Workday stock surges as earnings top estimates; company promotes Chano Fernandez to co-CEO

Workday shares rose as much as 13% in extended trading on Thursday after the cloud software company reported better-than-expected quarterly revenue and earnings.

The company also said Chano Fernandez is being promoted from co-president to co-CEO, operating alongside Aneel Bhusri, who’s been leading Workday since its founding in 2005.

Here’s how the company did: 

• Earnings: 84 cents per share, adjusted, vs. 66 cents per share as expected by analysts, according to Refinitiv.
• Revenue: $1.06 billion, vs. $1.04 billion as expected by analysts, according to Refinitiv.

Revenue increased by about 20% from a year earlier in the quarter, which ended on July 31, according to a statement.

Workday, whose software is used for financial management and human resources, said it now expects $3.73 billion to $3.74 billion in subscription revenue in fiscal 2021, up from a forecast in May of $3.67 billion to $3.69 billion.

Workday said it’s seeing growth among companies that need help navigating Covid-19, keeping them engaged with employees who are working remotely. It’s also partnered with IBM to help companies prepare their workplaces for a safe return as offices start to reopen.

In naming Fernandez as co-CEO, Workday is returning to a dual leadership structure it had at the time of its 2012 IPO, when Bhusri shared the role with co-founder Dave Duffield. Bhusri became sole CEO, when Duffield stepped down in 2014 and assumed the chairman role. Workday is going in the opposite direction of Oracle, Salesforce and SAP, which have recently switched from having two CEOs to having just one. 

Fernandez joined Workday in 2014 from SAP, where he had been a senior vice president.

“Chano is the right leader to join me as co-CEO, as we navigate such a dynamic year and make great progress on the long-term opportunity ahead of us,” Bhusri said in a statement.

The company’s call with analysts started at 4:30 p.m. Eastern time.

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