Workday Q2 Earnings Beat Estimates on Solid Revenue Growth

Workday, Inc. WDAY reported strong second-quarter fiscal 2026 results, with the bottom and top lines beating the respective Zacks Consensus Estimate. The company reported revenue growth year over year, driven by solid customer wins across various industries, including education, healthcare, financial Services, retail and hospitality. Management’s strong focus on innovations, AI integration and international expansion is a positive factor.

Net Income of WDAY

Net income on a GAAP basis was $228 million or 84 cents per share compared with $132 million or 49 cents in the year-ago quarter. Healthy top-line growth boosted the net income during the quarter.

Non-GAAP net income per share was $2.21 compared with $1.75 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents.

WDAY’s Revenues

Net sales during the quarter were $2.34 billion, up from $2.08 billion in the year-ago quarter, backed by rising demand for the company’s Human Capital Management and financial management solutions. The top line beat the Zacks Consensus Estimate by $8 million.

In the second quarter, healthy traction in education, healthcare, financial services, retail and hospitality drove the top line. New customer wins with Carrefour, Memorial Health, Smurfit Westrock and Banamex, and expansion agreements with Sanofi, Blue Origin and Google are positive factors.


Subscription services revenues contributed $2.2 billion, up from $1.9 billion in the year-ago quarter. Net sales beat our estimate of $2.16 billion. At the end of the quarter, the 12-month subscription revenue backlog was $7.91 billion, up 16.4%, backed by higher contract renewals. The total subscription revenue backlog was $25.37 billion, up 17.6% year over year. Revenues from professional services were $179 million compared with $182 million in the prior-year quarter. The top line missed our estimate of $180 million.

Other Details of WDAY

Operating income during the quarter was $248 million compared with $111 million in the year-ago quarter. Non-GAAP operating income was $680 million, up from $518 million a year ago, with respective margins of 29% and 24.9%. The year-over-year improvement was backed by a combination of revenue outperformance, ongoing cost discipline and improved efficiencies across the company.

WDAY’s Cash Flow & Liquidity

During the second quarter of fiscal 2026, the company generated $616 million of cash from operating activities compared with $571 million in the prior-year quarter. 

As of July 31, 2025, it had cash and cash equivalents and marketable securities of $8.19 billion, with long-term debt of $2.98 billion.

WDAY’s Outlook

For the third quarter of fiscal 2026, Workday expects Subscription services revenues to be $2.41 billion, representing growth of 12%. Revenues from Professional services are estimated to be $180 million. Management expects the non-GAAP operating margin to be 28%.

For fiscal 2026, the company expects subscription revenues to be $9.51 billion, indicating growth of 13% year over year. Professional services revenues are expected to be about $700 million. The non-GAAP operating margin is anticipated to be 29%. Capital expenditure is approximated to be around $200 million, down slightly from fiscal 2025. Non-GAAP tax rate is expected to be 19%. Operating cash flow is forecasted to be $2.85 billion.

WDAY’s Zacks Rank & Stocks to Consider

Workday currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader industry have been discussed below.

Ubiquiti Inc. UI carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the last reported quarter, it delivered an earnings surprise of 61.29%. Ubiquiti spends significantly on research and development activities for developing innovative products and state-of-the-art technology to expand its addressable market and remain at the cutting edge of networking technology. The company believes its new product pipeline will help to increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.

Jabil, Inc. JBL currently carries a Zacks Rank #2. In the last reported quarter, it delivered an earnings surprise of 9.44%.

Jabil’s focus on end-market and product diversification is a key catalyst. The company’s target of “no product or product family should be greater than 5% operating income or cash flows in any fiscal year” is commendable. This initiative should position Jabil well on the growth trajectory.

InterDigital, Inc. (IDCC ) currently carries a Zacks Rank #2. The company delivered an earnings surprise of 54.27% in the trailing four quarters.

InterDigital’s global footprint, diversified product portfolio and the ability to penetrate in different markets are impressive.It is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. Apart from it’s strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings are likely to drive considerable value, considering the massive size of the market it licenses

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