Workday Q2 Earnings Beat Estimates on Solid Revenue Growth

Core Insights - Workday, Inc. (WDAY) reported strong second-quarter fiscal 2026 results, with both revenue and net income exceeding Zacks Consensus Estimates, driven by customer wins across various industries and a focus on innovation and international expansion [1][2][4] Financial Performance - Net income on a GAAP basis was $228 million or 84 cents per share, up from $132 million or 49 cents in the year-ago quarter, with non-GAAP net income per share at $2.21 compared to $1.75 previously, beating estimates by 12 cents [2] - Net sales for the quarter reached $2.34 billion, an increase from $2.08 billion year-over-year, surpassing estimates by $8 million, supported by demand for Human Capital Management and financial management solutions [3][5] - Subscription services revenues were $2.2 billion, up from $1.9 billion year-over-year, with a 12-month subscription revenue backlog of $7.91 billion, reflecting a 16.4% increase [5] Operational Highlights - Operating income was $248 million compared to $111 million in the prior year, with non-GAAP operating income at $680 million, up from $518 million, resulting in margins of 29% and 24.9% respectively [6] - The company generated $616 million in cash from operating activities, an increase from $571 million in the prior-year quarter, and had cash and cash equivalents of $8.19 billion as of July 31, 2025 [7] Future Outlook - For the third quarter of fiscal 2026, Workday expects Subscription services revenues to be $2.41 billion, indicating a 12% growth, with professional services revenues estimated at $180 million [10] - For the full fiscal 2026, subscription revenues are projected to be $9.51 billion, reflecting a 13% year-over-year growth, with professional services revenues expected to be around $700 million [11]