Workday shares jump 8% as AI demand allays investor concerns
Workday's first-quarter billings exceeded estimates and management said AI-enabled HR tooling is expanding its enterprise customer base, sending the stock up 8% intraday. The company also revised its annual subscription bookings outlook higher.
Workday's first-quarter billings reached $2.42 billion through 30 April, exceeding the analyst consensus of $2.33 billion. CEO Carl Eschenbach said the number of users of Workday Illuminate, the company's AI assistant, has tripled across customer firms quarter-on-quarter. The company also reported securing significant contracts from the U.S. federal government, Australian public sector and major Indian technology firms.
Supplier-side cost pressures that had concerned investors three months ago were offset by AI functionality lifting subscription price points. Operating margin improved by 90 basis points quarter-on-quarter. The company reported Latin American growth accelerated to 22%, with enterprise customer additions in Brazil and Mexico more than doubling over the past 12 months.
CFO Zane Rowe raised the annual subscription bookings target from $25.7 billion to $26.4 billion. Goldman Sachs and Morgan Stanley raised their price targets for the stock to $305 and $312 respectively. Investment decisions should be discussed with financial professionals.
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