Live: Will Worday Outperform Q4 Earnings Estimates Tonight?
Key Points
- treet modeling ~12% revenue growth and ~21% EPS growth this quarter; full-year growth ~13%/20%.
- Focus on AI agents monetization and platform leverage (ExtendPro, partner apps) to drive H2 acceleration.
- Watch cRPO and margin cadence as management reiterated FY26 outlook and flagged a faster H2 ramp.
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My takeaway from the quarter
| Metric | Prior FY26 | Post-Guide FY26 | Shift |
|---|---|---|---|
| Subscription Rev | ~$8.78B | $8.815B | ✅ Higher |
| Margin | ~28.5% | 29.0% | ✅ Higher |
Takeaways
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Bullish: AI adoption now tied directly to revenue and backlog; raised guide confirms momentum.
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Balanced: Still exposed to macro deal cycle elongation, but backlog growth suggests resilience.
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Bearish: Heavy reliance on subscription renewals and expansions — any slowdown in large-enterprise IT spend could bite.
Key Operating Highlights
| KPI | Q2 Result | YoY | Context |
|---|---|---|---|
| Total Revenue | $2.35B | +12.6% | Slight beat; driven by subscription growth |
| Subscription Revenue | $2.17B | +14.0% | Core driver, consistent acceleration |
| Backlog (12-mo cRPO) | $7.91B | +16.4% | Demand signals remain strong |
| Non-GAAP Operating Margin | 29.0% | +410bps | Clear operating leverage |
| FCF | $588M | +14% | Cash conversion intact |
Guidance Update
| Metric | FY26 Prior | FY26 New | Direction |
|---|---|---|---|
| Subscription Revenue | ~$8.78B (implied) | $8.815B (+14.2%) | 📈 Raised |
| Non-GAAP Operating Margin | ~28.5% | 29.0% | 📈 Raised |
| Q3 Subscription Revenue | N/A | $2.235B (+14.1%) | 📈 Positive cadence |
More highlights
Revenue Forecast
• Subscription revenues of $2.235 billion for Q3 2026, representing growth of 14.1%
Product Segments
• Subscription revenues of $2.169 billion, up 14.0% year-over-year
Rnd Pipeline
• Unveiled a new AI developer toolset and introduced the Workday Agent Partner Network
Performance Drivers
• AI and platform innovation, international momentum
Growth Initiatives
• Acquisition of Paradox and Flowise, expansion in India
Industry Tailwinds
• Growing demand for AI-driven enterprise solutions
Numbers are in and stock up 4.65%
After-Hours Stock Move: WDAY +4.65%; INTU –5% (contrast shows market rewarding WDAY’s beat while punishing INTU despite solid results).
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Earnings vs. Estimates
| Metric | Reported | Consensus | Beat/Miss |
|---|---|---|---|
| Q2 Revenue | $2.35B | $2.34B | ✅ Beat |
| Q2 EPS (Non-GAAP) | $2.21 | $2.12 | ✅ Beat |
| Subscription Revenue | $2.17B | ~$2.16B | ✅ Beat |
| cRPO (12-mo backlog) | $7.91B | ~$7.85B implied | ✅ Beat |
Quick Take: Workday beat across revenue, EPS, and backlog, with subscription growth +14% and margins expanding to 29%. Importantly, management raised FY26 subscription revenue and margin guidance, driving the stock higher.
Earnings History
Four straight beats, but mixed stock reactions—three negative and one strong positive—raising the bar for tangible proof that AI/platform initiatives can drive H2 acceleration and sustained margin delivery.
| Quarter | EPS Surprise | 1-Day Move | 7-Day Move | 14-Day Move |
|---|---|---|---|---|
| Q1 FY2026 (May 22, 2025) | +10.95% | –12.52% | –7.70% | –7.86% |
| Q4 FY2025 (Feb 25, 2025) | +7.87% | +6.22% | –0.57% | –1.80% |
| Q3 FY2025 (Nov 26, 2024) | +7.39% | –6.21% | –1.40% | +2.89% |
| Q2 FY2025 (Aug 22, 2024) | +6.06% | +12.49% | +12.65% | +8.70% |
Worday (NASDAQ:WDAY) reports after the close. The setup: macro remains choppy, but Q1 showed healthy backlog, strong margins, and accelerating AI adoption across the suite. This print matters because management is guiding to faster growth in the back half and is leaning into AI agents, platform extensibility, and the medium-enterprise motion to sustain double-digit top-line with disciplined margins. Confirmation on demand signals (cRPO, win rates) and AI monetization is key.
Estimates Snapshot
- Revenue (Q2 FY26): $2.34B
- EPS (Q2 FY26, Normalized): $2.12
- FY2026 Revenue: $9.51B
- FY2026 EPS: $8.76
Key Areas to Watch
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AI agents monetization & attach – New ACV across AI products more than doubled YoY; ~25% of expansions included an AI SKU. Investors will look for contribution to cRPO and evidence that agents become needle-movers in H2.
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Platform leverage: ExtendPro & marketplace – ExtendPro more than doubled YoY; partner ecosystem expanding with 25 new marketplace apps in Q1 and increasing partner-sourced pipeline. Expect questions on ecosystem revenue and pull-through.
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Demand indicators & guidance cadence – Q1 cRPO up ~15.6%; FY26 subscription revenue guide reiterated with an expected H2 acceleration; Q2 cRPO guide +15–16% (incl. ~1-pt tenant impact). Update on billings vs. backlog will be scrutinized.
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WorkdayGO (mid-market) traction – Launch targeting 30–60-day implementations for emerging/medium enterprise; watch pipeline build and time-to-value as a growth vector.
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Margin discipline & capital return – FY26 non-GAAP margin outlook ~28.5% with continued AI and go-to-market investment; incremental buyback authorization underscores balance in capital allocation.
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