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

Key Points
  • Workday will have a dual CEO structure for the first time since one of its co-founders, Dave Duffield, stepped down in 2014.
  • Software companies Salesforce, Oracle and SAP recently did away with co-CEOs. 
Aneel Bhusri at the 2016 World Economic Forum in Davos, Switzerland.
David A. Grogan | CNBC

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. Growth was down from 23% one quarter earlier.

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. In his new role he will run the company's sales, marketing and customer support.

Two likeminded CEOs are better than one, Bhusri said on a conference call with analysts.

"I'm more of a product person and strategy person, and I personally would like to get back to working with our product teams and our venture teams and our strategy teams on where we go in the future," he said. "And then it's super important that we you know maintain the great culture that we have and so, working with employees is critical too. So, you know, much like it was with with me and Dave."

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