Workday Announces Fiscal 2027 Second Quarter Financial Results
Subscription Revenues of $2.471 Billion, Up 13.9% Year-Over-Year
PLEASANTON, Calif., Aug. 27, 2026 /PRNewswire/ -- Workday, Inc. (NASDAQ: WDAY), the enterprise AI platform for HR, finance, and IT, today announced results for the fiscal 2027 second quarter ended July 31, 2026.
Fiscal 2027 Second Quarter Results
1
See the section titled "About Non-GAAP Financial Measures" in the accompanying financial tables for further details.
Comments on the News
"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," said Aneel Bhusri, co-founder, CEO, and chair, Workday. "Because of Workday's deterministic rails, customers can trust our agents with the work that matters, and you're seeing that in the numbers."
"Our Q2 results reflect continued momentum across our platform, with AI emerging as a strategic driver of customer expansion," said Zane Rowe, CFO, Workday. "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%. We continue to prioritize investment in our agentic AI roadmap and our platform opportunity while driving operational efficiencies as we scale."
Recent Business Highlights
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Gartner, Magic Quadrant for Talent Acquisition (Recruiting) Suites, Rania Stewart, Jackie Watrous, Hiten Sheth, 8 May 2026
Financial Outlook
Workday is providing guidance for the fiscal 2027 third quarter ending October 31, 2026 as follows:
Workday is updating guidance for the fiscal 2027 full year ending January 31, 2027 as follows:
1
The Company has not provided a reconciliation of its forward outlook for non-GAAP operating margin with its forward-looking GAAP operating margin in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable to predict with reasonable certainty the amount and timing of adjustments that are used to calculate this non-GAAP financial measure, particularly related to stock-based compensation and its related tax effects, acquisition-related costs, and restructuring costs.
Earnings Call Details
Workday plans to host a conference call today to review its fiscal 2027 second quarter financial results and to discuss its financial outlook. The call is scheduled to begin at 1:30 p.m. PT/4:30 p.m. ET and can be accessed via webcast. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 90 days.
Workday uses its blog.workday.com website as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
About Workday
Workday operates at the heart of the enterprise – HR, finance, and IT – where the margin for error is effectively zero. By tightly coupling AI with the context, guardrails, and trusted processes that run the business, Workday goes beyond AI that assists with work to agents that are capable of driving measurable outcomes. More than 11,500 organizations worldwide, including more than 65% of the Fortune 500, trust Workday to deliver. For more information about Workday, visit workday.com.
© 2026 Workday, Inc. All rights reserved. Workday and the Workday logo are trademarks of Workday, Inc. All other brand and product names are trademarks or registered trademarks of their respective holders.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's third quarter and full year fiscal 2027 subscription revenues and non-GAAP operating margin, momentum, growth, innovation, and investments. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to: (i) breaches in our security measures or those of our third-party providers, unauthorized access to our customers' or other users' personal data, or disruptions in our data center or computing infrastructure operations; (ii) service outages, delays in the deployment of our applications, and the failure of our applications to perform properly; (iii) competitive factors, including pricing pressures, industry consolidation, entry of new competitors and new applications, advancements in technology, and marketing initiatives by our competitors; (iv) privacy concerns and evolving domestic or foreign laws and regulations; (v) any loss of key employees or the inability to attract, train, and retain highly skilled employees; (vi) our reliance on our network of partners to drive additional growth of our revenues; (vii) the regulatory, economic, and political risks associated with our domestic and international operations; (viii) our ability to realize the expected business or financial benefits of any acquisitions of or investments in companies; (ix) adoption of our applications and services by customers and individuals, including any new features, enhancements, and modifications, as well as our customers' and users' satisfaction with the deployment, training, and support services they receive; (x) the regulatory risks related to new and evolving technologies such as AI and our ability to realize a return on our development efforts; (xi) delays or reductions in information technology spending; (xii) adverse litigation results; (xiii) changes in sales, which may not be immediately reflected in our results due to our subscription model; and (xiv) the impact of continuing global economic and geopolitical volatility and conflicts on our business, as well as on our customers, prospects, partners, and service providers. Further information on these and additional risks that could affect Workday's results is included in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.
Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.
Workday, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
July 31, 2026
January 31, 2026
Assets
Current assets:
Cash and cash equivalents
$ 661
$ 1,501
Marketable securities
2,742
3,942
Trade and other receivables, net
1,895
2,332
Deferred costs
320
306
Prepaid expenses and other current assets
351
348
Total current assets
5,969
8,429
Property and equipment, net
1,126
1,093
Operating lease right-of-use assets
680
719
Deferred costs, noncurrent
654
634
Acquisition-related intangible assets, net
611
681
Deferred tax assets
1,129
829
Goodwill
5,227
5,229
Other assets
461
460
Total assets
$ 15,857
$ 18,074
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$ 102
$ 142
Accrued expenses and other current liabilities
462
454
Accrued compensation
493
642
Unearned revenue
4,387
5,010
Operating lease liabilities
130
130
Debt, current
999
0
Total current liabilities
6,573
6,378
Debt, noncurrent
1,990
2,987
Unearned revenue, noncurrent
72
71
Operating lease liabilities, noncurrent
653
704
Other liabilities
109
129
Total liabilities
9,397
10,269
Stockholders' equity:
Common stock
0
0
Additional paid-in capital
13,365
12,673
Treasury stock
(7,151)
(4,220)
Accumulated other comprehensive loss
(96)
(136)
Retained earnings (accumulated deficit)
342
(512)
Total stockholders' equity
6,460
7,805
Total liabilities and stockholders' equity
$ 15,857
$ 18,074
Workday, Inc.
Condensed Consolidated Statements of Operations
(in millions, except number of shares which are reflected in thousands and per share data)
(unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2026
2025
2026
2025
Revenues:
Subscription services
$ 2,471
$ 2,169
$ 4,826
$ 4,228
Professional services
178
179
365
360
Total revenues
2,649
2,348
5,191
4,588
Costs and expenses (1):
Costs of subscription services
436
370
848
720
Costs of professional services
216
212
408
399
Product development
747
660
1,451
1,322
Sales and marketing
706
641
1,386
1,264
General and administrative
231
216
447
429
Restructuring
0
1
0
167
Total costs and expenses
2,336
2,100
4,540
4,301
Operating income
313
248
651
287
Other income, net
14
56
31
120
Income before provision for (benefit from) income taxes
327
304
682
407
Provision for (benefit from) income taxes
(305)
76
(172)
111
Net income
$ 632
$ 228
$ 854
$ 296
Net income per share, basic
$ 2.58
$ 0.86
$ 3.42
$ 1.11
Net income per share, diluted
$ 2.57
$ 0.84
$ 3.41
$ 1.09
Weighted-average shares used to compute net income per share, basic
245,181
266,777
249,464
266,649
Weighted-average shares used to compute net income per share, diluted
246,307
270,180
250,238
270,240
(1) Costs and expenses include share-based compensation expense as follows:
Three Months Ended July 31,
Six Months Ended July 31,
2026
2025
2026
2025
Costs of subscription services
$ 44
$ 39
$ 80
$ 81
Costs of professional services
30
28
56
58
Product development
217
170
401
353
Sales and marketing
93
84
183
177
General and administrative
78
70
151
140
Restructuring
0
0
0
42
Total share-based compensation expense
$ 462
$ 391
$ 871
$ 851
Workday, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2026
2025
2026
2025
Cash flows from operating activities:
Net income
$ 632
$ 228
$ 854
$ 296
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
92
81
183
165
Share-based compensation expense
462
391
871
851
Amortization of deferred costs
83
72
162
140
Non-cash lease expense
32
28
64
54
Net losses on investments
(3)
2
5
2
Accretion of discounts on marketable debt securities, net
(7)
(18)
(15)
(38)
Deferred income taxes
(386)
66
(293)
84
Asset impairments
0
0
0
34
Other
(6)
0
(2)
13
Changes in operating assets and liabilities:
Trade and other receivables, net
(326)
(264)
421
337
Deferred costs
(131)
(100)
(195)
(152)
Prepaid expenses and other assets
20
54
(11)
15
Accounts payable
(12)
3
(13)
0
Accrued expenses and other liabilities
6
32
(194)
(99)
Unearned revenue
64
41
(622)
(629)
Net cash provided by operating activities
520
616
1,215
1,073
Cash flows from investing activities:
Purchases of marketable securities
(14)
(866)
(215)
(2,211)
Maturities of marketable securities
305
793
536
1,515
Sales of marketable securities
729
125
824
265
Capital expenditures
(60)
(28)
(139)
(64)
Purchases of non-marketable equity and other investments
(13)
(11)
(13)
(15)
Sales of non-marketable equity and other investments
0
0
42
0
Other
0
0
8
0
Net cash provided by (used in) investing activities
947
13
1,043
(510)
Cash flows from financing activities:
Repurchases of common stock
(1,337)
(298)
(2,924)
(589)
Proceeds from issuance of common stock from employee equity plans
98
111
98
111
Taxes paid related to net share settlement of equity awards
(128)
(161)
(273)
(372)
Net cash used in financing activities
(1,367)
(348)
(3,099)
(850)
Effect of exchange rate changes
0
0
0
2
Net increase (decrease) in cash, cash equivalents, and restricted cash
100
281
(841)
(285)
Cash, cash equivalents, and restricted cash at the beginning of period
568
988
1,509
1,554
Cash, cash equivalents, and restricted cash at the end of period
$ 668
$ 1,269
$ 668
$ 1,269
Workday, Inc.
Reconciliations of GAAP to Non-GAAP Data
Reconciliations of Workday's GAAP to non-GAAP operating results are included in the following tables (in millions, except number of shares which are reflected in thousands, percentages, and per share data). See the section titled "About Non-GAAP Financial Measures" below for further details.
Three Months Ended July 31,
Six Months Ended July 31,
2026
2025
2026
2025
Non-GAAP operating income
Operating income
$ 313
$ 248
$ 651
$ 287
Share-based compensation expense (1)
462
391
871
809
Employer payroll tax-related items on employee stock transactions
13
12
32
39
Amortization of acquisition-related intangible assets
34
21
70
42
Acquisition-related costs
2
7
9
14
Restructuring costs
0
1
0
167
Non-GAAP operating income
$ 824
$ 680
$ 1,633
$ 1,358
Non-GAAP operating margin (2)
Operating margin
11.8 %
10.6 %
12.5 %
6.3 %
Share-based compensation expense (1)
17.4 %
16.7 %
16.8 %
17.6 %
Employer payroll tax-related items on employee stock transactions
0.5 %
0.5 %
0.6 %
0.8 %
Amortization of acquisition-related intangible assets
1.3 %
0.9 %
1.4 %
0.9 %
Acquisition-related costs
0.1 %
0.3 %
0.2 %
0.3 %
Restructuring costs
0.0 %
0.0 %
0.0 %
3.7 %
Non-GAAP operating margin
31.1 %
29.0 %
31.5 %
29.6 %
Non-GAAP net income
Net income
$ 632
$ 228
$ 854
$ 296
Share-based compensation expense (1)
462
391
871
809
Employer payroll tax-related items on employee stock transactions
13
12
32
39
Amortization of acquisition-related intangible assets
34
21
70
42
Acquisition-related costs
2
7
9
14
Restructuring costs
0
1
0
167
Net (gains) losses on strategic investments
(2)
2
7
3
Income tax effects (3)
(464)
(64)
(489)
(170)
Non-GAAP net income
$ 677
$ 598
$ 1,354
$ 1,200
Non-GAAP diluted net income per share (2)(4)
Diluted net income per share
$ 2.57
$ 0.84
$ 3.41
$ 1.09
Share-based compensation expense (1)
1.88
1.45
3.48
2.99
Employer payroll tax-related items on employee stock transactions
0.05
0.04
0.13
0.14
Amortization of acquisition-related intangible assets
0.14
0.08
0.28
0.15
Acquisition-related costs
0.01
0.03
0.04
0.05
Restructuring costs
0.00
0.00
0.00
0.62
Net (gains) losses on strategic investments
(0.01)
0.01
0.03
0.01
Income tax effects (3)
(1.89)
(0.24)
(1.96)
(0.61)
Non-GAAP diluted net income per share
$ 2.75
$ 2.21
$ 5.41
$ 4.44
(1)
Share-based compensation expense in the GAAP to non-GAAP reconciliation tables above excludes share-based compensation associated with restructuring activities of $42 million for the six months ended July 31, 2025. These expenses are included in Restructuring costs. There was no comparable activity for the six months ended July 31, 2026.
(2)
Operating margin and diluted net income per share are calculated using unrounded data.
(3)
Income tax effects includes the impact of an intra-entity transfer of certain intellectual property rights as part of an internal legal entity restructuring completed during the three months ended July 31, 2026, which resulted in the recognition of a deferred tax asset and related tax benefit of $374 million.
(4)
Weighted-average shares used to calculate GAAP and non-GAAP diluted net income per share were 246,307 and 270,180 for the three months ended July 31, 2026, and 2025, respectively, and 250,238 and 270,240 for the six months ended July 31, 2026, and 2025, respectively.
Reconciliation of Workday's GAAP cash flows from operating activities to non-GAAP free cash flow is as follows (in millions). See the section titled "About Non-GAAP Financial Measures" below for further details.
Three Months Ended July 31,
Six Months Ended July 31,
2026
2025
2026
2025
Net cash provided by operating activities
$ 520
$ 616
$ 1,215
$ 1,073
Less: Capital expenditures
(60)
(28)
(139)
(64)
Free cash flows
$ 460
$ 588
$ 1,076
$ 1,009
About Non-GAAP Financial Measures
To provide investors and others with additional information regarding Workday's results, the following non-GAAP financial measures are disclosed: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP diluted net income per share, and free cash flows. Workday has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. Non-GAAP operating income and non-GAAP operating margin differ from GAAP in that they exclude share-based compensation expense, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, acquisition-related costs, and restructuring costs. Non-GAAP net income and non-GAAP diluted net income per share differ from GAAP in that they exclude share-based compensation expense, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, acquisition-related costs, restructuring costs, gains and losses on strategic investments, and income tax effects. Free cash flows differ from GAAP cash flows from operating activities in that it treats capital expenditures as a reduction to cash flows.
Workday's management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate Workday's financial performance. Management believes these non-GAAP financial measures reflect Workday's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in Workday's business. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Workday's operating results and prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.
Management believes excluding the following items from the GAAP Condensed Consolidated Statements of Operations is useful to investors and others in assessing Workday's operating performance due to the following factors:
Additionally, with regards to free cash flows, Workday's management believes that reducing cash provided by operating activities by capital expenditures is meaningful to investors and others because it provides an enhanced view of cash flow generation from the ongoing operations of our business, and it balances operating results, cash management, and capital efficiency.
The use of these non-GAAP measures have certain limitations as they do not reflect all items of expense or cash that affect Workday's operations. Workday compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review Workday's financial information in its entirety and not rely on a single financial measure.
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SOURCE Workday, Inc.