01—Abstract
Summary
Summary of the 10-Q filed August 22, 2025. Cited figures are marked; the original filing is the authoritative source.
Workday, Inc. reported solid financial results for the second quarter and first half of fiscal year 2026.
Total revenues increased by 13%a year-over-year, driven by a 14% increase in subscription services revenue, which now constitutes 92% of total revenue. This growth was supported by strong customer expansion and new customer acquisition. The company also demonstrated improved profitability, with GAAP operating income more than doubling year-over-year for the quarter and increasing significantly for the half.
Non-GAAP operating margins remained robust at 29.0%b for the quarter and 29.6% for the half, indicating effective cost management despite increased investments in product development and sales and marketing. The company's financial position remains strong with substantial cash, cash equivalents, and marketable securities. Notably, Workday announced a significant restructuring plan earlier in the fiscal year, which resulted in a workforce reduction and associated charges.
While this plan impacted costs in the short term, the company expects it to contribute to long-term durable growth and margin expansion. Looking ahead, Workday has also announced the pending acquisition of Paradox, Inc. for approximately $1.0 billionc, signaling continued strategic investment in AI capabilities and market expansion. The company's strong backlog of future subscription revenue provides visibility into continued growth.
02—Key points
Key Highlights
- Total revenues grew 13% to $2.35 billion for Q2 FY2026, driven by a 14% increase in subscription services revenue to $2.17 billion.
- GAAP operating income surged to $248 million from $111 million in the prior year's quarter, reflecting improved operational leverage.
- Non-GAAP operating margin remained strong at 29.0%, up from 24.9% in the prior year's quarter.
- Subscription revenue backlog reached $25.4 billion, an 18% increase year-over-year, indicating strong future revenue visibility.
- The company continued to repurchase shares, with $299 million spent in Q2 FY2026 under its ongoing share repurchase programs.
- Workday announced its intent to acquire Paradox, Inc. for approximately $1.0 billion in cash, reinforcing its commitment to AI and candidate experience solutions.
- Restructuring charges of $167 million were incurred in the first half of FY2026 related to workforce reductions and office space exits, impacting profitability but supporting long-term efficiency.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed August 22, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $2.35B$2.08B | +12.6% |
| R&D Expenses | $660.00M$649.00M | +1.7% |
| Operating Expenses | $2.10B$1.97B | +6.4% |
| Operating Income | $248.00M$111.00M | +123.4% |
| Interest Expense | $29.00M$29.00M | 0.0% |
| Net Income | $228.00M$132.00M | +72.7% |
| EPS (Basic) | $0.86$0.50 | +72.0% |
| EPS (Diluted) | $0.84$0.49 | +71.4% |
| Shares Outstanding (Basic) | 266.78M265.32M | +0.6% |
| Shares Outstanding (Diluted) | 270.18M267.95M | +0.8% |
05—Questions
Frequently Asked Questions
What is Workday's revenue growth for the reported period?
For the three months ended July 31, 2025, Workday's total revenues increased by 13% to $2.35 billion, with subscription services revenues growing 14% to $2.17 billion. For the six months ended July 31, 2025, total revenues increased by 13% to $4.59 billion, and subscription services revenues increased by 14% to $4.23 billion.
How did Workday's profitability change?
Workday's profitability improved significantly. For the three months ended July 31, 2025, GAAP operating income was $248 million, a substantial increase from $111 million in the prior year quarter. GAAP operating margin improved to 10.6% from 5.3%. Non-GAAP operating margin was strong at 29.0%.
What is the outlook for future revenues based on the backlog?
Workday's total subscription revenue backlog was $25.4 billion as of July 31, 2025, an 18% increase year-over-year. Approximately $7.9 billion of this backlog is expected to be recognized as revenue over the next 12 months, providing good visibility into future revenue streams.
What are the key strategic initiatives or events mentioned in the filing?
Key strategic actions include a restructuring plan announced in February 2025 to prioritize investments and drive durable growth, which involved workforce reductions and office space exits. Additionally, Workday announced a definitive agreement to acquire Paradox, Inc. for approximately $1.0 billion in cash, aimed at enhancing its AI capabilities, particularly in candidate experience.
06—Continue