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On Thu, 27 Feb, 12:04 AM UTC
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Workday closes out a strong full fiscal year with Elon Musk and AI agents providing fresh growth opportunities for the next
Elon Musk's efficiency drive and the opportunities around AI agents were two of the growth opportunities that were flagged up in Workday's post-earnings analyst call yesterday, topping off a set of strong quarterly and full year numbers that sent the share price soaring. Q4 revenues were $2.21 billion, up 15% on $1.92 billion for the comparable year-ago quarter, of which subscription revenue was $2.04 billion, up 16% year-on-year from $1.76 billion. Net income was $94 million, down from $1.188 billion a year ago. For fiscal full year '25, total revenues came in at $8.446 billion, up 16% compared to $7.259 billion, while net income was $526 million against $1.381 billion. Full year subscription revenue was $7.718 billion, up 17% from $6.603 billion for the previous year. Other stats of note from the results: Federal Government growth is a big deal, Eschenbach says: We also have a growing opportunity with the US Federal Government thanks to the administration's strong focus on driving efficiencies and IT modernization. Our recent wins at the DOE (Department of Energy) and DIA (Defense Intelligence Aency) have helped set a solid foundation in this sector, opening up a number of exciting Fed opportunities. And it's the activities of Elon Musk and his new DOGE (Department of Government Efficiency) initiative that may present fresh inroads, he adds: Over the last 18 months, we've started to lean into the federal business and opportunity more aggressively than we've historically done. And the reason for that is if you look at the federal government, while they spend a tremendous amount of money on technology, the systems they have, specifically ERP, HCM or financial systems, are very antiquated. In fact, the majority of them are still on-premises, which means they're inefficient. As we think about DOGE and what that could potentially do going forward. If you want to drive efficiency in the government, you have to upgrade your systems and we find that as a really rich opportunity. Inevitably AI features highly on any commentary about the year with Eschenbach confirming that it is a topic that is "front and center" of every conversation with customers: Our approach to AI has always been customer-centric. While others rushed to charge for early gen AI features, we integrated them into our core offering. Now that our AI has evolved and is delivering tangible ROI, we have new monetization opportunities that will fuel our long-term growth. And perhaps more importantly, we are further distancing ourselves from the competition. With more than one trillion transactions processed on our platform in FY '25, our AI leverages the world's largest and cleanest HR and Financial dataset. And the combination of this data with our ability to understand the context behind it puts Workday in a unique position. Following the company's announcements around agentic AI at last year's Rising conference, a further four agents have been launched covering contracts, payroll, financial auditing and policy, he added: These are not task-based agents, like most in the market today. Our role-based agents contain a configurable set of skills that give them greater ability to support people in their roles. Each has multiple skills and can perform a large number of tasks. That's where the true ROI is and where we see that customers are willing to pay. Eschenbach also flagged up this month's launch of Workday's Agent System of Record, explaining: Over the past year, hundreds and maybe thousands of agents have been introduced to the market across a number of vendors. As more agents are deployed, organizations risk fragmented operations, increased security risk, and difficulty measuring the true value of their AI investments. At this point, there's no central place to manage agents and there's a real risk of sprawl. That's what the Workday Agent System of Record aims to solve. It will manage a business' entire fleet of AI agents alongside their human workforce, all on a trusted platform. And it won't just manage Workday agents, it will also manage customer-built agents and partner-built agents. Since the launch, we've had strong interest from our customers and technology partners, who'd like access to Workday's Agent System of Record to mitigate risk in the enterprise. And as to the question of how AI will be monetized - and when - Eschenbach argues that there are multiple options here: Today, we're monetizing in the platform because we have a lot of functionality around AI in the platform itself. We're monetizing it through some of the things we rolled out in the last year, the Recruiting Agent, Extend Pro, we have things like Evisort, and all of these new agents now we're bringing to-market is another way for us to monetize it. And it's both seat base and consumption-based. So we have lots of opportunity to monetize it. The drop in net income, which might look worrying, is explicable as being the result of Workday last year benefitting from a one-off deferred tax allowance of $1.1 billion, so there's no cause for alarm there. And of course last month the firm announced it was laying off 1,760 employees, around 8.5% of its workforce, but Eschenbach is quick to position this as a course correction to allocate resources appropriately in areas such as AI: I would expect at this time next year, we will have more headcount at Workday than we did prior to the restructuring. All told, a strong Q4 and a solid full year that positions the firm well for the coming 12 months.
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Workday talks up AI agent amid staff cuts
CEO assures investors he'll plough headcount savings into risk-management enterprise product Workday has confirmed that AI did indeed cost the job of colleagues that are leaving the organization following a restructuring plan cooked up by executive head chef Carl Eschenbach. How so? The money the org expects to save will be ploughed into its Agent System of Record platform. The HR and finance SaaS application biz said earlier this month that it was erasing 8.5 percent of the workforce, impacting around 1,750 people. Workday said it plans to hire in "strategic positions," as the commercial climate "demands a new approach". During an earnings call to discuss the latest financial results yesterday, CEO Eschenbach said it is essential for Workday to be "able to invest back in" any money saved on staffing costs "specifically into the product and technology organization around our Agent System of Record." The platform - designed to securely onboard and manage an org's AI agents - was released a fortnight ago, and the exec says there's been a surge in interest from customers and other tech vendors it has allied with, including IBM, Google Cloud, and Salesforce. Customers "who want to build agents," he said, "understand there is a risk of them entering the enterprise in an uncontrolled way." "So, there's no doubt this investment is required because of the demand we're seeing. It's also required on the go-to-market side, where we're going to continue to invest to be able to take the Agent System of Record along with all of our role-based agents deeper into the enterprise." The cost of the restructuring expenses is estimated at up to $270 million in total, both in terms of cash expenditure and non-cash charges. Workday hasn't said what it expects to save. Workday has itself launched role-base agents including for contracts, payroll, financial auditing and policy. "These are not task-based agents like most of the market today. Our role-based agents contain a configurable set of skills that give them greater ability to support people in their roles," said Eschenbach. Each of these agent can perform a number of tasks and this, he assured analysts on the earnings call, is where the "true ROI" resides and "where we see that customers are willing to pay. "Over the past year, hundreds and maybe thousands of agents have been introduced into the market across a number of vendors. As more agents are deployed, organizations risk fragmented operations, increased security risks, and difficulty measuring the true value of their AI investments." This is where the Agent System of Record platform comes into play: "At this point, there's no central place to manage agents, and there is a real risk of sprawl. That's what the Workday Agent System of Record aims to solve. It will manage a business' entire fleet of AI agents alongside their human workforce, all on a trusted platform. And it won't just manage Workday agents." So while AI may not yet be taking over as many jobs as previously feared by some, according to the Bureau of Labor Statistics this week, it has certainly cost those 1,750 jobs at Workday. As for the corporation's fiscal 2025, which ended January 31, Workday reported revenue of $8.44 billion, up 16.4 percent year-on-year, including a $7.71 billion contribution from subscriptions, and operating profit of $415 million, up from $183 million. ®
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Workday reports strong financial results for Q4 and FY2025, emphasizing AI integration and the launch of its Agent System of Record platform. The company's restructuring plan, including layoffs, aims to reallocate resources towards AI development.
Workday, a leading HR and finance SaaS application provider, has reported robust financial results for its fourth quarter and fiscal year 2025. The company's Q4 revenues reached $2.21 billion, marking a 15% increase from the previous year, with subscription revenue growing by 16% to $2.04 billion 1. For the full fiscal year, Workday achieved total revenues of $8.446 billion, up 16% year-over-year, with subscription revenue climbing 17% to $7.718 billion 1.
CEO Carl Eschenbach emphasized that AI is "front and center" in every customer conversation. Workday's approach to AI has been customer-centric, integrating early AI features into their core offering without additional charges. As their AI capabilities have evolved and demonstrated tangible ROI, the company now sees new monetization opportunities 1.
Workday has launched four new role-based AI agents covering contracts, payroll, financial auditing, and policy. These agents are designed with configurable skills to support various roles within organizations, offering greater functionality than typical task-based agents 12.
A significant development in Workday's AI strategy is the launch of its Agent System of Record platform. This system aims to manage an organization's entire fleet of AI agents alongside their human workforce on a trusted platform. The platform addresses the growing concern of agent sprawl and fragmented operations as more AI agents are deployed across enterprises 12.
Eschenbach highlighted the strong interest from customers and technology partners in accessing Workday's Agent System of Record to mitigate risks in enterprise AI deployment 1.
In a move that has raised eyebrows, Workday announced layoffs affecting approximately 1,760 employees, or 8.5% of its workforce 2. Eschenbach framed this restructuring as a strategic reallocation of resources, particularly towards AI development:
"I would expect at this time next year, we will have more headcount at Workday than we did prior to the restructuring." 1
The company plans to reinvest the savings from these cuts into the product and technology organization, specifically focusing on the Agent System of Record platform 2.
Workday sees significant growth potential in the US Federal Government sector, citing the administration's focus on driving efficiencies and IT modernization. Recent wins with the Department of Energy and Defense Intelligence Agency have set a foundation for further expansion in this area 1.
Workday's AI monetization strategy includes platform-based functionality, new AI-driven products like the Recruiting Agent and Extend Pro, and the newly introduced AI agents. The company is exploring both seat-based and consumption-based pricing models for these offerings 1.
As Workday navigates the evolving AI landscape, its strong financial performance and strategic focus on AI development position the company for continued growth in the coming year, despite the challenges posed by workforce restructuring.
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Workday, a leader in enterprise cloud applications, has announced its latest AI innovation, Workday Illuminate. This AI-powered agent aims to enhance employee productivity and streamline various HR and finance processes.
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3 Sources
Workday introduces the Agent System of Record, a platform designed to manage AI agents alongside human workers, sparking debate on whether AI management falls under HR or IT jurisdiction.
4 Sources
4 Sources
Workday reports strong Q4 earnings, beating analyst expectations with AI-driven growth. The company sees opportunities in government contracts and plans further AI integration.
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7 Sources
Workday, a major HR and finance management software company, announces layoffs of 1,750 employees as part of a strategic realignment focusing on AI development and global expansion.
7 Sources
7 Sources
Workday, a leader in enterprise cloud applications, is making significant strides in AI integration. The company's recent moves include acquiring Evisort, investing in AI startups, and launching industry-specific solutions. However, some analysts remain cautious about Workday's market position.
8 Sources
8 Sources
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