In today’s minute, I take a look at Workday’s Q2 results and what they say about the company under co-CEO Carl Eschenbach.
Highlights
00:24 — We’re seeing the first signs of the impact of co-CEO Carl Eschenbach, who joined Workday at the beginning of this calendar year. He said he wanted the sales organization to have more “giddy-up:” more energy, vibrancy, and focus on growth. Those qualities came through nicely in Q2.
01:27 — Bear in mind that Eschenbach will become the sole CEO when Workday begins its fiscal year in February 2024. It is a big change. But here are details that support that change: Q2 subscription revenue is up 19% to $1.62 billion; for the full year, Workday raised its subscription revenue guidance and projects that it will come in at about 18% growth.
02:21 — Looking at the backlog, which is contracted deals not yet recognized as revenue, Workday said the 24-month backlog is now almost $11 billion, up 23%. Beyond the 24 months, it’s well over $17 billion, up 32%. It also said customer contract duration is growing.
03:08 — Workday believes many customers are starting to say, “Okay, I don’t want to have so many best-of-breed point solutions, it’s time to move to a best-of-suite or the total platform.” Workday feels it can offer this, especially in this age of generative AI (Gen AI).
03:41 — Finally, Eschenbach talked about five key issues: landing new customers; expanding within existing customers; the global need for more strength outside the U.S.; industry focus; and also, Gen AI capabilities.
04:37 — Eschenbach has had quite an impact on the company. We’ll have more analysis of Workday’s Q2 and where it’s headed, especially in Gen AI, coming up.
