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Workday Q1 Earnings Beat Estimates, Revenues Up Y/Y on Solid Demand
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Key Takeaways
WDAY posted Q1 fiscal 2027 beats, with revenues up 13.5% year over year to $2.54B.
Workday's Subscription revenues climbed 14.3% to $2.35B as AI adoption and customer expansion continued.
WDAY's 12-month subscription backlog rose to $8.81B while total subscription backlog increased 10.9% YoY.
Workday, Inc. (WDAY - Free Report) reported strong first-quarter fiscal 2027 results, with both bottom and top lines beating the Zacks Consensus Estimate.
The company reported 13.5% year-over-year revenue growth, driven by steady demand for its cloud-based human capital management and financial software solutions. Solid subscription demand, higher enterprise spending on digital transformation, strong international momentum, and growing adoption of artificial intelligence (AI) offerings also supported the top-line growth.
Net Income
Net income, on a GAAP basis, was $222 million or 87 cents per share compared with $68 million or 25 cents per share in the year-ago quarter. Healthy top-line growth boosted GAAP earnings during the quarter.
Non-GAAP net income in the reported quarter was $676 million or $2.66 per share compared with $602 million or $2.23 per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 17 cents.
Net sales during the quarter were $2.54 billion, up from $2.24 billion in the year-ago quarter, backed by 14.3% growth in the Subscription services revenues. The top line beat the Zacks Consensus Estimate of $2.52 billion.
Subscription services revenues contributed $2.35 billion, up from $2.06 billion in the year-ago quarter, driven by continued customer expansion, growing adoption of AI solutions and new customer additions. Revenues from Professional services were $188 million compared with $181 million in the prior-year quarter.
At the end of the first quarter of fiscal 2027, the 12-month subscription revenue backlog was $8.81 billion, up 15.5%. The total subscription revenue backlog was $27.29 billion, up 10.9% year over year.
Other Details
During the quarter, the company’s total costs and expenses were $2.2 billion, up 0.14% compared with the year-ago quarter. Operating income during the quarter was $338 million compared with $39 million in the year-ago quarter, with respective margins of 13.3% and 1.8%. Non-GAAP operating income was $809 million, up from $677 million a year ago, with respective margins of 31.8% and 30.2%.
Cash Flow & Liquidity
In the first quarter of fiscal 2027, the company generated $696 million of cash from operating activities compared with $457 million in the prior-year quarter. As of April 30, 2026, it had cash and cash equivalents and marketable securities of $4.35 billion, with long-term debt of $1.99 billion.
Outlook
For the second quarter of fiscal 2027, Workday expects revenues to be $2.64 billion, indicating growth of 12% year over year. Subscription revenues are expected to be $2.46 billion, suggesting growth of 13% year over year. Management expects non-GAAP operating margin to be about 30%.
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 30.5%. Capital expenditure is approximated to be around $270 million. Operating cash flow is forecasted to be $3.45 billion, suggesting growth of 17% year over year.
In the last reported quarter, it delivered an earnings surprise of 20.61%. Silicon Motion is benefiting from rising demand for NAND flash controllers used in smartphones, PCs, and data center storage devices. The growing adoption of AI applications and high-capacity SSDs is also expected to support demand for its advanced storage solutions and long-term growth prospects.
Celestica Inc. (CLS - Free Report) carries a Zacks Rank #2 (Buy) at present. It delivered an earnings surprise of 3.85% in the last reported quarter.
The company is experiencing strong momentum from growing demand for AI data center infrastructure, cloud networking equipment, and advanced hardware solutions. Its expanding hyperscaler customer base and focus on high-performance computing are likely to drive long-term growth.
Monolithic Power Systems, Inc. (MPWR - Free Report) carries a Zacks Rank #2 at present. It delivered an earnings surprise of 4.29% in the last reported quarter.
Monolithic Power continues to gain from strong demand for power management solutions across AI data centers, automotive, industrial, and cloud computing markets. Its expanding product portfolio, growing adoption of high-performance power chips, and focus on innovation support steady growth and strengthen its long-term market position.
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Workday Q1 Earnings Beat Estimates, Revenues Up Y/Y on Solid Demand
Key Takeaways
Workday, Inc. (WDAY - Free Report) reported strong first-quarter fiscal 2027 results, with both bottom and top lines beating the Zacks Consensus Estimate.
The company reported 13.5% year-over-year revenue growth, driven by steady demand for its cloud-based human capital management and financial software solutions. Solid subscription demand, higher enterprise spending on digital transformation, strong international momentum, and growing adoption of artificial intelligence (AI) offerings also supported the top-line growth.
Net Income
Net income, on a GAAP basis, was $222 million or 87 cents per share compared with $68 million or 25 cents per share in the year-ago quarter. Healthy top-line growth boosted GAAP earnings during the quarter.
Non-GAAP net income in the reported quarter was $676 million or $2.66 per share compared with $602 million or $2.23 per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate by 17 cents.
Workday, Inc. Price, Consensus and EPS Surprise
Workday, Inc. price-consensus-eps-surprise-chart | Workday, Inc. Quote
Revenues
Net sales during the quarter were $2.54 billion, up from $2.24 billion in the year-ago quarter, backed by 14.3% growth in the Subscription services revenues. The top line beat the Zacks Consensus Estimate of $2.52 billion.
Subscription services revenues contributed $2.35 billion, up from $2.06 billion in the year-ago quarter, driven by continued customer expansion, growing adoption of AI solutions and new customer additions. Revenues from Professional services were $188 million compared with $181 million in the prior-year quarter.
At the end of the first quarter of fiscal 2027, the 12-month subscription revenue backlog was $8.81 billion, up 15.5%. The total subscription revenue backlog was $27.29 billion, up 10.9% year over year.
Other Details
During the quarter, the company’s total costs and expenses were $2.2 billion, up 0.14% compared with the year-ago quarter. Operating income during the quarter was $338 million compared with $39 million in the year-ago quarter, with respective margins of 13.3% and 1.8%. Non-GAAP operating income was $809 million, up from $677 million a year ago, with respective margins of 31.8% and 30.2%.
Cash Flow & Liquidity
In the first quarter of fiscal 2027, the company generated $696 million of cash from operating activities compared with $457 million in the prior-year quarter. As of April 30, 2026, it had cash and cash equivalents and marketable securities of $4.35 billion, with long-term debt of $1.99 billion.
Outlook
For the second quarter of fiscal 2027, Workday expects revenues to be $2.64 billion, indicating growth of 12% year over year. Subscription revenues are expected to be $2.46 billion, suggesting growth of 13% year over year. Management expects non-GAAP operating margin to be about 30%.
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 30.5%. Capital expenditure is approximated to be around $270 million. Operating cash flow is forecasted to be $3.45 billion, suggesting growth of 17% year over year.
WDAY’s Zacks Rank
Workday currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Silicon Motion Technology Corporation (SIMO - Free Report) sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last reported quarter, it delivered an earnings surprise of 20.61%. Silicon Motion is benefiting from rising demand for NAND flash controllers used in smartphones, PCs, and data center storage devices. The growing adoption of AI applications and high-capacity SSDs is also expected to support demand for its advanced storage solutions and long-term growth prospects.
Celestica Inc. (CLS - Free Report) carries a Zacks Rank #2 (Buy) at present. It delivered an earnings surprise of 3.85% in the last reported quarter.
The company is experiencing strong momentum from growing demand for AI data center infrastructure, cloud networking equipment, and advanced hardware solutions. Its expanding hyperscaler customer base and focus on high-performance computing are likely to drive long-term growth.
Monolithic Power Systems, Inc. (MPWR - Free Report) carries a Zacks Rank #2 at present. It delivered an earnings surprise of 4.29% in the last reported quarter.
Monolithic Power continues to gain from strong demand for power management solutions across AI data centers, automotive, industrial, and cloud computing markets. Its expanding product portfolio, growing adoption of high-performance power chips, and focus on innovation support steady growth and strengthen its long-term market position.