Workday's outlook meets estimates despite AI demand, shares slip

Aug 27 (Reuters) - Workday ‌reported a ​12.8% ​increase in second-quarter revenue, as enterprises signed up for its AI-powered finance ‌and human resources software.

Shares of the Pleasanton, ⁠California-based company fell 5% in extended trading after its ‌quarterly revenue and forecast ‌for third-quarter subscription revenue broadly met Wall Street expectations.

"We had a strong second quarter, with ​AI driving more than 25% of our new Annual Contract Value and more than ⁠5,500 customers now using at least one of our organic ​agents," said CEO Aneel Bhusri.

Despite the ongoing shift to the cloud, Workday faces ​headwinds from a challenging macroeconomic ‌environment that has caused some customers to scrutinize IT budgets and delay ⁠large-scale software projects.

Analysts say Workday's room for further module expansion could be limited, and that reviving ⁠growth in its Financials business and overseas markets may ​prove difficult unless the company lowers its prices.

Workday posted total revenue of $2.65 billion for the second quarter ended ‌July 31, compared with analysts' average estimate of $2.64 billion, according to data ‌compiled by LSEG.

It forecast subscription revenue of $2.52 billion ⁠for the current ‌quarter, which will ​end on October 31.

(Reporting by Juby Babu in Mexico City; Editing by Vijay ‌Kishore)

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