Workday delivered Q4 fiscal 2026 revenue of $2.532 billion with strong subscription growth and non-GAAP EPS of $2.47, topping Street estimates, while the stock fell about 7-8% after-hours on slower FY27 subscription growth guidance and margin outlook, signaling cautious market sentiment.
About Workday
Workday, Inc. (NASDAQ: WDAY) is a cloud-based enterprise software company focused on human capital management, financial management, planning, and AI-powered agents for large and mid-sized organizations worldwide. The company, founded in 2005, is headquartered in Pleasanton, California and serves over 11,500 global customers across sectors including technology, healthcare, public sector, and financial services. Workday positions itself as an enterprise AI platform that combines deterministic HR and finance systems of record with domain-specific AI models and agentic workflows.
As of early March 2026, Workday’s market capitalization is in the mid‑$30 billion range, with a price-to-earnings ratio around 52, reflecting its growth profile and investment focus. The company does not currently pay a dividend, preferring to reinvest in AI innovation, international expansion, and its ecosystem while returning capital through share repurchases of $2.9 billion in fiscal 2026. Workday ended the year with 21,070 employees and $5.4 billion in cash and marketable securities, highlighting a solid balance sheet to fund continued AI and product investments.
Top Financial Highlights
- Fiscal Q4 2026 total revenue was $2.532 billion, up 14.5% year over year.
- Q4 subscription revenue reached $2.360 billion, growing 15.7%-16% year over year and benefiting by nearly one point from a large DIA contract.
- Full‑year fiscal 2026 total revenue was $9.552 billion, an increase of 13.1% from fiscal 2025, with subscription revenue of $8.833 billion, up 14%-14.5%.
- Q4 non‑GAAP operating income was $774 million, delivering a non‑GAAP operating margin of 30.6%, supported by revenue growth and slower hiring.
- Full‑year non‑GAAP operating income was $2.82-2.824 billion, with a non‑GAAP operating margin of 29.6%.
- GAAP operating income for fiscal 2026 was $721 million, or 7.5% of revenue, impacted by $303 million of restructuring expenses compared with $84 million the prior year.
- Q4 operating cash flow was $1.28 billion, with full‑year operating cash flow of $2.94 billion, up 19% year over year.
- Free cash flow in Q4 was $1.22 billion, and $2.78 billion for the year, representing approximately 27% growth.
- Q4 U.S. revenue was $1.91 billion (up 15%), while international revenue was $626 million (up 13%); full‑year U.S. revenue was $7.18 billion and international $2.38 billion.
- Current 12‑month subscription revenue backlog (cRPO) ended Q4 at $8.83 billion, up 15.8% year over year.
- Total subscription revenue backlog reached $28.10 billion, growing 12%, with shorter average contract duration due to a higher mix of renewals and base activity.
- Q4 free‑cash‑flow margin and non‑GAAP margin both exceeded prior guidance, with non‑GAAP operating margin 210 basis points above an earlier 28.5% guide.
- Workday repurchased $1.5 billion of stock in Q4 and $2.9 billion for the year, leaving $2.9 billion of authorization.
- The company ended fiscal 2026 with $5.4 billion in cash and marketable securities, and gross revenue retention at 97% with stable net expansion contributing roughly 60% of subscription growth.
- Emerging AI products generated over $100 million in new ACV in Q4, growing over 100% year over year, with ARR from these solutions above $400 million.
Beat or Miss?
| Metric | Reported | Difference / Analysis |
| Total Revenue (Q4) | $2.532 billion | Beat consensus by about 0.4% (vs roughly $2.52 billion expected). |
| Non‑GAAP EPS (Q4) | $2.47 | Beat by about 6.5% vs consensus around $2.32. |
| Subscription Revenue (Q4) | $2.360 billion | Modest beat vs expectations; growth 15.7%-16% YoY, aided by DIA contract. |
| Non‑GAAP Operating Margin | 30.6% | Outperformed prior guidance of 28.5%, a 210 bps upside. |
| FY27 Subscription Guide | $9.925–$9.950 billion | Implies 12-13% growth, below some investor expectations, seen as a disappointment. |
| Q1 FY27 Non‑GAAP Margin | 30.5% guided | Slightly below market hopes around 30.9%, pressuring sentiment. |
What Leadership Is Saying?
“We built Workday to bring innovation back to the worlds of HR and finance, and AI gives us the chance to do it all again. We operate at the heart of the global enterprise, where trust and accuracy matter most. That gives Workday a unique opportunity to bring AI directly into the HR and finance workflows our customers rely on every day and to deliver real, measurable value.”— Aneel Bhusri, Co-Founder, CEO and Chair, Workday
“Our fourth quarter results reflect the deep trust customers place in Workday to manage their most critical assets. We expect fiscal 2027 subscription revenues of approximately $9.925 billion to $9.950 billion, representing 12% to 13% growth, and we expect fiscal 2027 non-GAAP operating margin of approximately 30.0%. We are prioritizing investment in our agentic AI roadmap to capture a larger market opportunity.”–– Zane Rowe, CFO, Workday
Historical Performance
Q4 FY2026 vs. Q4 FY2025
| Category | Q4 FY2026 | Q4 FY2025 | Change (%) |
| Total Revenue | $2,532M | $2,211M | +14.5% |
| Subscription Revenue | $2,360M | $2,039M | +15.7% |
| GAAP Operating Income | $174M | $75M | +132.0% |
| Non-GAAP Operating Income | $774M | $584M | +32.5% |
| GAAP Diluted EPS | $0.55 | $0.35 | +57.1% |
| Non-GAAP Diluted EPS | $2.47 | $1.92 | +28.6% |
| Operating Cash Flow (Q4) | $1,278M | $1,110M | 15.10% |
Full Year
FY2026 vs. FY2025
| Category | FY2026 | FY2025 | Change (%) |
| Total Revenue | $9,552M | $8,446M | +13.1% |
| Subscription Revenue | $8,833M | $7,713M | +14.5% |
| GAAP Operating Income | $721M | $415M | 73.70% |
| Non-GAAP Operating Income | $2,824M | $2,186M | +29.2% |
| Operating Cash Flow | $2,939M | $2,461M | +19.4% |
| Free Cash Flow | $2,777M | $2,192M | 26.70% |
| Non-GAAP Diluted EPS | $9.23 | $7.30 | 26.40% |
GAAP operating income in FY2026 was impacted by $303 million in restructuring costs (up from $84 million in FY2025), including workforce reductions announced in early 2026.
Competitor Performance Comparison
| Category | Workday (Q4 FY2026, Jan 2026) | SAP (Q4 FY2025, Dec 2025) | Oracle (Q4 FY2025, May 2025) |
| Total Revenue | $2.53B | ~€9.68B (~$10.5B) | $15.9B |
| Revenue Growth (YoY) | +14.5% | +9% (constant currency) | +11% |
| Cloud/Subscription Revenue | $2.36B | €5.6B cloud | $6.7B cloud |
| Cloud Revenue Growth | +15.7% | +26% (constant currency) | +27% |
| Non-GAAP Operating Margin | 30.6% | N/A (FY non-IFRS: ~28%) | 44% |
| Non-GAAP EPS | $2.47 | €1.62 (non-IFRS) | $1.70 |
| Full-Year Revenue | $9.55B | ~€36.8B (~$40B) | $57.4B |
| Full-Year Revenue Growth | +13.1% | +11% (constant currency) | +8% |
| Key Growth Driver | HCM/Finance AI agents | Cloud ERP Suite (+32% cc) | Cloud Infrastructure (+52%) |
SAP and Oracle operate at significantly larger scale and across broader product portfolios. SAP’s cloud revenue growth of 26% at constant currency and Oracle’s cloud infrastructure surge of 52% reflect different strategic emphases. Workday remains the leading pure-play cloud HCM/Finance platform, with AI-driven agentic workflows emerging as its next growth lever. SAP’s Business AI was included in two-thirds of Q4 cloud order entry, while Oracle is aggressively expanding cloud infrastructure for AI workloads.
How the Market Reacted?
Workday shares dropped approximately 7-8% in after-hours trading on February 24, 2026, falling to around $120.38 despite the Q4 beat. The selloff was driven primarily by the FY2027 subscription revenue guidance of $9.925-$9.950 billion (12-13% growth), which fell below investor expectations and signaled a deceleration from the 14.5% subscription growth achieved in FY2026.
Several brokers, including Jefferies, had already cut price targets ahead of the print, compounding downside pressure. By February 27, the stock was trading around $133.76, reflecting a partial recovery but still down significantly from pre-earnings levels, with the 52-week range spanning $117.76 to $276.00.
The broader concern centers on whether Workday’s prioritization of AI investment over near-term margin expansion will translate into reaccelerated growth, or whether the high-growth era for the company is ending.
