• Workday's CEO said outdated federal software systems are a "tremendous opportunity."
• The company has been working with federal agencies since May.
• Workday's fourth-quarter revenue surpassed expectations and sent its stock up 12%.

Workday sees a "tremendous opportunity" with DOGE, the software company's CEO said on Tuesday.

"If you want to drive efficiency in the government, you have to upgrade your systems and we find that as a really rich opportunity," Eschenbach said on an earnings call on Tuesday.

His comments about DOGE echoed similar remarks he made on a November call.

On Tuesday, Eschenbach said despite high tech spending from the federal government, its human resource and financial systems are "very antiquated." He added that most of these systems are inefficient because they are on-premises — still physically located on local servers.

Private and public organizations have been pushing to move their servers to the cloud for cost efficiency, security, and collaboration. On an earnings call in November, Eschenbach said that 80% of the federal government's HR systems were on local servers.

Workday makes cloud-based human resource software used by employers for job applications, payroll, and performance evaluations.

The company's fourth-quarter revenue was $2.2 billion, beating analyst expectations of $2.18 billion. Revenue grew 15% from the same quarter last year.

Workday rose over 12% after hours on Tuesday. The company's shares are down 13.5% in the past year. Earlier this month, Workday cut about 1,750 jobs or 8.5% of its workforce.

In a note on Tuesday, Jefferies analyst Brent Thill wrote that Workday has an "attractive valuation" relative to other high-growth software companies and international opportunities that can drive long-term revenue growth. Jefferies has a buy rating on the stock.

Since May, Workday has been working with some federal agencies, including the Department of Energy and the Defense Intelligence Agency.

"Over the last 18 months, we've started to lean into the federal business and opportunity more aggressively than we've historically done," Eschenbach said on Tuesday.

Eschenbach also acknowledged that there is "some uncertainty" regarding DOGE, which has been throwing back-to-back curveballs at federal employees.

Just weeks after offering buyouts, the department asked federal workers to respond to an email asking them to detail what they did last week. Agencies differed on their recommendations to employees before the Tuesday night deadline.

About 75,000 federal employees accepted the buyout offer, the Office of Management and Budget said last week. That made up 3.75% of the federal government's 2 million people workforce, under the White House's goal of 5% to 10%.