chief Commercial Officer Rob Enslin.
Workday, however, retained its annual subscription revenue forecast.
“We are not sure these results will be a thesis changer but provide comforting data points nonetheless,” said Barclays’ analysts.
The stock has fallen over 43% year-to-date while the S&P 500 software and services index is also down about 14% 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.
Quarterly revenue came in at $2.54 billion, compared with analysts’ average estimate of $2.52 billion, according to data compiled by LSEG. Its quarterly adjusted per-share profit came in at $2.66, well above analysts’ estimate of $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 10.93, compared with peer Salesforce’s 12.8.
(Reporting by Kanchana Chakravarty in Bengaluru; Editing by Nivedita Bhattacharjee)
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