Workday Announces Fiscal 2026 Second Quarter Financial Results
Fiscal Second Quarter Total Revenues of $2.348 Billion, Up 12.6% Year-Over-Year
Subscription Revenues of $2.169 Billion, Up 14.0% Year-Over-Year
PLEASANTON, Calif., Aug. 21, 2025 /PRNewswire/ -- Workday , Inc. (NASDAQ: WDAY), the AI platform for managing people, money, and agents, today announced results for the fiscal 2026 second quarter ended July 31, 2025.
Fiscal 2026 Second Quarter Results
1
See the section titled "About Non-GAAP Financial Measures" in the accompanying financial tables for further details.
Comments on the News
"Workday delivered another solid quarter, driven by our AI and platform innovation, international momentum, and an ecosystem that continues to grow alongside us," said Carl Eschenbach, CEO, Workday. "Customers are choosing Workday because we help them unlock value today and prepare for what's next—whether that's navigating AI transformation, streamlining operations, or creating more meaningful work for their people."
"Our second quarter results reflect the strength of our platform and our continued progress across several of our growth initiatives," said Zane Rowe, CFO, Workday. "Following our first half momentum – and also incorporating the acquisition of Paradox—we are increasing our fiscal 2026 subscription revenue guidance to $8.815 billion, representing growth of 14%, and increasing our fiscal 2026 non-GAAP operating margin guidance to approximately 29%."
Recent Business Highlights
1
Gartner Magic Quadrant for Cloud-Based ERP for U.S. Local Government, Albert Gauthier, Robert Stoneman, Todd Kimbriel, 19 May 2025
2
Gartner Voice of the Customer for Cloud ERP for Service-Centric Enterprises, By Peer Contributors, 23 May 2025
3
Gartner Voice of the Customer for Financial Planning Software, By Peer Contributors, 30 May 2025
4
Gartner Voice of the Customer for Cloud HCM Suites for 1,000+ Employee Enterprises, By Peer Contributors, 23 May 2025
Financial Outlook
Workday is providing guidance for the fiscal 2026 third quarter ending October 31, 2025 as follows:
Workday is updating guidance for the fiscal 2026 full year ending January 31, 2026 as follows:
1
The Company has not provided a reconciliation of its forward outlook for non-GAAP operating margin with its forward-looking GAAP operating margin in
reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. The Company is unable to predict with reasonable
certainty the amount and timing of adjustments that are used to calculate this non-GAAP financial measure, particularly related to stock-based compensation
and its related tax effects, acquisition-related costs, and restructuring costs.
Earnings Call Details
Workday plans to host a conference call today to review its fiscal 2026 second quarter financial results and to discuss its financial outlook. The call is scheduled to begin at 1:30 p.m. PT/4:30 p.m. ET and can be accessed via webcast. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 90 days.
Workday uses the Workday Blog as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.
About Workday
Workday is the AI platform for managing people, money, and agents. The Workday platform is built with AI at the core to help customers elevate people, supercharge work, and move their business forever forward. Workday is used by more than 11,000 organizations around the world and across industries – from medium-sized businesses to more than 65% of the Fortune 500. For more information about Workday, visit workday.com.
© 2025 Workday, Inc. All rights reserved. Workday and the Workday logo are registered trademarks of Workday, Inc. All other brand and product names are trademarks or registered trademarks of their respective holders.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding Workday's planned acquisition of Paradox, Workday's third quarter and full year fiscal 2026 subscription revenues and non-GAAP operating margin, momentum, and growth. These forward-looking statements are based only on currently available information and our current beliefs, expectations, and assumptions. Because forward-looking statements relate to the future, they are subject to risks, uncertainties, assumptions, and changes in circumstances that are difficult to predict and many of which are outside of our control. If the risks materialize, assumptions prove incorrect, or we experience unexpected changes in circumstances, actual results could differ materially from the results implied by these forward-looking statements, and therefore you should not rely on any forward-looking statements. Risks include, but are not limited to: (i) breaches in our security measures or those of our third-party providers, unauthorized access to our customers' or other users' personal data, or disruptions in our data center or computing infrastructure operations; (ii) service outages, delays in the deployment of our applications, and the failure of our applications to perform properly; (iii) privacy concerns and evolving domestic or foreign laws and regulations; (iv) the impact of continuing global economic and geopolitical volatility on our business, as well as on our customers, prospects, partners, and service providers; (v) any loss of key employees or the inability to attract, train, and retain highly skilled employees; (vi) competitive factors, including pricing pressures, industry consolidation, entry of new competitors and new applications, advancements in technology, and marketing initiatives by our competitors; (vii) our reliance on our network of partners to drive additional growth of our revenues; (viii) the regulatory, economic, and political risks associated with our domestic and international operations; (ix) adoption of our applications and services by customers and individuals, including any new features, enhancements, and modifications, as well as our customers' and users' satisfaction with the deployment, training, and support services they receive; (x) the regulatory risks related to new and evolving technologies such as AI and our ability to realize a return on our development efforts; (xi) our ability to realize the expected business or financial benefits of any acquisitions of or investments in companies; (xii) delays or reductions in information technology spending; (xiii) adverse litigation results; and (xiv) changes in sales, which may not be immediately reflected in our results due to our subscription model. Further information on these and additional risks that could affect Workday's results is included in our filings with the Securities and Exchange Commission ("SEC"), including our most recent report on Form 10-Q or Form 10-K and other reports that we have filed and will file with the SEC from time to time, which could cause actual results to vary from expectations. Workday assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by law.
Any unreleased services, features, or functions referenced in this document, our website, or other press releases or public statements that are not currently available are subject to change at Workday's discretion and may not be delivered as planned or at all. Customers who purchase Workday services should make their purchase decisions based upon services, features, and functions that are currently available.
Workday, Inc.
Condensed Consolidated Balance Sheets
(in millions)
(unaudited)
July 31, 2025
January 31, 2025
Assets
Current assets:
Cash and cash equivalents
$ 1,264
$ 1,543
Marketable securities
6,922
6,474
Trade and other receivables, net
1,609
1,950
Deferred costs
278
267
Prepaid expenses and other current assets
334
311
Total current assets
10,407
10,545
Property and equipment, net
1,121
1,239
Operating lease right-of-use assets
719
336
Deferred costs, noncurrent
562
561
Acquisition-related intangible assets, net
320
361
Deferred tax assets
959
1,039
Goodwill
3,478
3,478
Other assets
395
418
Total assets
$ 17,961
$ 17,977
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$ 100
$ 108
Accrued expenses and other current liabilities
346
296
Accrued compensation
537
578
Unearned revenue
3,852
4,467
Operating lease liabilities
110
99
Total current liabilities
4,945
5,548
Debt, noncurrent
2,985
2,984
Unearned revenue, noncurrent
65
80
Operating lease liabilities, noncurrent
681
279
Other liabilities
113
52
Total liabilities
8,789
8,943
Stockholders' equity:
Common stock
0
0
Additional paid-in capital
12,055
11,463
Treasury stock
(1,900)
(1,308)
Accumulated other comprehensive income (loss)
(74)
84
Accumulated deficit
(909)
(1,205)
Total stockholders' equity
9,172
9,034
Total liabilities and stockholders' equity
$ 17,961
$ 17,977
Workday, Inc.
Condensed Consolidated Statements of Operations
(in millions, except number of shares which are reflected in thousands and per share data)
(unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2025
2024
2025
2024
Revenues:
Subscription services
$ 2,169
$ 1,903
$ 4,228
$ 3,719
Professional services
179
182
360
356
Total revenues
2,348
2,085
4,588
4,075
Costs and expenses (1):
Costs of subscription services
370
304
720
594
Costs of professional services
212
207
399
406
Product development
660
649
1,322
1,305
Sales and marketing
641
611
1,264
1,184
General and administrative
216
202
429
403
Restructuring (2)
1
1
167
8
Total costs and expenses
2,100
1,974
4,301
3,900
Operating income
248
111
287
175
Other income, net
56
57
120
116
Income before provision for income taxes
304
168
407
291
Provision for income taxes
76
36
111
52
Net income
$ 228
$ 132
$ 296
$ 239
Net income per share, basic
$ 0.86
$ 0.50
$ 1.11
$ 0.90
Net income per share, diluted
$ 0.84
$ 0.49
$ 1.09
$ 0.89
Weighted-average shares used to compute net income per share, basic
266,777
265,317
266,649
264,885
Weighted-average shares used to compute net income per share, diluted
270,180
267,949
270,240
269,128
(1) Costs and expenses include share-based compensation expense as follows:
Three Months Ended July 31,
Six Months Ended July 31,
2025
2024
2025
2024
Costs of subscription services
$ 39
$ 35
$ 81
$ 73
Costs of professional services
28
28
58
59
Product development
170
163
353
336
Sales and marketing
84
77
177
149
General and administrative
70
67
140
138
Restructuring
0
0
42
0
Total share-based compensation expense
$ 391
$ 370
$ 851
$ 755
(2)
In February 2025, Workday announced a restructuring plan ("Fiscal 2026 Restructuring Plan") intended to prioritize its investments and continue advancing
its ongoing focus on durable growth. The plan reduced Workday's workforce by approximately 7.5%. In connection with the plan, Workday has exited
certain owned office space. During the six months ended July 31, 2025, Workday recorded expenses of $133 million for employee transition, severance
payments, employee benefits, and share-based compensation expense, and $34 million related to an impairment of office space under the Fiscal 2026
Restructuring Plan. During the six months ended July 31, 2024, Workday recorded exit charges of $8 million associated with office space reductions under
a separate restructuring plan.
Workday, Inc.
Condensed Consolidated Statements of Cash Flows
(in millions)
(unaudited)
Three Months Ended July 31,
Six Months Ended July 31,
2025
2024
2025
2024
Cash flows from operating activities:
Net income
$ 228
$ 132
$ 296
$ 239
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
81
79
165
154
Share-based compensation expense
391
370
851
755
Amortization of deferred costs
72
62
140
121
Non-cash lease expense
28
25
54
51
Losses on investments, net
2
3
2
10
Accretion of discounts on marketable debt securities, net
(18)
(29)
(38)
(62)
Deferred income taxes
66
27
84
33
Other
0
9
47
11
Changes in operating assets and liabilities, net of business combinations:
Trade and other receivables, net
(264)
(157)
337
351
Deferred costs
(100)
(64)
(152)
(104)
Prepaid expenses and other assets
54
46
15
24
Accounts payable
3
2
0
12
Accrued expenses and other liabilities
32
69
(99)
(124)
Unearned revenue
41
(3)
(629)
(528)
Net cash provided by operating activities
616
571
1,073
943
Cash flows from investing activities:
Purchases of marketable securities
(866)
(1,365)
(2,211)
(2,143)
Maturities of marketable securities
793
1,035
1,515
2,132
Sales of marketable securities
125
51
265
68
Capital expenditures
(28)
(55)
(64)
(136)
Business combinations, net of cash acquired
0
(10)
0
(522)
Purchases of non-marketable equity and other investments
(11)
(7)
(15)
(7)
Sales of non-marketable equity and other investments
0
5
0
5
Net cash provided by (used in) investing activities
13
(346)
(510)
(603)
Cash flows from financing activities:
Repurchases of common stock
(298)
(312)
(589)
(440)
Proceeds from issuance of common stock from employee equity plans
111
106
111
106
Taxes paid related to net share settlement of equity awards
(161)
(141)
(372)
(381)
Net cash used in financing activities
(348)
(347)
(850)
(715)
Effect of exchange rate changes
0
0
2
0
Net increase (decrease) in cash, cash equivalents, and restricted cash
281
(122)
(285)
(375)
Cash, cash equivalents, and restricted cash at the beginning of period
988
1,771
1,554
2,024
Cash, cash equivalents, and restricted cash at the end of period
$ 1,269
$ 1,649
$ 1,269
$ 1,649
Workday, Inc. Reconciliations of GAAP to Non-GAAP Data
Reconciliations of Workday's GAAP to non-GAAP operating results are included in the following tables (in millions, except number of shares which are
reflected in thousands, percentages, and per share data). See the section titled "About Non-GAAP Financial Measures" below for further details.
Three Months Ended July 31,
Six Months Ended July 31,
2025
2024
2025
2024
Non-GAAP operating income
Operating income
$ 248
$ 111
$ 287
$ 175
Share-based compensation expense (1)
391
370
809
755
Employer payroll tax-related items on employee stock transactions (1)
12
10
39
48
Amortization of acquisition-related intangible assets
21
20
42
37
Acquisition-related costs
7
6
14
10
Restructuring costs
1
1
167
8
Non-GAAP operating income
$ 680
$ 518
$ 1,358
$ 1,033
Non-GAAP operating margin (2)
Operating margin
10.6 %
5.3 %
6.3 %
4.3 %
Share-based compensation expense (1)
16.7 %
17.7 %
17.6 %
18.5 %
Employer payroll tax-related items on employee stock transactions (1)
0.5 %
0.6 %
0.8 %
1.2 %
Amortization of acquisition-related intangible assets
0.9 %
1.0 %
0.9 %
1.0 %
Acquisition-related costs
0.3 %
0.3 %
0.3 %
0.2 %
Restructuring costs
0.0 %
0.0 %
3.7 %
0.2 %
Non-GAAP operating margin
29.0 %
24.9 %
29.6 %
25.4 %
Non-GAAP diluted net income per share (2)(3)
Diluted net income per share
$ 0.84
$ 0.49
$ 1.09
$ 0.89
Share-based compensation expense (1)
1.45
1.38
2.99
2.80
Employer payroll tax-related items on employee stock transactions (1)
0.04
0.04
0.14
0.18
Amortization of acquisition-related intangible assets
0.08
0.07
0.15
0.14
Acquisition-related costs
0.03
0.02
0.05
0.04
Restructuring costs
0.00
0.00
0.62
0.03
Losses on strategic investments, net
0.01
0.01
0.01
0.04
Income tax effects
(0.24)
(0.26)
(0.61)
(0.63)
Non-GAAP diluted net income per share
$ 2.21
$ 1.75
$ 4.44
$ 3.49
(1)
The Share-based compensation expense and Employer payroll tax-related items on employee stock transactions lines in the GAAP to non-GAAP reconciliation
tables above exclude $42 million and $2 million, respectively, related to restructuring initiatives for the six months ended July 31, 2025. These expenses are
included in the Restructuring costs lines.
(2)
Operating margin and diluted net income per share are calculated using unrounded data.
(3)
For the three months ended July 31, 2025, GAAP and non-GAAP diluted net income per share were calculated based upon 270,180 diluted weighted-average
shares of common stock. For the three months ended July 31, 2024, GAAP and non-GAAP diluted net income per share were calculated based upon 267,949
diluted weighted-average shares of common stock. For the six months ended July 31, 2025, GAAP and non-GAAP diluted net income per share were calculated
based upon 270,240 diluted weighted-average shares of common stock. For the six months ended July 31, 2024, GAAP and non-GAAP diluted net income per
share were calculated based upon 269,128 diluted weighted-average shares of common stock.
Reconciliation of Workday's GAAP cash flows from operating activities to non-GAAP free cash flow is as follows (in millions). See the section titled "About Non-GAAP
Financial Measures" below for further details.
Three Months Ended July 31,
Six Months Ended July 31,
2025
2024
2025
2024
Net cash provided by operating activities
$ 616
$ 571
$ 1,073
$ 943
Less: Capital expenditures
(28)
(55)
(64)
(136)
Free cash flows
$ 588
$ 516
$ 1,009
$ 807
About Non-GAAP Financial Measures
To provide investors and others with additional information regarding Workday's results, the following non-GAAP financial measures are disclosed: non-GAAP operating income, non-GAAP operating margin, non-GAAP diluted net income per share, and free cash flows. Workday has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. Non-GAAP operating income and non-GAAP operating margin differ from GAAP in that they exclude share-based compensation expense, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, acquisition-related costs, and restructuring costs. Non-GAAP diluted net income per share differs from GAAP in that it excludes share-based compensation expense, employer payroll tax-related items on employee stock transactions, amortization expense for acquisition-related intangible assets, acquisition-related costs, restructuring costs, gains and losses on strategic investments, and income tax effects. Free cash flows differ from GAAP cash flows from operating activities in that it treats capital expenditures as a reduction to cash flows.
Workday's management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, and to evaluate Workday's financial performance. Management believes these non-GAAP financial measures reflect Workday's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in Workday's business. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating Workday's operating results and prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.
Management believes excluding the following items from the GAAP Condensed Consolidated Statements of Operations is useful to investors and others in assessing Workday's operating performance due to the following factors:
Additionally, with regards to free cash flows, Workday's management believes that reducing cash provided by operating activities by capital expenditures is meaningful to investors and others because it provides an enhanced view of cash flow generation from the ongoing operations of our business, and it balances operating results, cash management, and capital efficiency.
The use of these non-GAAP measures have certain limitations as they do not reflect all items of expense or cash that affect Workday's operations. Workday compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review Workday's financial information in its entirety and not rely on a single financial measure.
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SOURCE Workday Inc.