Welcome to the Cloud Wars Minute — your daily cloud news and commentary show. Each episode provides insights and perspectives around the “reimagination machine” that is the cloud.
In today’s Cloud Wars Minute, I delve into Workday’s fiscal Q3 performance, exploring the challenges of its declining growth rate and the potential game-changers — AI innovation, full-suite adoption, and the strategic addition of Rob Enslin — that could shape its future trajectory.
Highlights
00:14 — Workday reported its fiscal Q3 numbers last week. In Q3, its subscription revenue was up 15.8% to $1.96 billion. While 15.8% isn’t bad, if you look back at the most recent eight quarters of subscription revenue growth, you’ll notice that in seven of those eight quarters, Workday’s growth rate has been declining. Its guidance for Q4 continues that trend.
01:34 — Will it be able to boost this back up? There are three areas that might help. First, AI. CEO Carl Eschenbach noted that in Q3, 30% of expansion deals with existing customers included some of Workday’s AI products. Second, he discussed “full suites,” which combine Workday HCM and Workday Financials. Eschenbach stated that 35% of new Q3 customers adopted this full-suite approach.
02:31 — The third major factor Eschenbach cited during the Q3 earnings call was the arrival of Rob Enslin as president and chief commercial officer. Rob Enslin has an impressive career: He achieved tremendous success at SAP, then joined Google Cloud. Following that, he served as co-CEO at UiPath for about two years before joining Workday.
Ask Cloud Wars AI Agent about this analysis
03:53 — I think adding someone like Rob Enslin is a great move for Workday. Overall, both Workday and Salesforce have reported softness in the enterprise applications market recently. Eschenbach specifically mentioned continued challenges in EMEA but expressed optimism that Workday’s AI products and solutions rollout, combined with its push for full suites, will counterbalance these issues.
04:29 — Eschenbach was asked about potential impacts of a new U.S. administration. He said that the federal sector would likely move away from legacy on-premise systems and migrate to the cloud. Eschenbach believes Workday is well-positioned to benefit from this transition. Despite Workday’s bullish outlook, the decline in growth rate remains a notable challenge.
