Workday Financial Performance Shows Strong Growth in Q2 2026
Workday Reports Fiscal 2026 Second Quarter Financial Results
Impressive Revenue Growth
Workday, Inc. (NASDAQ: WDAY), a leader in enterprise cloud applications for finance and human resources, has unveiled its financial results for the second quarter of Fiscal 2026, noting total revenues of $2.348 billion, marking a robust increase of 12.6% compared to the previous year's quarter. Subscription revenues again showcased strength, reaching $2.169 billion, up 14.0% year-over-year.
Details on Financial Performance
Additionally, the company reported operating income of $248 million, representing 10.6% of revenues, versus $111 million or 5.3% of revenues from the same quarter last year. Non-GAAP operating income for the quarter stood at $680 million, translating into a 29.0% operating margin, considerably higher than 24.9% from the prior year.
Net Income Highlights
For the second quarter, Workday's diluted net income per share was $0.84, compared to $0.49 in the same quarter of the previous fiscal year. Furthermore, the non-GAAP diluted net income per share also saw a boost, calculated at $2.21, up from $1.75 from the corresponding period last year.
Subscription Revenue Backlog
Strong Backlog Numbers
Workday's subscription revenue backlog turned heads with a reported 12-month figure at $7.91 billion, which reflects a 16.4% increase from the prior year. In the overarching total subscription revenue backlog, the figure rose to $25.37 billion, showcasing a significant 17.6% year-over-year increase.
Cash Flow and Share Repurchase
The company's operating cash flows were reported at $616 million for the quarter, a rise from $571 million year-over-year, while free cash flows increased to $588 million compared to $516 million last year. During this quarter, Workday initiated the repurchase of approximately 1.2 million shares of Class A common stock, totaling $299 million.
Comments from Leadership
Leadership Insights
CEO, Carl Eschenbach expressed enthusiasm for the second quarter results, emphasizing the role of Workday's capabilities in AI and innovative solutions which have become pivotal for customers, aiding them in enhancing operations and navigating the complexities of technological transformation.
CFO, Zane Rowe, reaffirmed their growth initiatives, adding that with the acquisition of Paradox, a candidate experience agent, Workday is optimistic about its future trajectory, expecting to increase its fiscal 2026 subscription revenue guidance to $8.815 billion, illustrating a 14% growth projection alongside an enhanced operating margin target of approximately 29%.
Recent Business Developments
Expansion and New Partnerships
The quarter also saw Workday welcoming a slew of new customers including Banamex and Carrefour, while enhancing engagement with key partners like Google and Nationwide Insurance. Moreover, through the acquisition of Paradox, the company aims to revolutionize the job application experience via AI capabilities, signifying a broader push toward innovative technologies.
Financial Outlook
Guidance for Future Performance
For the upcoming third quarter of Fiscal 2026, Workday outlined subscription revenues expected to hit $2.235 billion with a 14.1% growth forecast, while also enhancing its full-year subscription revenue guidance as previously mentioned.
Frequently Asked Questions
What are the key financial figures that Workday reported?
Workday reported total revenues of $2.348 billion and subscription revenues of $2.169 billion for Q2 of Fiscal 2026, marking significant year-over-year growth.
How much did Workday's share repurchase program amount to?
During the second quarter, Workday repurchased approximately 1.2 million shares of its Class A common stock, totaling $299 million.
What is Workday's outlook for Fiscal 2026?
Workday anticipates a subscription revenue of $8.815 billion for Fiscal 2026, alongside a projected non-GAAP operating margin of approximately 29%.
Which companies were highlighted as new customers for Workday?
Notable new customers include Banamex, Carrefour, and Masan Group, among others, indicating strong market traction.
What is Workday's approach regarding AI technologies in their operations?
Workday emphasizes utilizing AI technologies to enhance operational efficiency and improve customer value, positioning itself as a frontrunner in AI-driven enterprise solutions.
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