With Q1 subscription revenue up 14.3% and total subscription backlog up 11% to $27.3 billion, Workday is clearly embracing the challenge from returning CEO Aneel Bhusri to ensure that “AI first” is more than a slogan.
On Workday’s Q1 earnings call last week, as Bhusri was discussing the company’s stepped-up pace of AI product launches and development, he offered a perspective that I believe was not only the most-important comment he made on the entire call but also the key to Workday’s ability to thrive in a wickedly competitive market:
“So it’s really about reprioritizing to be AI-first and AI-native, as opposed to AI being just part of our story. When you go through a technology transition — and I’m old enough to have been through a lot of them — you have gotta put that technology transition front and center.
“Now, our core business is strong — but the 150th feature in HR or Finance is not gonna move the needle for our business.
“But the next agentic application will.”
That hard-earned insight — and the ability of Workday’s 20,000 employees (“workmates,” in company lingo) to not just hear and understand it but internalize and embrace it — will determine Workday’s ability to continue to thrive against much-larger competitors led by SAP, Oracle, and Microsoft.
Along with that profound lesson, Bhusri is exhorting his workmates to also embrace a startup mentality — faster decisions, sharper focus, accelerated innovation — to ensure Workday not only keeps up but leads the way during a time of technological and business upheaval unlike anything the world has ever seen.
With 80 million users under contract, Workday has to quickly, confidently, and transparently lead them and their organizations into the AI Economy that will be orchestrated in stunningly large part by AI agents. And in the Q&A portion of the call, Bhusri described how Workday is positioned to help customers make that journey will avoiding the “lawless” side of AI.
“When I look at the world of agentic AI in the enterprise, we have this concept of ‘lawful’ and ‘lawless’ agents, with lawful being done the right way and lawless going directly against the data, and getting results that bypass security or bypass a business process framework,” Bhusri said.
“I have yet to meet a single customer that wants to do things in a lawless way. They all have to follow lawful. And if they follow lawful, there are three paths for Workday to be successful:
- “The best path is for us to sell our own agents, and there is a clear TCO on those agents. And I think we have defined that, and we are seeing the success with those agents.
- “They can use ExtendPro to build their own AI applications, again, leveraging our platform.
- “As we roll out these AI APIs, on a consumption basis, that is the way that third parties could build agentic applications but they still have to use the rails, the security, the governance, the business process framework, to make sure they are doing it in a lawful way.
“And again, I will just say there is not a single customer that wants to do things in a lawless way — not in the world of HR and Finance. And I think we feel pretty well covered in having a solution for whatever customers would like to do,” Bhusri said.
Final Thought
You can see the full breakdown of Workday’s Q1 details here.
But to me, the bigger Q1 story is the renewed sense of focus on product innovation, accelerated development, and product/market fit that Bhusri has brought back to Workday.
Carl Eschenbach, whom Bhusri hand-picked to replace himself as CEO, is an outstanding and high-integrity leader who brought operational discipline and an expanding market focus to the company at a time when it desperately needed both.
But here in the AI Revolution, Workday needed and needs someone with Bhusri’s world-class advanced-technology chops. And Bhusri’s insistence that Workday be not just AI-first but “AI-native” is the core from which the company’s next waves of market innovation and growth are very likely to flow.
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