Workday Reports AI-Driven Growth in New Annual Contract Value Despite Slower Total Subscription Backlog Increase
In its latest quarterly report, Workday (WDAY) highlighted that artificial intelligence contributed to more than $100 million of new annual contract value (ACV), representing over 25% of all new ACV signed in the second quarter. Despite this AI-driven momentum, total subscription backlog grew only 8%, slower than recent quarters and below expectations for growth acceleration. The company reported a 13.9% increase in second-quarter subscription revenue to $2.47 billion, with twelve-month subscription backlog rising by 14.2%. However, the broader metric of total subscription backlog—covering all contracted but unearned revenue—grew at only half that rate due to factors like customer mix and contract duration. Workday also noted a slowdown in longer-term growth trends, including weaker cash flow generation and slower backlog expansion compared to prior quarters. Management expects continued moderate growth for the remainder of fiscal 2027 but did not signal an acceleration heading into 2028.
Tickers: $WDAY
Topics: ACV AI backlog growth subscription revenue