- Despite a recent software stock sell-off amid AI disruption, Workday's CEO called the tech a growth catalyst.
- Shares in Workday fell in after-hours trading, following a weaker subscription outlook.
- The company's newly reinstated CEO said AI revenue will ramp later, and guidance will stay cautious.
Workday is betting on artificial intelligence taking over more work.
While software stocks — including Workday's — have sunk recently amid concerns over AI advancements, the company framed the technology as a growth opportunity on its Tuesday earnings call.
"We're working really hard to figure out how do we improve business process execution for our customers at a lower cost," CEO Anil Bhusri said.
"I think that's where the agentic model fits in. What can agents do to replace human labor?" he said. "And then obviously longer term, we've got to figure out what we're going to do with those humans that are displaced."
Bhusri's remarks cameafter Workday reported revenue and net-income growth for the January-ended quarter. Shares fell around 10%, however, as the company projected slower subscription revenue growth than Wall Street expected for the fiscal year ahead.
A spokesperson for Workday said that Bhusri's comments were not about Workday planning to replace its employees or its customers' employees, but rather about industry-level shifts.
Bhusri said the outlook reflects that the AI products Workday is building aren't expected to generate meaningful revenue until later in the year.
Workday's stock drop marks another setback for the company, whose shares have slid in recent weeks amid a broader software selloff driven by fears that artificial intelligence could upend the industry.
The rout began in early February, tipping the sector into a deep bear market and spilling into adjacent industries as investors grapple with AI's disruptive potential. Other companies affected include LegalZoom, Thomson Reuters, and Okta.
On the call, Workday didn't directly address those concerns directly and instead emphasized its investments in agentic products to expand its footprint in HR and finance software.
Earlier this month, Workday said it was laying off about 400 employees, citing a need to realign its resources to meet its top priorities. A week later, Bhursi was renamed CEO, succeeding Carl Eschenbach, who stepped down.
Bhusri has held the top job three times before. He told analysts on Tuesday's earnings call that while he's optimistic about the business, he tends to set guidance cautiously and aim to outperform it.
"I don't know if you know you remember me when I was a CEO before, but I do try to be conservative on the guide and then beat it," he said.
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