Workday Q2 Revenue Rises 13% as AI Drives New Business Growth

Workday reported fiscal second-quarter revenue of $2.65 billion, up 12.8% from a year earlier, as subscription revenue increased 13.9% to $2.47 billion. Operating income rose to $313 million from $248 million, while non-GAAP diluted earnings increased to $2.75 per share from $2.21.

The company said AI generated more than 25% of new annual contract value during the quarter, while more than 5,500 customers were using at least one of Workday's internally developed AI agents, up more than 35% from the previous quarter. Twelve-month subscription revenue backlog increased 14.2% to $9.03 billion, and total subscription revenue backlog reached $27.4 billion.

Workday also announced that its board authorized the repurchase of up to an additional $4 billion of Class A common stock, with no expiration date. The company repurchased approximately $1.3 billion of shares during the second quarter. Operating cash flow was $520 million, compared with $616 million a year earlier, while free cash flow declined to $460 million from $588 million.

For fiscal 2027, Workday expects subscription revenue of $9.94 billion to $9.95 billion, representing 13% growth, and increased its non-GAAP operating-margin guidance to 31%. For the third quarter, the company expects subscription revenue of $2.515 billion, up 12%, and a non-GAAP operating margin of 30%.