Company Performance - Workday reported a revenue increase of 13% year-over-year for the fiscal second quarter, totaling $2.35 billion, surpassing the expected $2.34 billion [1][5] - Net income rose to $228 million, or 84 cents per share, compared to $132 million, or 49 cents per share, in the same quarter last year [1] Future Guidance - For the current quarter, Workday anticipates $2.24 billion in subscription revenue and $180 million in professional services, leading to a total revenue forecast of $2.42 billion, aligning with analyst expectations [2] - The company projects an adjusted operating margin of 28.0%, slightly below the consensus of 28.1% [2] Full Year Outlook - Workday expects $8.82 billion in subscription revenue and $700 million in professional services revenue for the full year, totaling $9.52 billion, which is in line with the LSEG consensus of $9.51 billion [3] Challenges and Acquisitions - The segment serving state and local governments faced challenges, attributed to uncertainties regarding funding [3][4] - Workday announced the acquisition of Paradox, a company specializing in conversational AI for recruiting, although the terms were not disclosed [4] Market Performance - As of the latest market close, Workday shares have declined approximately 12% year-to-date, contrasting with a 9% increase in the Nasdaq [5]

Financial Data and Key Metrics Changes - Workday reported a 14% growth in subscription revenue, totaling $2,169 million for Q2 [28] - Total revenue for Q2 reached $2,348 million, reflecting a 13% increase [28] - Non-GAAP operating margin was 29%, with non-GAAP operating income of $680 million [30] - Cash flow from operations for Q2 was $616 million, an 8% growth [31] - The twelve-month subscription revenue backlog (CRPO) increased by 16.4% to $7,910 million [29] Business Line Data and Key Metrics Changes - Approximately 30% of net new deals were full suite offerings, with this number rising to over 50% in sectors like SLED and healthcare [11] - More than 70% of new customers purchased an AI SKU, contributing to over 100% year-over-year growth in net new AI SKUs [50][92] - Professional services revenue was $179 million, contributing to the overall revenue growth [28] Market Data and Key Metrics Changes - U.S. revenue for Q2 totaled $1,760 million, up 13%, while international revenue reached $584 million, an 11% increase [29] - The company saw strong performance in Europe, particularly in the UK and Germany, with no significant headwinds from macroeconomic factors [59] - The government sector is experiencing a significant opportunity for modernization, with Workday launching a dedicated subsidiary, Workday Government [15][16] Company Strategy and Development Direction - Workday is focusing on AI-driven solutions, with a roadmap aimed at delivering purpose-built AI solutions for HR and finance [17] - The company is making strategic acquisitions, including the recent agreement to acquire Paradox, enhancing its recruiting capabilities [19][80] - Workday is expanding its global footprint, particularly in India, and is investing in new markets and industries [26][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to leverage its market position and strong customer base to capitalize on AI opportunities [46][50] - The company anticipates continued growth in subscription revenue, increasing its FY 2026 guidance to $8,815 million, reflecting a 14% growth [32] - Management acknowledged potential challenges in the SLED market but remains optimistic about overall performance and momentum heading into the second half of the year [60][68] Other Important Information - Workday's gross revenue retention rate remained healthy at 97% [30] - The company ended the quarter with $8,200 million in cash and marketable securities [31] - Workday's headcount stood at approximately 19,500 as of July 31 [32] Q&A Session Summary Question: Market concerns regarding SaaS and AI disruption - Management believes concerns about AI disruption to SaaS models are overblown, emphasizing Workday's strong customer base and AI adoption [46][50] Question: Crosscurrents affecting growth - Management noted that while there are macroeconomic factors to monitor, the international business performed well, particularly in Europe [58][60] Question: Workday Government subsidiary - The subsidiary was launched to demonstrate commitment to the government sector and to provide a secure cloud environment tailored to their needs [74][75] Question: Acquisition of Paradox - The acquisition is seen as a strategic move to enhance Workday's recruiting platform, with expected synergies and growth opportunities [80][87] Question: AI product influence on win rates - AI solutions are significantly influencing sales, with over 70% of new sales including AI products, contributing to strong growth [92][93] Question: Notable wins in Q2 - Significant wins included the University of Virginia and Nationwide Insurance, showcasing strong performance across various sectors [94][95]

Financial Data and Key Metrics Changes - Workday reported a 14% growth in subscription revenue, totaling $2,169 million for Q2 2026, with total revenue reaching $2,348 million, reflecting a 13% increase [28][29] - Non-GAAP operating margin stood at 29%, with non-GAAP operating income of $680 million [30][33] - Cash and marketable securities at the end of the quarter were $8,200 million, with operating cash flow of $616 million, an 8% growth [31][32] Business Line Data and Key Metrics Changes - Approximately 30% of net new deals were full suite offerings, with this number rising to over 50% in sectors like SLED and healthcare [10][12] - More than 70% of core customers are utilizing Workday Illuminate, with over 30% of customer-based deals including AI products [12][15] - The financial services sector saw significant expansions, including new relationships with Nationwide Insurance and others [12][13] Market Data and Key Metrics Changes - U.S. revenue increased by 13% to $1,760 million, while international revenue grew by 11% to $584 million [29] - The twelve-month subscription revenue backlog (CRPO) reached $7,910 million, up 16.4% year-over-year [29][30] - Strong performance was noted in EMEA, particularly in Germany and the UK, with notable wins in APAC, including a deal in Vietnam [24][122] Company Strategy and Development Direction - Workday is focusing on AI-driven solutions and expanding its platform capabilities, including the acquisition of Paradox to enhance its recruiting suite [16][78] - The company is investing in organic innovation and strategic acquisitions to strengthen its market position and deliver greater value to customers [16][21] - Workday Government was launched to cater specifically to the needs of the U.S. government, emphasizing a commitment to modernization and AI integration [14][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's momentum, driven by AI innovation and a unified platform, while acknowledging macroeconomic challenges in certain sectors [25][56] - The company anticipates continued growth in subscription revenue, increasing its FY 2026 guidance to $8,815 million, reflecting a 14% growth [32][34] - Management highlighted the importance of customer trust in navigating AI transitions, positioning Workday as a key partner in this area [100][49] Other Important Information - Workday's headcount as of July 31 was approximately 19,500, with ongoing efforts to attract top talent [31][21] - The company is expanding its partner ecosystem, with over 20% of net new ACV sourced from partners in the last quarter [22] - Workday is actively pursuing growth opportunities in India, with plans to establish a local data center and expand its team [24][122] Q&A Session Summary Question: Market concerns regarding SaaS and AI startups - Management believes concerns about AI disruption to SaaS models are overblown, emphasizing Workday's strong market position and customer base [45][49] Question: Crosscurrents affecting growth - Management noted strong performance in Europe despite macroeconomic challenges, while observing some headwinds in the SLED market [56][58] Question: Workday Government subsidiary - The subsidiary was established to demonstrate commitment to the government sector and to provide a secure cloud environment [70][71] Question: Acquisition of Paradox - The acquisition is seen as a strategic move to enhance Workday's recruiting capabilities, with expected synergies and growth opportunities [78][84] Question: AI product engagement and win rates - Engagement with AI products is strong, with significant growth in adoption rates among customers [88][90] Question: International market performance - Management expressed satisfaction with growth in international markets, particularly in Europe and Japan, and highlighted plans for expansion in India [122][121]

Core Insights - Workday, Inc. reported adjusted earnings of $2.21 per share, exceeding the Street estimate of $2.12 [1] - Quarterly revenue reached $2.34 billion, matching analyst expectations [1] - The company announced the acquisition of Paradox, with financial terms undisclosed [2] Financial Performance - The 12-month subscription revenue backlog was $7.91 billion, reflecting a 16.4% increase year-over-year [6] - Total subscription revenue backlog increased to $25.37 billion, up 17.6% from the previous year [6] - Operating cash flows were reported at $616 million, compared to $571 million in the same period last year [6] - Free cash flows increased to $588 million from $516 million year-over-year [6] - Non-GAAP operating income for the second quarter was $680 million, representing 29% of revenues, compared to $518 million or 24.9% of revenues in the same period last year [6] Strategic Commentary - The CEO of Workday highlighted the company's solid quarter driven by AI and platform innovation, as well as international momentum [4] - Workday's value proposition includes helping customers navigate AI transformation and streamline operations [4] Stock Performance - Workday's stock price decreased by 6.35% to $213.13 in extended trading following the earnings report [5]

Financial Performance - Trailing twelve month subscription revenues reached $8.227 billion, demonstrating a year-over-year growth of 14.7%[9] - Trailing twelve month non-GAAP operating income was $2.511 billion, resulting in a 28.0% margin[9] - Trailing twelve month operating cash flow amounted to $2.591 billion, achieving a 28.9% margin[9] - Q2 FY26 total revenues were $2.348 billion, a 12.6% increase year-over-year[22] - Q2 FY26 subscription revenues reached $2.169 billion, reflecting a 14.0% increase year-over-year[22] - The company anticipates full year FY26 subscription revenues of $8.815 billion, representing a 14% increase year-over-year[13, 29] Customer Base and Market Position - The company serves 65%+ of the Fortune 500, including 70%+ of the top 50 Fortune 500 companies[9] - The customer community represents more than 75 million users under contract[10, 27] - The estimated total addressable market (TAM) is $160 billion[9] Strategic Initiatives - The company entered into an agreement to acquire Paradox for approximately $1 billion in cash and acquired Flowise[27] - The company launched Workday Government, a new subsidiary dedicated to serving the U.S Government[27]

[Fiscal 2026 Second Quarter Financial Results Announcement](index=1&type=section&id=Fiscal%202026%20Second%20Quarter%20Financial%20Results%20Announcement) [Financial Performance](index=1&type=section&id=Financial%20Performance) Workday reported strong Q2 FY2026 results with total revenues of $2.348 billion and subscription revenues of $2.169 billion, demonstrating significant year-over-year increases in operating income and EPS Q2 FY2026 Financial Performance Summary | Financial Metric | Q2 FY2026 | Q2 FY2025 | % Change YoY | | :--- | :--- | :--- | :--- | | Total Revenues | $2.348 B | $2.085 B | +12.6% | | Subscription Revenues | $2.169 B | $1.903 B | +14.0% | | Operating Income (GAAP) | $248 M | $111 M | +123.4% | | Operating Margin (GAAP) | 10.6% | 5.3% | +5.3 pts | | Non-GAAP Operating Income | $680 M | $518 M | +31.3% | | Non-GAAP Operating Margin | 29.0% | 24.9% | +4.1 pts | | Diluted EPS (GAAP) | $0.84 | $0.49 | +71.4% | | Non-GAAP Diluted EPS | $2.21 | $1.75 | +26.3% | | Operating Cash Flows | $616 M | $571 M | +7.9% | | 12-Month Subscription Backlog | $7.91 B | - | +16.4% | | Total Subscription Backlog | $25.37 B | - | +17.6% | - CEO Carl Eschenbach attributed the strong quarter to AI and platform innovation, international momentum, and a growing partner ecosystem[4](index=4&type=chunk) - CFO Zane Rowe announced an increase in fiscal 2026 guidance for both subscription revenue and non-GAAP operating margin, citing first-half momentum and the acquisition of Paradox[4](index=4&type=chunk) [Recent Business Highlights](index=1&type=section&id=Recent%20Business%20Highlights) Workday expanded its customer base and key relationships, strategically acquiring Paradox and Flowise to enhance AI capabilities, and launched new AI tools and a U.S. Government subsidiary - Workday announced key strategic acquisitions to enhance its AI capabilities: - **Paradox:** A definitive agreement to acquire the candidate experience agent that uses conversational AI - **Flowise:** Acquired a low-code platform for building AI agents[7](index=7&type=chunk) - The company is expanding its AI ecosystem by unveiling a new AI developer toolset and launching the Workday Agent Partner Network for building AI agents connected to its platform[7](index=7&type=chunk) - New customer wins include Banamex, Carrefour, Masan Group, Memorial Health, and Red Coats, with expanded relationships including Google, Nationwide Insurance, and Qantas Airways[7](index=7&type=chunk) - Workday launched Workday Government, a new subsidiary dedicated to serving the U.S. Government, and expanded its presence in India with a new president and commitment to a local data center[7](index=7&type=chunk)[12](index=12&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Outlook) Workday raised its full-year fiscal 2026 guidance, projecting subscription revenues of $8.815 billion (14.2% growth) and a non-GAAP operating margin of approximately 29.0% Q3 Fiscal 2026 Outlook | Guidance Metric | Q3 Fiscal 2026 Outlook | | :--- | :--- | | Subscription Revenues | $2.235 billion (+14.1% growth) | | Non-GAAP Operating Margin | 28.0% | Full Year Fiscal 2026 Outlook (Updated) | Guidance Metric | Full Year Fiscal 2026 Outlook (Updated) | | :--- | :--- | | Subscription Revenues | $8.815 billion (+14.2% growth) | | Non-GAAP Operating Margin | ~29.0% | [Financial Statements](index=5&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of July 31, 2025, Workday's balance sheet shows stable total assets of $17.96 billion, with total liabilities at $8.79 billion and stockholders' equity at $9.17 billion Condensed Consolidated Balance Sheet Data (in millions) | Balance Sheet Item (in millions) | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | Cash, cash equivalents, and marketable securities | $8,186 | $8,017 | | Total Assets | $17,961 | $17,977 | | Unearned Revenue (Current) | $3,852 | $4,467 | | Total Liabilities | $8,789 | $8,943 | | Total Stockholders' Equity | $9,172 | $9,034 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 FY2026, Workday reported total revenues of $2.348 billion and net income of $228 million, a significant increase from the prior year, driven by strong subscription services revenue growth Condensed Consolidated Statements of Operations (in millions) | Income Statement (in millions) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Subscription Services Revenue | $2,169 | $1,903 | | Total Revenues | $2,348 | $2,085 | | Total Costs and Expenses | $2,100 | $1,974 | | Operating Income | $248 | $111 | | Net Income | $228 | $132 | | Diluted Net Income per Share | $0.84 | $0.49 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q2 FY2026, net cash provided by operating activities was $616 million, leading to free cash flow of $588 million after capital expenditures, with $348 million used in financing activities Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow (in millions) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $616 | $571 | | Capital expenditures | $(28) | $(55) | | Net cash used in financing activities | $(348) | $(347) | | Repurchases of common stock | $(298) | $(312) | [Non-GAAP Financial Measures](index=8&type=section&id=Non-GAAP%20Financial%20Measures) [Reconciliation of GAAP to Non-GAAP Data](index=8&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Data) For Q2 FY2026, non-GAAP operating income was $680 million (29.0% margin) and non-GAAP diluted EPS was $2.21, significantly higher than GAAP figures, primarily adjusted for share-based compensation Reconciliation of GAAP to Non-GAAP Operating Income (in millions) | Reconciliation (in millions) | Three Months Ended July 31, 2025 | | :--- | :--- | | **GAAP Operating Income** | **$248** | | Share-based compensation expense | $391 | | Amortization of acquisition-related intangible assets | $21 | | Other adjustments | $20 | | **Non-GAAP Operating Income** | **$680** | Reconciliation of GAAP to Non-GAAP Diluted Net Income per Share | Reconciliation | Three Months Ended July 31, 2025 | | :--- | :--- | | **GAAP Diluted Net Income per Share** | **$0.84** | | Share-based compensation expense | $1.45 | | Income tax effects | $(0.24) | | Other adjustments | $0.16 | | **Non-GAAP Diluted Net Income per Share** | **$2.21** | Free Cash Flow (in millions) | Free Cash Flow (in millions) | Three Months Ended July 31, 2025 | | :--- | :--- | | Net cash provided by operating activities | $616 | | Less: Capital expenditures | $(28) | | **Free cash flows** | **$588** | [Explanation of Non-GAAP Measures](index=9&type=section&id=Explanation%20of%20Non-GAAP%20Measures) Management uses non-GAAP measures to evaluate financial performance by excluding items not reflective of ongoing operations, such as share-based compensation, to provide a clearer view of core business - Management uses non-GAAP financial measures for internal budgeting, forecasting, and evaluating the company's financial performance, believing it allows for more meaningful trend analysis[29](index=29&type=chunk) - Key items excluded from GAAP results to calculate non-GAAP measures include: - Share-based compensation expense - Employer payroll tax on employee stock transactions - Amortization of acquisition-related intangible assets - Acquisition-related costs - Restructuring costs - Gains and losses on strategic investments[28](index=28&type=chunk)[30](index=30&type=chunk)[34](index=34&type=chunk) [Other Information](index=3&type=section&id=Other%20Information) [About Workday](index=3&type=section&id=About%20Workday) Workday is an AI platform for managing people, money, and agents, serving over 11,000 organizations globally, including over 65% of the Fortune 500, with more than 75 million users under contract - Workday is an AI platform for managing people, money, and agents, built with AI at the core[10](index=10&type=chunk) - The company serves over **11,000 organizations worldwide**, including more than **65% of the Fortune 500**, and has over **75 million users** under contract[10](index=10&type=chunk)[12](index=12&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This section cautions investors that the press release contains forward-looking statements, including financial guidance and acquisition plans, which are subject to various risks and uncertainties - The press release contains forward-looking statements regarding financial guidance (subscription revenues, non-GAAP operating margin) and the planned acquisition of Paradox[13](index=13&type=chunk) - These statements are subject to risks and uncertainties, including security breaches, economic volatility, competition, regulatory risks related to AI, and the ability to realize benefits from acquisitions[13](index=13&type=chunk)

Core Insights - Workday, Inc. reported total revenues of $2.348 billion for the fiscal second quarter of 2026, reflecting a year-over-year increase of 12.6% [1][6] - Subscription revenues reached $2.169 billion, marking a 14.0% increase compared to the same period last year [1][6] - The company has raised its fiscal 2026 subscription revenue guidance to $8.815 billion, indicating a growth of 14% [4] Financial Performance - Operating income for the second quarter was $248 million, representing 10.6% of total revenues, compared to $111 million (5.3% of revenues) in the same quarter of the previous year [6] - Non-GAAP operating income was $680 million, or 29.0% of revenues, up from $518 million (24.9% of revenues) year-over-year [6][21] - Diluted net income per share increased to $0.84 from $0.49 in the same quarter last year, while non-GAAP diluted net income per share rose to $2.21 from $1.75 [6][21] Subscription Backlog - The 12-month subscription revenue backlog stood at $7.91 billion, a 16.4% increase year-over-year [6] - Total subscription revenue backlog reached $25.37 billion, reflecting a 17.6% growth compared to the previous year [6] Cash Flow and Share Repurchase - Operating cash flows were $616 million, compared to $571 million in the same period last year [6] - Free cash flows amounted to $588 million, up from $516 million year-over-year [6] - The company repurchased approximately 1.2 million shares of Class A common stock for $299 million as part of its share repurchase program [6] Strategic Initiatives - Workday's growth is attributed to its AI and platform innovation, as well as international momentum and an expanding ecosystem [4] - The acquisition of Paradox is expected to contribute positively to the company's growth initiatives [4]

Paradox's Candidate Experience Agent Delivers Superior Candidate Care, Accelerated Candidate Conversion and Time-to-HireThe Addition of Paradox Will Give Workday an AI-Powered Talent Acquisition Suite for Every Worker and Every Type of WorkPLEASANTON, Calif., Aug. 21, 2025 /PRNewswire/ -- Workday, Inc. (NASDAQ: WDAY), the AI platform for managing people, money, and agents, has entered into a definitive agreement to acquire Paradox, a candidate experience agent that uses conversational AI to simplify every s ...

Workday, Inc. WDAY will release financial results for the second quarter after the closing bell on Thursday, Aug. 21. Analysts expect the Pleasanton, California-based company to report quarterly earnings at $2.12 per share, up from $1.75 per share in the year-ago period. Workday projects to report quarterly revenue at $2.34 billion, compared to $2.08 billion a year earlier, according to data from Benzinga Pro. On Aug. 14, Workday, announced it has acquired Flowise. Workday shares fell 1% to close at $227.49 ...

Key Takeaways WDAY to report Q2 results on Aug. 21, subscription services revenues are projected to grow 13.5% YOY.Strong focus on AI integration across Workday product suite is a major growth driver.Healthy traction in multiple verticals like education, financial services, retail will likely boost net sales.Workday, Inc. (WDAY) is set to release second-quarter fiscal 2026 results on Aug. 21, after the closing bell. In the trailing four quarters, the company delivered an earnings surprise of 9.75%, while in ...