Key Takeaways:
- Workday Q2 revenue rose 12.8% to $2.649B, beating consensus of $2.64B.
- AI drove more than 25% of new ACV, with 5,500+ customers using organic agents.
- FY2027 subscription revenue guidance raised to $9.940-9.950B, up 13%.
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Workday Q2 revenue up 12.8% as AI agents fuel enterprise adoption
Workday reported fiscal second-quarter revenue of $2.649 billion, up 12.8% year over year, beating analyst estimates as AI agent adoption accelerated across its enterprise platform.
"We had a strong Q2, with AI driving more than 25% of our new ACV and more than 5,500 customers now using at least one of our organic agents," Aneel Bhusri, co-founder, CEO, and chair at Workday, said.
Total revenue topped the $2.64 billion consensus compiled by LSEG. Subscription revenue rose 13.9% to $2.471 billion. Non-GAAP diluted EPS was $2.75, up from $2.21 a year earlier. GAAP net income was $632 million, or $2.57 per share, compared with $228 million, or $0.84 per share, in the prior-year quarter.
Non-GAAP operating income was $824 million, or 31.1% of revenues, up from 29.0% a year earlier. Twelve-month subscription revenue backlog reached $9.034 billion, up 14.2%, while total subscription backlog stood at $27.403 billion, up 8.0%. Operating cash flow was $520 million and free cash flow was $460 million.
"Our Q2 results reflect continued momentum across our platform, with AI emerging as a strategic driver of customer expansion," CFO Zane Rowe said. "We now expect fiscal 2027 subscription revenue of $9.940 billion to $9.950 billion, growth of 13%, while increasing our fiscal 2027 non-GAAP operating margin guidance to 31.0%."
Workday welcomed new customers including BWX Technologies, Guess, KPMG, and S-E-B, and expanded relationships with Caterpillar, Delivery Hero, Lithia & Driveway, Merck, and Novartis. The company also authorized an additional $4.0 billion share repurchase program and repurchased approximately 9.8 million shares for $1.3 billion during the quarter.
The company's agentic AI push includes the recently launched Developer Agent, which lets developers build AI apps using natural language, and Agent Passport, which tests and verifies AI agents before production deployment. Workday also expanded partnerships with Amazon Web Services and Google Cloud to integrate its data layer and agents into those platforms. The company launched a new AI research arm in August and made its Financial Audit Agent generally available, targeting faster audit evidence package creation.
For the fiscal third quarter ending October 31, Workday guided subscription revenue of $2.515 billion, representing 12% growth, with a non-GAAP operating margin of 30.0%.
The guidance raise indicates management expects AI-driven demand to sustain through the fiscal year. Investors will watch the Q3 earnings call in late November for updated agent adoption metrics and margin trajectory.
This article is for informational purposes only and does not constitute investment advice.
