Workday Reports Strong Growth for Fiscal 2026 Second Quarter
Workday's Impressive Fiscal 2026 Second Quarter Results
Workday, Inc. (NASDAQ: WDAY), the leading AI platform for managing people, money, and agents, has announced remarkable results for its second quarter of fiscal 2026. With total revenues of $2.348 billion, this represents a strong year-over-year increase of 12.6%. Subscription revenues are even more impressive, reaching $2.169 billion, which is a growth of 14.0% compared to the same quarter last year.
Detailed Financial Performance
The operating income showed a robust improvement, climbing to $248 million, which accounts for 10.6% of total revenues. This is a significant jump compared to the previous year where the operating income was $111 million, or 5.3% of revenues. Even more noteworthy is the non-GAAP operating income, which reached $680 million, translating to 29.0% of total revenues, up from 24.9% last year.
Profitability Metrics Highlighted
In terms of net income, Workday reported a diluted net income per share of $0.84, up from $0.49 in the same quarter the previous year. The non-GAAP diluted net income per share also increased significantly, reaching $2.21 from $1.75.
Subscription Revenue Backlog Continues to Climb
One of the key indicators of Workday's ongoing success is its 12-month subscription revenue backlog, which has increased to $7.91 billion, marking a rise of 16.4% from the same period last year. The total subscription revenue backlog now stands at an impressive $25.37 billion, reflecting a year-over-year growth of 17.6%. This strongly affirms the demand for Workday's cloud-based solutions.
Operating Cash Flows and Share Buybacks
Workday generated operating cash flows of $616 million, compared to $571 million in the second quarter of last year. Additionally, free cash flows improved to $588 million, rising from $516 million from the previous year. As part of its commitment to returning value to shareholders, Workday has repurchased approximately 1.2 million shares of its Class A common stock for $299 million.
Leadership Commentary
Carl Eschenbach, the CEO, remarked, "Workday delivered another solid quarter, driven by our AI and platform innovation, international momentum, and an ecosystem that continues to grow alongside us. Customers are choosing Workday because we help them unlock value today and prepare for what's next—whether that's navigating AI transformation, streamlining operations, or creating more meaningful work for their people." Zane Rowe, CFO, added, "Our second quarter results reflect the strength of our platform and our continued progress across several of our growth initiatives, and we are increasing our fiscal 2026 subscription revenue guidance to $8.815 billion, representing growth of 14%."
Recent Strategic Developments
Workday's growth has not only been driven by its financial results but also by strategic actions and partnerships. Some key developments include the acquisition of Paradox, a candidate experience agent using conversational AI, and Flowise, a low-code platform for building AI agents. The company has also recently launched Workday Government, a subsidiary focused on serving government clients.
Customer Base Expansion
In addition to its innovations, Workday has welcomed new customers like Banamex, Carrefour, and Memorial Health, while expanding partnerships with major businesses like Google and Nationwide Insurance. The customer community now encompasses over 11,000 organizations, representing more than 65% of the Fortune 500.
Outlook for the Future
Looking ahead, Workday forecasts its subscription revenues for the fiscal 2026 third quarter will reach $2.235 billion, with expected growth of 14.1%. For the full year, the company anticipates achieving subscription revenues of around $8.815 billion, alongside a non-GAAP operating margin near 29.0%. Workday's commitment to innovation and market leadership positions it well for continued success in this competitive landscape.
Frequently Asked Questions
What were Workday's total revenues for the second quarter of fiscal 2026?
Total revenues were $2.348 billion, reflecting a year-over-year increase of 12.6%.
How much did Workday's subscription revenues increase?
Subscription revenues reached $2.169 billion, up 14.0% compared to the same period last year.
What was the diluted net income per share?
The diluted net income per share was $0.84 for the second quarter of fiscal 2026.
What are Workday's subscription revenue backlog figures?
Workday's 12-month subscription revenue backlog was $7.91 billion, marking a rise of 16.4% year-over-year.
What future outlook has Workday provided for subscription revenues?
Workday has provided guidance of approximately $8.815 billion in subscription revenues for the fiscal year 2026.
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