A month has gone by since the last earnings report for Workday (WDAY Quick QuoteWDAY - Free Report) . Shares have lost about 4.6% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Workday due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Workday, Inc. before we dive into how investors and analysts have reacted as of late.

Workday Q4 Earnings Beat Estimates on Solid Revenue Growth

Workday reported strong fourth-quarter fiscal 2026 results, with both bottom and top lines beating the Zacks Consensus Estimate.

The company reported year-over-year revenue growth, driven by strong subscription demand, new customer wins and rising adoption of AI solutions. Management’s focus on innovation, product growth and international expansion remains positive.

Net Income

Net income, on a GAAP basis, was $145 million or 55 cents per share compared with $94 million or 35 cents per share in the year-ago quarter. Healthy top-line growth boosted GAAP earnings during the quarter.

Non-GAAP net income per share was $2.47 compared with $1.92 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 17 cents.

For fiscal 2026, Workday reported GAAP net income of $693 million or $2.59 per share compared with $526 million or $1.95 per share in fiscal 2025. Non-GAAP net income per share was $9.23 compared with $7.30 in fiscal 2025.

Revenues

Net sales during the quarter were $2.53 billion, up from $2.21 billion in the year-ago quarter, backed by solid growth in the Subscription services revenues segment. The top line beat the Zacks Consensus Estimate of $2.52 billion. For fiscal 2026, revenues increased to $9.55 billion from $8.45 billion in fiscal 2025.

Subscription services revenues contributed $2.36 billion, up from $2.04 billion in the year-ago quarter. Net sales beat our estimate of $2.355 billion. Revenues from professional services were $172 million compared with $171 million in the prior-year quarter. The top line beat our estimate of $167.9 million.

At the end of fiscal 2026, the 12-month subscription revenue backlog was $8.83 billion, up 15.8%. The total subscription revenue backlog was $28.1 billion, up 12.2% year over year. 

Other Details

During the quarter, the company’s total costs and expenses totaled $2.36 billion compared with $2.14 billion in the year-ago quarter. Operating income during the quarter was $174 million compared with $75 million in the year-ago quarter, with respective margins of 6.9% and 3.4%. Non-GAAP operating income was $774 million, up from $584 million a year ago, with respective margins of 30.6% and 26.4%.

Cash Flow & Liquidity

During the fourth quarter of fiscal 2026, the company generated $1.28 billion of cash from operating activities compared with $1.11 billion in the prior-year quarter. For fiscal 2026, the company generated $2.94 billion of cash from operating activities compared with $2.46 billion in fiscal 2025.

As of Jan. 31, 2026, it had cash and cash equivalents and marketable securities of $5.44 billion, with long-term debt of $2.99 billion compared with respective tallies of $8.02 billion and $2.98 million a year ago.

Outlook

For the first quarter of fiscal 2027, Workday expects revenues to be $2.52 billion, indicating growth of 12% year over year. Subscription revenues are expected to be $2.34 billion, suggesting growth of 13% year over year. Management expects non-GAAP operating margin to be 30.5%.

For fiscal 2027, the company expects revenues to be between $10.64 billion and $10.66 billion, indicating 11-12% year-over-year growth. Subscription revenues are projected to be in the range of $9.93-$9.95 billion, indicating growth of 12-13% year over year. Non-GAAP operating margin is anticipated to be 30%. Capital expenditure is approximated to be around $270 million.  Operating cash flow is forecasted to be $3.45 billion.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in fresh estimates.

VGM Scores

At this time, Workday has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Workday has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Workday is part of the Zacks Internet - Software industry. Over the past month, Cloudflare (NET Quick QuoteNET - Free Report) , a stock from the same industry, has gained 26.9%. The company reported its results for the quarter ended December 2025 more than a month ago.

Cloudflare reported revenues of $614.51 million in the last reported quarter, representing a year-over-year change of +33.6%. EPS of $0.28 for the same period compares with $0.19 a year ago.

Cloudflare is expected to post earnings of $0.23 per share for the current quarter, representing a year-over-year change of +43.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Cloudflare. Also, the stock has a VGM Score of F.