Workday Exceeds Estimates, But Analyst Downgrades Despite Strong Performance
Workday Inc. (NASDAQ:WDAY) delivered a strong second-quarter fiscal 2027 performance with revenue and earnings that exceeded expectations. The company reported $2.649 billion in total revenues, up from the previous year, driven by subscription growth of nearly 14%. Despite this impressive showing, Freedom Broker analyst Almas Almaganbetov downgraded Workday's stock rating to Hold from Buy due to concerns about valuation and future revenue acceleration. The downgrade was attributed to several factors including a slower-than-expected adoption rate for AI tools through Flex Credits, with only 200 customers signing up in the quarter. Additionally, there are expectations of subscription growth deceleration as bookings shift toward existing clients rather than new ones. The firm also highlighted that Workday's current valuation may already reflect much of its potential upside. Workday announced a $4 billion share repurchase program and remains optimistic about AI adoption with annual recurring revenue nearing $600 million, primarily from agentic solutions.
Tickers: $WDAY
Topics: AI Adoption Analyst Downgrade Earnings Beat Share Repurchase Workday