Workday's AI Initiatives Alleviate Investor Concerns Despite Cautious Guidance
Workday (WDAY) reported fiscal second-quarter revenue of $2.65 billion, exceeding expectations and growing by nearly 13% year over year. Subscription revenue rose to $2.471 billion, with AI products contributing more than $100 million in new annual contract value—over a quarter of all new ACV closed during the period. Non-GAAP operating margin expanded significantly to 31.1%, indicating improved profitability alongside growth. Despite these positive results and Workday's aggressive push into AI, management provided cautious guidance for fiscal 2028, projecting subscription revenue growth at nearly 11%. This is below current levels of around 13%–14%, signaling an expected slowdown. Executives also noted that some AI adoption may be substitutive rather than incremental and highlighted potential delays in recognizing AI-related revenue due to new pricing models. The company's performance has helped ease investor fears about the disruptive impact of AI on traditional enterprise software platforms, but lingering concerns remain unresolved by a single strong quarter. Hedge fund ownership data shows mixed activity for Workday during Q2 2026.
Tickers: $WDAY
Topics: AI monetization non-GAAP margin expansion revenue growth