Workday (WDAY) WDAY Q2 Financial Results Summary
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Workday (WDAY) Q2 2027: Strong Revenue Growth and Improved Margins — Positive Outlook
Workday, Inc. (NASDAQ: WDAY) reported its fiscal 2027 second quarter results, showcasing a robust performance that exceeded the previous year's figures. Total revenues reached $2.649 billion, reflecting an increase of $301 million or 12.8% year-over-year. Subscription revenues also saw a significant rise, totaling $2.471 billion, which is up $302 million or 13.9% from the same period last year.
This quarter's results are a positive development for shareholders, as the company not only achieved substantial revenue growth but also improved its operating income and margins. The operating income for the quarter was $313 million, representing 11.8% of revenues, compared to $248 million or 10.6% of revenues in the same quarter last year. Furthermore, non-GAAP operating income increased to $824 million, or 31.1% of revenues, up from $680 million or 29.0% in the prior year.
Key metrics from the quarter include:
- Total Revenues: $2.649 billion, up 12.8% YoY
- Subscription Revenues: $2.471 billion, up 13.9% YoY
- Operating Income: $313 million (11.8% of revenues), up from $248 million (10.6% of revenues) YoY
- Non-GAAP Operating Income: $824 million (31.1% of revenues), up from $680 million (29.0% of revenues) YoY
- Diluted Net Income per Share: $2.57, compared to $0.84 in the same period last year
- Non-GAAP Diluted Net Income per Share: $2.75, compared to $2.21 YoY
- 12-Month Subscription Revenue Backlog: $9.034 billion, up 14.2% YoY
- Total Subscription Revenue Backlog: $27.403 billion, up 8.0% YoY
- Operating Cash Flows: $520 million, down from $616 million YoY
- Free Cash Flows: $460 million, down from $588 million YoY
Additionally, Workday repurchased approximately 9.8 million shares of Class A common stock for $1.3 billion as part of its share repurchase programs. The company also announced an open-ended repurchase authorization for up to an additional $4.0 billion of its outstanding shares.
Looking ahead, Workday has provided guidance for the fiscal 2027 third quarter, projecting subscription revenues of $2.515 billion, which represents growth of 12%. The company has also updated its full-year subscription revenue guidance to between $9.940 billion and $9.950 billion, indicating a growth rate of 13%. Furthermore, the non-GAAP operating margin guidance has been increased to 31.0%.
Investors should keep an eye on the following catalysts in the upcoming quarter:
- Continued growth in subscription revenues and backlog, particularly as AI becomes a strategic driver for customer expansion.
- The impact of new product offerings and partnerships, including the integration of Workday Data Cloud with Amazon Web Services and the expansion of its partnership with Google Cloud.
- The effectiveness of the company's share repurchase program and its implications for shareholder value.
Overall, Workday's second quarter results reflect a strong performance with promising growth prospects, making it a favorable outlook for shareholders.
Condensed Consolidated Statements of Operations
(in millions, except number of shares which are reflected in thousands and per share data)
Note: All amounts are in thousands/millions.
| Three Months Ended July 31, 2026 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2026 | Six Months Ended July 31, 2025 | |
|---|---|---|---|---|
| Revenues | $2,471 | $2,169 | $4,826 | $4,228 |
| Costs of subscription services | 178 | 179 | 365 | 360 |
| Total revenues | 2,649 | 2,348 | 5,191 | 4,588 |
| Costs and expenses | ||||
| 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 costs | 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 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 | 245,178 | 266,777 | 249,464 | 266,614 |
| Weighted-average shares used to compute net income per share, diluted | 246,316 | 270,180 | 250,238 | 270,241 |
Condensed Consolidated Balance Sheets
(in millions)
| 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 |
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