Workday (WDAY) Q1 2027 earnings summary

Executive summary

• Achieved best first quarter of new ACV growth in five years, with total revenues reaching $2.542 billion, up 13.5% year-over-year, driven by strong subscription services, accelerating AI adoption, and customer expansion.

• Renewed focus on AI innovation, customer growth, and values, with fully integrated Sana and Paradox acquisitions and Sana now the default front end for all customers on AI terms.

• Over 4,000 customers use at least one organically developed AI agent, with agentic AI ARR approaching $500 million and new AI-driven products launched, including Sana Travel Agent and Sana for ITSM.

• Customer base expanded with new and existing clients, surpassing 80 million users under contract and notable deals in education, government, and international markets.

• Operating income rose to $338 million (13.3% GAAP margin), with non-GAAP operating income at $809 million (31.8% margin), and free cash flow increased 46% to $616 million.

Financial highlights

• Q1 subscription revenue reached $2.354 billion, up 14.3% year-over-year; total revenue was $2.542 billion, up 13.5%.

• U.S. revenue grew to $1.89 billion; international revenue rose to $649 million.

• 12-month subscription revenue backlog (CRPO) was $8.81 billion, up 15.5%; total backlog $27.294 billion, up 10.9%.

• Non-GAAP operating income was $809 million (31.8% margin); GAAP operating income was $338 million (13.3% margin).

• Operating cash flow was $696 million, up 52%; free cash flow was $616 million, up 46%; cash and marketable securities at quarter end totaled $4.4 billion.

Outlook and guidance

• FY 2027 subscription revenue outlook reiterated at $9.925–$9.950 billion, 12–13% growth; total revenue projected at $10.635–$10.660 billion.

• Q2 FY 2027 subscription revenue expected at $2.455 billion, up 13%; CRPO to increase 13.5–14.5%.

• FY 2027 non-GAAP operating margin guidance raised to 30.5%; Q2 margin expected at 30%.

• FY 2027 operating cash flow outlook maintained at $3.45 billion; free cash flow expected at $3.18 billion, up 15%.

• Capital expenditures for fiscal 2027 projected at $270 million.