TLDR
- Workday pops on results, then drops after hours despite stronger profits.
- Q4 revenue climbs 14.5% as subscription growth and leverage kick in.
- Margins widen fast: non-GAAP operating margin hits 30.6% in Q4.
- Backlog hits records: total subscription backlog rises to $28.1B.
- FY2027 guide targets 12–13% subscription growth and ~30% margin.
Workday (WDAY) shares ended the regular session higher but dropped sharply after earnings, even as the company posted stronger profits and solid backlog growth. The stock closed at $130.23, up 0.79%, before sliding 8.35% to $119.35 in after-hours trading. The move followed the release of fiscal fourth-quarter and full-year 2026 results that showed rising margins and record subscription backlog.
Workday (WDAY) Fourth-Quarter Profit Expands
Workday reported fourth-quarter revenue of $2.532 billion, up 14.5% year over year. Subscription revenue reached $2.360 billion and increased 15.7% from the prior year. The company generated stronger operating leverage as income improved across key metrics.
Operating income rose to $174 million, or 6.9% of revenue, from $75 million a year earlier. Non-GAAP operating income increased to $774 million, representing 30.6% of revenue. Diluted earnings per share reached $0.55, while non-GAAP earnings per share climbed to $2.47.
The company attributed the performance to steady demand for its enterprise platform. Management highlighted growth in AI-driven services and workflow automation. As a result, subscription backlog continued to expand during the quarter.
Fiscal 2026 Results Show Margin Strength and Cash Flow Growth
For fiscal year 2026, Workday generated $9.552 billion in total revenue, up 13.1% year over year. Subscription revenue totaled $8.833 billion and rose 14.5% from fiscal 2025. Operating income increased to $721 million, although restructuring expenses totaled $303 million.
Non-GAAP operating income reached $2.824 billion, or 29.6% of revenue, compared with 25.9% last year. Diluted earnings per share rose to $2.59, while non-GAAP earnings per share advanced to $9.23. Operating cash flow grew 19.4% to $2.939 billion, and free cash flow increased 26.7% to $2.777 billion.
Subscription revenue backlog strengthened further and supported forward visibility. Twelve-month subscription backlog rose 15.8% to $8.833 billion. Total subscription backlog increased 12.2% to $28.101 billion, including recent acquisitions.
Outlook Signals Continued Subscription Growth in Fiscal 2027
Workday projected first-quarter fiscal 2027 subscription revenue of $2.335 billion, reflecting 13% growth. The company guided for a non-GAAP operating margin of 30.5% for the quarter. Management also forecast full-year subscription revenue between $9.925 billion and $9.950 billion.
The company expects full-year subscription growth of 12% to 13%. It also projected a non-GAAP operating margin of about 30.0% for fiscal 2027. Executives stated, “We built Workday to bring innovation back to HR and finance, and AI gives us the chance to do it again.”
Workday continued to expand its customer base and ecosystem during the year. The company now serves more than 11,500 customers globally, including over 7,000 core financial and HCM clients. It also repurchased 12.8 million shares for $2.9 billion and ended the year with $5.443 billion in cash and investments.
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