Subscription backlog grew to $27.4 billion
Total subscription revenue backlog was $27.4 billion as of July 31, 2026, up 8% year over year, while 12-month subscription revenue backlog rose 14% to $9.0 billion.
Source: 10-Q Item 2 MD&A
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Workday's second quarter of fiscal 2027 (three months ended July 31, 2026) was defined by sustained subscription revenue growth and an unusually large income tax benefit. Subscription services revenue grew 14%, with roughly 60% of the increase coming from expansion within existing customers. The tax benefit stemmed from a $374 million deferred tax asset tied to an intra-entity transfer of intellectual property, while management said sales cycles lengthened in government, higher education, and healthcare due to federal funding scrutiny. Cash and marketable securities declined as the company completed its share repurchase authorization.
Revenue
$2.65B
+12.82% YoY
EPS (Diluted)
$2.57
+205.95% YoY
Operating Income
$313M
+26.21% YoY
Source: SEC XBRL
Workday (WDAY) reported Q2 FY2027 revenue of $2.65B, up 12.8% year over year. Operating margin was 11.8%, up 1.2 points from 10.6% a year earlier. WDAY's fiscal Q2 FY2027 corresponds to calendar Q3 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Sep 2026 | 2.75 | 2.66 | Beat +3.4% |
| Jun 2026 | 2.66 | 2.56 | Beat +4.0% |
| Mar 2026 | 2.47 | 2.37 | Beat +4.2% |
| Dec 2025 | 2.32 | 2.23 | Beat +4.1% |
Compiled by AI from 10-Q Item 2 of this filing
Total subscription revenue backlog was $27.4 billion as of July 31, 2026, up 8% year over year, while 12-month subscription revenue backlog rose 14% to $9.0 billion.
Source: 10-Q Item 2 MD&A
Management disclosed a gross revenue retention rate of approximately 97% as of July 31, 2026, indicating strong existing customer retention before expansion.
Source: 10-Q Item 2 MD&A
The income tax benefit of $305 million for the quarter included a $374 million deferred tax asset from an intra-entity transfer of intellectual property rights, making net income growth partly non-recurring.
Source: 10-Q Item 2 MD&A
Workday completed its $4.0 billion September 2025 repurchase authorization during Q2 FY2027 and had no authorization remaining as of July 31, 2026; in August 2026 the board authorized an additional $4.0 billion.
Source: 10-Q Item 2 MD&A
Management said deal scrutiny and lengthening sales cycles are most evident in government, higher education, and healthcare, which are tied to federal funding, and it has provided some customers more flexible payment terms.
Source: 10-Q Item 2 MD&A
Compiled by AI from 10-Q Item 1A of this filing · 4 high, 1 medium, 0 low
Workday warns that any compromise of its information technology systems or security measures, including those of critical suppliers and service partners, or unauthorized access to customer or user data could materially harm its business. Because it processes large amounts of sensitive data, such incidents could cause significant disruption, data loss, or liability.
Source: 10-Q Item 1A Risk Factors
Workday depends on data centers operated by third parties and internet availability. Disruptions, capacity constraints, or service outages could interrupt customer access, damage reputation, cause refunds or contract terminations, and reduce renewal rates.
Source: 10-Q Item 1A Risk Factors
The enterprise cloud application market is highly competitive, with primary competitors Oracle and SAP, as well as Microsoft, ServiceNow, UKG and others. Workday also faces emerging competition from non-specialist AI solutions using large language models and general-purpose agents, which could pressure pricing and market share.
Source: 10-Q Item 1A Risk Factors
Workday is investing heavily in generative and agentic AI, but these technologies carry operational, legal, and reputational risks. If AI solutions fail to operate as expected, generate inaccurate outputs, or cannot be monetized, the company's business and reputation could be harmed.
Source: 10-Q Item 1A Risk Factors
Workday's success depends on attracting and retaining highly skilled employees, especially in AI and emerging technologies. In February 2026, Aneel Bhusri became CEO, and the company warns that executive leadership changes could disrupt the business and culture.
Source: 10-Q Item 1A Risk Factors
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 2.65 $B | 2.35 $B | +12.82% |
Operating Income $M | 313.00 $M | 248.00 $M | +26.21% |
Net Income $M | 632.00 $M | 228.00 $M | +177.19% |
EPS (Basic) $ | 2.58 $ | 0.86 $ | +200.00% |
EPS (Diluted) $ | 2.57 $ | 0.84 $ | +205.95% |
R&D Expense $M | 747.00 $M | 660.00 $M | +13.18% |
Answers draw on this SEC filing and the data on this page
Workday delivered stronger Q1 FY2027 profitability and cash generation, with revenue up 13.5% to $2.542B, GAAP operating margin expanding to 13.3% from 1.8%, and free cash flow rising 46% to $616M, although macro-driven sales-cycle pressure and substantial share repurchases reduced liquidity. Source: 10-Q Item 2 MD&A, pp.25, 30-32.
Workday (WDAY) delivered strong FY2026 results with revenue growing 13.1% to $9.55B, operating income surging 73.7% to $721M, and operating cash flow rising 19.4% to $2.94B, while aggressively returning $2.90B to shareholders via buybacks.
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