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Workday, Inc.: Q1 FY2027 earnings call

What management said about Q1 FY2027, from the documents filed with the SEC on 21 May 2026: press release. Guidance figures: 1 raised, 2 new, 1 kept. The quarter’s numbers.

Key takeaways

  • Total revenue grew 13.5%: Total revenues were $2.542 billion, up 13.5%, with professional services at $188 million against $181 million a year earlier. Source
  • Non-GAAP operating margin reached 31.8%: Non-GAAP operating income was $809 million, or 31.8% of revenues, against $677 million, or 30.2%, a year earlier. Source
  • Organically developed agent use doubled: Customers using Workday's organically developed agents more than doubled quarter over quarter. Source
  • 12-month backlog grew 15.5%: 12-month subscription revenue backlog was $8.806 billion, up 15.5%, compared with $8.833 billion in the prior release. Source
  • $1.6 billion of shares repurchased: About 12.0 million Class A shares were repurchased for $1.6 billion, against $290 million of repurchases a year earlier. Source
  • Agentic AI roadmap remains the focus: The CFO said the company's focus remains on executing its agentic AI roadmap while driving operational efficiencies as it scales. Source

“We had a great Q1, and it makes one thing clear: Workday is ready for this AI moment.”

Aneel Bhusri, co-founder, CEO, and chair, Workday

Guidance

AreaPeriodFigureAgainst last quarter
Subscription revenue SourceSecond quarter of fiscal 2027 (ending July 31, 2026)$2.455 billion, growth of 13%New
Non-GAAP operating margin SourceSecond quarter of fiscal 2027 (ending July 31, 2026)30.0%New
Subscription revenue SourceFiscal 2027 full year (ending January 31, 2027)$9.925 billion to $9.950 billion, growth of 12% to 13%Kept
Non-GAAP operating margin SourceFiscal 2027 full year (ending January 31, 2027)30.5%Raised from 30.0%

What changed from last quarter

  • Guidance raised: Full-year fiscal 2027 non-GAAP operating margin guidance raised from 30.0% to 30.5%. Source
  • New guidance: Guidance given for the quarter ending July 31, 2026, which the prior release did not include. Source
  • Guidance kept: Full-year fiscal 2027 subscription revenue guidance reiterated at $9.925 billion to $9.950 billion. Source
  • New: Workday expanded into Vietnam, its sixth market in the ASEAN region. Source
  • New: Workday Agent System of Record became generally available. Source

Results and growth drivers

  • Total revenue grew 13.5%: Total revenues were $2.542 billion, up 13.5%, with professional services at $188 million against $181 million a year earlier. Source
  • Operating income versus restructuring year: Operating income was $338 million, or 13.3% of revenues. The prior-year quarter included $166 million of restructuring expenses; this quarter had none. Source
  • Diluted EPS and non-GAAP EPS: Diluted net income per share was $0.87, against $0.25. Non-GAAP diluted net income per share was $2.66, against $2.23 a year earlier. Source

Costs and margins

  • Non-GAAP operating margin reached 31.8%: Non-GAAP operating income was $809 million, or 31.8% of revenues, against $677 million, or 30.2%, a year earlier. Source
  • Subscription and product costs rose: Costs of subscription services were $412 million against $350 million. Product development was $705 million against $663 million, and sales and marketing $679 million against $623 million. Source
  • Share-based compensation declined: Share-based compensation expense was $409 million against $459 million. The non-GAAP reconciliation excludes this expense. Source

“Our first quarter results demonstrate ongoing customer adoption across our platform, as enterprises around the globe turn to Workday to manage and empower their most important assets”

Zane Rowe, CFO, Workday

Products and customers

  • Organically developed agent use doubled: Customers using Workday's organically developed agents more than doubled quarter over quarter. Source
  • Recruiting Agent hiring volume up 44%: The Recruiting Agent supported 14 million hiring processes in the quarter, up 44% year over year. Source
  • Sana and new agents launched: Sana is now available worldwide. Workday also introduced Sana for IT Service Management and a Travel Agent that brings travel and expenses together. Source
  • New customers and expanded accounts named: New customers included ACHM Hotels by Marriott and Smiths Group, among others. Existing relationships expanded with Bank OZK, GE Vernova, and Queensland University of Technology. Source

Regions and public sector

  • Vietnam added as ASEAN market: Workday expanded into Vietnam, joining Singapore, Malaysia, Thailand, Indonesia, and the Philippines in the ASEAN region. Source
  • EU data residency in Frankfurt: Workday announced EU-based data residency in Frankfurt and multilingual support for Contract Lifecycle Management, aimed at EU data residency requirements. Source
  • Public sector and veteran hiring tools: New tools include the Personnel Action Request Agent for federal HR transactions and Military Skills Mapper for hiring veteran talent. Source

Demand and backlog

  • 12-month backlog grew 15.5%: 12-month subscription revenue backlog was $8.806 billion, up 15.5%, compared with $8.833 billion in the prior release. Source
  • Total backlog reached $27.294 billion: Total subscription revenue backlog was $27.294 billion at quarter end, compared with $28.101 billion in the prior release. Source
  • Unearned revenue lower at quarter end: Unearned revenue was $4.325 billion at April 30, 2026, against $5.010 billion at January 31, 2026. Source

Cash flow and shareholder returns

  • Operating and free cash flow rose: Operating cash flows were $696 million against $457 million, and free cash flows were $616 million against $421 million. Source
  • $1.6 billion of shares repurchased: About 12.0 million Class A shares were repurchased for $1.6 billion, against $290 million of repurchases a year earlier. Source
  • Cash and marketable securities declined: Cash, cash equivalents, and marketable securities were $4.353 billion at April 30, 2026, against $5.443 billion at January 31, 2026. Source
  • Current debt now $998 million: Current debt was $998 million at April 30, 2026, against nil at January 31, 2026, and noncurrent debt was $1.990 billion. Source
  • Capital expenditures rose: Capital expenditures were $80 million against $36 million. Sales of non-marketable equity and other investments brought in $41 million. Source

Strategy and partners

  • Agentic AI roadmap remains the focus: The CFO said the company's focus remains on executing its agentic AI roadmap while driving operational efficiencies as it scales. Source
  • Agent System of Record now available: The Workday Agent System of Record gives customers visibility and control over all of their AI agents, and is now generally available. Source
  • Microsoft partnership expanded: Workday expanded its Microsoft partnership, announced partner offerings with Achievers and Insperity, and added Morgan Stanley at Work and PerkSpot to its Wellness program. Source

Recognition and awards

  • Gartner Customers' Choice recognition: Workday was the only vendor named a Customers' Choice in the 2026 Gartner Voice of the Customer for Cloud ERP, for two consecutive years. Source
  • Gartner Leader for student systems: Workday was named a Leader in the Gartner Magic Quadrant for Student Information Systems. Source
  • Ethisphere ethics recognition: Workday was named one of the 2026 World's Most Ethical Companies by Ethisphere, for the sixth consecutive year. Source
  • KLAS best-in-class ERP recognition: KLAS Research named Workday the 2026 Best in KLAS winner for ERP for large organizations. Source

Figures management reported

FigureReported
Subscription revenue Source$2.354 billion, up 14.3%
12-month subscription revenue backlog Source$8.806 billion, up 15.5%
Total subscription revenue backlog Source$27.294 billion, up 10.9%
Customers Sourcemore than 11,500 organizations
Large customers Sourcemore than 65% of the Fortune 500
Customers using organically developed agents Sourceover 4,000
Users under contract Sourcemore than 80 million

Earlier plans management reported on

  • Not stated: Earlier guidance for the quarter just reported. The release does not state whether it was met.

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.