Workday (WDAY) Q2 2027 earnings summary

Executive summary

• Q2 FY27 revenues reached $2.649 billion, up 12.8–13% year-over-year, with subscription revenues at $2.471 billion, up 13.9–14%.

• AI products drove over $100 million in new ACV, accounting for more than 25% of all new ACV, and over 5,500 customers now use at least one organic AI agent, up 35% from last quarter.

• Major new AI products launched, including Sana Enterprise, Adaptive Decision Intelligence, Developer Agent, and Financial Audit Agent; strategic partnerships expanded with AWS and Google Cloud.

• The company is positioning itself as an enterprise context platform, leveraging a unified data and security model for AI.

• Expanded customer base to over 11,500 globally, serving more than 65% of the Fortune 500 and 80M+ users.

Financial highlights

• Non-GAAP operating income was $824 million (31.1% margin); GAAP operating margin was 11.8%, with a $374 million non-recurring tax benefit.

• Operating cash flow was $520 million; free cash flow was $460 million, both down year-over-year due to payroll timing.

• 12-month subscription revenue backlog (cRPO) ended at $9.03 billion, up 14.2%; total subscription backlog was $27.4 billion, up 8%.

• Gross revenue retention remained strong at 97%.

• Diluted net income per share was $2.57, including a $1.52/share tax benefit from an intra-entity IP transfer.

Outlook and guidance

• FY27 subscription revenue guidance is $9.940–$9.950 billion (13% growth); Q3 subscription revenue guidance is $2.515 billion (12% growth).

• FY27 non-GAAP operating margin guidance raised to 31%; Q3 non-GAAP margin expected at 30%.

• FY27 operating cash flow outlook maintained at $3.45 billion; free cash flow expected at $3.18 billion (15% growth).

• FY28 subscription revenue growth targeted at ~11%, with at least two percentage points of non-GAAP margin expansion.

• Capital expenditures for FY27 projected at $270 million.