Workday lifts outlook on AI-driven Q2 beat

Workday delivered fiscal second-quarter revenue of $2.65 billion, representing about 12.8% growth compared with the same period a year earlier. The company’s non-GAAP net income came in at $2.75 per diluted share, exceeding the FactSet analyst estimate of $2.61. The combination of double-digit top-line expansion and better-than-expected earnings underscored continued demand for Workday’s applications.

The revenue performance reflected broad adoption of the company’s offerings, while disciplined cost management supported profitability. The earnings beat against consensus highlighted operating leverage as Workday scales its subscription-based business.

Management emphasized that artificial intelligence has become a meaningful contributor to new business. AI now accounts for more than 25% of Workday’s new annual contract value, signaling growing customer willingness to adopt AI-enabled capabilities within the platform. This contribution is notable given the overall size of the company’s new contracts base.

More than 5,500 customers are running at least one of Workday’s organic AI agents. This customer count grew by more than 35% from the prior quarter, indicating rapid uptake of the company’s AI tools. The scaling use of agents across the installed base suggests that AI is being integrated into core workflows rather than remaining in limited pilot projects.

Reflecting the stronger operating performance and rising AI-driven demand, Workday raised its fiscal 2027 subscription revenue outlook. The company now projects subscription revenue in the range of $9.94 billion to $9.95 billion, which implies growth of about 13%. This updated target frames management’s expectations for continued expansion over the next several years.

Workday also increased its full-year non-GAAP operating margin guidance to 31.0%. The higher margin outlook points to anticipated efficiency gains alongside revenue growth. Together, the raised subscription revenue and margin targets indicate confidence that AI adoption can drive both higher contract value and improved profitability.

The latest quarter’s results illustrate how the incorporation of AI agents is becoming central to Workday’s business performance. With more than a quarter of new annual contract value tied to AI and a rapidly expanding installed base of AI agent users, these capabilities are now a core differentiator for the platform. The company’s updated long-term guidance is aligned with this shift, embedding AI-driven adoption and efficiency into its financial trajectory.

As Workday executes against its higher revenue and margin targets, the pace of AI agent deployment and customer engagement will remain key indicators. The combination of solid quarterly growth, an earnings beat, and increased guidance positions the company around a strategy in which AI is both a revenue engine and a lever for operating scale.