Why “AI-powered, human-centric and future-ready” Workday has nothing to fear from Sam Altman’s latest pontifications

Most days, for the sake of my sanity and blood pressure, I try to make it my business not to pay too much heed to the latest outpourings from OpenAI’s Sam Altman, albeit with a wary eye to the more dangerous pronouncements as they’re lapped up as gospel truths by an AI-hungry mainstream media.

While thoroughly enjoying his war of words with Elon Musk - toys out prams doesn’t even begin to cover it!!! - I couldn’t help but catch his tweet from earlier this month to the effect that we’re entering an era of so-called “fast fashion” SaaS, signaling a shift towards rapid, AI-powered  software development and deployment that will disrupt the market status quo.

My first eye-rolling reaction was, ‘Here we go again, did Klarna stunt PR die in vain?’. But because this is Altman, such prognosications get more attention than much of the routine armageddon pedling that is part and parcel of the tech hype cycle. Certainly it was a point deemed worthy of being made to Workday CEO Carl Eschenbach during the quarterly post-results analyst call yesterday.

So, as a firm that was once an HCM market challenger, is it now Workday’s turn to be challenged? Disruptors do get disrupted, after all, and yesterday's enfants terrible become today's establishment and tomorrow's yesterdays - 'You were the future once,' as one UK politician famously taunted Tony Blair when he was still UK Prime Minister.  Eschenbach, commendably, was having none of this nonsense, countering:

It is a narrative that we're hearing out there in the market…I think this whole concern around AI disruption and the potential negative impact on seat-based models [is] completely overblown. In fact, for Workday, we're going to leverage our entrenched position in the market and our strong customer base, and we're going to be one of the go-to providers for AI solutions in the enterprise.

In fact, for quite some time, even going back to early last year, we have talked about our headcount, right, and our customer base has moderated, and we've seen that.

But on a net basis, again this quarter, our headcount growth in our customer base was up year- over-year. And when we talk and when I talk to my peers out there and other executives in the market who have either slowed their headcount hiring or they've actually done a restructuring, if you dive into what drove that, most of the time, it isn't just because AI and the disruption of AI, it's because they've overhired going all the way back to the COVID days, where we've hired a lot of employees and we haven't got the economies of scale and efficiencies that we wanted. Now AI will help us get that.

As to Workday's prospects:

I think we're uniquely positioned. Just think about our market position, right? We have over 11,000 customers today, a strong installed base that includes 65% of the Fortune 500. Look at our gross retention rate, it's high 90s. We're a platform company and platforms are sticky. And in that customer base, more than 70% of our customers have already adopted an AI solution called Workday Illuminate…30% of our sales back into our customer base included an AI SKU and now 70-plus percent of net new customers who buy Workday are also buying an AI SKU. This in aggregate is what drove 100% year-over-year growth in net new AI SKUs this quarter. So when we talk to customers, and they say they're looking for AI solutions, they're leaning into their trusted partners and specifically partners that are platform providers, and that is Workday.

In other words, keep on keeping calm and carrying on.

Growth

Certainly yesterday’s Q2 numbers do nothing to undermine that basic philosophy. Total revenues were $2.348 billion, an increase of 12.6% from the second quarter of fiscal 2025, while net income was $228 million, up from $132 million a year ago.

Other stats of note:

• Subscription revenues were $2.169 billion, up 14.0% year-on-year.

• New customers during the quarter included Masan Group, Memorial Health, and Red Coats.

• New HCM engagements incuded Carrefour, Memorial Health, Smurfit Westrock and Banamex.

• Financials wins and expansions included Nationwide Insurance, Guaranteed Rate Handelsbanken and Miller Insurance Services.

• Workday now has “more than 75 million users under contract”.

Roughly 30% of  net new deals were full suite, said Eschenbach, noting:

Salesforce, a long-time HCM customer, went live on Workday Financial Management and Accounting Center in the quarter. They're all in on Workday. By unifying their HR and financial data on our platform, they're getting entirely new insights about their business to support their innovation and growth. We also had full suite go-lives with Advocate Health, Honor Health and University of Melbourne. 

The most recent quarter saw the launch of Workday Government, a wholly-owned subsidiary dedicated to serving the unique needs of the US Government. Eschenbach commented:

With this sector facing a once-in-a-generation opportunity to modernize its aging infrastructure, our value proposition has never been more relevant. By combining our proven platform, AI leadership and deep commitment to public service, we're poised to deliver real impact for millions of government workers while also unlocking meaningful long-term growth for Workday. And with the Government leaning heavily into AI, we see tremendous opportunity ahead for many years to come. 

Recruiting

The firm also announced an intent to acquire Paradox, a candidate experience agent that uses conversational AI to simplify the various steps in the job application journey. As per the official announcement: 

Paradox delivers exceptional candidate experiences at scale, giving every applicant a personalized, high-touch interaction powered by AI. Paradox's candidate experience agent gives candidates instant responses, self-scheduling capabilities, and 24/7 support in a natural conversational experience. Additionally, by turning slow, burdensome recruiting processes into quick, seamless conversations, Paradox helps companies fill high-volume roles with candidates faster, to drive measurable business results.

Paradox has powered more than 189 million AI-assisted candidate conversations. Their unique expertise in candidate experience and hiring processes has improved candidate response times resulting in employee conversion rates over 70%, helping organizations fill roles faster and reducing time-to-hire to as low as three-and-a-half days.

Eschenbach explained the motivation behind the move:

Paradox turns long, complex hiring processes into fast natural language conversations, making it easier for people to find work and for companies to fill critical roles, especially in frontline industries like retail, health care, hospitality, transportation and manufacturing. With Workday Recruiting, HiredScore and now Paradox, we will be able to deliver an incredibly powerful AI-powered talent acquisition suite, helping customers find, hire and onboard every type of worker for every type of work.

My take

Another healthy quarter with growth in all the right places. I’ve never thought of Workday as an over-excitable company, not since my first encounter with Dave Duffield and Aneel Bhusri, more years than any of us would like to admit I suspect. Keep calm and carry on, I said up top. That was then, in the heady days of setting out to take on PeopleSoft and Oracle, and that remains the case today.

In this case, the immediate carrying on takes us towards the annual Rising user gathering in San Francisco in a few weeks time. We’ll be on the ground as usual and bringing you back the best of the enterprise coverage from one the early runners in what looks to be a particularly frenetic and crowded events calendar over the next couple of months.

As for Altman’s latest burblings…these too will pass, although with that events cluster coming up, I suspect this won't be last we'll hear about that particular comment...sigh.

Onwards!