Workday shares continued their downward trajectory on Tuesday, declining approximately 1.2% to $152.71 in afternoon trading. This extends losses from the prior session following the company's unexpected announcement of a leadership change.
Leadership Shift Ahead of Earnings
Co-founder Aneel Bhusri has returned as chief executive officer, succeeding Carl Eschenbach, who stepped down from the role and the board. Eschenbach will remain as a strategic advisor. The transition occurs just ahead of the company's upcoming quarterly report scheduled for February 24.
Investors are focused on the financial implications of recent corporate actions. Workday previously indicated that fourth-quarter and full-year results should align with prior guidance, excluding GAAP operating margin impacts from reorganization. The company expects roughly $135 million in charges related to workforce reductions affecting about 2% of staff, along with asset impairments.
Strategic Focus on Artificial Intelligence
The software firm positioned the move as a strategic shift into its next phase, emphasizing a heightened focus on artificial intelligence integration. Bhusri has previously characterized AI as a more significant transformation than the software-as-a-service model that drove earlier cloud growth. The board cited this moment as a "defining moment shaped by AI" for the HR and finance software provider.
Some analysts expressed concern about the timing. Mizuho analyst Jordan Klein described the CEO change as "really bad," noting Eschenbach's strengths in execution and customer relationships during a period when the company seeks to build credibility in competitive AI markets against larger suite vendors like Oracle and SAP.
According to regulatory filings, Bhusri's compensation package was detailed alongside Eschenbach's separation agreement, which includes a cash payment of approximately $3.6 million and accelerated vesting of certain equity awards.
The market's immediate reaction reflects uncertainty about whether leadership changes alone can address demand challenges. With enterprise technology budgets under scrutiny, investors will monitor whether AI investments translate into sustained customer adoption without pressuring profitability. All attention now turns to the February earnings release for clarity on fiscal 2027 growth and margin trajectories under the returning CEO.
