Workday (WDAY) Reports Fiscal 2026 Second Quarter Financial Earnings Results

Workday, Inc. (WDAY) today announced its financial results for the most recent quarter, revealing a mixed performance. The company reported quarterly revenue of $2.348 billion, slightly surpassing analysts’ expectations by approximately $5.8 million. However, Workday fell short on earnings per share, posting a figure of $0.84, which missed the estimate of $2.11 by a significant margin.

Key Highlights:

• Total revenues for Q2 FY2026 reached $2.348 billion, a 12.6% increase year-over-year.
• Subscription revenues were $2.169 billion, up 14.0% from the previous year.
• Operating income improved to $248 million (10.6% of revenues), compared to $111 million (5.3% of revenues) in Q2 FY2025.
• Non-GAAP operating income was $680 million (29.0% of revenues), up from $518 million (24.9% of revenues) year-over-year.
• 12-month subscription revenue backlog increased by 16.4% to $7.91 billion.
• Workday repurchased approximately 1.2 million shares for $299 million.
• The company announced an increase in fiscal 2026 subscription revenue guidance to $8.815 billion, reflecting a growth of 14%.

Summary: Workday reported strong financial results for the second quarter of fiscal 2026, with total revenues of $2.348 billion, marking a 12.6% increase year-over-year. Subscription revenues also saw significant growth, rising 14% to $2.169 billion. The company’s operating income more than doubled from the previous year, reaching $248 million, while non-GAAP operating income rose to $680 million, reflecting the strength of Workday’s platform and its ongoing growth initiatives. CEO Carl Eschenbach highlighted that “customers are choosing Workday because we help them unlock value today and prepare for what’s next,” emphasizing the company’s focus on AI and platform innovation.

In addition to strong financial performance, Workday announced an increase in its fiscal 2026 subscription revenue guidance to $8.815 billion, which represents a growth of 14%. CFO Zane Rowe noted that the results reflect the company’s momentum and progress across various growth initiatives, including the recent acquisition of Paradox, which aims to enhance the candidate experience through AI. Workday’s commitment to innovation and customer satisfaction is further demonstrated by its expanding customer base and strategic partnerships, positioning the company for continued success in the future.

Workday, Inc. (WDAY) has experienced a mixed bag of price changes recently, with a modest increase of 1.98% over the past week, but a more concerning decline of 16.93% over the last three months. This volatility may raise eyebrows among investors, especially given the company’s high price-to-earnings ratio of 126.12, which suggests that the stock is trading at a premium compared to its earnings. On a more positive note, Workday has demonstrated solid revenue growth with a two-year compound annual growth rate (CAGR) of 15.92%, alongside an impressive free cash flow CAGR of 43.60%. However, the company’s net profit margin of 5.66% and return on invested capital of 5.63% indicate that there is still room for improvement in profitability. As the market digests these metrics, investors will be keenly watching how Workday navigates its growth trajectory amidst the recent price fluctuations. Overall, while the fundamentals show promise, the stock’s performance suggests a cautious approach may be warranted.

Workday, Inc. provides enterprise cloud applications in the United States and internationally. The company’s applications help its customers to plan, execute, analyze, and extend to other applications and environments, and to manage their business and operations. It offers a suite of financial management applications, which enable chief financial officers to maintain accounting information in the general ledger; manage financial processes; identify real-time financial, operational, and management insights; enhance financial consolidation; reduce time-to-close; promote internal control and auditability; and achieve consistency across finance operations. The company also provides cloud spend management solutions that helps organizations to streamline supplier selection and contracts, manage indirect spend, and build and execute sourcing events, such as requests for proposals; Human Capital Management (HCM) solution, a suite of human capital management applications that allows organizations to manage the entire employee lifecycle from recruitment to retirement, and enables HR teams to hire, onboard, pay, develop, reskill, and provide employee experiences; Workday applications for planning; and applications for analytics and reporting, including augmented analytics to surface insights to the line of business in simple-to-understand stories, machine learning to drive efficiency and automation, and benchmarks to compare performance against other companies. It serves professional and business services, financial services, healthcare, education, government, technology, media, retail, and hospitality industries. The company was formerly known as North Tahoe Power Tools, Inc. and changed its name to Workday, Inc. in July 2005. Workday, Inc. was incorporated in 2005 and is headquartered in Pleasanton, California.