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Aug 27, 2026, 4:01 PM ETTechnology

Workday — Fiscal 2027 Second Quarter Earnings Summary

WDAYWORKDAY INC
Source

Financial Performance

  • Total revenues were $2.649 billion, an increase of 12.8% year-over-year from the second quarter of fiscal 2026.
  • Subscription revenues were $2.471 billion, an increase of 13.9% year-over-year.
  • Operating income was $313 million (11.8% of revenues), compared to $248 million (10.6% of revenues) in the prior year period.
  • Non-GAAP operating income was $824 million (31.1% of revenues), compared to $680 million (29.0% of revenues) in the prior year period.
  • Diluted net income per share was $2.57, compared to $0.84 in the prior year period; this figure includes a $1.52 per share tax benefit from an intra-entity intellectual property transfer.
  • Non-GAAP diluted net income per share was $2.75, compared to $2.21 in the prior year period.
  • Operating cash flows were $520 million, compared to $616 million in the prior year period.
  • Free cash flows were $460 million, compared to $588 million in the prior year period.
  • 12-month subscription revenue backlog was $9.034 billion, up 14.2% year-over-year.
  • Total subscription revenue backlog was $27.403 billion, up 8.0% year-over-year.
  • Cash, cash equivalents, and marketable securities were $3.403 billion as of July 31, 2026.
  • Total debt was $2.989 billion ($999 million current, $1.990 billion noncurrent) as of July 31, 2026.

Guidance and Future Outlook

  • Fiscal 2027 full-year subscription revenue guidance is updated to $9.940 billion to $9.950 billion, representing 13% growth.
  • Fiscal 2027 full-year non-GAAP operating margin guidance is updated to 31.0%.
  • Fiscal 2027 third-quarter subscription revenue guidance is $2.515 billion, representing 12% growth.
  • Fiscal 2027 third-quarter non-GAAP operating margin guidance is 30.0%.

Business Segments and Product Lines

  • AI drove more than 25% of new Annual Contract Value (ACV).
  • More than 5,500 customers now use at least one of Workday's organic agents, up more than 35% from the previous quarter.
  • New product launches include Developer Agent (for building AI apps via natural language), Agent Passport (for testing and verifying AI agents), Workday Learning powered by Sana, Adaptive Decision Intelligence, and the Financial Audit Agent.
  • Workday announced a new research arm publishing peer-reviewed findings on enterprise AI agent reliability and efficiency.
  • New customers include BWX Technologies, Inc., Guess, KPMG LLP, and S-E-B.
  • Existing relationships expanded with Caterpillar, Delivery Hero (Talibat), Lithia & Driveway, Merck & Co., Inc., and Novartis.

Market and Competitive Landscape

  • Workday was named a Leader in the 2026 Gartner Magic Quadrant for Talent Acquisition (Recruiting) Suites.
  • Workday VNDLY was named a Leader in Everest Group's Vendor Management System PEAK Matrix Assessment 2026 for the sixth consecutive year.
  • Workday announced a partnership with Amazon Web Services (AWS) to integrate Workday Data Cloud for zero-copy access between AWS data and Workday's HR and finance data.
  • Workday expanded its strategic partnership with Google Cloud to integrate Workday agents into Gemini Enterprise.

Risks and Challenges

  • The press release lists forward-looking risks including security breaches, service outages, competitive pricing pressures, industry consolidation, and entry of new competitors.
  • Risks include evolving privacy laws, loss of key employees, reliance on partners, regulatory risks associated with AI, and delays in IT spending.
  • Actual results may differ from forward-looking statements due to risks such as geopolitical volatility, litigation, and the inability to predict stock-based compensation adjustments for non-GAAP measures.

Management Commentary and Tone

  • CEO Aneel Bhusri described the quarter as "strong," noting that AI is a strategic driver and that customers trust Workday's "deterministic rails" for agents.
  • CFO Zane Rowe stated that results reflect "continued momentum" with AI emerging as a driver of customer expansion, while prioritizing investment in the agentic AI roadmap and operational efficiencies.

Other Key Points

  • Workday repurchased approximately 9.8 million shares of Class A common stock for $1.3 billion during the quarter.
  • The Board of Directors authorized an open-ended repurchase of up to an additional $4.0 billion of outstanding shares.
  • The company operates with more than 11,500 organizations worldwide, including over 65% of the Fortune 500.