Q2 FY2027 results
| Metric | Result | Change |
|---|---|---|
| Subscription revenue | $2.471 billion | up 14% |
| Total revenue | $2.649 billion | up 13% |
| 12-month subscription revenue backlog (CRPO) | $9.03 billion | up 14.2% |
| Non-GAAP operating income | $824 million | Not stated |
| Gross revenue retention | 97% | Not stated |
Guidance and outlook
- FY '27 subscription revenue: $9.94 billion to $9.95 billion, growth of 13%.
- Q3 subscription revenue: approximately $2.515 billion, growth of 12%.
- Q3 CRPO growth: 11% to 12%.
- Q3 professional services revenue: $175 million.
- FY '27 professional services revenue: $710 million.
- FY '27 non-GAAP operating margin: 31%.
- Q3 non-GAAP operating margin: approximately 30%.
How management sounded
Positive (+7 on our -10 to +10 scale). Management expressed high confidence in the company's AI strategy, citing strong adoption metrics and raised operating margin guidance. Management sounded more upbeat than on 48% of the 190 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Q&A summary
Monetization and AI trade-offs
Asked: How does Workday monetize headless AI and are customers pressuring core product pricing?
Answer: Management is indifferent to the path of monetization, whether through APIs, Data Cloud, or Extend, as all are monetized. They see no pricing compression on core products and believe AI is driving broader platform wins.
AI Models
Asked: How does Workday view open source models and the competitive landscape?
Answer: The company focuses on customer ROI and uses a mix of models. They are actively exploring open weight models to improve performance, cost efficiency, and sovereignty.
AI Crowding Out
Asked: Is AI adoption cannibalizing other product sales or crowding out the roadmap?
Answer: Management stated that AI is not crowding out other products but rather acting as a driver for new platform wins. They noted that the shift to consumption-based models creates a delay in revenue recognition.
Platform Maturity
Asked: When will Workday arrive as an AI platform?
Answer: Management described the process as a continuous loop of innovation rather than a single destination, but they believe the company is arriving now as agents move into production.
What to watch before the next call
- Adoption rates of Flex credits and consumption-based models.
- Performance of the Sana platform as it becomes the default home screen.
- Integration progress of acquired agents into the core platform.
