Workday shares fell roughly 10% Tuesday after the company reported earnings and projected slower subscription revenue growth than analysts anticipated, even as CEO Anil Bhusri touted the potential of artificial intelligence to reshape the business software landscape.
During the earnings call, Bhusri discussed the possibility of “agentic AI” replacing human labor, prompting questions about the company’s workforce strategy. “We’re working really hard to figure out how do we improve business process execution for our customers at a lower cost,” Bhusri said, according to a transcript of the call. “I think that’s where the agentic model fits in. What can agents do to replace human labor?” He added, “And then obviously longer term, we’ve got to figure out what we’re going to do with those humans that are displaced.”
A Workday spokesperson clarified to Insider that Bhusri’s comments were intended to reflect broader industry trends, not specific plans to reduce the company’s own workforce or those of its customers. The spokesperson said the goal is to leverage AI to automate routine tasks and provide customers with deeper insights, rather than eliminate jobs.
The discussion around AI comes as Workday recently announced a layoff of approximately 400 employees, citing a need to realign resources. The cuts, announced earlier this month, preceded Bhusri’s return to the role of CEO, succeeding Carl Eschenbach. Bhusri has previously served as CEO of Workday on three separate occasions.
Workday’s stock decline mirrors a broader downturn in the software sector, fueled by investor anxieties about the disruptive potential of AI. Companies like LegalZoom, Thomson Reuters, and Okta have also seen their shares fall in recent weeks, according to reports. The selloff began in early February, pushing the sector into a bear market.
Despite the stock drop, Workday reported revenue and net income growth for the quarter ending in January. However, the company’s forecast for future subscription revenue growth fell short of Wall Street expectations. Bhusri acknowledged a tendency to provide conservative guidance, aiming to exceed projections. “I don’t know if you remember me when I was a CEO before, but I do endeavor to be conservative on the guide and then beat it,” he told analysts.
Workday emphasized its investments in agentic AI products as a key driver of future growth, though the company indicated that meaningful revenue from these products is not expected until later this year.
