Workday, Inc. (WDAY): Results of Operations and Financial Condition
Workday, Inc. (WDAY) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Workday Announces Fiscal 2027 Second Quarter Financial Results Fiscal Second Quarter Total Revenues of $2.649 Billion, Up 12.8% Year-Over-Year Subscription Revenues of $2.471 Billion, Up 13.9% Year-Over-Year PLEASANTON, Calif., August 27, 2026 – Workday, Inc. (NASDAQ
How this was made
The 30-second read
Why it matters
The earnings beat and raised guidance are likely to trigger buying interest, especially given the AI‑centric growth narrative.
Market read
First‑report earnings with strong top‑line growth and higher guidance provide a clear trading catalyst.
What to watch
Cash flow decline and lower operating cash flow year‑over‑year may raise concerns about liquidity.
Fiscal Second Quarter Total Revenues of $2.649 Billion, Up 12.8% Year-Over-Year Subscription Revenues of $2.471 Billion, Up 13.9% Year-Over-Year
Revenue, subscription revenue, GAAP operating income, non-GAAP operating income, and non-GAAP diluted net income per share increased year-over-year, while the company raised fiscal 2027 non-GAAP operating margin guidance to 31.0%.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenuesGAAP | $2.649 billion | – | 12.8% |
| Subscription services revenuesGAAP | $2.471 billion | – | 13.9% |
| Professional services revenuesGAAP | $178 million | – | – |
| Costs of subscription servicesGAAP | $436 million | – | – |
| Costs of professional servicesGAAP | $216 million | – | – |
| Product developmentGAAP | $747 million | – | – |
| Sales and marketingGAAP | $706 million | – | – |
| General and administrativeGAAP | $231 million | – | – |
| RestructuringGAAP | $0 million | – | – |
| Total costs and expensesGAAP | $2.336 billion | – | – |
| Operating incomeGAAP | $313 million | – | – |
| Operating marginGAAP | 11.8% | – | – |
| Non-GAAP operating incomenon-GAAP | $824 million | – | – |
| Non-GAAP operating marginnon-GAAP | 31.1% | – | – |
| Other income, netGAAP | $14 million | – | – |
| Income before provision for (benefit from) income taxesGAAP | $327 million | – | – |
| Provision for (benefit from) income taxesGAAP | $(305) million | – | – |
| Net incomeGAAP | $632 million | – | – |
| Non-GAAP net incomenon-GAAP | $677 million | – | – |
| Net income per share, basicGAAP | $2.58 | – | – |
| Diluted net income per shareGAAP | $2.57 | – | – |
| Non-GAAP diluted net income per sharenon-GAAP | $2.75 | – | – |
| Share-based compensation expenseGAAP | $462 million | – | – |
| 12-month subscription revenue backlogother | $9.034 billion | – | 14.2% |
| Total subscription revenue backlogother | $27.403 billion | – | 8.0% |
| Net cash provided by operating activitiesGAAP | $520 million | – | – |
| Capital expendituresGAAP | $(60) million | – | – |
| Free cash flowsnon-GAAP | $460 million | – | – |
| Cash and cash equivalentsGAAP | $661 million | – | – |
| Marketable securitiesGAAP | $2.742 billion | – | – |
| Debt, currentGAAP | $999 million | – | – |
| Debt, noncurrentGAAP | $1.990 billion | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Subscription servicesAI drove more than 25% of new ACV, according to the CEO. | $2.471 billion | – | 13.9% |
| Professional servicesNo segment driver was quantified in the release. | $178 million | – | – |
fiscal 2027 third quarter ending October 31, 2026 and fiscal 2027 full year ending January 31, 2027 outlook
- RevenueFiscal 2027 third quarter subscription revenues of $2.515 billion, representing growth of 12%; fiscal 2027 full year subscription revenues of $9.940 billion to $9.950 billion, representing growth of 13%
- NoteFiscal 2027 third quarter non-GAAP operating margin of 30.0%
- NoteFiscal 2027 full year non-GAAP operating margin of 31.0%
Capital returns
- Repurchased approximately 9.8 million shares of Class A common stock for $1.3 billion as part of its share repurchase programs.
- Repurchases of common stock were $(1.337) billion for the three months ended July 31, 2026.
- The Board of Directors authorized the open-ended repurchase of up to an additional $4.0 billion of outstanding Class A common stock.
What drove it
- AI drove more than 25% of new ACV.
- More than 5,500 customers used at least one Workday organic agent.
- Customers using one or more Workday organic agents increased more than 35% from last quarter.
- Management cited continued momentum across the platform and AI as a strategic driver of customer expansion.
- Workday announced partnerships with AWS and Google Cloud related to Workday Data Cloud and Workday agents.
Concerns
- Operating cash flows were $520 million compared to $616 million in the same period last year.
- Free cash flows were $460 million compared to $588 million in the same period last year.
- Professional services revenues were $178 million compared to $179 million in the same period last year.
- GAAP diluted net income per share included a tax benefit of $1.52 per share related to an intra-entity transfer of certain intellectual property rights as part of an internal legal entity restructuring.
- The reconciliation identifies a deferred tax asset and related tax benefit of $374 million from the intra-entity transfer.
What to watch
- Fiscal 2027 third-quarter subscription revenues guidance of $2.515 billion, representing growth of 12%.
- Fiscal 2027 third-quarter non-GAAP operating margin guidance of 30.0%.
- Fiscal 2027 full-year subscription revenues guidance of $9.940 billion to $9.950 billion, representing growth of 13%.
- Fiscal 2027 full-year non-GAAP operating margin guidance of 31.0%.
- Subscription backlog growth, including 12-month subscription revenue backlog of $9.034 billion and total subscription revenue backlog of $27.403 billion.
- Adoption and expansion of Workday organic agents.
Balance sheet and cash flow
- Cash, cash equivalents, and marketable securities were $3.403 billion as of July 31, 2026.
- Cash and cash equivalents were $661 million as of July 31, 2026, compared with $1.501 billion as of January 31, 2026.
- Marketable securities were $2.742 billion as of July 31, 2026, compared with $3.942 billion as of January 31, 2026.
- Debt, current was $999 million as of July 31, 2026.
- Debt, noncurrent was $1.990 billion as of July 31, 2026, compared with $2.987 billion as of January 31, 2026.
- Operating cash flows were $520 million compared to $616 million in the same period last year.
- Free cash flows were $460 million compared to $588 million in the same period last year.
- Unearned revenue was $4.387 billion as of July 31, 2026, compared with $5.010 billion as of January 31, 2026.
Analysis
Workday reported fiscal 2027 second-quarter total revenues of $2.649 billion, up 12.8% year-over-year, led by subscription services revenues of $2.471 billion, up 13.9%. Professional services revenues were $178 million, compared with $179 million in the same period last year. The subscription mix and the reported $9.034 billion of 12-month subscription revenue backlog, up 14.2%, point to continued recurring-revenue momentum. Total subscription revenue backlog was $27.403 billion, increasing 8.0% year-over-year.
Profitability improved on both reported bases. GAAP operating income was $313 million, or 11.8% of revenues, compared with $248 million, or 10.6% of revenues. Non-GAAP operating income was $824 million, or 31.1% of revenues, compared with $680 million, or 29.0% of revenues. Share-based compensation expense was $462 million, compared with $391 million, and remains the largest reconciling item between GAAP and non-GAAP operating income.
GAAP net income was $632 million and diluted net income per share was $2.57, compared with $228 million and $0.84. The release states that current-quarter GAAP diluted net income per share included a tax benefit of $1.52 per share from an intra-entity transfer of certain intellectual property rights as part of an internal legal entity restructuring. Non-GAAP net income was $677 million, while non-GAAP diluted net income per share was $2.75, compared with $598 million and $2.21, respectively.
Cash generation was lower year-over-year. Net cash provided by operating activities was $520 million compared with $616 million, and free cash flows were $460 million compared with $588 million. Workday repurchased approximately 9.8 million Class A shares for $1.3 billion and received authorization for an additional $4.0 billion open-ended repurchase program. Cash, cash equivalents, and marketable securities were $3.403 billion as of July 31, 2026.
The outlook calls for fiscal 2027 third-quarter subscription revenues of $2.515 billion, representing growth of 12%, and a non-GAAP operating margin of 30.0%. For fiscal 2027, Workday updated guidance to subscription revenues of $9.940 billion to $9.950 billion, representing growth of 13%, and a non-GAAP operating margin of 31.0%. Management described AI as a strategic driver of customer expansion, with more than 5,500 customers using at least one organic agent and AI driving more than 25% of new ACV.
Management, verbatim
We had a strong Q2, with AI driving more than 25% of our new ACV and more than 5,500 customers now using at least one of our organic agents.
Aneel Bhusri, co-founder, CEO, and chair
We now expect fiscal 2027 subscription revenue of $9.940 billion to $9.950 billion, growth of 13%, while increasing our fiscal 2027 non-GAAP operating margin guidance to 31.0%.
Zane Rowe, CFO
Not in the filing
stated, not guessed- GAAP gross margin and non-GAAP gross margin
- GAAP gross profit and non-GAAP gross profit
- Prior-quarter comparisons for revenue, operating income, net income, EPS, cash flow, backlog, and segment revenue
- Professional services revenue year-over-year percentage change
- GAAP and non-GAAP effective tax rates
- Forward guidance for total revenues, gross margin, operating expenses, tax rate, GAAP operating margin, GAAP EPS, operating cash flow, free cash flow, capital expenditures, and capital returns
- Prior-period outlook for comparison with actual results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Workday filed a Form 8‑K reporting its fiscal 2027 Q2 results and updated guidance.
Ticker impact
Workday reported Q2 fiscal 2027 results with revenue up 12.8% YoY and raised full-year subscription revenue guidance.
Expect price appreciation in the near term as investors price in higher revenue growth and margin expansion.
The 8‑K filing is the first public disclosure of the earnings and guidance, providing fresh material that can move the market.
Market effects
Positive earnings and AI‑driven growth may lift the broader enterprise software and cloud‑AI sector.
U.S. tech equities could see buying pressure following the release.
International customers cited (e.g., KPMG, Caterpillar) highlight global demand for Workday's AI platform.
Counterpoint
If the AI revenue growth slows or the share repurchase fails to sustain price, the rally could be limited.
Key entities
- companyWorkday, Inc.
Enterprise AI platform for HR, finance, and IT.
